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PENN TREATY AMERICAN CORPORATION  

 Issuer  

 AND  

 WELLS FARGO BANK MINNESOTA, N.A.  

 Trustee  

 INDENTURE  

 Dated as of January     , 2002  

 61/4% Convertible Subordinated Notes Due 2008  

  

 
 

CROSS-REFERENCE TABLE*    
  

	Trust Indenture Act Section
 
	 	Indenture

Section
	 
	310	 	(a)(1)	 	7.10	 
	 	 	(a)(2)	 	7.10	 
	 	 	(a)(3)	 	N.A.	 
	 	 	(a)(4)	 	N.A.	 
	 	 	(a)(5)	 	7.10	 
	 	 	(b)	 	7.9	 
	 	 	(c)	 	N.A.	 
	311	 	(a)	 	7.14	 
	 	 	(b)	 	7.14	 
	 	 	(c)	 	N.A.	 
	312	 	(a)	 	2.5(a); 5.1	 
	 	 	(b)	 	16.5	 
	 	 	(c)	 	16.5	 
	313	 	(a)	 	7.2	 
	 	 	(b)(1)	 	N.A.	 
	 	 	(b)(2)	 	7.2	 
	 	 	(c)	 	7.2	 
	 	 	(d)	 	7.2	 
	314	 	(a)	 	4.7(a); 5.2	 
	 	 	(b)	 	N.A.	 
	 	 	(c)(1)	 	16.7	 
	 	 	(c)(2)	 	16.7	 
	 	 	(c)(3)	 	N.A.	 
	 	 	(d)	 	N.A.	 
	 	 	(e)	 	16.7	 
	 	 	(f)	 	N.A.	 
	315	 	(a)	 	7.1(b	)
	 	 	(b)	 	6.8	 
	 	 	(c)	 	7.1(a	)
	 	 	(d)	 	7.1(c	)
	 	 	(e)	 	6.9	 
	316	 	(a) (last sentence)	 	8.4	 
	 	 	(a)(1)(A)	 	6.7	 
	 	 	(a)(1)(B)	 	6.7	 
	 	 	(a)(2)	 	N.A.	 
	 	 	(b)	 	6.4	 
	 	 	(c)	 	9.2	 
	317	 	(a)	 	6.2	 
	 	 	(b)	 	4.4	 
	318	 	(a)	 	16.10; 16.11	 

N.A.
means "not applicable." 

	*
	This
Cross-Reference Table is not part of the Indenture. 

i

  

 
 

Table of Contents    
  

	 
	 	 
	 	Page

	

ARTICLE I

DEFINITIONS
	

Section 1.1	
 	

DEFINITIONS	
 	

1
	Section 1.2	 	INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT	 	6
	Section 1.3	 	RULES OF CONSTRUCTION	 	6
	

ARTICLE II

ISSUE, DESCRIPTION, EXECUTION, REGISTRATION AND EXCHANGE OF NOTES
	

Section 2.1	
 	

DESIGNATION, AMOUNT AND ISSUE OF NOTES	
 	

7
	Section 2.2	 	FORM OF NOTES	 	7
	Section 2.3	 	DATE AND DENOMINATION OF NOTES; PAYMENTS OF INTEREST	 	7
	Section 2.4	 	EXECUTION OF NOTES	 	9
	Section 2.5	 	EXCHANGE AND TRANSFER OF NOTES; RESTRICTIONS ON TRANSFER; DEPOSITORY	 	9
	Section 2.6	 	MUTILATED, DESTROYED, LOST OR STOLEN NOTES	 	11
	Section 2.7	 	TEMPORARY NOTES	 	12
	Section 2.8	 	CANCELLATION OF NOTES PAID, ETC	 	12
	Section 2.9	 	CUSIP NUMBERS	 	13
	

ARTICLE III

REDEMPTION AND REPURCHASE OF NOTES
	

Section 3.1	
 	

REDEMPTION PRICES	
 	

13
	Section 3.2	 	NOTICE OF REDEMPTION; SELECTION OF NOTES	 	13
	Section 3.3	 	PAYMENT OF NOTES CALLED FOR REDEMPTION	 	14
	Section 3.4	 	CONVERSION ARRANGEMENT ON CALL FOR REDEMPTION	 	15
	Section 3.5	 	REPURCHASE OF NOTES UPON A CHANGE OF CONTROL	 	15
	

ARTICLE IV

PARTICULAR COVENANTS OF THE COMPANY
	

Section 4.1	
 	

PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST	
 	

16
	Section 4.2	 	MAINTENANCE OF OFFICE OR AGENCY	 	17
	Section 4.3	 	APPOINTMENTS TO FILL VACANCIES IN TRUSTEE'S OFFICE	 	17
	Section 4.4	 	PROVISIONS AS TO PAYING AGENT	 	17
	Section 4.5	 	CORPORATE EXISTENCE	 	18
	Section 4.6	 	STAY, EXTENSION AND USURY LAWS	 	18
	Section 4.7	 	COMPLIANCE STATEMENT; NOTICE OF DEFAULTS	 	18
	Section 4.8	 	LIMITATION ON DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES	 	19
	Section 4.9	 	TAXES	 	19

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	Section 4.10	 	INSURANCE	 	19
	

ARTICLE V

NOTEHOLDERS' LISTS AND REPORTS BY THE COMPANY
	

Section 5.1	
 	

NOTEHOLDERS' LISTS	
 	

20
	Section 5.2	 	REPORTS BY COMPANY	 	20
	

ARTICLE VI

DEFAULTS AND REMEDIES
	

Section 6.1	
 	

EVENTS OF DEFAULT	
 	

21
	Section 6.2	 	PAYMENTS OF NOTES ON DEFAULT; SUIT THEREFOR	 	22
	Section 6.3	 	APPLICATION OF MONIES COLLECTED BY TRUSTEE	 	24
	Section 6.4	 	PROCEEDINGS BY NOTEHOLDER	 	24
	Section 6.5	 	PROCEEDINGS BY TRUSTEE	 	25
	Section 6.6	 	REMEDIES CUMULATIVE AND CONTINUING	 	25
	Section 6.7	 	DIRECTION OF PROCEEDINGS AND WAIVER OF DEFAULTS BY MAJORITY OF NOTEHOLDERS	 	25
	Section 6.8	 	NOTICE OF DEFAULTS	 	25
	Section 6.9	 	UNDERTAKING TO PAY COSTS	 	26
	

ARTICLE VII

CONCERNING THE TRUSTEE
	

Section 7.1	
 	

DUTIES AND RESPONSIBILITIES OF TRUSTEE	
 	

26
	Section 7.2	 	REPORTS BY TRUSTEE TO HOLDERS	 	27
	Section 7.3	 	RELIANCE ON DOCUMENTS, OPINIONS, ETC	 	27
	Section 7.4	 	NO RESPONSIBILITY FOR RECITALS, ETC	 	28
	Section 7.5	 	TRUSTEE, PAYING AGENTS, CONVERSION AGENTS OR REGISTRAR MAY OWN NOTES	 	28
	Section 7.6	 	MONIES TO BE HELD IN TRUST	 	28
	Section 7.7	 	COMPENSATION AND EXPENSES OF TRUSTEE	 	28
	Section 7.8	 	OFFICERS' CERTIFICATE AS EVIDENCE	 	29
	Section 7.9	 	CONFLICTING INTERESTS OF TRUSTEE	 	29
	Section 7.10	 	ELIGIBILITY OF TRUSTEE	 	29
	Section 7.11	 	RESIGNATION OR REMOVAL OF TRUSTEE	 	29
	Section 7.12	 	ACCEPTANCE BY SUCCESSOR TRUSTEE	 	30
	Section 7.13	 	SUCCESSOR, BY MERGER, ETC	 	30
	Section 7.14	 	LIMITATION ON RIGHTS OF TRUSTEE AS CREDITOR	 	31
	

ARTICLE VIII

CONCERNING THE NOTEHOLDERS
	

Section 8.1	
 	

ACTION BY NOTEHOLDERS	
 	

31
	Section 8.2	 	PROOF OF EXECUTION BY NOTEHOLDERS	 	31

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	Section 8.3	 	WHO ARE DEEMED ABSOLUTE OWNERS	 	31
	Section 8.4	 	COMPANY-OWNED NOTES DISREGARDED	 	31
	Section 8.5	 	REVOCATION OF CONSENTS, FUTURE HOLDERS BOUND	 	32
	

ARTICLE IX

NOTEHOLDERS' MEETINGS
	

Section 9.1	
 	

PURPOSES FOR WHICH MEETINGS MAY BE CALLED	
 	

32
	Section 9.2	 	MANNER OF CALLING MEETINGS; RECORD DATE	 	33
	Section 9.3	 	CALL OF MEETING BY COMPANY OR NOTEHOLDERS	 	33
	Section 9.4	 	WHO MAY ATTEND AND VOTE AT MEETINGS	 	33
	Section 9.5	 	MANNER OF VOTING AT MEETINGS AND RECORD TO BE KEPT	 	33
	Section 9.6	 	EXERCISE OF RIGHTS OF TRUSTEE AND NOTEHOLDERS NOT TO BE HINDERED OR DELAYED	 	34
	

ARTICLE X

SUPPLEMENTAL INDENTURES
	

Section 10.1	
 	

SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF NOTEHOLDERS	
 	

34
	Section 10.2	 	SUPPLEMENTAL INDENTURES WITH CONSENT OF NOTEHOLDERS	 	35
	Section 10.3	 	EFFECT OF SUPPLEMENTAL INDENTURES	 	35
	Section 10.4	 	NOTATION ON NOTES	 	35
	Section 10.5	 	EVIDENCE OF COMPLIANCE OF SUPPLEMENTAL INDENTURE TO BE FURNISHED TO THE TRUSTEE	 	36
	

ARTICLE XI

CONSOLIDATION, MERGER, SALE, CONVEYANCE, TRANSFER AND LEASE
	

Section 11.1	
 	

COMPANY MAY CONSOLIDATE, ETC. ON CERTAIN TERMS	
 	

36
	Section 11.2	 	SUCCESSOR COMPANY TO BE SUBSTITUTED	 	36
	Section 11.3	 	OPINION OF COUNSEL TO BE GIVEN TO TRUSTEE	 	36
	

ARTICLE XII

SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS
	

Section 12.1	
 	

LEGAL DEFEASANCE AND COVENANT DEFEASANCE OF THE NOTES	
 	

36
	Section 12.2	 	TERMINATION OF OBLIGATIONS UPON CANCELLATION OF THE NOTES	 	38
	Section 12.3	 	SURVIVAL OF CERTAIN OBLIGATIONS	 	38
	Section 12.4	 	ACKNOWLEDGMENT OF DISCHARGE BY TRUSTEE	 	39
	Section 12.5	 	APPLICATION OF TRUST ASSETS	 	39
	Section 12.6	 	REPAYMENT TO THE COMPANY; UNCLAIMED MONEY	 	39
	Section 12.7	 	REINSTATEMENT	 	39

iv

 

	

ARTICLE XIII

IMMUNITY OF INCORPORATORS, SHAREHOLDERS, OFFICERS AND DIRECTORS
	

Section 13.1	
 	

INDENTURE AND NOTES SOLELY CORPORATE OBLIGATIONS	
 	

40
	

ARTICLE XIV

CONVERSION OF NOTES
	

Section 14.1	
 	

RIGHT TO CONVERT	
 	

41
	Section 14.2	 	EXERCISE OF CONVERSION PRIVILEGE; ISSUANCE OF COMMON STOCK ON CONVERSION; NO ADJUSTMENT FOR INTEREST OR DIVIDENDS	 	42
	Section 14.3	 	MANDATORY CONVERSION	 	42
	Section 14.4	 	CASH PAYMENTS IN LIEU OF FRACTIONAL SHARES	 	43
	Section 14.5	 	CONVERSION PRICE	 	43
	Section 14.6	 	ADJUSTMENT OF CONVERSION PRICE	 	43
	Section 14.7	 	EFFECT OF RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE	 	49
	Section 14.8	 	TAXES ON SHARES ISSUED	 	50
	Section 14.9	 	RESERVATION OF SHARES; SHARES TO BE FULLY PAID; LISTING OF COMMON STOCK	 	50
	Section 14.10	 	RESPONSIBILITY OF TRUSTEE	 	51
	Section 14.11	 	NOTICE TO HOLDERS PRIOR TO CERTAIN ACTIONS	 	51
	Section 14.12	 	SUPPLEMENTAL INDENTURE PRIOR TO ISSUANCE OF NOTES IN DEFINITIVE FORM	 	51
	

ARTICLE XV

SUBORDINATION
	

Section 15.1	
 	

AGREEMENT TO SUBORDINATE	
 	

52
	Section 15.2	 	CERTAIN DEFINITIONS	 	52
	Section 15.3	 	LIQUIDATION; DISSOLUTION; BANKRUPTCY	 	52
	Section 15.4	 	DEFAULT ON SENIOR INDEBTEDNESS	 	53
	Section 15.5	 	WHEN DISTRIBUTION MUST BE PAID OVER	 	53
	Section 15.6	 	NOTICE BY COMPANY	 	54
	Section 15.7	 	SUBROGATION	 	54
	Section 15.8	 	RELATIVE RIGHTS	 	54
	Section 15.9	 	SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY	 	54
	Section 15.10	 	DISTRIBUTION OR NOTICE TO REPRESENTATIVE	 	54
	Section 15.11	 	RIGHTS OF TRUSTEE AND PAYING AGENT	 	55
	Section 15.12	 	AUTHORIZATION TO EFFECT SUBORDINATION	 	55
	Section 15.13	 	CONVERSIONS NOT DEEMED PAYMENT	 	55
	Section 15.14	 	AMENDMENTS	 	55

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ARTICLE XVI

MISCELLANEOUS PROVISIONS
	

Section 16.1	
 	

POOLING OF INTERESTS	
 	

56
	Section 16.2	 	PROVISIONS BINDING ON COMPANY'S SUCCESSORS	 	56
	Section 16.3	 	OFFICIAL ACTS BY SUCCESSOR COMPANY	 	56
	Section 16.4	 	ADDRESSES FOR NOTICES, ETC	 	56
	Section 16.5	 	COMMUNICATIONS BY HOLDERS WITH OTHER HOLDERS	 	56
	Section 16.6	 	GOVERNING LAW	 	56
	Section 16.7	 	EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT; CERTIFICATES TO TRUSTEE	 	57
	Section 16.8	 	LEGAL HOLIDAYS	 	57
	Section 16.9	 	NO SECURITY INTEREST CREATED	 	57
	Section 16.10	 	TRUST INDENTURE ACT	 	57
	Section 16.11	 	TRUST INDENTURE ACT CONTROLS	 	57
	Section 16.12	 	BENEFITS OF INDENTURE	 	57
	Section 16.13	 	TABLE OF CONTENTS, HEADINGS ETC	 	57
	Section 16.14	 	AUTHENTICATING AGENT	 	57
	Section 16.15	 	EXECUTION IN COUNTERPARTS	 	58

vi

  

        INDENTURE, dated as of January    , 2003, by and between PENN TREATY AMERICAN CORPORATION, a Pennsylvania corporation (the "Company"), and WELLS FARGO BANK MINNESOTA, N.A., a
national banking corporation (the "Trustee"). 

W
I T N E S S E T H: 

        WHEREAS,
for its lawful corporate purposes, the Company has duly authorized the issuance of its 61/4% Convertible Subordinated Notes Due 2008 (the "Notes"), in an
aggregate principal amount not to exceed $45,000,000 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 will be originally issued solely in global form, and in the event that the Company issues Notes in definitive form, such issuance will be accompanied by a supplement
to this Indenture including the form of definitive Notes and provisions for conversion of the Notes under Article XIV hereunder; and 

        WHEREAS,
the Notes, the certificate of authentication to be borne by the Notes, a form of assignment, a form of option to require repurchase by the Company upon a Change of Control (as
hereinafter defined), and a certificate of transfer 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 these presents a valid agreement according to its terms, have been done and performed, and the
execution of this Indenture and the issuance 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: 

 
 

ARTICLE I    
    DEFINITIONS    
  

        Section 1.1    Definitions.    The terms defined in this Section 1.1 (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 1.1. All other terms used in this Indenture that are defined in the Trust Indenture Act (as hereinafter defined) or that are by reference defined in the Securities Act (as hereinafter
defined), except as herein otherwise expressly provided for 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 on the date 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 or Section. 

        ACQUISITION
PRICE: The term "Acquisition Price" shall mean the weighted average price paid by the person or group in acquiring the Voting Stock. 

        AFFILIATE:
An "Affiliate" of any specified person shall mean an "affiliate" as defined in Rule 144(a) as promulgated under the Securities Act. 

1

 

        BOARD
OF DIRECTORS: The term "Board of Directors" shall mean the Board of Directors of the Company or a committee of such Board of Directors duly authorized to act for it. 

        BOARD
RESOLUTION: The term "Board Resolution" shall mean a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board
of Directors and to be in full force and effect on the date of such certification. 

        BUSINESS
DAY: The term "Business Day" shall mean a day, other than a Saturday, a Sunday or a day on which the banking institutions in the State and City of New York are authorized or
obligated by law or executive order to close or a day that is declared a national or New York state holiday. 

        CAPITAL
STOCK: The term "Capital Stock" of any person shall mean any and all shares, interests, participations or other equivalents (however designated) of such person's corporate stock
or any and all equivalent ownership interests in a person (other than a corporation) whether now outstanding or issued after the date hereof. 

        CASH
EQUIVALENT NOTES: The term "Cash Equivalent Notes" shall have the meaning specified in Section 14.1(b). 

        CEDE:
The term "Cede" shall mean Cede & Co., a nominee of the Depository. 

        CHANGE
OF CONTROL: The term "Change of Control" shall have the meaning specified in Section 3.5(d). 

        CHANGE
OF CONTROL PURCHASE PRICE: The term "Change of Control Purchase Price" shall have the meaning specified in Section 3.5(a). 

        CHANGE
OF CONTROL PURCHASE DATE: The term "Change of Control Purchase Date" shall have the meaning specified in Section 3.5(a). 

        CHANGE
OF CONTROL OFFER: The term "Change of Control Offer" shall have the meaning specified in Section 3.5(a). 

        COMMISSION:
The term "Commission" shall mean the United States 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 instrument such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, the body performing such duties at such time. 

        COMMON
STOCK: The term "Common Stock" shall mean any stock of any class of the Company that does not have a preference in respect of dividends or of amounts payable in the event of any
voluntary or involuntary liquidation, dissolution or winding up of the Company and that is not subject
to redemption by the Company. Subject to the provisions of Section 14.6, 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 or shares of any class or classes resulting from any reclassification or reclassifications thereof and that do not have a preference in respect of dividends or of
amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company and that are not subject to redemption by the Company; provided that if at any time
there shall be more than one such resulting class, the shares of each such class then so issuable shall be substantially in the proportion that the total number of shares of such class resulting from
all such reclassification bears to the total number of shares of all such classes resulting from all such reclassifications. 

        COMPANY:
The term "Company" shall mean Penn Treaty American Corporation, a Pennsylvania corporation, and subject to the provisions of Article XI, shall include its successors and
assigns. 

        CONVERSION
PRICE: The term "Conversion Price" shall have the meaning specified in Section 14.5. 

2

 

        CORPORATE
TRUST OFFICE OF THE TRUSTEE: The term "Corporate Trust Office of the Trustee," or other similar term, shall mean the office of the Trustee at which at any particular time its
corporate trust business shall be principally administered, from its office which is, located at 6th Street & Marquette Avenue, MAC N9303-110, Minneapolis, Minnesota
55479. The Trustee also maintains an office at 45 Broadway, 12th Floor, MAC N2666-120, New York, New York 10006, at which office it is authorized to receive notices
hereunder. 

        COVENANT
DEFEASANCE: The term "covenant defeasance" shall have the meaning specified in Section 12.1(c). 

        CUSTODIAN:
The term "Custodian" shall mean the Trustee, as custodian for Cede pursuant to Section 2.5 with respect to the Notes in global form, or any successor entity thereto. 

        DEFAULT:
The term "default" shall mean any event that is, or after notice or passage of time, or both, would be, an Event of Default. 

        DEFAULTED
INTEREST: The term "Defaulted Interest" shall have the meaning specified in Section 2.3. 

        DEFINITIVE
NOTES; IN DEFINITIVE FORM: The term "definitive Notes" shall mean the Notes in definitive form. Any reference to Notes "in definitive form" shall mean definitive Notes, and
any reference to securities "in definitive form" shall mean definitive Notes or Common Stock as the context requires. 

        DEPOSITORY:
The term "Depository" shall mean, with respect to the Notes issuable or issued in whole or in part in global form, the person specified in Section 2.5(b) as the
Depository with respect to the Notes, until a successor shall have been appointed and become such pursuant to the applicable provisions of this Indenture, and thereafter, "Depository" shall mean or
include such successor. 

        DWAC:
The term "DWAC" shall mean Deposit and Withdrawal at Custodian Service. 

        EVENT
OF DEFAULT: The term "Event of Default" shall mean any event specified in Section 6.1(a) through (g). 

        EXCHANGE
ACT: The term "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. 

        EXPIRATION
TIME: The term "Expiration Time" shall have the meaning specified in Section 14.6(f). 

        GLOBAL
NOTE: The term "Global Note" shall mean the note in global form as specified in Exhibit A. 

        INDENTURE:
The term "Indenture" shall mean this instrument as originally executed or, if amended or supplemented as herein provided, as so amended or supplemented. 

        INTEREST
PAYMENT DATE: The term "Interest Payment Date" shall mean each October 15 and April 15. 

        LEGAL
DEFEASANCE: The term "legal defeasance" shall have the meaning specified in Section 12.1(b). 

        MANDATORY
CONVERSION DATE: The term "Mandatory Conversion Date" shall have the meaning specified in Section 14.3. 

        MARKET
CASH CONVERSION PRICE: The term "Market Cash Conversion Price" means with respect to any exchange, the average of the closing prices of the Common Stock (or other securities, as
the case may be) for the ten Trading Day period (appropriately adjusted to take into account the occurrence during such period of certain events that would result in an adjustment of the Conversion 

3

 

Price with respect to the Common Stock or other consideration) commencing on the first Trading Day after delivery of written notice by the Company to the Trustee and holders that the Company has
elected to pay cash in lieu of delivering shares of Common Stock or other securities. The period between the date of delivery by a holder to an office or agency maintained by the Company of a notice
of conversion as required pursuant to Section 14.2 hereof, and the date of determination of the Market Cash Conversion Price may not exceed fifteen Trading Days. 

        NONPAYMENT
DEFAULT: The term "Nonpayment Default" shall have the meaning specified in Section 15.4(b). 

        NOTE
OR NOTES: The terms "Note" or "Notes" shall mean any one or more, as the case may be, of the 61/4% Convertible Subordinated Notes Due 2008 authenticated and delivered
under this Indenture. 

        NOTEHOLDER;
HOLDER: The terms "Noteholder" or "holder" as applied to any Note, or other similar terms (but excluding the term "beneficial holder"), shall mean any person in whose name at
the time a particular Note is registered on the Note registrar's books. 

        NOTE
REGISTER: The term "Note register" shall have the meaning specified in Section 2.5(a). 

        NOTE
REGISTRAR: The term "Note registrar" shall have the meaning specified in Section 2.5(a). 

        OFFICERS'
CERTIFICATE: The term "Officers' Certificate," when used with respect to the Company, shall mean a certificate signed by two authorized officers which shall include
(a) any of the President, the Chief Executive Officer, the Chief Operating Officer or the Chief Financial Officer and (b) any Treasurer or Secretary or any Assistant Secretary of the
Company, that is delivered to the Trustee. Each such certificate shall include the statements provided for in Section 16.7 if and to the extent required by the provisions of such Section. 

        OPINION
OF COUNSEL: The term "Opinion of Counsel" shall mean an opinion in writing signed by legal counsel, who may be an employee of or counsel to the Company or other counsel
acceptable to the Trustee, that is delivered to the Trustee. Each such opinion shall include the statements provided for in Section 16.7 if and to the extent required by the provisions of such
Section. 

        OUTSTANDING:
The term "outstanding" with reference to Notes as of any particular time shall mean, subject to the provisions of Section 8.4, 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, for which monies in the necessary amount shall have been deposited in trust with the Trustee for payment, redemption or repurchase; provided
that if such Notes are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given pursuant to Article III or provision satisfactory to the Trustee shall have
been made for giving such notice; 

        (c)  Notes
paid or converted pursuant to Section 2.6 hereof or Notes in lieu of or in substitution for which other Notes shall have been authenticated and delivered
pursuant to the terms of Section 2.6 unless proof satisfactory to the Trustee is presented that any such Notes are held by BONA FIDE holders in due course; and 

        (d)  Notes
converted into Common Stock or cash pursuant to Article XIV and Notes not deemed outstanding pursuant to Section 3.2 and 3.5. 

        PAYMENT
BLOCKAGE NOTICE: The term "Payment Blockage Notice" shall have the meaning specified in Section 15.4(b). 

4

 

        PAYMENT
DEFAULT: The term "Payment Default" shall have the meaning specified in Section 6.1(d). 

        PERSON:
The term "person" shall mean a corporation, an association, a partnership, 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. 

        PREDECESSOR
NOTE: The term "Predecessor Note" of any particular Note shall mean 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 2.6 in lieu of a lost, destroyed or stolen Note shall be deemed to evidence the same debt as
the lost, destroyed or stolen Note. 

        PURCHASED
SHARES: The term "Purchased Shares" shall have the meaning specified in Section 14.6(f). 

        RECORD
DATE: The term "record date" with respect to any interest payment date shall have the meaning set forth in Section 2.3 hereof. 

        RESPONSIBLE
OFFICER: The term "Responsible Officer" with respect to the Trustee, shall mean an officer of the Trustee assigned and duly authorized by the Trustee to administer its
corporate trust matters. 

        SECURITIES:
The term "Securities" shall have the meaning specified in Section 14.6(d). 

        SECURITIES
ACT: The term "Securities Act" shall mean the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. 

        SUBSIDIARY:
The term "Subsidiary" of any specified person shall mean (i) a corporation, a majority of whose Capital Stock with voting power under ordinary circumstances to elect
directors is at the time directly or indirectly owned by such person or (ii) any other person (other than a corporation) in which such person or such person and a Subsidiary or Subsidiaries of
such person or a Subsidiary or Subsidiaries of such person directly or indirectly, at the date of determination thereof, has at least majority ownership. 

        SUCCESSOR
COMPANY: The term "Successor Company" shall have the meaning specified in Section 11.1. 

        TRADING
DAY: The term "Trading Day" shall mean (x) if the applicable security is listed or admitted for trading on the New York Stock Exchange or another national security
exchange, a day on which the New York Stock Exchange or such other national security exchange is open for business or (y) if the applicable security is quoted on the Nasdaq National Market, a
day on which trades may be made thereon 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. 

        TRIGGER
EVENT: The term "Trigger Event" shall have the meaning specified in Section 14.6(d). 

        TRUST
INDENTURE ACT: The term "Trust Indenture Act" shall mean the Trust Indenture Act of 1939, as amended, as it was in force at the date of execution of this Indenture, except as
provided in Sections 10.3 and 14.6; provided that in the event said 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, said Trust Indenture Act of 1939 as so amended. 

        TRUSTEE:
The term "Trustee" shall mean Wells Fargo Bank Minnesota, N.A., its successors and any corporation resulting from or surviving any consolidation or merger to which it or its
successors may be a party and any successor trustee at the time serving as successor trustee hereunder. 

5

 

        U.S.
GOVERNMENT OBLIGATIONS: The term "U.S. Government Obligations" shall mean securities that are (i) direct obligations of the United States of America for the payment of which
its full faith and credit is pledged or (ii) obligations of a person controlled or supervised by, and acting as an agency or instrumentality of, the United States of America the timely payment
of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America, which, in either case, are not callable or redeemable at the option of the issuer thereof,
and shall also include a depository receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act) as custodian with respect to any such U.S. Government Obligation or a specific
payment of principal or interest on any such U.S. Government Obligation held by such custodian for the account of the holder of such depository receipt; provided that (except as required by law) such
custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by such custodian in respect of the U.S. Government
Obligation or the specific payment of principal of or interest on the U.S. Government Obligation evidenced by such depository receipt. 

        VOTING
STOCK: The term "Voting Stock" shall have the meaning set forth in Section 3.5(e) hereof. 

        Section 1.2    Incorporation by reference of Trust Indenture Act.    

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

        The
following Trust Indenture Act terms used in this Indenture have the following meanings: 

        "INDENTURE
SECURITIES" means the Notes; 

        "INDENTURE
SECURITY HOLDER" means a holder of Notes; 

        "INDENTURE
TO BE QUALIFIED" means this Indenture; 

        "INDENTURE
TRUSTEE" or "INSTITUTIONAL TRUSTEE" means the Trustee; 

        "OBLIGOR"
on the Notes means the Company and any successor obligor under the Trust Indenture Act. 

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

        Section 1.3    Rules of construction.    

        Unless
the context otherwise requires: 

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

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

	(3)
	"or"
is not exclusive;

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

	(5)
	provisions
apply to successive events and transactions. 

6

 

 
 

ARTICLE II    
    ISSUE, DESCRIPTION, EXECUTION, REGISTRATION
  AND EXCHANGE OF NOTES    
  

        Section 2.1    Designation, amount and issue of notes.    The Notes shall be designated as
"61/4% Convertible Subordinated Notes Due 2008." Notes not to exceed the aggregate principal amount of $45,000,000 upon the execution of this Indenture, or from time to time thereafter,
may be executed by the Company and delivered to the Trustee for authentication, and the Trustee shall thereupon authenticate and make available for delivery said Notes upon the written order of the
Company, signed by its (a) Chief Executive Officer, President, Chief Operating Officer or Chief Financial Officer, and (b) any Treasurer or Secretary or any Assistant Secretary, without
any further action by the Company hereunder. 

        Section 2.2    Form of notes.    

        The
Global Note shall represent all of the outstanding Notes. Payment of principal of and interest and premium, if any, on the Global Note shall be made in accordance with the provisions
of Section 2.3 hereof. 

        The
terms and provisions contained in the form of Global 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 2.3    DATE
AND DENOMINATION OF NOTES; PAYMENTS OF INTEREST. The Notes shall be issuable in registered form only without coupons in denominations of $1,000
principal amount and
integral multiples thereof. Every Note shall be dated the date of its authentication, shall bear interest from January    , 2003 and shall be payable semiannually on each April 15
and October 15, commencing April 15, 2003, as specified on the face of the form of Global Note, attached as Exhibit A hereto. 

        The
person in whose name any Note (or its Predecessor Note) is registered at the close of business on any record date with respect to any interest payment date (including any Note that
is converted after the record date and on or before the interest payment date) shall be entitled to receive the interest payable on such interest payment date notwithstanding the cancellation of such
Note upon any transfer, exchange or conversion subsequent to the record date and prior to such interest payment date. Interest may, at the option of the Company, be paid by check mailed to the address
of such person as it appears on the Note register; provided that, with respect to any holder of Notes with an aggregate principal amount equal to or in excess of $5,000,000, at the request (such
request to include appropriate wire instructions) of such holder in writing to the Trustee on or before the record date preceding any interest payment date, interest on such holder's Notes shall be
paid by wire transfer in immediately available funds. The term "record date" with respect to any interest payment date shall mean the October 1 or April 1 preceding said
October 15, or April 15. 

        None
of the Company, the Trustee or any paying agent shall have any responsibility or liability for any aspect of the records relating to or payment made on account of beneficial
ownership interests in the Global Note or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. 

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

        Any
interest on any Note that is payable, but is not punctually paid or duly provided for, on any said October 15, or April 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 

7

 

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 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 persons entitled to such
Defaulted Interest as in this clause provided. Thereupon, the
Trustee shall fix a special record date for the payment of such Defaulted Interest, which shall be not more than 15 days and not less than 10 days prior to the date of the payment and
not less than 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 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 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 such
special record date and shall no longer be payable pursuant to the following clause (2). 

        (2)  The
Company may make payment of any Defaulted Interest in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Notes
may be listed, and upon such notice as may be required by such exchange, 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. 

8

  

        Section 2.4    Execution of Notes.    The Notes shall be signed in the name and on behalf of the Company by
the
signature of its Chief Executive Officer, President, Chief Operating Officer or Chief Financial Officer and attested by the signature of its Treasurer, Secretary or any of its Assistant Secretaries
(any of which signatures 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 16.14),
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 2.5    Exchange and Transfer of Notes; Restrictions on Transfer; Depository.    

        Any
exchange or transfer of all or a part of the Global Note for definitive Notes pursuant to this Section 2.5 will be accompanied by a supplemental indenture that will include
the form of such definitive Notes and provisions for conversion of the Notes under Article XIV. 

        (a)  The
Company shall cause to be kept at the Corporate Trust Office of the Trustee a register (the register maintained in such office and in any other office or agency of
the Company designated pursuant to Section 4.2 being herein sometimes collectively referred to as the "Note register") in which, subject to such reasonable regulations as it may prescribe, the
Company shall provide for the transfers of Notes. Such Note register shall be in written form or in any form capable of being converted into written form within a reasonable period of time. The
Trustee is hereby appointed "Note registrar" for the purpose of transfers of Notes as herein provided. The Company may appoint one or more co-registrars. 

        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 2.5, the Company shall execute, and the Trustee shall authenticate and make available for delivery, 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 may be required by Section 2.5(b). 

        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.
Whenever any Notes are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and make available for delivery, the Notes that the Noteholder making the exchange is
entitled to receive bearing certificate numbers not contemporaneously outstanding. 

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

        No
service charge shall be charged to the Noteholder for any exchange or registration of transfer of Notes, but the Company may require payment of a sum sufficient to cover any tax,
assessments or other governmental charges that may be imposed in connection therewith. 

9

 

        None
of the Company, the Trustee, the Note registrar or any co-registrar shall be required to exchange or register a transfer of (a) any Notes for a period of
15 days next preceding the mailing of a notice of redemption, (b) any Notes called for redemption or, if a portion of any Note is selected or called for redemption, such portion thereof
selected or called for redemption, (c) any Notes surrendered for conversion or, if a portion of any Note is surrendered for conversion, such portion thereof surrendered for conversion or
(d) any Notes surrendered for repurchase pursuant to Section 3.5 or, if a portion of any Note is surrendered for repurchase pursuant to Section 3.5, such portion thereof
surrendered for repurchase pursuant to Section 3.5. 

        All
Notes issued upon any 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, the transfer and/or exchange of which is effectuated by the Trustee pursuant to this Section 2.5, shall be
accompanied by an Officers' Certificate of the Company, certifying that such transfer, exchange and/or registration is authorized by the Company and permitted hereunder. 

        Any
transfer of a beneficial interest in the Global Note that cannot be effected through book-entry settlement must be effected by the delivery to the transferee (or its
nominee) of a definitive Note or Notes registered in the name of the transferee (or its nominee) on the books maintained by the Trustee, in accordance with the transfer instructions set forth herein.
With respect to any such transfer, the Trustee or the Custodian, at the direction of the Trustee, shall cause, in accordance with the standing instructions and procedures existing between the
Depository and the Custodian, the aggregate principal amount of the Global Note to be reduced by the principal amount of the beneficial interest in the Note being transferred and, following such
reduction, the Company shall execute and the Trustee shall authenticate and make available for delivery to the transferee (or such transferee's nominee, as the case may be), a definitive Note or Notes
in the appropriate aggregate principal amount in the name of such transferee (or its nominee). 

        Any
transfer of a definitive Note or Notes must be effected by the delivery to the transferee (or its nominee) of a definitive Note or Notes registered in the name of the transferee (or
its nominee) on the books maintained by the Trustee. With respect to any such transfer, the Company shall execute and the Trustee shall authenticate and make available for delivery to the transferee
(or such transferee's nominee, as the case may be), a definitive Note or Notes in the appropriate aggregate principal amount in the name of such transferee (or its nominee) and bearing such
restrictive legends as may be required by this Indenture. 

        (b)  Notwithstanding
any other provisions of this Indenture (other than the provisions set forth in this Section 2.5(b)), the Global Note may not be transferred as a
whole except by the Depository to a nominee of the Depository or by a nominee of the Depository to the Depository or another nominee of the Depository or by the Depository or any such nominee to a
successor Depository or a nominee of such successor Depository. 

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

        Neither
the Company nor the Trustee (or any registrar, paying agent or conversion agent under this Indenture) shall have responsibility for the performance by the Depository or its
participants or indirect participants of its respective obligations under the rules and procedures governing its operations. The Depository will take any action permitted to be taken by a holder of
Notes (including, without limitation, the presentation of Notes for exchange as described below) only at the direction of one or more participants to whose account with the Depository interests in the
Global Note are 

10

 

credited, and only in respect of the principal amount of the Notes represented by the Global Note as to which such participant or participants has or have given such direction. 

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

        Definitive
Notes issued in exchange for all or a part of the Global Note pursuant to this Section 2.5(b) shall be registered in such names and in such authorized denominations as
the Depository, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Trustee. Upon execution and authentication, the Trustee shall make available for
delivery such definitive Notes to the persons in whose names such definitive Notes are so registered. 

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

        The
Company and the Trustee may for all purposes, including the making of payments due on the Notes, deal with the Depository as the authorized representative of the Noteholders for the
purposes of exercising the rights of Noteholders hereunder. The rights of the owner of any beneficial interest in the Global Note shall be limited to those established by law and agreements between
such owners and depository participants; provided that no such agreement shall give any rights to any person against the Company or the Trustee without the written consent of the parties so affected.
Multiple requests, and directions from and votes of the Depository, as holder of notes in book-entry form with respect to any particular matter, shall not be deemed inconsistent to the
extent they do not represent an amount of notes in excess of those held in the name of the Depository or its nominee. 

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

        Section 2.6    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 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. The Company may charge such applicant for the expenses of the Company in replacing a Note. 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 from 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 

11

 

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. 

        The
Trustee or such authenticating agent may authenticate any such substituted Note and deliver the same upon the receipt of such security or indemnity as the Trustee, the Company and,
if applicable, such authenticating agent may require. Upon the issuance of any substituted Note, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed in relation thereto and any other expenses connected therewith. In case any Note that has matured or is about to mature or has been called for redemption or is about to be
repurchased or converted into Common Stock or cash shall become mutilated or be destroyed, 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 from any loss, liability, cost or
expense caused by or connected with such substitution, and in case of destruction, loss or theft, evidence satisfactory to the Company, the Trustee and, if applicable, any paying agent or conversion
agent of the destruction, loss or theft of such Note and of the ownership thereof. 

        Every
substitute Note issued pursuant to the provisions of this Section 2.6 in lieu of any Note that 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 enforceable by anyone, 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 2.7    Temporary Notes.    Pending the preparation of definitive Notes, the Company may execute and the
Trustee or an authenticating agent appointed by the Trustee shall, upon written request of the Company, authenticate and make available for delivery temporary Notes (printed or lithographed).
Temporary Notes shall be issuable in any authorized denomination and shall be substantially in the form of the definitive Notes 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 definitive Notes. Without unreasonable delay the Company shall execute and deliver to the Trustee or such
authenticating agent definitive Notes (other than in the case of Notes in global form) and thereupon any or all temporary Notes (other than the Global Note) may be surrendered in exchange therefor, at
each office or agency maintained by the Company pursuant to Section 4.2 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 definitive Notes. Such exchange shall be made by the Company at its own expense and without any charge therefor. Until so exchanged, the
temporary Notes shall in all respects be entitled to the same benefits and subject to the same limitations under this Indenture as definitive Notes authenticated and delivered hereunder. 

        Section 2.8    Cancellation of Notes Paid, Etc.    All Notes surrendered for the purpose of payment,
redemption, repurchase, conversion, exchange or registration of transfer shall, if surrendered to the Company or any paying agent or any 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 

12

 

this Indenture. If required by the Company, the Trustee shall return canceled Notes to the Company. 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 2.9    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 holders; provided that any such notice may state that no representation is made as to the correctness
of such numbers either as printed on the Notes or as contained in any notice of a redemption 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 shall promptly notify the Trustee of any change in the CUSIP numbers. 

 
 

ARTICLE III    
    REDEMPTION AND REPURCHASE OF NOTES    
  

        Section 3.1    Redemption Prices.    The Notes are not redeemable at the option of the Company prior to
October 15, 2004. At any time on or after that date, the Notes may be redeemed at the Company's option, upon notice as set forth in Section 3.2, in whole at any time or in part from time
to time, at the redemption price of 100% of principal amount of Notes plus accrued and unpaid interest. 

        Section 3.2    Notice of Redemption; 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 3.1, it shall fix a date for redemption and, in the case of any redemption pursuant to Section 3.1,
it or, at its written request accompanied by the proposed form of notice of redemption (which must be received by the Trustee at least 45 days prior to the date fixed for redemption unless a
shorter period is agreed to by the Trustee), 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 at least 30 and not more than
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 that
subject to the approval of the form of notice by the Trustee if the Company shall give such notice, it shall also give such notice, and 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. 

        Each
such notice of redemption shall identify the Notes to be redeemed (including CUSIP numbers), specify the aggregate principal amount of Notes to be redeemed, the date fixed for
redemption, the redemption price at which Notes are to be redeemed, the place or places of payment, that payment shall be made upon presentation and surrender of such Notes, that interest accrued to
the date fixed for redemption shall be paid as specified in said notice and that on and after said date, interest thereon or on the portion thereof to be redeemed shall cease to accrue. Such notice
shall also state the current Conversion Price and the date on which the right to convert such Notes or portions thereof into Common Stock shall expire. If fewer than all the Notes are to be redeemed,
the notice of redemption shall identify the Notes to be redeemed. 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 shall be
issued. 

        On
or prior to the Business Day prior to the redemption date specified in the notice of redemption given as provided in this Section 3.2, the Company shall deposit by
11:00 a.m. Eastern Time with the Trustee or with one or more paying agents (or, if the Company is acting as its own 

13

 

paying agent, set aside, segregate and hold in trust as provided in Section 4.4) an amount of money sufficient to redeem on the redemption date all the Notes so called for redemption (other
than those theretofore surrendered for conversion into Common Stock or cash) at the appropriate redemption price, together with accrued interest to the date fixed for redemption. If any Note called
for redemption is converted pursuant hereto, 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. If fewer than all the Notes are to be redeemed, the Company shall give the Trustee written notice in the
form of an Officers' Certificate not fewer than 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
fewer than all the Notes are to be redeemed, the Trustee shall select the Notes or portions thereof to be redeemed (in principal amounts of $1,000 or integral multiples thereof), by
lot or, in its
discretion, on a pro rata basis. If any Note selected for partial redemption is converted in part after such selection, the converted portion of such Note 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 converted
as a whole or in part before the mailing of the notice of redemption. 

        Upon
any redemption of less than all Notes, the Company and the Trustee may treat as outstanding any Notes surrendered for conversion during the period of 15 days next preceding
the mailing of a notice of redemption and 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 3.3    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 and
at the place or places stated in such notice at the applicable redemption price, together with interest thereon accrued to 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, together with interest thereon accrued to said date), interest on the Notes or portion of Notes so called for redemption shall cease
to accrue, and such Notes shall cease after the close of business on the Business Day next preceding the date fixed for redemption to be convertible into Common Stock or cash and, except as provided
in Sections 7.6 and 12.4, 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 unpaid interest thereon to 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, together with interest accrued thereon to the date fixed for redemption; provided that any
semi-annual payment of interest becoming due on the date fixed for redemption shall be payable to the holders of such Notes registered as such on the relevant record date subject to the
terms and provisions of Section 2.3 hereof. 

        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. 

        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, shall have been paid or duly provided
for. 

14

 

        Section 3.4    Conversion Arrangement on Call for Redemption.    In connection with any redemption of Notes,
with notice to the Trustee, 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 prior to the close of business one Business Day prior to the date fixed for redemption, an amount not less than the applicable redemption
price, together with interest accrued to the date fixed for redemption, of such Notes. Notwithstanding anything to the contrary contained in this Article III, the obligation of the Company to
pay the redemption price of such Notes, together with interest accrued to 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 shall 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 XIV) surrendered by such purchasers for conversion, prior to the close of business on the date fixed for redemption (and the right to convert any such Notes shall be deemed to have been
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, and the Company agrees to
indemnify the Trustee from, and hold it harmless against, any loss, liability or expense arising out of or in connection with any such arrangement for the purchase and conversion of any Notes between
the Company and such purchasers including the costs and expenses incurred by the Trustee in the defense of any claim or liability arising out of or in connection with the exercise or performance of
any of its powers, duties, responsibilities or obligations under this Indenture. 

        Section 3.5    Repurchase of Notes Upon a Change of Control.    

        (a)  If
a Change of Control shall occur at any time, then each holder of Notes shall have the right to require that the Company repurchase such holder's Notes in whole or in
part in integral multiples of $1,000 at a purchase price (the "Change of Control Purchase Price") in cash in an amount equal to 101% of the principal amount of such Notes, plus accrued and unpaid
interest thereon, if any, to the purchase date (the "Change of Control Purchase Date") pursuant to the offer described below (the "Change of Control Offer") and in accordance with the other procedures
set forth in this Indenture. 

        (b)  Within
30 days following any Change of Control, the Company shall publish a notice in the Wall Street Journal, notify the Trustee thereof and give written notice
of such Change of Control to each holder of Notes, by first-class mail, postage prepaid, at the Noteholder's address appearing in the Note register, stating, among other things, (i) that a
Change of Control has occurred, (ii) the Change of Control Purchase Price, (iii) the Change of Control Purchase Date (which shall be a Business Day no earlier than 30 days nor
later than 60 days from the date such notice is mailed, or such later date as is necessary to comply with requirements under the Exchange Act), (iv) that any Note not tendered shall
continue to accrue interest and to have all of the benefits of this Indenture, (v) that, unless the Company defaults in the payment of the Change of Control Purchase Price, any Notes accepted
for payment pursuant to the Change of Control Offer shall cease to accrue interest after the Change of Control Purchase Date, (vi) that Noteholders electing to have any Notes purchased pursuant
to a Change of Control Offer shall be required to surrender the Notes, with the form entitled "Option of
Noteholder to Elect Purchase" on the reverse of the Notes completed, to the Company at the address specified in the notice prior to the close of business on the third Business Day preceding the Change
of Control Purchase Date, (vii) that Noteholders shall be entitled to withdraw their election if the Company receives, not later than the close of business on the second Business Day preceding
the 

15

 

Change of Control Purchase Date, a telegram, telex, facsimile transmission or letter setting forth the name of the Noteholder, the principal amount of Notes delivered for purchase, and a statement
that such Noteholder is withdrawing his election to have such Notes purchased, and (viii) that Noteholders whose Notes are being purchased only in part shall be issued new Notes equal in
principal amount to the unpurchased portion of the Notes surrendered, which unpurchased portion must be equal to $1,000 in principal amount or an integral multiple thereof. The Company shall comply
with the requirements of Rule 13e-4 and 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are
applicable in connection with the repurchase of the Notes in connection with a Change of Control. 

        (c)  On
the Change of Control Purchase Date, the Company shall, to the extent lawful, (i) accept for payment Notes or portions thereof tendered pursuant to the Change
of Control Offer, (ii) deposit with the Trustee in immediately available funds by 11:00 a.m. Eastern Time an amount equal to the Change of Control Purchase Price in respect of all Notes
or portions thereof so tendered and (iii) deliver or cause to be delivered to the Trustee the Notes so accepted together with an Officers' Certificate stating the Notes or portions thereof
tendered to the Company. The Trustee shall promptly mail to each Noteholder of Notes so accepted payment in an amount equal to the purchase price of such Notes, and the Trustee shall promptly
authenticate and mail to each Noteholder a new Note equal in principal amount to any unpurchased portion of the Notes surrendered, if any; provided that each such new Note shall be in a principal
amount of $1,000 or an integral multiple thereof. The Company shall publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date. 

        (d)  The
term "Change in Control" shall mean an event or series of events in which (i) any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of
the Exchange Act) acquires "beneficial ownership" (as determined in accordance with Rule 13d-3 under the Exchange Act), directly or indirectly, of more than 50% of the total Voting
Stock of the Company at an Acquisition Price less than the conversion price then in effect with respect to the Notes and (ii) the holders of the Common Stock receive consideration which is not
all or substantially all common stock that is (or upon consummation of or immediately following such event or events will be) listed on a United States national securities exchange or approved for
quotation on the Nasdaq Stock Market or any similar United States system of automated dissemination of quotations of securities' prices; provided, however, that any such person or group shall not be
deemed to be the beneficial owner of, or to beneficially own, any Voting Stock tendered in a tender offer until such tendered Voting Stock is accepted for purchase under the tender offer. 

        (e)  "Voting
Stock" means stock of the class or classes pursuant to which the holders thereof have the general voting power under ordinary circumstances to elect the
directors, managers or trustees of a corporation (irrespective whether or not at the time stock of any other class or classes shall have or might have voting power by reason of the happening of any
contingency). 

 
 

ARTICLE IV    
    PARTICULAR COVENANTS OF THE COMPANY    
  

        Section 4.1    Payment of Principal, Premium and Interest.    The Company covenants and agrees that it shall
duly and punctually pay or cause to be paid the principal of and premium, if any, and interest on each of the Notes at the places, at the respective times and in the manner provided herein and in the
Notes. Any amounts of cash to be given to the Trustee or paying agent shall be deposited with the Trustee or paying agent in immediately available funds by 11:00 a.m. Eastern Time on or before
the date such payment is to be made. Each installment of interest on the Notes due on any semi-annual interest payment date may be paid by mailing checks for the interest payable to or
upon the written order of the holders of Notes entitled thereto as they shall appear on the Note register; provided that, with respect to any holder of Notes with an aggregate principal amount equal
to or in excess of 

16

 

$5,000,000, at the request (such request to include appropriate wire instructions) of such holder in writing to the Trustee, interest on such holder's Notes shall be paid by wire transfer in
immediately available funds. An installment of principal or interest shall be considered paid on the date due if the Trustee or paying agent (other than the Company, a Subsidiary of the Company or any
Affiliate of any of them) holds on that date money designated for and sufficient to pay the installment of principal or interest and is not prohibited from paying such money to the holders of the
Notes pursuant to the terms of this Indenture. 

        Section 4.2    Maintenance of Office or Agency.    The Company shall maintain in the Borough of Manhattan, The
City of New York, an office or agency where the Notes may be surrendered for registration of transfer or exchange or for presentation for payment or for conversion, redemption or repurchase and where
notices and demands to or upon the Company in respect of the Notes and this Indenture may be served. The Company shall give prompt written notice to the Trustee of the location, and any change in the
location, of such office or agency. If at any time the Company shall fail to maintain any such office or agency or shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee. 

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

        The
Company hereby initially designates the Trustee as paying agent, Note registrar and conversion agent and the Corporate Trust Office of the Trustee, as offices or agencies of the
Company for the purposes set forth in the first paragraph of this Section 4.2. 

        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 7.11(a). 

        Section 4.3    Appointments to Fill Vacancies in Trustee's Office.    The Company, whenever necessary to avoid
or fill a vacancy in the office of Trustee, shall appoint, in the manner provided in Section 7.11, a Trustee, so that there shall at all times be a Trustee hereunder. 

        Section 4.4    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 or the Trustee, as the case may be,
shall 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 4.4: 

        (1)  that
it shall hold all sums held by it as such agent for the payment of the principal of, premium, if any, or interest 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 shall give the Trustee written notice of any failure by the Company (or by any other obligor on the Notes) to make any payment of the principal of, 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 shall forthwith pay to the Trustee all sums so held in trust. 

17

 

        The
Company shall, before each due date of the principal of, premium, if any, or interest on the Notes, deposit with the paying agent a sum sufficient to pay such principal, premium, if
any, or interest, and (unless such paying agent is the Trustee) the Company shall promptly notify the Trustee of any failure to take such action. 

        (b)  If
the Company shall act as its own paying agent, it shall, on or before each due date of the principal of, premium, if any, or interest 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 so becoming due and shall 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 on the Notes when the same shall
become due and payable. 

        (c)  Anything
in this Section 4.4 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 4.4, 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 4.4 to the contrary notwithstanding, the agreement to hold sums in trust as provided in this Section 4.4 is subject to Sections
12.3 and 12.4. 

        Section 4.5    Corporate Existence.    Subject to Article XI, the Company shall do or cause to be done
all things necessary to preserve and keep in full force and effect (i) its corporate existence, and the corporate, partnership or other existence of any Subsidiary of the Company, in accordance
with the respective organizational documents (as the same may be amended from time to time) of the Company or any such Subsidiary and (ii) the rights (charter and statutory), licenses and
franchises of the Company and its Subsidiaries; provided that the Company shall not be required to preserve any such right, license or franchise, or the corporate, partnership or other existence of
any of its Subsidiaries if the Board of Directors shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and its Subsidiaries, taken as a
whole, and that the loss thereof is not materially adverse to the holders of the Notes. 

        Section 4.6    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 that would prohibit or forgive
the Company from paying all or any portion of the principal of or interest on the Notes as contemplated herein, wherever enacted, now or at any time hereafter in force, or that 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 shall not,
by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but shall suffer and permit the execution of every such power as though no such law has
been enacted. 

        Section 4.7    Compliance Statement; Notice of Defaults    

        (a)  The
Company shall deliver to the Trustee within 120 days after the end of each fiscal year of the Company an Officers' Certificate stating whether or not to the
best knowledge of the signers thereof the Company is in compliance (without regard to periods of grace or notice requirements) with all conditions and covenants under this Indenture, and if the
Company shall not be in compliance, specifying such non-compliance and the nature and status thereof of which such signer may have knowledge. 

18

 

	(b)
	The
Company shall file with the Trustee written notice of the occurrence of any default or Event of Default within ten days of its becoming aware of any such default or Event of
Default. 

        Section 4.8    Limitation on Dividend and Other Payment Restrictions Affecting Subsidiaries.    The Company
shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any consensual encumbrance or restriction on the
ability of any Subsidiary to (i) pay dividends or make any other distribution on its Capital Stock or with respect to any other interest or participation in, or measured by, its profits, or pay
any indebtedness owed to, the Company or a Subsidiary of the Company, (ii) make loans or advances to the Company or any Subsidiary of the Company, or (iii) transfer any of its properties
or assets to the Company. 

        Section 4.9    Taxes.    The Company shall pay or discharge or cause to be paid or discharged, before the same
shall become delinquent, (i) all taxes, assessments and governmental charges (including withholding taxes and any penalties, interest and additions to taxes) levied or imposed upon the Company
or its Subsidiaries or upon the income, profits or property of the Company or any such Subsidiary and (ii) all lawful claims for labor, materials and supplies that, if unpaid, might by law
become a lien upon the property of the Company or any such Subsidiary; provided that the Company shall not be required to pay or discharge or cause to be paid or discharged any such tax, assessment,
charge or claim whose amount, applicability or validity is being contested in good faith by appropriate proceedings and for which disputed amounts adequate reserves have been made. 

        Section 4.10    Insurance.    The Company shall provide, or cause to be provided, for itself and its
Subsidiaries, insurance (including appropriate self-insurance) against loss or damage of the kinds customarily insured against by corporations similarly situated and owning like
properties, including, but not limited to, products liability insurance and public liability insurance, with reputable insurers or with the government of the United States of America or an agency or
instrumentality thereof, in such amounts with such deductibles and by such methods as shall be determined in good faith by the Board of Directors to be appropriate. 

19

  

 
 

ARTICLE V    
    NOTEHOLDERS' LISTS AND REPORTS BY THE COMPANY    
  

        Section 5.1    Noteholders' Lists.    The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of holders of Notes, the Company and the Trustee, and shall otherwise comply with Trust Indenture Act Section 312(a).
If the Trustee is not the Notes registrar, the Company shall furnish to the Trustee on or before at least seven Business Days preceding each interest payment date and at such other times as the
Trustee may request in writing a list in such form and as of such date as the Trustee reasonably may require of the names and addresses of holders of Notes, and the Company shall otherwise comply with
Trust Indenture Act Section 312(a). 

        Section 5.2    Reports by Company.    The Company shall deliver to the Trustee within 15 days after it
files the same with the Commission, copies of all reports and information (or copies of such portions of any of the foregoing as the Commission may by its rules and regulations prescribe), if any,
which the Company is required to file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act or pursuant to the immediately following sentence. So long as at least $5,000,000
aggregate principal amount of Notes remain outstanding, the Company shall file with the Commission such reports as may be required pursuant to Section 13 of the Exchange Act in respect of a
security registered pursuant to Section 12 of the Exchange Act, regardless of whether the Company is otherwise required to file such reports. If the Company is not subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act (or otherwise required to file reports pursuant to the immediately preceding sentence), the Company shall deliver to the Trustee, within
15 days after it would have been required to file such information with the Commission were it required to do so, annual and quarterly financial statements, including any notes thereto (and, in
the case of a fiscal year end, an auditors' report by an independent certified public accounting firm of established national reputation), and a "Management's Discussion and Analysis of Financial
Condition and Results of Operations," in each case substantially equivalent to that which it would have been required to include in such quarterly or annual reports, information, documents or other
reports if it had been subject to the requirements of Section 13 or 15(d) of the Exchange Act. The Company shall provide copies of the foregoing materials to the Noteholders to the extent
required by the Trust Indenture Act once this Indenture has been qualified. The Company shall also comply with the other provisions of the Trust Indenture Act Section 314(a). 

        If
the Company is not required to file the reports and information described above with the Commission, and the Company's Common Stock is still publicly held, the Company shall deliver
an annual financial report for the Common Stock (as required by the Commission) to the Trustee no later than 120 days from the end of its fiscal year and quarterly financial reports for the
Common Stock (as required by the Commission) no later than 30 days after the end of each quarter; provided, however, that if the Company's Common Stock is no longer publicly held, the Company
shall deliver annual and quarterly reports to the Trustee at the same times as described in this paragraph, but the Company shall not have to include management's discussion and analysis of financial
conditions and results of operations or description of the business sections in such reports. 

        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). 

20

 

 
 

ARTICLE VI    
    DEFAULTS AND REMEDIES    
  

        Section 6.1    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: 

        (a)  default
in the payment of the principal of or premium, if any, on the Notes when due at maturity, upon redemption or otherwise, including failure by the Company to
purchase the Notes when required under Section 3.5 (whether or not such payment shall be prohibited by Article XV of this Indenture); or 

        (b)  default
in the payment of any installment of interest on the Notes as and when the same shall become due and payable (whether or not such payment shall be prohibited by
Article XV of this Indenture), and continuance of such default for a period of 30 days; or 

        (c)  a
failure on the part of the Company to duly observe or perform any other covenants or agreements on the part of the Company in this Indenture (other than a default in
the performance or breach of a covenant or agreement that is specifically dealt with elsewhere in this Section 6.1) that continues for a period of 90 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 to the Company and a Responsible Officer of the Trustee, by the holders of at
least 25% in aggregate principal amount of the Notes at the time outstanding determined in accordance with Section 8.4; or 

        (d)  an
event of default occurs under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any indebtedness for
money borrowed by the Company or any of its Subsidiaries (or the payment of which is guaranteed by the Company or any of its Subsidiaries), whether such indebtedness or guarantee now exists or shall
be created after the date hereof, which default (i) is caused by a failure to pay principal or interest on such indebtedness prior to the expiration of the grace period provided in such
indebtedness (a "Payment Default") or (ii) results in the acceleration of such indebtedness prior to its expressed maturity and, in each case, the principal amount of such indebtedness,
together with the principal amount of any other such indebtedness under which there has been a Payment Default or the maturity of which has been so accelerated, aggregates $10,000,000 or more; 

        (e)  final
judgments or decrees shall be entered by a court of competent jurisdiction against the Company or any Subsidiary involving liabilities of $25,000,000 or more
(singly or in the aggregate) (after deducting the portion of such liabilities accepted by a reputable insurance company) and such final judgments or decrees shall not have been vacated, discharged,
satisfied or stayed pending appeal within 60 days from the entry thereof; 

        (f)    the
Company shall commence a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself 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 it or any substantial part
of its property, 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 it or shall make a
general assignment for the benefit of creditors or shall fail generally to pay its debts as they become due; or 

        (g)  an
involuntary case or other proceeding shall be commenced against the Company seeking liquidation, reorganization or other relief with respect to it 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 it or any substantial
part of its property, and 

21

 

such involuntary case or other proceeding shall remain undismissed and unstayed for a period of 60 consecutive days; 

then,
and in each and every such case (other than an Event of Default specified in Section 6.1(f) or (g)), 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 25% in aggregate principal amount of the Notes then outstanding hereunder determined in accordance with Section 8.4, by notice in writing to
the Company (and to the Trustee if given by Noteholders), may declare the principal of, premium, if any, on the Notes and the interest accrued thereon to be due and payable immediately, and upon any
such declaration the same shall become and shall be immediately due and payable, anything in this Indenture or in the Notes contained to the contrary notwithstanding. If an Event of Default specified
in Section 6.1(f) or (g) occurs and is continuing, the principal of all the Notes and the interest accrued thereon shall be immediately due and payable. The foregoing provision 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 upon all Notes and the
principal of and premium, if any, on any and all Notes that shall have become due otherwise than by acceleration (with interest on overdue installments of interest (to the extent that payment of such
interest is enforceable under applicable law) and on such principal and premium, if any, at the rate borne by the Notes, to the date of such payment or deposit) and amounts due to the Trustee pursuant
to Section 7.7, and if any and all defaults under this Indenture, other than the nonpayment of principal of, premium, if any, and accrued interest on Notes that shall have become due by
acceleration, shall have been cured or waived pursuant to Section 6.7, 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 thereto. The Company shall notify 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 6.2    Payments of Notes on Default; Suit Therefor.    The Company covenants that (a) in case a
default shall be made in the payment of any installment of interest 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
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 or repurchase, by declaration or otherwise, then, upon demand of the Trustee, the Company shall 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 of, premium, if any, or interest, or both, as the case may be, with interest upon the
overdue principal, premium, if any, and (to the extent that payment of such interest is enforceable under applicable law) upon the overdue installments of interest at the rate 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
any expenses or liabilities incurred by the Trustee hereunder other than through its negligence or bad faith. Until such demand by the 

22

 

Trustee, the Company may pay the principal of and premium, if any, and interest on 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 6.2, shall be entitled and empowered, by intervention in such proceedings
or otherwise, to file and prove a claim or claims for the whole amount of principal, premium, if any, and interest owing and unpaid in respect of the 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 7.7; 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 that 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. 

        Nothing
herein contained shall be deemed to authorize the Trustee to authorize or consent to or adopt on behalf of any Noteholder any plan of reorganization or arrangement affecting the
Notes or the rights of any Noteholder, or to authorize the Trustee to vote in respect of the claim of any Noteholder in any such proceeding. 

        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 on 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 pursuant to this Indenture or any supplement hereto (and in any proceedings involving the interpretation of any provision of this Indenture to
which the 

23

 

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 6.3    Application of Monies Collected by Trustee.    Any monies collected by the Trustee pursuant to
this Article VI 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: 

        First:
To the payment of all amounts due the Trustee under Section 7.7; 

        Second:
Subject to the provisions of Article XV, in case the principal of the outstanding Notes shall not have become due and be unpaid, to the payment of interest on 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
at the rate borne by the Notes, such payments to be made ratably to the persons entitled thereto; and 

        Third:
Subject to the provisions of Article XV, 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 holding and unpaid upon the Notes for principal, premium, if any, and interest, with interest on the overdue principal and premium, if any, and (to the extent that such interest
has been collected by the Trustee) upon overdue installments of interest 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, premium, if any, and interest without preference or priority of principal and premium, if any, over interest, or of interest over
principal and premium, if any, or of any installment of interest over any other installment of interest, or of any Note over any other Note, ratably to the aggregate of such principal and premium, if
any, and accrued and unpaid interest. 

        Section 6.4    Proceedings by Noteholder.    No holder of any Note shall have any right by virtue of or by
availing of 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 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 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 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 6.7; 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 availing of any provision of this Indenture to affect, disturb or prejudice the rights of any other
holder of Notes, 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 6.4, 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, premium, if any, and
interest on such Note, on or after the respective due dates expressed in such Note, or to institute suit for the 

24

 

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 except as otherwise set forth herein. 

        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 his own
behalf and for his own benefit, may enforce, and may institute and maintain any proceeding suitable to enforce, his rights of conversion as provided herein. 

        Section 6.5    Proceedings by Trustee.    In case of an Event of Default and subject to the provisions of
Section 7.7 hereof, 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 the Trustee shall deem
most effectual 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 6.6    Remedies Cumulative and Continuing.    Except as provided in Section 2.7, all powers and
remedies given by this Article VI to the Trustee or to the Noteholders shall, to the extent permitted by law, be deemed cumulative and not exclusive of such powers and remedies 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 6.4, every power and remedy given by this Article VI 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 6.7    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 8.4) shall have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee; provided that (a) such direction shall not be in conflict with any rule of law
or with this Indenture and (b) the Trustee may take any other action deemed proper by the Trustee that is not inconsistent with such direction. The holders of a majority in aggregate principal
amount of the Notes at the time outstanding (determined in accordance with Section 8.4) 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 or premium, if any, on, or the principal of, the Notes, (ii) a failure by the Company to convert any Notes into Common
Stock or cash, as the case may be, or (iii) a default in respect of a covenant or provisions hereof that under Article X cannot be modified or amended without the consent of the holders
of all Notes then outstanding. Whenever any default or Event of Default hereunder shall have been waived as permitted by this Section 6.7, 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 and the Company, the Trustee and the holders of the Notes shall as reasonably possible 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. 

        Section 6.8    Notice of Defaults.    The Trustee shall, within 90 days after the occurrence of a
default, mail to all Noteholders, as the names and addresses of such holders appear upon the Note register, notice of all defaults of which a Responsible Officer has actual knowledge, unless such
defaults shall have been cured or waived before the giving of such notice; provided that, except in the case of default in the payment of the principal of, premium, if any, or interest on any of the
Notes, the Trustee 

25

 

shall be protected in withholding such notice if and so long as a Responsible Officer of the Trustee in good faith determine that the withholding of such notice is in the interests of the
Noteholders. 

        Section 6.9    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 that the provisions of this Section 6.9 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 10% in principal amount of the Notes at the time outstanding determined in accordance with Section 8.4 or to
any suit instituted by any Noteholder for the enforcement of the payment of the principal of, 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 XIV. 

 
 

ARTICLE VII    
    CONCERNING THE TRUSTEE    
  

        Section 7.1    Duties and Responsibilities of Trustee.    

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

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

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

        (ii)  in
the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein,
upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; provided that in the case of any such certificates or opinions that by any provision 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 (but need
not confirm or investigate the accuracy of mathematical calculations or other facts stated therein). 

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

        (i)    this
paragraph (c) does not limit the effect of paragraph (b) of this Section 7.1; 

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

        (iii)  the
Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to
Section 6.7. 

        (d)  Every
provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b), (c) and (e) of this Section 7.1. 

26

 

        (e)  The
Trustee may refuse to perform any duty or exercise any right or power or extend or risk its own funds or otherwise incur any financial liability unless it receives
indemnity satisfactory to it against any loss, liability or expense. 

        Section 7.2    Reports by Trustee to Holders.    Within 60 days after each April 1 commencing
with the April 1 following the date of this Indenture, the Trustee shall, if required by the Trust Indenture Act, mail to each Noteholder a brief report dated as of such April 1 that
complies with Trust Indenture Act Section 313(a). The Trustee also shall comply with Trust Indenture Act Sections 313(b) and 313(c). 

        The
Company shall promptly notify the Trustee in writing if the Notes become listed or delisted on any stock exchange or automatic quotation system. 

        A
copy of each report at the time of its mailing to Noteholders shall be mailed to the Company and, to the extent required by Section 5.2 hereof and of the Trust Indenture Act
Section 313(d), filed with the Commission and each stock exchange, if any, on which the Notes are listed. 

        Section 7.3    Reliance on Documents, Opinions, Etc.    Except as otherwise provided in Section 7.1: 

        (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, coupon or other paper or document 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 or required by the Trust Indenture Act); 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 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 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; no Depository, Custodian or paying agent who is not the Trustee shall
be deemed an agent of the Trustee, and the Trustee (in its capacity as Trustee) shall not be responsible for any act or omission by any such Depository, Custodian or paying agent; 

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

        (f)    Subject
to the provisions of Section 7.1(c), the Trustee shall not be liable for any action it takes or omits to take in good faith that it believes to be
authorized or within its rights or powers; 

        (g)  In
connection with any request to transfer or exchange any Note, the Trustee may request a direction (in the form of an Officers' Certificate) from the Company and an
Opinion of Counsel with respect to compliance with any restrictions on transfer or exchange imposed by this Indenture, the Securities Act, other applicable law or the rules and regulations of any
exchange on which the Notes or the Common Stock may be traded, and the Trustee may rely and shall be protected in acting upon such direction and in accordance with such Officers' Certificate and
Opinion of Counsel; 

        (h)  The
Trustee may rely and shall be fully protected in acting upon the determination and notice by the Company of the Conversion Price; and 

27

 

        (i)    The
Trustee shall not be deemed to have knowledge of any Event of Default or other fact or event upon the occurrence of which it may be required to take action hereunder
unless one of its Responsible Officers has actual knowledge thereof obtained by a written statement. 

        Section 7.4    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 7.5    Trustee, Paying Agents, Conversion Agents or Registrar May Own Notes.    The Trustee, any paying
agent, any conversion agent or any 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 7.6    Monies to be Held in Trust.    Subject to the provisions of Section 12.4, 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 to in writing from
time to time by the Company and the Trustee. 

        Section 7.7    Compensation and Expenses of Trustee.    The Company covenants and agrees to pay to the Trustee
from time to time, and the Trustee shall be entitled to, such compensation as the Company and the Trustee shall from time to time agree in writing, 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), and the Company shall pay or reimburse the Trustee upon its request for
all reasonable expenses, disbursements and advances 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 or bad faith. The Company also
covenants to indemnify each of the Trustee or any predecessor Trustee in any capacity under this Indenture and its agents and any authenticating agent for, and to hold them harmless against, any and
all loss, liability, damage, claim or expense, including taxes (other than taxes based on the income of the Trustee) incurred without negligence or bad faith on the part of the Trustee or such 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 7.7 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. 

28

  

        Section 7.8    Officers' Certificate as Evidence.    Except as otherwise provided in Section 7.1,
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 negligence or bad faith on the part of the Trustee, be deemed to be
conclusively proved and established by an Officers' Certificate delivered to the Trustee, and such Officers' Certificate, in the absence of negligence or bad faith on the part of the Trustee, shall be
full warrant to the Trustee for any action taken or omitted by it under the provisions of this Indenture upon the faith thereof. 

        Section 7.9    Conflicting Interests of Trustee.    In the event that the Trust Indenture Act is applicable
hereto, and if the Trustee has or shall acquire a conflicting interest within the meaning of Trust Indenture Act Section 310(b) and there exists an Event of Default hereunder (exclusive of any
period of grace or requirement of notice), 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. 

        Section 7.10    Eligibility of Trustee.    There shall at all times be a Trustee hereunder that shall be a
person that satisfies the requirements of Trust Indenture Act Section 310(a)(1) and Section 310(a)(5) and that has 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, it shall resign immediately in the manner and with the effect hereinafter specified in this Article VII. 

        Section 7.11    Resignation or Removal of Trustee.    

        (a)  The
Trustee may at any time resign by giving written notice of such resignation to the Company; and the Company shall mail, or cause to be mailed, notice thereof to the
holders of Notes at their addresses as they shall appear on the Note register. 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. 

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

        (i)    the
Trustee shall fail to comply with Section 7.9 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 months; or 

        (ii)  the
Trustee shall cease to be eligible in accordance with the provisions of Section 7.10 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 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 any Noteholder who has been a bona fide holder of a Note or Notes for at least six months may, on
behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal 

29

 

of the Trustee and the 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 days after notice to the Company of such nomination the Company objects thereto, in which case the Trustee so removed or any
Noteholder, upon the terms and conditions and otherwise as provided in the next paragraph, may petition any court of competent jurisdiction for an appointment of a successor trustee. 

        If
no successor trustee shall have been so appointed and have accepted appointment within 60 days after removal or the mailing of such notice of resignation to the Noteholders,
the Trustee resigning or being removed may petition any court of competent jurisdiction for the appointment of a successor trustee, or, in the case of either resignation or removal, any Noteholder who
has been a bona fide holder of a Note or Notes for at least six months may, 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. 

        (d)  Any
resignation or removal of the Trustee and appointment of a successor trustee pursuant to any of the provisions of this Section 7.11 shall become effective
upon acceptance of appointment by the successor trustee as provided in Section 7.12. 

        Section 7.12    Acceptance by Successor Trustee.    Any successor trustee appointed as provided in
Section 7.11 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 on the written request of the Company or of the successor trustee, the Trustee ceasing to act shall, upon
payment of any amounts then due it pursuant to the provisions of Section 7.7, execute and deliver an instrument transferring to such successor trustee all the rights and powers of the Trustee
so ceasing to act. Upon request of any such successor trustee, the Company shall execute any and all instruments in writing for more fully and certainly vesting in and confirming to such successor
trustee all such rights and powers. Any Trustee ceasing to act shall, nevertheless, retain a lien upon all property and funds held or collected by such trustee as such, except for funds held in trust
for the benefit of holders of particular Notes, to secure any amounts then due it pursuant to the provisions of Section 7.7. 

        No
successor trustee shall accept appointment as provided in this Section 7.12 unless at the time of such acceptance such successor trustee shall be qualified under the provisions
of Section 7.9 and eligible under the provisions of Section 7.10. 

        Upon
acceptance of appointment by a successor trustee as provided in this Section 7.12, 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 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 7.13    Successor, 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, shall be the successor to the Trustee hereunder, provided such corporation shall be qualified under the provisions of
Section 7.9 and eligible under the provisions of Section 7.10 without the execution or filing of any paper or any further act on the part of any of the parties hereto. 

30

 

        Section 7.14    Limitation on Rights of Trustee as Creditor.    If and when the Trustee shall be or become a
creditor of the Company (or any other obligor upon the Notes) and the Trust Indenture Act is applicable hereto, the Trustee shall be subject to the provisions of Trust Indenture Act
Section 311(a)
or, if applicable, Trust Indenture Act Section 311(b) regarding the collection of the claims against the Company (or any such other obligor). 

 
 

ARTICLE VIII    
    CONCERNING THE NOTEHOLDERS    
  

        Section 8.1    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, (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 IX 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 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 15 days prior to the date of commencement of solicitation of such action. 

        Section 8.2    Proof of Execution by Noteholders.    Subject to the provisions of Sections 7.1, 7.2 and 9.5,
proof of the execution of any instrument by a Noteholder or by agent or proxy shall be sufficient if made in accordance with Section 7.3 hereof. The holding of Notes shall be proved by the Note
register or by a certificate of the Note registrar. 

        The
record of any Noteholders' meeting shall be proved in the manner provided in Section 9.5. 

        Section 8.3    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 books of the Company to be, and may treat such person 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) 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 order of such holder, 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. 

        The
Depository shall be deemed to be the owner of the Global Note for all purposes, including receipt of notices to Noteholders and payment of principal of, premium, if any, and interest
on the Notes. None of the Company, the Trustee (in its capacity as Trustee), any paying agent or the Note registrar (or co-registrar) shall have any responsibility for any aspect of the
records relating to or payments made on account of beneficial interests of the Global Note or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. 

        Section 8.4    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 that are owned by the Company or any other obligor on the Notes or by
any person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company or any other obligor on the Notes shall be disregarded and deemed not to 

31

 

be outstanding for the purpose of any such determination; provided that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, consent, waiver or
other action, only Notes that a Responsible Officer of the Trustee actually knows are so owned shall be so disregarded. 

        Notes
so owned that have been pledged in good faith may be regarded as outstanding for the purposes of this Section 8.4 if the pledgee shall establish to the satisfaction of the
Trustee the pledger's right to vote such Notes and that the pledgee is not the Company, any other obligor on the Notes or a person directly or indirectly controlling or controlled by or under direct
or indirect common control with the Company or any such other obligor. 

        In
the case of a dispute as to such right, any decision by the Trustee taken upon the advice of counsel shall be full protection to the Trustee. Upon request of the Trustee, the Company
shall furnish to the Trustee promptly an Officers' Certificate listing and identifying all 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 7.1, 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 8.5    Revocation of Consents, Future Holders Bound.    At any time prior to (but not after) the
evidencing to the Trustee, as provided in Section 8.1, 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 that 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 8.2, 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 IX    
    NOTEHOLDERS' MEETINGS    
  

        Section 9.1    Purposes for Which Meetings May be Called.    A meeting of Noteholders may be called at any time
and from time to time pursuant to the provisions of this Article IX for any of the following purposes: 

        (i)    to
give any notice to the Company or to the Trustee, or to give any directions to the Trustee, or to consent to the waiving of any 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 VI; 

        (ii)  to
remove the Trustee and appoint a successor trustee pursuant to the provisions of Article VII; 

        (iii)  to
consent to the execution of an indenture or indentures supplemental hereto pursuant to the provisions of Section 10.2; or 

        (iv)  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 provisions of
this Indenture or under applicable law. 

        Section 9.2    Manner of Calling Meetings; Record Date.    The Trustee may at any time call a meeting of
Noteholders to take any action specified in Section 9.1, to be held at such time and at such place in Minneapolis, Minnesota as the Trustee shall determine. Notice of every meeting of the
Noteholders, 

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setting forth the time and the place of such meeting and in general terms the action proposed to be taken at such meeting, shall be mailed not less than 30 nor more than 60 days prior to the
date fixed for the meeting to such Noteholders at their addresses as such addresses appear in the Note register. For the purpose of determining Noteholders entitled to notice of any meeting of
Noteholders, the Company, upon written notice to the Trustee, shall fix in advance a date as the record date for such determination, such date to be a business day not more than ten days prior to the
date of the mailing of such notice as hereinabove provided. Only persons in whose name any Note shall be registered in the Note register at the close of business on a record date fixed by the Trustee
as aforesaid, or by the
Company or the Noteholders as provided in Section 9.3, shall be entitled to notice of the meeting of Noteholders with respect to which such record date was so fixed. 

        Section 9.3    Call of Meeting 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 10% in aggregate principal amount of the Notes then outstanding shall have requested the Trustee to call a meeting of Noteholders to
take any action authorized in Section 9.1 by written request setting forth in reasonable detail the action proposed to be taken at the meeting, and the Trustee shall not have mailed notice of
such meeting within 20 days after receipt of such request, then the Company or the holders of Notes in the amount above specified, as the case may be, may fix the record date with respect to,
and determine the time and the place for, such meeting and may call such meeting to take any action authorized in Section 9.1, by mailing notice thereof as provided in Section 9.2. The
record date fixed as provided in the preceding sentence shall be set forth in a written notice to the Trustee and shall be a business day not less than 15 nor more than 20 days after the date
on which the original request is sent to the Trustee. 

        Section 9.4    Who May Attend and Vote at Meetings.    Only persons entitled to receive notice of a meeting of
Noteholders and their respective proxies duly appointed by an instrument in writing shall be entitled to vote at 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. When a determination of Noteholders entitled to vote at any meeting of Noteholders has been made as provided in this Section, such determination shall apply to any adjournments thereof. 

        Section 9.5    Manner of Voting at Meetings and Record to be Kept.    The vote upon any resolution submitted to
any meeting of Noteholders shall be by written ballots on each of which shall be subscribed the signature of the Noteholder or proxy casting such ballot and the identifying number or numbers of the
Notes held or represented in respect of which such ballot is cast. The 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 9.2. The
record shall show the identifying numbers of the Notes voting in favor of or against any resolution. Each counterpart of such record shall be signed and verified by the affidavits of the chairman and
secretary of the meeting and one of the counterparts shall be delivered to the Company and the other to the Trustee to be preserved by the Trustee. 

        Any
counterpart record so signed and verified shall be conclusive evidence of the matters therein stated and shall be the record referred to in clause (b) of Section 8.1. 

        Section 9.6    Exercise of Rights of Trustee and Noteholders Not to be Hindered or Delayed.    Nothing in this
Article IX contained shall be deemed or construed to authorize or permit, by reason of any call 

33

 

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 X    
    SUPPLEMENTAL INDENTURES    
  

        Section 10.1    Supplemental Indentures Without Consent of Noteholders.    The Company, when authorized by a
Board Resolution, 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)  to
make provision with respect to the conversion rights of the holders of Notes pursuant to the requirements of Article XIV; 

        (b)  subject
to Article XV, 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 Company of the covenants, agreements and
obligations of the Company pursuant to Article XI; 

        (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 that in respect of any such additional covenant, restriction or condition,
such supplemental indenture may provide for a particular period of grace after default (which period may be shorter or longer than that allowed in the case of other defaults) or may provide for an
immediate enforcement upon such default or may limit the remedies available to the Trustee upon such default; 

        (e)  to
provide for the issuance under this Indenture of 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 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 necessary to effect the qualification of this Indenture under the Trust Indenture Act (if
applicable), or under any similar federal statute hereafter enacted (if applicable). 

        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 10.1 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 10.2. 

34

 

        Section 10.2    Supplemental Indentures with Consent of Noteholders.    With the consent (evidenced as provided
in Article VIII) 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 a Board Resolution 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 that no such supplemental indenture shall (i) without
the consent of the holders of each Note so affected, 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 or repurchase thereof, alter the obligation of the Company to repurchase the Notes at the option of the holder upon the
occurrence of a Change of Control or impair or affect 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, modify the subordination provisions in a manner adverse to the
holders of the Notes, or impair the right to convert the Notes into Common Stock or cash subject to the terms set forth herein or (ii) without the consent of the holders of all the Notes then
outstanding, reduce the aforesaid percentage of Notes, the holders of which are required to consent to any such supplemental indenture. 

        Upon
the request of the Company, accompanied by a copy of a Board Resolution 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 10.2 to approve the particular form of any proposed supplemental indenture, but it shall be
sufficient if such consent shall approve the substance thereof. 

        Section 10.3    Effect of Supplemental Indentures.    Any supplemental indenture executed pursuant to the
provisions of this Article X shall comply with the Trust Indenture Act, as then in effect, if such supplemental indenture is then required to so comply. Upon the execution of any supplemental
indenture pursuant to the provisions of this Article X, 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 10.4    Notation on Notes.    Notes authenticated and delivered after the execution of any supplemental
indenture pursuant to the provisions of this Article X may bear a notation in form approved by the Company as to any matter provided for in such supplemental indenture, but they need not do so.
After notice to the Trustee, if the Company shall determine to add such a notation, new Notes so modified as to conform, in the opinion of 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 16.14) and delivered in exchange for the Notes then outstanding, upon surrender of such Notes then outstanding. 

35

 

        Section 10.5    Evidence of Compliance of Supplemental Indenture to be Furnished to the Trustee.    The Trustee
shall be furnished with and, subject to the provisions of Sections 7.1 and 7.2, may rely conclusively upon 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 X. 

 
 

ARTICLE XI    
    CONSOLIDATION, MERGER, SALE, CONVEYANCE, TRANSFER AND LEASE    
  

        Section 11.1    Company may Consolidate, etc. on Certain Terms.    The Company shall not consolidate with or
merge with or into, or convey, transfer or lease all or substantially all of its assets (determined on a consolidated basis) to any person unless: (i) either the Company is the resulting,
surviving or transferee person (the "Successor Company") or the Successor Company is a person organized and existing under the laws of the United States or any State thereof or the District of
Columbia, and the Successor Company (if not the Company) expressly assumes by a supplemental indenture, executed and delivered to the Trustee, in form satisfactory to the Trustee, all the obligations
of the Company under this Indenture and the Notes, including the rights pursuant to Article XIV hereof, (ii) immediately after giving effect to such transaction, no Event of Default has
happened and is continuing and (iii) the Company delivers to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such
supplemental indenture (if any) comply with this Indenture. 

        Section 11.2    Successor Company to be Substituted.    In case of any such consolidation, merger, sale,
conveyance, transfer or lease and upon the assumption by the Successor Company, 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, 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 Company shall succeed to and be substituted for the Company, with the same effect as if it had been named herein as the party hereto. When a Successor Company duly assumes
all the obligations of the Company pursuant to this Indenture and the Notes, the predecessor shall be released from all such obligations. 

        Section 11.3    Opinion of Counsel to be Given to Trustee.    The Trustee, subject to Sections 7.1 and 7.2,
shall receive an Officers' Certificate and an Opinion of Counsel as conclusive evidence that any such consolidation, merger, sale, conveyance, transfer or lease and any such assumption complies with
the provisions of this Article XI. 

 
 

ARTICLE XII    
    SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS    
  

        Section 12.1    Legal Defeasance and Covenant Defeasance of the Notes.    

        (a)  The
Company may, at its option by Board Resolution, at any time, with respect to the Notes, elect to have either paragraph (b) or paragraph (c) below be
applied to the outstanding Notes upon compliance with the conditions set forth in paragraph (d). 

        (b)  Upon
the Company's exercise under paragraph (a) of the option applicable to this paragraph (b), the Company shall be deemed to have been released and
discharged from its obligations with respect to the outstanding Notes on the date the conditions set forth in paragraph (d) below are satisfied (hereinafter, "legal defeasance"). For this
purpose, such legal defeasance means that the Company shall be deemed to have paid and discharged the entire indebtedness represented by the outstanding Notes, which shall thereafter be deemed to be
"outstanding" only for the purposes of the Sections of and matters under this Indenture referred to in clauses (i) and (ii) below and to have satisfied all its other obligations under
such Notes and this Indenture insofar as such Notes are 

36

 

concerned, except for the following, which shall survive until otherwise terminated or discharged hereunder: (i) the rights of holders of outstanding Notes to receive solely from the trust
fund described in paragraph (d) below and as more fully set forth in such paragraph, payments in respect of the principal of, premium, if any, and interest on such Notes when such payments are
due and (ii) obligations listed in Section 12.3. 

        (c)  Upon
the Company's exercise under paragraph (a) of the option applicable to this paragraph (c), the Company shall be released and discharged from its
obligations under any covenant contained in Article XI and Section 3.5 with respect to the outstanding Notes on and after the date the conditions set forth in paragraph (d) are
satisfied (hereinafter, "covenant defeasance"), and the Notes shall thereafter be deemed to be not "outstanding" for the purpose of any direction, waiver, consent or declaration or act of holders (and
the consequences of any thereof) in connection with such covenants, but shall continue to be deemed "outstanding" for all other purposes hereunder. For this purpose, such covenant defeasance means
that, with respect to the outstanding Notes, the Company may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such covenant, whether
directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document, and
such omission to comply shall not constitute a Default or an Event of Default under Section 6.1,
but, except as specified above, the remainder of this Indenture and such Notes shall be unaffected thereby. 

        (d)  The
following shall be the conditions to application of either paragraph (b) or paragraph (c) above to the outstanding Notes: 

        (i)    The
Company shall have irrevocably deposited in trust with the Trustee, pursuant to an irrevocable trust and security agreement in form and substance satisfactory to the
Trustee, cash or non-callable U.S. Government Obligations maturing as to principal and interest at such times, or a combination thereof, in such amounts as are sufficient, without
consideration of the reinvestment of such interest and after payment of all federal, state and local taxes or other charges or assessments in respect thereof payable by the Trustee, in the opinion of
a nationally recognized firm of independent public accountants expressed in a written certification thereof (in form and substance reasonably satisfactory to the Trustee) delivered to the Trustee, to
pay the principal of, premium, if any, and interest on the outstanding Notes on the dates on which any such payments are due and payable in accordance with the terms of this Indenture and of the Notes
as well as all other sums payable hereunder by the Company; 

        (ii)  (A)
No Event of Default shall have occurred or be continuing on the date of such deposit, and (B) no Default or Event of Default under Section 6.1(f) or
6.1(g) shall occur on or before the 123rd day after the date of such deposit; 

        (iii)  Such
deposit shall not result in a Default under this Indenture or a breach or violation of, or constitute a default under, any other instrument or agreement to which
the Company is a party or by which it or its property is bound; 

        (iv)  In
the case of a legal defeasance under paragraph (b) above, the Company shall have delivered to the Trustee an Opinion of Counsel in form and substance
reasonably satisfactory to the Trustee stating that (A) the Company has received from, or there has been published by, the Internal Revenue Service a ruling applicable to such a defeasance or
(B) since the date of this Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the
holders of the Notes shall not recognize income, gain or loss for federal income tax purposes as a result of such deposit, defeasance and discharge and shall be subject to federal income tax on the
same amounts and in the same manner and at the same times as would have been the case if such deposit, defeasance and discharge had not occurred; and, in the case of a covenant defeasance under
paragraph (c) 

37

 

above, the Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, in form and substance reasonably satisfactory to the Trustee, to the effect that holders of
the Notes shall not recognize income, gain or loss for federal income tax purposes as a result of such deposit and defeasance and shall be subject to federal income tax on the same amounts and in the
same manner and at the same times as would have been the case if such deposit and defeasance had not occurred; 

        (v)  The
holders shall have a perfected security interest under applicable law in the cash or U.S. Government Obligations deposited pursuant to
Section 12.1(d)(i) above; 

        (vi)  The
Company shall have delivered to the Trustee an Opinion of Counsel, in form and substance reasonably satisfactory to the Trustee, to the effect that, after the
passage of 123 days following the deposit, the trust funds shall not be subject to any applicable bankruptcy, insolvency, reorganization or similar law affecting creditors' rights generally; 

        (vii) Such
defeasance shall not cause the Trustee to have a conflicting interest with respect to any securities of the Company; and 

        (viii)The
Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee, each
stating that all conditions precedent specified herein relating to the defeasance contemplated by this Section 12.1 have been complied with; 

provided,
that no deposit under clause (i) shall be effective to terminate the obligations of the Company under the Notes or this Indenture prior to the passage of 123 days following
such deposit. 

        Section 12.2    Termination of Obligations Upon Cancellation of the Notes.    In addition to the Company's
rights under Section 12.1, the Company may terminate all of its obligations under this Indenture (subject to Section 12.3) when: 

        (a)  (i)
all Notes theretofore authenticated and delivered (other than Notes that have been destroyed, lost or stolen and that have been replaced, converted or paid as
provided in Section 2.6) have been delivered to the Trustee for cancellation; and 

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

        (b)  (i) the
Notes not previously 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 under arrangements satisfactory to the Trustee upon delivery of notice, (ii) the Company
shall have irrevocably deposited with the Trustee, as trust funds, cash, in an amount sufficient to pay principal of premium, if any, and interest on the outstanding Notes, to maturity or redemption,
as the case may be, (iii) such deposit shall not result in a breach or violation of, or constitute a default under, any agreement or instrument pursuant to which the Company is a party or by
which it or its property is bound and (iv) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel in form and substance reasonably satisfactory to the
Trustee, each stating that all conditions related to such defeasance have been complied with. 

        Section 12.3    Survival of Certain Obligations.    Notwithstanding the satisfaction and discharge of this
Indenture and of the Notes referred to in Section 12.1 or 12.2, the respective obligations of the Company and the Trustee under Sections 2.3, 2.4, 2.5, 2.6, 3.1, 4.2, 5.1, 6.4, 6.9, 7.6, 7.11,
12.5, 12.6, 12.7, Articles XIV and XV shall survive until the Notes are no longer outstanding, and thereafter, the obligations of the Company and the Trustee under Sections 6.9, 7.6, 12.5, 12.6 and
12.7 shall survive. Nothing contained in this Article XII shall abrogate any of the rights, obligations or duties of the Trustee under this Indenture. 

38

 

        Section 12.4    Acknowledgment of Discharge by Trustee.    Subject to Section 12.7, after (i) the
conditions of Section 12.1 or 12.2 have been satisfied, (ii) the Company has paid or caused to be paid all other sums payable hereunder by the Company and (iii) the Company has
delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent referred to in clause (i) above relating to the satisfaction and
discharge of this Indenture have been complied with, the Trustee upon written request shall acknowledge in writing the discharge of the Company's obligations under this Indenture except for those
surviving obligations specified in Section 12.3. 

        Section 12.5    Application of Trust Assets.    The Trustee shall hold any cash or U.S. Government Obligations
deposited with it in the irrevocable trust established pursuant to Section 12.1 or 12.2, as the case may be. The Trustee shall apply the deposited cash or the U.S. Government Obligations,
together with earnings thereon in accordance with this Indenture and the terms of the irrevocable trust agreement established pursuant to Section 12.1 or 12.2, as the case may be, to the
payment of principal of, premium, if any, and interest on the Notes. The cash or U.S. Government Obligations so held in trust and deposited with the Trustee in compliance with Section 12.1 or
12.2, as the case may be, shall not be part of the trust estate under this Indenture, but shall constitute a separate trust fund for the benefit of all holders entitled thereto. Except as specifically
provided herein, the Trustee shall not be requested to invest any amounts held by it for the benefit of the holders or pay interest on uninvested amounts to any holder. 

        The
Company shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the U.S. Government Obligations deposited pursuant to
Section 12.1 hereof or Section 12.2 hereof or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the
holders of outstanding Notes. 

        Section 12.6    Repayment to the Company; Unclaimed Money.    Subject to applicable laws governing escheat of
such property, and upon termination of the trust established pursuant to Section 12.1 hereof or 12.2 hereof, as the case may be, the Trustee shall promptly pay to the Company upon written
request any excess cash or U.S. Government Obligations held by them. Additionally, if amounts for the payment of principal, premium, if any, or interest remains unclaimed for two years, the Trustee
shall, upon written request, pay such amounts back to the Company forthwith. Thereafter, all liability of the Trustee with respect to such amounts shall cease. After payment to the Company, holders
entitled to such payment must look to the Company for such payment as general creditors unless an applicable abandoned property law designates another person. 

        Section 12.7    Reinstatement.    If the Trustee is unable to apply any cash or U.S. Government Obligations in
accordance with Section 12.1 or 12.2 by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise
prohibiting such application, the Company's obligations under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to Section 12.1 or 12.2
until such time as the Trustee is permitted to apply all such cash or U.S. Government Obligations in accordance with Section 12.1 or 12.2, as the case may be; provided that if the Company makes
any payment of principal of, premium, if any, or interest on any Notes 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 amounts held by the Trustee. 

 
 

ARTICLE XIII    
    IMMUNITY OF INCORPORATORS, SHAREHOLDERS, OFFICERS AND DIRECTORS    
  

        Section 13.1    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 

39

 

creation of any indebtedness represented thereby, shall be had against any incorporator, shareholder, officer or director, as such, past, present or future, of the Company or of any successor entity,
either directly or through the Company or any successor entity, 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 issuance of the Notes. 

40

  

 
 

ARTICLE XIV    
    CONVERSION OF NOTES    
  

        Section 14.1    Right to Convert.    

        (a)  Subject
to and upon compliance with the provisions of this Indenture, the holder of any Note shall have the right to convert the principal hereof or any portion of such
principal that is $1,000 or an integral multiple thereof, into the Company's Common Stock at any time following the earlier of (i) April 15, 2003 or (ii) such time as the
Company's shareholders shall have approved an amendment to its Articles of Incorporation to increase the number of authorized shares of Common Stock to an amount sufficient to cover the conversion of
the Notes, the conversion of the Company's existing notes due in 2003 and 2008, the conversion of the Company's convertible preferred stock issuable upon execution of the warrants granted to Centre
Solutions (Bermuda) Limited and the exercise of outstanding options granted pursuant to the Company's stock option plans, and prior to the close of business on October 14, 2008 (except that,
with respect to any Note or portion of a Note that shall be called for redemption or delivered for repurchase, such conversion right shall terminate at the close of business one Business Day
immediately preceding the date fixed for redemption or repurchase of such Note or portion of a Note unless the Company shall default in payment due upon redemption or repurchase thereof). The
principal amount of any such Note, or any portion of such principal amount that is $1,000 or an integral multiple thereof, is convertible into that number of fully paid and nonassessable shares of
Common Stock (as such shares shall then be constituted) obtained by dividing the aggregate principal amount of the Notes or portion thereof surrendered for conversion by the Conversion Price in effect
at such time rounded to the nearest 1/100,000th of a share (with 0.000005 being rounded upward) as such amount shall be certified by the Company as provided in an Officers' Certificate,
by following the procedures specified in Section 14.2. A Note (or portion thereof) in respect of which a holder is exercising its option to require repurchase upon a Change of Control pursuant
to Section 3.5 of this Indenture, may only be converted if such holder withdraws its election to exercise said redemption option in accordance with the terms of this Indenture. A holder of
Notes is not entitled to any rights of a holder of Common Stock until such holder has converted such holder's Notes to Common Stock and only to the extent such Notes are deemed to have been converted
to Common Stock under this Article XIV. 

        (b)  In
the event a Noteholder desires to convert all, or any portion, of its Notes into shares of Common Stock (or other securities into which the Notes are then
convertible) and the Company does not have authorized a sufficient number of shares of Common Stock (or other securities into which the Notes are then convertible) for such conversion, then in lieu of
delivering shares of Common Stock (or other securities into which the Notes are then convertible) upon conversion pursuant to 14.1(a) of that portion of such holder's Notes for which there is an
insufficient number of shares of Common Stock (or other securities into which the Notes are then convertible) (the "Cash Equivalent Notes"), the Company shall pay to the holder converting the Cash
Equivalent Notes who properly exercises the conversion privilege, as set forth in Section 14.2, an amount, as calculated by the Company and certified to the Trustee in an Officers' Certificate
of the Company, in cash equal to the Market Cash Conversion Price of the shares of Common Stock into which such Cash Equivalent Notes are then convertible. 

        (c)  In
the event that the Company directs the Trustee to pay cash upon any conversion in lieu of delivering shares of Common Stock or any other securities, as the case may
be, the Company shall deliver to the Trustee written notice of such direction not later than the close of business on the first Trading Day after the date of receipt by the Trustee of the notice of
conversion delivered by such holder pursuant to Section 14.2, and the Trustee shall notify by facsimile the contact person specified in the holder's conversion notice of such election by the
Company to such holder. In such event, notwithstanding any other provisions in this Article XIV, in lieu of delivering Common Stock upon conversion of such Notes surrendered in accordance with
Section 14.2, the Company shall pay or direct 

41

 

the Trustee to pay the holder surrendering such securities an amount in cash equal to the Market Cash Conversion Price of the shares of Common Stock, plus any cash and other property theretofore
apportioned to such shares of Common Stock in accordance with Section 14.2. Prior to or concurrently with such cash payment, the Company will provide the Trustee with an Officers' Certificate
setting forth the Market Cash Conversion Price and will deposit with the paying agent the cash so payable. The Trustee shall have no obligation or liability with respect to the calculation of the
Market Cash Conversion Price. 

        Section 14.2    Exercise of Conversion Privilege; Issuance of Common Stock on Conversion; No Adjustment for Interest or Dividends.  To exercise the conversion privilege with respect to any interest in the Global Note, the beneficial
holder must complete the appropriate instruction form for conversion
pursuant to the Depository's book-entry conversion program and follow the other procedures set forth in such program. 

        As
promptly as practicable after satisfaction of the requirements for conversion set forth above, subject to Section 14.1(b) and in 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 in book-entry form the number of full shares issuable upon the conversion of such Note or portion thereof in the name of such holder in compliance with the Depository's
book-entry conversion program and with the provisions of this Article XIV and shall issue a check or cash in respect of any fractional interest in respect of a share of Common Stock
arising upon such conversion, as provided in Section 14.4. 

        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 14.2 have been
satisfied as to such Note (or portion thereof), and, subject to Section 14.1(b), the person in whose name any 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. 

        Any
unpaid interest on any Note or portion thereof as of the date such Note or portion thereof is surrendered for conversion shall (unless such Note or portion thereof being converted
shall have been called for redemption on a redemption date during the period from the close of business on or after any record date for the payment of interest to the close of business on the business
day following the corresponding interest payment date) be paid in cash to the former holder of such Note or portion thereof on the next succeeding interest payment date. 

        Upon
the conversion of an interest in the Global Note, the Trustee, or the Custodian at the direction of the Trustee, shall make a notation on the Global Note as to the reduction in the
principal amount represented thereby. 

        Section 14.3    Mandatory Conversion.    The Notes shall be automatically converted into Common Stock on the
first date (the "Mandatory Conversion Date") on or after the 15th Trading Day following October 15, 2004, on which: (i) the average of the Closing Price (as defined in
Section 14.6(g)) of the Common Stock on 15 consecutive preceding Trading Days is equal to or greater than 110% of the Conversion Price and (ii) the Company has sufficient shares of
Common Stock (or other securities into which the Notes are then convertible) authorized to execute the Mandatory Conversion (as defined below). The Notes shall be converted into that number of fully
paid and nonassessable shares of Common Stock (or other securities into which the Notes are then convertible) obtained by dividing the aggregate principal amount of the Notes by the Conversion Price
in effect at such time rounded to the nearest 1/100,000th of a share (with 0.000005 being rounded upward) (the "Mandatory Conversion"). 

        The
Company will monitor the Closing Price of the Common Stock. Upon the occurrence of Mandatory Conversion, the Company shall complete the appropriate instruction form for conversion
pursuant to the Depository's book-entry conversion program and follow the procedures set forth in 

42

 

such program. Any interest on the Notes accrued as of the Mandatory Conversion Date shall be paid in cash to the former holders of such Notes on the next succeeding interest payment date. After the
Mandatory Conversion, the Notes will no longer represent Indebtedness of the Company, will no longer accrue interest or require the Company to make any payment of principal, and the Company's
obligations to make any further payments with respect to the Notes will terminate (except for under this Section 14.3). The Company will cause to be issued in book-entry form shares
of Common Stock sufficient to effect the Mandatory Conversion and shall issue a check or cash in respect of any fractional interest in respect of a share of Common Stock arising upon such conversion,
as provided in Section 14.4. The shares of Common Stock issued as a result of the Mandatory Conversion shall be credited through the Depository's book-entry conversion program to
the respective account of each Noteholder as of the Mandatory Conversion Date. 

        Section 14.4    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. Subject to Section 14.1(b), (i) if more than one Note shall be surrendered for conversion at one time by the same
holder, the number of fully paid and nonassessable shares of Common Stock issuable upon conversion of a Note shall be determined by dividing the aggregate principal amount of such Notes or portion
thereof surrendered for conversion by the Conversion Price and (ii) the aggregate number of shares of Common Stock issuable upon conversion shall be rounded to the nearest 1/100,000th of a
share (with .0000005 being rounded upward). If any fractional share of stock would be issuable upon the conversion of any Note or Notes, the Company shall make an adjustment therefor in cash at the
current market value thereof. The current market value of a share of Common Stock shall be determined by multiplying the fractional share by the Closing Price on the Trading Day immediately preceding
the Mandatory Conversion Date or the date, pursuant to Section 14.2, on which the Notes (or specified portions thereof) are deemed to have been converted. 

        Section 14.5    Conversion Price.    The conversion price of the Notes (the "Conversion Price") shall be $2.50
per share of Common Stock, subject to adjustment as provided in this Article XIV. 

        Section 14.6    Adjustment of Conversion Price.    The Conversion Price shall be adjusted from time to time by
the Company as follows: 

        (a)  In
case the Company shall (i) pay a dividend or make a distribution on its outstanding Common Stock in shares of its Common Stock, (ii) subdivide or split
its outstanding Common Stock into a greater number of shares, (iii) combine its outstanding Common Stock into a smaller number of shares or (iv) issue any shares of Capital Stock by
reclassification of its Common Stock, the conversion price in effect immediately prior thereto shall be adjusted so that the holder of any Notes thereafter surrendered for conversion shall be entitled
to receive the number of shares of Common Stock of the Company which such holder would have owned or have been entitled to receive after the occurrence of any of the events described above had such
Notes been surrendered for conversion immediately prior to the occurrence of such event or the record date therefor, whichever is earlier. An adjustment made pursuant to this subsection
(a) shall become effective immediately after the close of business on the record date for determination of shareholders entitled to receive such dividend or distribution in the case of a
dividend or distribution (except as provided in Section 14.6(j)) and shall become effective immediately after the close of business on the effective date in the case of a subdivision, split,
combination or reclassification. Any shares of Common Stock issuable in payment of a dividend shall be deemed to have been issued immediately prior to the close of business on the record date for such
dividend for purposes of calculating the number of outstanding shares of Common Stock under Sections 14.6(b) and (c). 

        (b)  In
case the Company shall issue rights, options or warrants to all holders of its outstanding shares of Common Stock entitling them to subscribe for or purchase shares
of Common Stock at a price per share less than the Current Market Price (as defined in Section 14.6(g)) on the Record Date 

43

 

fixed for determination of shareholders entitled to receive such rights, options or warrants, the Conversion Price shall be adjusted so that the same shall equal the price determined by multiplying
the Conversion Price in effect at the opening of business on the date after the Record Date by a fraction the numerator of which shall be the number of shares of Common Stock outstanding at the close
of business on the Record Date 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 the denominator of
which shall be the number of shares of Common Stock outstanding on the close of business on the Record Date plus the total number of additional shares of Common Stock so offered for subscription or
purchase. Such adjustment shall become effective immediately after the opening of business on the day following the Record Date fixed for determination of shareholders entitled to receive such rights,
options or warrants. To the extent that shares of Common Stock are not delivered after the expiration or termination of such rights, options or warrants, the Conversion Price shall be readjusted to
the Conversion Price that would then be in effect had the adjustments made upon the issuance of such rights, options 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, options or warrants are not so issued, the Conversion Price shall again be adjusted to be the Conversion Price that would then be in
effect if such date fixed for the determination of shareholders entitled to receive such rights, options or warrants had not been fixed. In determining whether any rights, options 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 for such rights, options or warrants, 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 Price in effect at the opening of business
on the day following the day upon which such subdivision becomes effective shall be proportionately reduced, and conversely, in case outstanding shares of Common Stock shall be combined into a smaller
number of shares of Common Stock, the Conversion Price in effect at the opening of business on the day following the day upon which such combination becomes effective shall be proportionately
increased, such reduction or increase, 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 (other than any
dividends or distributions to which Section 14.6(a) applies) or evidences of its indebtedness or assets (including securities, but excluding any rights, options or warrants referred to in
Section 14.6(b), and excluding any dividend or distribution (x) in connection with the liquidation, dissolution or winding-up of the Company, whether voluntary or
involuntary, (y) exclusively in cash or (z) referred to in Section 14.6(a) (any of the foregoing hereinafter in this Section 14.6(d) called the "Securities")), then, in
each such case, the Conversion Price shall be reduced so that the same shall be equal to the price determined by multiplying the Conversion Price in effect immediately prior to the close of business
on the Record Date (as defined in Section 14.6(g)) with respect to such distribution by a fraction of which the numerator shall be the Current Market Price (determined as provided in
Section 14.6(g)) on such date less the fair market value (as determined by the Board of Directors, whose determination shall be conclusive and described in a Board Resolution) on such date of
the portion of the Securities so distributed applicable to one share of Common Stock and the denominator shall be such Current Market Price, such reduction to become effective immediately prior to the
opening of business on the day following the Record Date; provided that in the event the then fair market value (as so determined) of the portion of the Securities so distributed applicable to one
share of Common Stock is equal to or greater than the Current Market Price 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 

44

 

each Note on such date. In the event that such dividend or distribution is not so paid or made, the Conversion Price shall again be adjusted to be the Conversion Price 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 14.6(d) by reference to the
actual or when issued trading market for any securities comprising all or part of such distribution, it must in doing so consider the prices in such market over the same period used in computing the
Current Market Price pursuant to Section 14.6(g) to the extent possible. 

        Notwithstanding
the foregoing provisions of this Section 14.6(d), no adjustment shall be made hereunder for any distribution of Securities if the Company makes proper provision so
that each Noteholder who converts a Note (or any portion thereof) after the date fixed for determination of shareholders entitled to receive such distribution shall be entitled to receive upon such
conversion, in addition to the shares of Common Stock issuable upon such conversion, the amount and kind of Securities that such holder would have been entitled to receive if such holder had,
immediately prior to such determination date, converted such Note into Common Stock; provided that, with respect to any Securities that are convertible, exchangeable or exercisable, the foregoing
provision shall only apply to the extent (and so long as) the Securities receivable upon conversion of such Note would be convertible, exchangeable or exercisable, as applicable, without any loss of
rights or privileges for a period of at least 60 days following conversion of such Note. 

        Rights,
options or warrants distributed by the Company to all holders of Common Stock entitling the holders thereof to purchase shares of the Company's Capital Stock (either initially or
under certain circumstances), which rights, options or warrants, until the occurrence of a specified event or events (the "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 not be deemed distributed for purposes of this
Section 14.6(d) (and no adjustment to the Conversion Price under Section 14.6(d) shall be required) until the occurrence of the earliest Trigger Event. In addition, in the event of any
distribution of rights, options or warrants, or any Trigger Event with respect thereto, that shall have resulted in an adjustment to the Conversion Price under this Section 14.6(d),
(1) in the case of any such rights, options or warrants that shall all have been redeemed or repurchased without exercise by any holders thereof, the Conversion Price 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 of Common Stock with respect to such rights, options or warrants (assuming such holder had retained such rights, options or warrants), made to all holders of Common Stock as
of the date of such redemption or repurchase, and (2) in the case of such rights, options or warrants all of which shall have expired or been terminated without exercise by any holder thereof,
the Conversion Price shall be readjusted as if such issuance had not occurred. 

        For
purposes of this Section 14.6(d) and Sections 14.6(a) and (b), any dividend or distribution to which this Section 14.6(d) is applicable that also includes shares of
Common Stock, or rights, options 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, options or warrants (and any Conversion Price reduction required by this Section 14.6(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, options or warrants (and any further Conversion Price reduction required by
Sections 14.6(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 shareholders entitled to receive such dividend or other distribution" and "the date fixed for such determination" within the meaning of Sections 14.6(a) and
(b) and (B) any shares of Common Stock 

45

 

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 14.6(a). 

        (e)  In
case the Company shall, by dividend or otherwise, distribute to all holders of its Common Stock cash (excluding any cash that is distributed upon a merger or
consolidation to which Section 14.7 applies or as part of a distribution referred to in Section 14.6(d) for which an adjustment to the Conversion Price is provided therein) in an
aggregate amount that, combined together with (1) the aggregate amount of any other such distributions to all holders of its Common Stock made exclusively in cash within the 12 months
preceding the date of payment of such distribution, and in respect of which no adjustment pursuant to this Section 14.6(e) has been made, and (2) the aggregate of any cash plus the fair
market value (as determined by the Board of Directors, whose determination shall be conclusive and described in a Board Resolution) of consideration payable in respect of any tender offer, by the
Company or any of its Subsidiaries for all or any portion of the Common Stock concluded within the 12 months preceding the date of payment of such distribution, and in respect of which no
adjustment pursuant to Section 14.6(f) has been made, exceeds 20.0% of the product of the Current Market Price (determined as provided in Section 14.6(g)) on the Record Date with respect
to such distribution times the number of shares of Common Stock outstanding on such date, then, and in each such case, immediately after the close of business on such date, unless the Company elects
to reserve such cash for distribution to the holders of the Notes upon the conversion of the Notes so that any such holder converting Notes shall receive upon such conversion, in addition to the
shares of Common Stock to that such holder is entitled, the amount of cash which such holder would have received if such holder had, immediately prior to the Record Date for such distribution of cash,
converted its Notes into Common Stock, the Conversion Price shall be reduced so that the same shall equal the price determined by multiplying the Conversion Price in effect immediately prior to the
close of business on such date by a fraction (i) the numerator of which shall be equal to the Current Market Price on the Record Date less an amount equal to the quotient of (x) the
excess of such combined amount over such 20.0% and (y) the number of shares of Common Stock outstanding on the Record Date and (ii) the denominator of which shall be equal to the Current
Market Price on such date; provided 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 Price shall again be adjusted to be
the Conversion Price that would then be in effect if such dividend or distribution had not been declared. 

        (f)    In
case a tender offer made by the Company or any of its Subsidiaries for all or any portion of the Common Stock shall expire and such tender offer (as amended upon the
expiration thereof) shall require the payment to shareholders (based on the acceptance (up to any maximum specified in the
terms of the tender offer) of Purchased Shares (as defined below)) of an aggregate consideration having a fair market value (as determined by the Board of Directors, whose determination shall be
conclusive and described in a Board Resolution) that combined together with (1) the aggregate of the cash plus the fair market value (as determined by the Board of Directors, whose
determination shall be conclusive and described in a Board Resolution), as of the expiration of such tender offer, of consideration payable in respect of any other tender offer, by the Company or any
of its Subsidiaries for all or any portion of the Common Stock expiring within the 12 months preceding the expiration of such tender offer, and in respect of which no adjustment pursuant to
Section 14.6(f) has been made, and (2) the aggregate amount of any distributions to all holders of the Company's Common Stock made exclusively in cash within 12 months preceding
the expiration of such tender offer, and in respect of which no adjustment pursuant to Section 14.6(e) has been made, exceeds 20.0% of the product of the Current Market Price (determined as
provided in Section 14.6(g)) as of the last time (the "Expiration Time") tenders could have been made pursuant to such tender offer (as it may be 

46

 

amended) times the number of shares of Common Stock outstanding (including any tendered shares) on the Expiration Time, then, and in each such case, immediately prior to the opening of business on
the day after the date of the Expiration Time, the Conversion Price shall be adjusted so that the same shall equal the price determined by multiplying the Conversion Price in effect immediately prior
to close of business on the date of the Expiration Time by a fraction of which the numerator shall be the number of shares of Common Stock outstanding (including any tendered shares) on the Expiration
Time multiplied by the Current Market Price of the Common Stock on the Trading Day next succeeding the Expiration Time and the denominator shall be the sum of (x) the fair market value
(determined as aforesaid) of the aggregate consideration payable to shareholders based on the acceptance (up to any maximum specified in the terms of the tender offer) of all shares validly tendered
and not withdrawn as of the Expiration Time (the shares deemed so accepted, up to any such maximum, being referred to as the "Purchased Shares") and (y) the product of the number of shares of
Common Stock outstanding (less any Purchased Shares) on the Expiration Time and the Current Market Price of the Common Stock on the Trading Day next succeeding the Expiration Time, such reduction 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 offer,
but the Company is permanently prevented by applicable law from effecting any such purchases or all such purchases are rescinded, the Conversion Price shall again be adjusted to be the Conversion
Price that would then be in effect if such tender offer had not been made. 

        (g)  For
purposes of this Section 14.6, the following terms shall have the meaning indicated: 

        (i)    "Closing
Price" with respect to any securities 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 on the New York Stock Exchange, or, if such security is not listed or admitted to trading on such exchange, on the
principal national security 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 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, whose determination shall be conclusive and described in a Board
Resolution. 

        (ii)  "Current
Market Price" shall mean the average of the daily Closing Prices per share of Common Stock for the ten consecutive Trading Days immediately prior to the date
in question; provided that (1) if the "ex" date (as hereinafter defined) for any event (other than the issuance or distribution or Change of Control requiring such computation) that requires an
adjustment to the Conversion Price pursuant to Section 14.6(a), (b), (c), (d), (e) or (f) occurs during such ten consecutive Trading Days, the Closing Price for each Trading Day
prior to the "ex" date for such other event shall be adjusted by multiplying such Closing Price by the same fraction by which the Conversion Price is so required to be adjusted as a result of such
other event, (2) if the "ex" date for any event (other than the issuance, distribution or Change of Control requiring such computation) that requires an adjustment to the Conversion Price
pursuant to Section 14.6(a), (b), (c), (d), (e) or (f) occurs on or after the "ex" date for the issuance or distribution requiring such computation and prior to the day in
question, the Closing Price for each Trading Day on and after the "ex" date for such other event shall be adjusted by multiplying such Closing Price by the reciprocal of the fraction by which the
Conversion Price is so required to be adjusted as a result of such other event and (3) if the "ex" date for the issuance, distribution or Change of Control requiring such computation is prior
to the day in question, after taking into account any adjustment required pursuant to clause (1) or (2) of this proviso, the Closing Price for each 

47

 

Trading Day on or after such "ex" date shall be adjusted by adding thereto the amount of any cash and the fair market value (as determined by the Board of Directors in a manner consistent with any
determination of such value for purposes of Section 14.6(d) or (f), whose determination shall be conclusive and described in a Board Resolution) of the evidences of indebtedness, shares of
Capital Stock or assets being distributed applicable to one share of Common Stock as of the close of business on the day before such "ex" date. For purposes of any computation under
Section 14.6(f), the Current Market Price of the Common Stock on any date shall be deemed to be the average of the daily Closing Prices per share of Common Stock for such day and the next two
succeeding Trading Days; provided that if the "ex" date for any event (other than the tender or exchange offer requiring such computation) that requires an adjustment to the Conversion Price pursuant
to Section 14.6(a), (b), (c), (d), (e) or (f) occurs on or after the Expiration Time for the tender or exchange offer requiring such computation and prior to the day in question,
the Closing Price for each Trading Day on and after the "ex" date for such other event shall be adjusted by multiplying such Closing Price by the reciprocal of the fraction by which the Conversion
Price is so required to be adjusted as a result of such other event. For purposes of this paragraph, the term "ex" date, (1) when used with respect to any issuance or distribution, means the
first date on which the Common Stock trades regular way on the relevant exchange or in the relevant market from which the Closing Price was obtained without the right to receive such issuance or
distribution, (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 and (3) when used with respect to any tender or exchange offer means the first date on which the Common
Stock trades regular way on such exchange or in such market after the expiration of such offer. Notwithstanding the foregoing, whenever successive adjustments to the Conversion Price are called for
pursuant to this Section 14.6, such adjustments shall be made to the Current Market Price as may be necessary or appropriate to effectuate the intent of this Section 14.6 and to avoid
unjust or inequitable results as determined in good faith by the Board of Directors. 

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

        (iv)  "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 shareholders 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). 

        (h)  The
Company may make such reductions in the Conversion Price, in addition to those required by Sections 14.6(a), (b), (c), (d), (e) and (f), as the Board of
Directors considers to be advisable to avoid or diminish any income tax to holders of Common Stock or rights to purchase Common Stock resulting from any dividend or distribution of stock (or rights to
acquire stock) or from any event treated as such for income tax purposes. To the extent permitted by applicable law, the Company from time to time may reduce the Conversion Price by any amount for any
period of time if the period is at least 20 days, the reduction is irrevocable during the period and the Board of Directors shall have made a determination that such reduction would be in the
best interests of the Company, which determination shall be conclusive and described in a Board Resolution. Whenever the Conversion Price is reduced pursuant to the preceding sentence, the Company
shall mail to all holders of record of the Notes a notice of the reduction at least 15 days prior to the date the reduced Conversion Price takes effect, and such notice shall state the reduced
Conversion Price and the period it shall be in effect. 

48

 

        (i)    No
adjustment in the Conversion Price shall be required unless such adjustment would require an increase or decrease of at least 1% in such price; provided that any
adjustments that by reason of this Section 14.6(i) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this
Article XIV shall be made by the Company and shall be made to the nearest 1/100,000 (with 0.0000005 being rounded upward). 

        No
adjustment need be made for rights to purchase Common Stock pursuant to a Company plan for reinvestment of dividends or interest. 

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

        To
the extent the Notes become convertible into cash, assets, property or securities (other than Common Stock of the Company), no adjustment need be made thereafter as to the cash,
assets, property or such securities (except as such securities may otherwise by their terms provide), and interest shall not accrue on such cash. 

        (j)    Whenever
the Conversion Price is adjusted as herein provided, the Company shall promptly file with the Trustee and any conversion agent other than the Trustee an
Officers' Certificate setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment. Promptly after delivery of such certificate,
the Company shall prepare a notice of such adjustment of the Conversion Price setting forth the adjusted Conversion Price and the date on which each adjustment becomes effective and shall mail such
notice of such adjustment of the Conversion Price to the holder of each Note at his last address appearing on the Note register provided for in Section 2.5, within 20 days after
execution thereof. Failure to deliver such notice shall not effect the legality or validity of any such adjustment. 

        (k)  In
any case in which this Section 14.6 provides that an adjustment shall become effective immediately after a Record Date for an event, the Company may defer
until the occurrence of such event (i) issuing to the holder of any Note converted after such Record Date and before the occurrence of such event the additional shares of Common Stock issuable
upon such conversion by reason of the adjustment required by such event over and above the Common Stock issuable upon such conversion before giving effect to such adjustment and (ii) paying to
such holder any amount in cash in lieu of any fraction pursuant to Section 14.4. 

        Section 14.7    Effect of Reclassification, Consolidation, Merger or Sale.    If any of the following events
occur, namely (i) any reclassification or change of outstanding shares of Common Stock (other than a change in par value, or to or from no par value, as a result of a subdivision or
combination), (ii) any consolidation, merger or combination of the Company with another corporation as a result of which holders of Common Stock shall be entitled to receive stock, 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 the properties and assets of the Company as, or
substantially as, an entirety (determined on a consolidated basis) to any other corporation as a result of which holders of Common Stock shall be entitled to receive stock, securities or other
property or assets (including cash) with respect to or in exchange for such Common Stock, then the Company or the successor or purchasing corporation, 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 if such supplemental indenture is then required to
so comply) providing that the Notes shall be convertible into the kind and amount of shares of stock and other securities or property or assets (including cash) receivable upon such reclassification,
change, consolidation, merger, 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 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 

49

 

to the kind or amount of securities, cash or other property receivable upon such reclassification, change, consolidation, merger, combination, sale or conveyance (provided that, if the kind or amount
of securities, cash or other property receivable upon such reclassification, change, consolidation, merger, combination, sale or conveyance is not the same for each share of Common Stock in respect of
which such rights of election shall not have been exercised ("non-electing share"), then for the purposes of this Section 14.7 the kind and amount of securities, cash or other
property 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 that shall be as nearly equivalent as may be practicable to the adjustments provided for in this
Article XIV. 

        The
Company shall cause notice of the execution of such supplemental indenture to be mailed to each holder of Notes, at his address appearing on the Note register provided for in
Section 2.5, within 20 days after execution thereof. Failure to deliver such notice shall not affect the legality or validity of such supplemental indenture. 

        The
above provisions of this Section 14.7 shall similarly apply to successive reclassifications, changes, consolidations, mergers, combinations, sales and conveyances. 

        Section 14.8    Taxes on Shares Issued.    The issuance of stock certificates on conversions of Notes shall be
made without charge to the converting Noteholder for any transfer or similar tax in respect of the issue thereof. The Company shall not, however, be required to pay any tax that 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 issuance 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 14.9    Reservation of Shares; Shares to be Fully Paid; Listing of Common Stock.    Subject to
Section 14.1(b) the Company shall provide, free from preemptive rights, out of its authorized but unissued shares or shares held in treasury, sufficient shares to provide for the conversion of
the Notes from time to time as such Notes are presented for conversion. 

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

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

50

  

        Section 14.10    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 whether any facts exist that may require any adjustment of the Conversion Price or notice thereof, or with respect to the
nature, accuracy 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,
that 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 or actions or omissions by the
Company in connection with this Article XIV. Subject to the provisions of Section 7.1, 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 XIV. Without limiting the generality of the foregoing, neither the Trustee nor any conversion agent shall
be under any responsibility to determine whether a supplemental indenture under Section 14.7 hereof need to be entered into or the correctness of any provisions contained in any supplemental
indenture entered into pursuant to Section 14.7 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 14.7 or to any adjustment to be made with respect thereto, and 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 14.11    Notice to Holders prior to certain actions.    In case: 

        (a)  the
Company makes any distribution or dividend that would require an adjustment in the Conversion Price pursuant to Section 14.6; or 

        (b)  the
Company takes any action that would require a supplemental indenture pursuant to Section 14.7; or 

        (c)  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, as promptly as possible but in any event at least
15 days prior to the applicable date hereinafter specified, a notice stating (x) the date on which a record date is to be taken for the purpose of such dividend, distribution, rights,
options 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, rights, options or warrants are to be
determined or (y) the date on which such reclassification, change, consolidation, merger, sale, conveyance, 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 record of Common Stock shall be entitled to exchange their Common Stock for securities or other property deliverable upon
such reclassification, change, consolidation, merger, sale, conveyance, transfer, dissolution, liquidation or winding-up. Neither the failure to give such notice nor any defect therein
shall affect the legality or validity of the proceedings referenced in clauses (a) through (c) of this Section 14.11. 

        Section 14.12    Supplemental Indenture prior to issuance of notes in definitive form.    If the Company is
required by this Indenture or chooses to issue Notes in definitive form, then the Company 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 of such supplemental indenture is then required to so comply) stating procedures under this Article XIV for the mandatory and
optional conversion of definitive Notes into Common Stock. 

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ARTICLE XV
  SUBORDINATION    
  

        Section 15.1    Agreement to Subordinate.    The Company agrees, and each Noteholder by accepting a Note
agrees, that the indebtedness evidenced by the Notes is subordinated in right of payment, to the extent and in the manner provided in this Article XV, to the prior payment in full of all Senior
Indebtedness and that the subordination is for the benefit of the holders of Senior Indebtedness. 

        Section 15.2    Certain Definitions.    For purposes of this Article XV, the following terms shall have
the meaning indicated: 

        (1)
"Representative" shall mean a duly authorized indenture trustee or other trustee, agent or representative for any Senior Indebtedness. 

        (2)
"Senior Indebtedness" with respect to the Notes means the principal of, premium, if any, and interest on, and any fees, costs, expenses and any other amounts (including indemnity
payments) related to the following, whether outstanding on the date hereof or hereafter incurred or created: (a) indebtedness, matured or unmatured, whether or not contingent, of the Company
for money borrowed evidenced by notes or other written obligations, (b) any interest rate contract, interest rate swap agreement or other similar agreement or arrangement designed to protect
the Company or any of its Subsidiaries against fluctuations in interest rates, (c) indebtedness, matured or unmatured, whether or not contingent, of the Company evidenced by notes, debentures,
bonds or similar instruments or letters of credit (or reimbursement agreements in respect thereof), (d) obligations of the Company as lessee under capitalized leases and under leases of
property made as part of any sale and leaseback transactions, (e) indebtedness of others of any of the kinds described in the preceding clauses (a) through (d) assumed or
guaranteed by the Company and (f) renewals, extensions, modifications, amendments, and refundings of, and indebtedness and obligations of a successor person issued in exchange for or in
replacement of, indebtedness or obligations of the kinds described in the preceding clauses (a) through (f), unless the agreement pursuant to which any such indebtedness described in clauses
(a) through (f) is created, issued, assumed or guaranteed expressly provides that such indebtedness is not senior or superior in right of payment to the Notes; provided that the
following shall not constitute Senior Indebtedness: (i) any indebtedness or obligation of the Company in respect of the Notes, (ii) any indebtedness of the Company to any of its
Subsidiaries or other Affiliates; (iii) any indebtedness that is subordinated or junior in any respect to any other indebtedness of the Company other than Senior Indebtedness; (iv) any
indebtedness incurred for the purchase of goods or materials in the ordinary course of business and (v) any indebtedness or obligation of the Company in respect of the 61/4%
Convertible Subordinated Notes Due 2003. 

        For
the purposes of this Indenture, Senior Indebtedness shall not be deemed to have been paid in full until the holders of the Senior Indebtedness shall have indefeasibly received
payment in full in cash of all Senior Indebtedness; provided that if any holder of Senior Indebtedness agrees to accept payment in full of such Senior Indebtedness for consideration other than cash,
such holder shall be deemed to have indefeasibly received payment in full of such Senior Indebtedness. The provisions of this Article XV shall continue to be effective or be reinstated, as the
case may be, if at any time any payment of any of the Senior Indebtedness is rescinded or must otherwise be returned by any holder of Senior Indebtedness upon the insolvency, bankruptcy or
organization of the Company or otherwise, all as though such payment had not been made. 

        A
distribution may consist of cash, securities or other property, by set-off or otherwise. 

        Section 15.3    Liquidation; Dissolution; Bankruptcy.    Upon any distribution to creditors of the Company in a
liquidation or dissolution of the Company or in a bankruptcy, reorganization, insolvency, receivership or similar proceeding relating to the Company or its property, in an assignment for the 

52

 

benefit of creditors or any marshalling of the Company's assets and liabilities, (a) holders of all Senior Indebtedness shall first be entitled to receive payment in full of all amounts due or
to become due thereon before Noteholders shall be entitled to receive any payment with respect to the principal of, premium, if any, or interest on the Notes (except that Noteholders may receive
securities that are subordinated to at least the same extent as the Notes to Senior Indebtedness and any securities issued in exchange for Senior Indebtedness) and (b) until all Senior
Indebtedness (as provided in clause (a)
above) is paid in full, any distribution to which Noteholders would be entitled but for this Article shall be made to holders of Senior Indebtedness (except that Noteholders may receive securities
that are subordinated to at least the same extent as the Notes to (x) Senior Indebtedness and (y) any securities issued in exchange for Senior Indebtedness), as their interests may
appear. 

        Section 15.4    Default on Senior Indebtedness.    The Company may not make any payment upon or in respect of
the Notes (except in such subordinated securities) and may not acquire from the Trustee or any Noteholder any Note for cash or property (other than securities that are subordinated to at least the
same extent as the Note to (i) Senior Indebtedness and (ii) any securities issued in exchange for Senior Indebtedness) until all Senior Indebtedness has been paid in full if: 

        (a)
a default in the payment of the principal of, premium, if any, or interest on Senior Indebtedness occurs and is continuing beyond any applicable period of grace (a "Payment
Default"); or 

        (b)
a default, other than a Payment Default on Senior Indebtedness occurs and is continuing that permits holders of the Senior Indebtedness as to which such default relates to accelerate
its maturity (a "Nonpayment Default") and the Trustee receives a notice of the default (a "Payment Blockage Notice") from the Representative or Representatives of holders of at least a majority in
principal amount of Senior Indebtedness then outstanding. No Nonpayment Default that existed or was continuing on the date of delivery of any such Payment Blockage Notice to the Trustee shall be, or
be made, the basis for a subsequent Payment Blockage Notice unless such default shall have been cured or waived for a period of not less than 180 days. No new period of payment blockage may be
commenced within 360 days after the receipt by the Trustee of any prior Payment Blockage Notice. 

        The
Company, with notice and evidence of the occurrence of (c) or (d) provided to the Trustee, may and shall resume payments on and distributions in respect of the Notes
and may acquire them upon the earlier of: 

        (c)
in the case of a Payment Default, upon the date on which the default is cured or waived, or 

        (d)
in the case of a default other than a NonPayment Default: 179 days after the date on which the applicable Payment Blockage Notice is received, unless the maturity of such
Senior Indebtedness has been accelerated, if this Article XV otherwise permits the payment, distribution or acquisition at the time of such payment or acquisition. 

        Section 15.5    When Distribution must be paid over.    In the event that the Trustee (or paying agent if other
than the Trustee) or any Noteholder receives any payment of principal or interest with respect to the Notes at a time when such payment is prohibited by Section 15.3 or 15.4 hereof, such
payment shall be held by the Trustee (or paying agent if other than the Trustee) or such Noteholder, in trust for the benefit of, and immediately shall be paid over and delivered, upon written
request, to, the holders of
Senior Indebtedness as their interests may appear or their Representative under the indenture or other agreement (if any) pursuant to which Senior Indebtedness may have been issued, as their
respective interests may appear, for application to the payment of all Senior Indebtedness remaining unpaid to the extent necessary to pay all Senior Indebtedness in full in accordance with its terms,
after giving effect to any concurrent payment or distribution to or for the holders of Senior Indebtedness. 

53

 

        With
respect to the holders of Senior Indebtedness, the Trustee undertakes to perform only such obligations on the part of the Trustee as are specifically set forth in this
Article XV, 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 shall not be liable to any such holders if the Trustee shall pay over or distribute to or on behalf of Noteholders or the Company or
any other person money or assets to which any holders of Senior Indebtedness shall be entitled by virtue of this Article XV, except if such payment is made as a result of the willful misconduct
or gross negligence of the Trustee. 

        Section 15.6    Notice by Company.    The Company shall promptly notify the Trustee and the paying agent in
writing of any facts known to the Company that would cause a payment of any principal or interest with respect to the Notes to violate this Article XV, but failure to give such notice shall not
affect the subordination of the Notes to the Senior Indebtedness as provided in this Article XV. 

        Section 15.7    Subrogation.    Until all Senior Indebtedness is paid in full and until the Notes are paid in
full, Noteholders shall be subrogated (equally and ratably with all other indebtedness pari passu with the Notes) to the rights of holders of Senior
Indebtedness to receive distributions applicable to Senior Indebtedness to the extent that distributions otherwise payable to the Noteholders have been applied to the payment of Senior Indebtedness. A
distribution made under this Article XV to holders of Senior Indebtedness that otherwise would have been made to Noteholders is not, as between the Company and Noteholders, a payment by the
Company on the Notes. 

        Section 15.8    Relative Rights.    This Article XV defines the relative rights of Noteholders and
holders of Senior Indebtedness. Nothing in this Indenture shall: 

        (a)
impair, as between the Company and the Noteholders, the obligation of the Company, which is absolute and unconditional, to pay principal of, premium, if any, and interest on the
Notes in accordance with their terms; 

        (b)
affect the relative rights of Noteholders and creditors of the Company other than their rights in relation to holders of Senior Indebtedness; or 

        (c)
prevent the Trustee or any Noteholder from exercising its available remedies upon a default or Event of Default, subject to the rights of holders and owners of Senior Indebtedness to
receive distributions and payments otherwise payable to Noteholders. 

        If
the Company fails because of this Article XV to pay principal of, premium, if any, or interest on a Note on the due date, the failure is still a default or Event of Default. 

        Section 15.9    Subordination may not be impaired by Company.    No right of any holder of Senior Indebtedness
to enforce the subordination of the indebtedness evidenced by the Notes shall be impaired by any act or failure to act by the Company or any holder of Notes or by the failure of the Company or any
holder of Notes to comply with this Indenture. 

        Section 15.10    Distribution or Notice to Representative.    Whenever a distribution is to be made or a notice
given to holders of Senior Indebtedness, the distribution may be made and the notice given to their Representative. 

        Upon
any payment or distribution of assets of the Company referred to in this Article XV, the Trustee and the Noteholders shall be entitled to rely upon any order or decree made
by any court of competent jurisdiction or upon any certificate of such Representative or of the liquidating trustee or agent or other person making any distribution to the Trustee or to the
Noteholders 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, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article XV. 

54

 

        Section 15.11    Rights of Trustee and Paying Agent.    Notwithstanding the provisions of this
Article XV 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 or distribution
by the Trustee, and the Trustee and the paying agent may continue to make payments on the Notes, unless the Trustee shall have received at its Corporate Trust Office at least three Business Days prior
to the date of such payment written notice of facts that would cause the payment of any principal, premium, if any, and interest with respect to the Notes to violate this Article XV. Only the
Company or a Representative may give the notice. Nothing in this Article XV shall impair the claims of, or payments to, the Trustee under or pursuant to Section 7.6 hereof. 

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

        The
Trustee in its individual or any other capacity may hold Senior Indebtedness with the same rights it would have if it were not Trustee. Any paying agent, any authenticating agent,
any conversion agent, any Note registrar and their successors may do the same with like rights. 

        Section 15.12    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 effectuate the subordination as provided in this Article XV and
appoints the Trustee to act as the holder's attorney-in-fact for any and all such purposes. Without limiting the foregoing, each Representative is hereby irrevocably authorized
and empowered (in its own name or in the name of the Noteholders or the Trustee or otherwise), but shall have no obligation, to demand, sue for, collect and receive every payment or distribution
referred to in Section 15.3 above and give acquittance therefor and to file claims and proofs of claim and take such other action as it may deem necessary or advisable for the exercise or
enforcement of any of the rights or interests of the holders or owners of the Senior Indebtedness hereunder; provided that for purposes of this Section 15.12 holders or owners of Senior
Indebtedness may act only through such Representative. 

        Section 15.13    Conversions not deemed payment.    For the purposes of this Article XV only, the
issuance and delivery of Common Stock upon conversion of the Notes in accordance with Article XIV shall not be deemed to constitute a payment or distribution on account of the principal of or
interest on the Notes or on account of the purchase or other acquisition of Notes. Nothing contained in this Article 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 holders, the right, which is absolute and unconditional, of the holder of any Note to convert such Note in accordance
with Article XIV. 

        Section 15.14    Amendments.    The provisions of this Article XV shall not be amended or modified
without the written consent of the holders of Senior Indebtedness. 

55

 

 
 

ARTICLE XVI
  MISCELLANEOUS PROVISIONS    
  

        Section 16.1    Pooling of interests.    The Company desires to preserve its ability to account for acquisition
and other business combination transactions using the pooling-of-interests method where appropriate, and the provisions of this Indenture shall be interpreted accordingly. 

        Section 16.2    Provisions binding on Company's Successors.    All the covenants, stipulations, promises and
agreements in this Indenture made by the Company shall bind its successors and assigns whether so expressed or not. 

        Section 16.3    Official acts by Successor Company.    Any act or proceeding by any provision of this Indenture
authorized or required to be done or performed by any board (including the Board of Directors), 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 corporation that shall at the time be the lawful sole successor of the Company. 

        Section 16.4    Addresses for notices, etc.    Any notice or demand that 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 sent by prepaid overnight delivery or 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 Penn Treaty American Corporation, 5440 Lehigh Street, Allentown, Pennsylvania 18103, Attention: General Counsel with a copy to Justin P. Klein, Ballard Spahr Andrews &
Ingersoll, LLP, 1735 Market Street, Philadelphia, Pennsylvania 19103. 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 sent by prepaid overnight delivery or being deposited postage prepaid by registered or certified mail in a post office letter box addressed to the
Trustee, which office is, at the date as of which this Indenture is dated, located at 6th Street & Marquette Avenue, MAC N9303-110, Minneapolis, Minnesota 55479.
Attention: Corporate 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 the address of such Noteholder as it appears on the Note register and
shall be sufficiently given to such Noteholder if so mailed within the time prescribed. 

        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 16.5    Communications by Holders with other Holders.    Noteholders may communicate pursuant to Trust
Indenture Act Section 312(b) with other Noteholders with respect to their rights under this Indenture or the Notes. The Company, the Trustee, the Note registrar and any other person shall have
the protection of Trust Indenture Act Section 312(c). 

        Section 16.6    Governing Law.    This Indenture shall be deemed to be a contract made under the substantive
laws of New York and for all purposes shall be construed in accordance with the substantive laws of New York without regard to conflicts of laws principles thereof. 

        Section 16.7    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, including those actions set forth in Trust Indenture Act Section 314(c),
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 

56

 

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 16.8    Legal Holidays.    In any case where any interest payment date, date fixed for redemption,
stated maturity or Change of Control Purchase Date of any Note or the last date on which a holder has the right to convert his Notes shall not be a Business Day, then (notwithstanding any other
provision of this Indenture or of the Notes) payment of interest or principal (and premium, if any) or conversion 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 Interest Payment Date, date fixed for redemption, Change of Control Purchase Date, or at the stated maturity, or on such last day for
conversion, provided that no interest shall accrue for the period from and after such interest payment
date, date fixed for redemption, Change of Control Purchase Date or stated maturity, as the case may be. 

        Section 16.9    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 where property of
the Company or its Subsidiaries is located. 

        Section 16.10    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. 

        Section 16.11    Trust Indenture Act controls.    If any provision of this Indenture limits, qualifies, or
conflicts with the duties imposed by operation of the Trust Indenture Act, the imposed duties, upon qualification of this Indenture under the Trust Indenture Act, shall control. 

        Section 16.12    Benefits of Indenture.    Nothing in this Indenture or in the Notes, expressed or implied,
shall give to any person, other than the parties hereto, any paying agent, any authenticating agent, any conversion agent, any Note registrar and their successors hereunder and the holders of Notes,
any benefit or any legal or equitable right, remedy or claim under this Indenture. 

        Section 16.13    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 16.14    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 2.4, 2.5, 2.6, 2.7 and 3.3, 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 

57

 

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 7.10. 

        Any
corporation into which any authenticating agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, consolidation or
conversion to which any authenticating agent shall be a party, or any corporation succeeding to the corporate trust business of any authenticating agent, shall be the successor of the authenticating
agent hereunder, if such successor company is otherwise eligible under this Section, 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 company. 

        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 promptly appoint a successor authenticating agent (which may be the Trustee), shall give written notice
of such appointment to the Company and shall mail notice of such appointment 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 reasonable compensation for its services. 

        The
provisions of Sections 7.3, 7.4, 7.5, 8.3 and this Section 16.14 shall be applicable to any authenticating agent. 

        Section 16.15    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. 

58

   
        Wells Fargo Bank Minnesota, N.A. hereby accepts the trusts in this Indenture declared and provided, upon the terms and conditions hereinabove set forth. 

        IN
WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly signed and attested, all as of the date first written above. 

	 	 	PENN TREATY AMERICAN CORPORATION
	

 	
 	
By:	

 
	 	 	 	
 Name:

Title:
	Attest:
	 	 	 
	 	 	WELLS FARGO BANK MINNESOTA, N.A., AS TRUSTEE
	

 	
 	
By:	

 
	 	 	 	
 Name: Michael Lechner

Title: Vice President
	Attest:
	 	 	 

59

  

 
 

EXHIBIT A—FORM OF GLOBAL NOTE    
  

          [FORM OF FACE OF NOTE]  

	No. A-	 	$
	                                      

CUSIP

PENN TREATY AMERICAN CORPORATION  

 61/4% Convertible Subordinated Notes Due 2008  

        PENN TREATY AMERICAN CORPORATION, a corporation duly organized and validly existing under the laws of the Commonwealth of Pennsylvania (the "Company"), which term
includes any Successor Company under the Indenture referred to on the reverse hereof, for value received hereby promises to pay to Cede & Co., or registered assigns, the principal sum of
                        Dollars (subject to adjustment as set forth in the next paragraph hereof) on October 15, 2008, at the
office or agency of the Company maintained for that purpose in the Borough
of Manhattan, The City of New York, or, at the option of the holder of this Global Note, at the Corporate Trust Office of the Trustee, in such coin or currency of the United States of America as at
the time of payment shall be legal tender for the payment of public and private debts, and to pay interest, semi-annually on April 15 and October 15 of each year (each an
"Interest Payment Date"), commencing,

                        , on said principal sum at said office or agency, in like coin or currency, at the rate per annum
specified in the title of this Global Note, from                        ,
            or the most recent Interest Payment Date, as the case
may be, next preceding the date of this Global 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 Global Note, or unless no interest has been paid or duly provided for on the Notes, in which case
from                        ,            , until payment of said
principal sum has been made or duly provided for. Any interest on any Note that is payable, but is not punctually paid or duly provided for on said April 15 or October 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, either (i) by notifying the Trustee of a special record date, the amount of interest to be paid on such special record date and the date of payment (not
more than 25 days after receipt by the Trustee of such interest, unless the Trustee shall consent to an earlier date) and depositing with the Trustee an amount of money equal to the aggregate
amount to be paid in respect of such Defaulted Interest on making arrangements satisfactory to the Trustee for such deposit or (ii) in any lawful manner not inconsistent with the requirements
of any securities exchange on which the Notes may be listed and upon notice requested by such exchange, if, after notice to the Trustee, the Trustee deems such manner of payment to be practicable. The
interest so payable on any October 15 or April 15 will be paid to the person in whose name this Global Note (or one or more Predecessor Notes) is registered at the close of business on
the record date, which shall be the October 1 and April 1 (record date) (whether or not a Business Day) next preceding such October 15 and April 15, respectively, provided
that any such interest not punctually paid or duly provided for shall be payable as provided in the Indenture. Interest shall be paid by check mailed to the registered holder at the registered address
of such person unless other arrangements are made in accordance with the provisions of the Indenture. 

        The
aggregate principal amount of this Global Note represented hereby may from time to time be reduced or increased to reflect exchanges of a part of this Global Note for interests in
the Global Note or definitive Notes or exchanges of interests in the Global Note or definitive Notes for a part of this Global Note or conversions, redemptions or repurchases of a part of this Global
Note or cancellations 

A-1

 

of a part of this Global Note or transfers of interests in the Global Note or definitive Notes in return for a part of this Global Note or transfers of a part of this Global Note effected by delivery
of interests in the Global Note or definitive Notes, in each case, and in any such case, by means of notations on the Schedule of Exchanges, Conversions, Redemptions, Repurchases, Cancellations and
Transfers on the last page hereof. Notwithstanding any provision of this Global Note to the contrary, (i) exchanges of a part of this Global Note for interests in the Global Note or definitive
Notes, (ii) exchanges of interests in the Global Note or definitive Notes for a part of this Global Note, (iii) conversions, redemptions or repurchases of a part of this Global Note,
(iv) cancellations of a part of this Global Note, (v) transfers of interests in the Global Note or definitive Notes in return for a part of this Global Note and (vi) transfers of
a part of this Global Note effected by delivery of interests in the Global Note or definitive Notes may be effected without the surrendering of this Global Note, provided that appropriate notations on
the Schedule of Exchanges, Conversions, Redemptions, Repurchases, Cancellations and Transfers are made by the Trustee, or the Custodian at the direction of the Trustee, to reflect the appropriate
reduction or increase, as the case may be, in the aggregate principal amount of this Global Note resulting therefrom or as a consequence thereof. 

        Reference
is made to the further provisions of this Global Note set forth on the reverse hereof, including, without limitation, provisions giving the holder of this Global Note the right
to convert this Global Note into Common Stock of the Company (or, under certain circumstances specified in the Indenture, into an amount of cash as set forth in the Indenture) 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. 

A-2

 

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

        IN
WITNESS WHEREOF, the Company has caused this Global Note to be duly executed under its corporate seal. 

	 	 	PENN TREATY AMERICAN CORPORATION
	

 	
 	
By:	

 
	 	 	 	
 Name:

Title:

	

 	
 	

 	
 	

 
	Attest:	 	 	 	 
	 	 	 	 	 
	

 Secretary	
 	

 	
 	

 

A-3

 
[FORM OF CERTIFICATE OF AUTHENTICATION]  

  
 
CERTIFICATE OF AUTHENTICATION    
  

Dated: 

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

	 	 	WELLS FARGO BANK MINNESOTA, N.A., as Trustee
	

 	
 	

By:	

 
	 	 	 	
 Authorized Signatory

A-4

 
[FORM OF REVERSE OF GLOBAL NOTE]  

 PENN TREATY AMERICAN CORPORATION  

 61/4% Convertible Subordinated Notes Due 2008  

        This Global Note is one of a duly authorized issue of Notes of the Company, designated as its 61/4% Convertible Subordinated Notes Due 2008 (herein
called the "Notes"), limited to the aggregate principal amount of $45,000,000 all issued or to be issued under and pursuant to an Indenture dated as of January    , 2003 (the "Indenture"),
between the Company and Wells Fargo Bank Minnesota, N.A., as trustee (the "Trustee"), to which Indenture and all indentures supplemental thereto reference is hereby made for a complete description of
the rights, limitations of rights, obligations, duties and immunities thereunder of the Trustee, the Company and the holders of the Notes. Each Note is subject to, and
qualified by, all such terms as set forth in the Indenture certain of which are summarized hereon and each holder of a Note is referred to the corresponding provisions of the Indenture for a complete
statement of such terms. To the extent that there is any inconsistency between the summary provisions set forth in the Notes and the Indenture, the provisions of the Indenture shall govern.
Capitalized terms used but not defined in this Global Note shall have the meanings ascribed to them in the Indenture. 

        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 on all Notes may be declared, 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
payment of principal of, premium, if any, and interest on the Notes will, to the extent set forth in the Indenture, be subordinated in right of payment to the prior payment in full
of all Senior Indebtedness (as defined in the Indenture). Upon any distribution to creditors of the Company in a liquidation or dissolution of the Company or in a bankruptcy, reorganization,
insolvency, receivership or similar proceeding related to the Company or its property, in an assignment for the benefit of creditors or any marshalling of the Company's assets and liabilities, the
holders of all Senior Indebtedness will first be entitled to receive payment in full of all amounts due or to become due thereon before the holders of the Notes will be entitled to receive any payment
in respect of the principal of, premium, if any, or interest on the Notes (except that holders of Notes may receive securities that are subordinated at least to the same extent as the Notes to Senior
Indebtedness and any securities issued in exchange for Senior Indebtedness). 

        The
Company also may not make any payment upon or in respect of the Notes (except in such subordinated securities) and may not acquire from the Trustee or the holder of any Note for cash
or property (other than securities subordinated to at least the same extent as the Note to (i) Senior Indebtedness and (ii) any securities issued in exchange for Senior Indebtedness)
until all Senior Indebtedness has been paid in full if (a) a default in the payment of the principal of, premium, if any, or interest on Senior Indebtedness occurs and is continuing beyond any
applicable period of grace or (b) any other default occurs and is continuing with respect to Senior Indebtedness that permits holders of the Senior Indebtedness as to which such default relates
to accelerate its maturity and the Trustee receives a notice of such default (a "Payment Blockage Notice") from the representative or representatives of holders of at least a majority in principal
amount of Senior Indebtedness then outstanding. Payments on the Notes may and shall be resumed (i) in the case of a Payment Default, upon the date on which such default is cured or waived, or
(ii) in the case of a Nonpayment Default, 179 days after the date on which the applicable Payment Blockage Notice is received, unless the maturity of any Senior Indebtedness has been
accelerated. No new period of payment blockage may be commenced within 360 days after the receipt by the Trustee of any prior Payment Blockage Notice. No default, other than a Nonpayment
Default, that existed or was continuing on the date of delivery of any 

A-5

 

Payment Blockage Notice to the Trustee shall be, or be made, the basis for a subsequent Payment Blockage Notice unless such default shall have been cured or waived for a period of not less than
180 days. 

        In
the event that the Trustee (or paying agent if other than the Trustee) or any holder of the Notes receives any payment of principal or interest with respect to the Notes at a time
when such payment is prohibited under the Indenture, such payment shall be held in trust for the benefit of, and immediately shall be paid over and delivered to, the holders of Senior Indebtedness or
their representative as their respective interests may appear. After all Senior Indebtedness is paid in full and until the Notes are paid in full, the holders of the Notes shall be subrogated (equally
and ratably with all other Indebtedness pari passu with the Notes) to the rights of holders of Senior Indebtedness to receive distributions applicable
to Senior Indebtedness to the extent that distributions otherwise payable to the holders of the Notes have been applied to the payment of Senior Indebtedness. 

        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, evidenced as in the Indenture provided, 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 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, alter the
obligation of the Company to repurchase the Notes at the option of the holders upon the occurrence of a Change of Control, or impair or affect 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, modify the subordination provisions in a
manner adverse to the holders of the Notes, or impair the right to convert the Notes into Common Stock subject to the terms set forth in the Indenture 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. The Company and the Trustee may amend or supplement the Indenture without notice to or consent of any holder of Notes in certain events specified in the Indenture. It is also provided in
the Indenture that, prior to any declaration accelerating the maturity of the Notes, 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 or any premium on or the principal of any of
the Notes, a failure by the Company to convert any Notes into Common Stock of the Company, unless otherwise excused pursuant to the terms of the Indenture, or a default in respect of a covenant or
provision of the Indenture that under Article X thereof cannot be modified or amended without the consent of the holders of all Notes then outstanding. Any such consent or waiver by the holder
of this Global 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 Global Note and any Notes that may be
issued in exchange or substitution hereof, irrespective of whether or not any notation thereof is made upon this Global Note or such other Notes. 

        No
reference herein to the Indenture and no provision of this Global 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 on this Global 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 composed of twelve 30-day months. 

        The
Notes are issuable in registered form without coupons in denominations of $1,000 principal amount and integral multiples thereof. At the office or agency of the Company referred to
on the face 

A-6

 

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 or other governmental
charge that may be imposed in connection with any registration or exchange of Notes, Notes may be exchanged for a like aggregate principal amount of Notes of other authorized denominations. 

        The
Notes are not redeemable at the option of the Company prior to October 15, 2004. At any time on or after that date, the Notes may be redeemed at the Company's option, upon
notice as set forth in the Indenture, in whole at any time or in part from time to time, at the price of 100% of the principal amount, together with accrued interest to the date fixed for redemption;
provided that if the date fixed for redemption is a date on or after the record date and on or before the next following Interest Payment Date, then the interest payable on such date shall be paid to
the holder of record on the next preceding October 1 or April 1, respectively. 

        If
a Change of Control (as defined in the Indenture) shall occur at any time, then each holder of Notes shall have the right to require that the Company repurchase such holder's Notes in
whole or in part in integral multiples of $1,000, at a purchase price in cash in an amount equal to 101% of the principal amount of such Notes, plus accrued and unpaid interest, if any, to the
repurchase date pursuant to an offer to be made by the Company and in accordance with the procedures set forth in the Indenture. 

        Subject
to the provisions of the Indenture, the holder hereof has the right to convert the principal hereof or any portion of such principal that is $1,000 or an integral multiple
thereof, into the Company's Common Stock at any time following the earlier of (i) April 15, 2003 or (ii) such time as the Company's shareholders shall have approved an amendment
to its Articles of Incorporation to increase the number of authorized shares of Common Stock to an amount sufficient to cover the conversion of the Notes, the conversion of the Company's existing
notes due in 2003 and 2008, the conversion of the Company's convertible preferred stock issuable upon execution of the warrants granted to Centre Solutions (Bermuda) Limited and the exercise of
outstanding options granted pursuant to the Company's stock option plans, until the close of business on October 14, 2008, subject to prior redemption or repurchase, or, as to all or any
portion hereof called for redemption, prior to the close of business one business day before the date fixed for redemption (unless the Company shall default in payment due upon redemption thereof).
The principal hereof or any portion of such principal that is $1,000 or an integral multiple thereof, is convertible into that number of fully paid and non-assessable shares of the
Company's Common Stock, as said shares shall be constituted at the date of conversion, obtained by dividing the principal amount of this Global Note or portion thereof to be converted by the
conversion price of $2.50 per share or such conversion price as adjusted from time to time as provided in the Indenture, upon surrender of this Global Note to the Company at the office or agency of
the Company maintained for that purpose in the Borough of Manhattan, the City of New York, or at the option of such holder, the Corporate Trust Office of the Trustee, and, unless the shares issuable
on conversion are to be issued in the same name as this Global 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. 

        Except
as described in the Indenture, no adjustment will be made on conversion of any Notes for interest accrued thereon or for dividends paid on any Common Stock issued. A Holder of
Notes at the close of business on a record date will be entitled to receive the interest payable on such Notes on the corresponding interest payment date. Any unpaid interest on any Note or portion
thereof as of the date such Note or portion thereof is surrendered for conversion shall (unless such Note or portion thereof being converted is called for redemption on a redemption date during the
period from the close of business on or after any record date to the close of business on the business day following the corresponding interest payment date) be paid in cash to the former holder of
such Note or portion thereof on the next succeeding interest payment date. 

A-7

 

        In
the event a holder desires to convert all or any portion of its Notes into shares of Common Stock and the Company does not have authorized a sufficient number of shares of Common
Stock for such conversion, in lieu of delivering shares of Common Stock (or other securities into which the Notes are then convertible) upon conversion of that portion of such holder's Notes for which
there is an insufficient number of shares of Common Stock (the "Cash Equivalent Notes") pursuant to the provisions of the Indenture, the Company will pay to the holder converting the Cash Equivalent
Notes who properly exercises the conversion privilege, as set forth in the Indenture, an amount in cash equal to the Market Cash Conversion Price (as defined in the Indenture) of the shares of Common
Stock into which such Cash Equivalent Notes are then convertible. 

        On
any date on or after the 15th business day following October 15, 2004, if: (i) the average of the closing price of the Common Stock on 15 consecutive business days is
equal to or greater than 110% of the conversion price (as it may be adjusted in the Indenture) and (ii) the Company has sufficient shares of Common Stock (or other securities into which the
Notes are then convertible) authorized to execute the Mandatory Conversion (as defined below), then the Notes shall be converted into that number of fully paid and nonassessable shares of Common Stock
(or other securities into which the Notes are then convertible) obtained by dividing the aggregate principal amount of the Notes by the conversion price in effect at such time rounded to the nearest
1/100,000th of a share (with 0.000005 being rounded upward) (the "Mandatory Conversion"). After the Mandatory Conversion, the Notes will no longer represent indebtedness of the Company
and will no longer accrue interest or require the Company to make any payment of principal; and the Company's obligations to make any further payments with respect to the Notes will terminate. 

        The
Company is not required to issue fractional shares of Common Stock upon conversion of Notes and, in lieu thereof, will pay a cash adjustment based upon the closing price of the
Common Stock on the last business day prior to the date of conversion. 

        Upon
due presentment for registration of transfer of this Global Note at the office or agency of the Company in the Borough of Manhattan, The City of New York, or at the option of the
holder of this Global Note, at the Corporate Trust Office of the Trustee, 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 conditions and limitations provided in the Indenture, without charge except
for any tax 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 hereof as the absolute owner of
this Global Note (whether or not this Global 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 any 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 Global Note. 

        No
recourse for the payment of the principal of or any premium or interest on this Global 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 indenture supplemental thereto or in any Note, or because of the creation of any indebtedness represented thereby,
shall be had against any incorporator, shareholder, officer or director, as such, past, present or future, of the Company or of any Successor Company, either directly or through the Company or any
Successor Company, 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 the acceptance hereof and
as part of the consideration for the issue hereof, expressly waived and released. 

A-8

 
 
 

ABBREVIATIONS    
  

        The following abbreviations, when used in the inscription of the face of this Global 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 —

Uniform Gifts to Minors Act

	 	 
	 	 	 	 	 	 	 
	 	 	 	 	
                (State)	 	 
	

TEN ENT	
 	

-  as tenants by the entireties

         

	
 	

                (Cust)	
 	

Custodian

	

JT TEN	
 	

-  as joint tenants with right of survivorship

    and not as tenants in common

	
 	

                (Minor)	
 	

under

Additional
abbreviations may also be used

though not in the above list. 

A-9

 

Fill
in for registration of shares 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)	
 	

 	

 
	

Please print name and address	
 	

 	

 

	 	Principal amount to be converted

(if less than all)	 
	 	$___________________	 
	

	

 Social Security or Other Taxpayer

Identification Number	

 

A-10

 
[FORM OF OPTION TO ELECT REPAYMENT

UPON A CHANGE OF CONTROL]  

To: Penn Treaty American Corporation 

        The
undersigned registered owner of this Global Note hereby irrevocably acknowledges receipt of a notice from Penn Treaty American Corporation (the "Company") as to the occurrence of a
Change of Control with respect to the Company and requests and instructs the Company to repay the entire principal amount of this Global Note, or the portion thereof (which is $1,000 principal amount
or an integral multiple thereof) below designated, in accordance with the terms of the Indenture referred to in this Global Note, together with accrued interest to such date, to the registered holder
hereof. 

	Dated:___________________	 
	

	

 Signature(s)
	

	

	

	

Social Security or Other Taxpayer

Identification Number
	

	

Principal amount to be repaid (if less than

all): $___________________

A-11

 
[FORM OF ASSIGNMENT]  

        For value received                        hereby sell(s),
assign(s) and transfer(s) unto                        (please insert social security or other identifying number of
assignee) the within Note, and hereby irrevocably constitutes and appoints

                    attorney to transfer the said Note on the books of the Company, with full power of substitution in the premises. 

	Dated:                                       
                 	 
	

	

 
	

 Signature(s)	

 
	

Signature(s) must be guaranteed by an eligible Guarantor Institution (banks, stock brokers, savings and loan associations and credit unions) with membership in an approved signature guarantee medallion program pursuant to Securities and Exchange
Commission Rule 17Ad-15.	

 
	

 Signature Guarantee	

 

NOTICE:
The option to elect payment upon a Change of Control 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-12

 
 
 

SCHEDULE A    
  

        SCHEDULE OF EXCHANGES, CONVERSIONS,

REDEMPTIONS, REPURCHASES, CANCELLATIONS AND TRANSFERS  

        The initial principal amount of this Global Note is U.S.
$                        . The following additions to principal, redemptions, repurchases, exchanges of a part of
this Global Note for an interest in the Global Note, definitive Notes and conversions into Common Stock or cash have been made: 

	

	

	Date of Addition to Principal, Redemption, Repurchase, Exchange or Conversion
	 	Principal Amount Added on Exchange of Interest in the Global Note or Definitive Notes
	 	Principal Amount Redeemed, Repurchased Exchanged for Interest in the Global Note or Definitive Notes or Converted into Common Stock or Cash
	 	Remaining Principal Amount Outstanding Following such Transaction
	 	Notation Made by or on behalf of the Trustee

	

	

	

	

	

	

	

	

	

	

	

	

	

	

	

A-13

QuickLinks

CROSS-REFERENCE TABLE

Table of Contents

ARTICLE I DEFINITIONS

ARTICLE II ISSUE, DESCRIPTION, EXECUTION, REGISTRATION AND EXCHANGE OF NOTES

ARTICLE III REDEMPTION AND REPURCHASE OF NOTES

ARTICLE IV PARTICULAR COVENANTS OF THE COMPANY

ARTICLE V NOTEHOLDERS' LISTS AND REPORTS BY THE COMPANY

ARTICLE VI DEFAULTS AND REMEDIES

ARTICLE VII CONCERNING THE TRUSTEE

ARTICLE VIII CONCERNING THE NOTEHOLDERS

ARTICLE IX NOTEHOLDERS' MEETINGS

ARTICLE X SUPPLEMENTAL INDENTURES

ARTICLE XI CONSOLIDATION, MERGER, SALE, CONVEYANCE, TRANSFER AND LEASE

ARTICLE XII SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS

ARTICLE XIII IMMUNITY OF INCORPORATORS, SHAREHOLDERS, OFFICERS AND DIRECTORS

ARTICLE XIV CONVERSION OF NOTES

ARTICLE XV SUBORDINATION

ARTICLE XVI MISCELLANEOUS PROVISIONS

EXHIBIT A—FORM OF GLOBAL NOTE

CERTIFICATE OF AUTHENTICATION

ABBREVIATIONS

SCHEDULE AExhibit 10.1

Letter Agreement Dated December 20, 2002
By and Between William W. Reid and
U.S. Gold Corporation

This letter agreement (the "Agreement") is made
between William W. Reid, President, Chief executive
Officer and Chairman of the Board of Directors (the
"Option Holder") and U.S. Gold Corporation (the
"Corporation").

WHEREAS, effective August 20, 2002, Option Holder
was granted an Incentive Stock Option Agreement
under the Corporation's 2002 Stock Option and Stock
Grant Plan (the "Plan") covering options to
purchase 900,000 shares of Common Stock of the
Corporation at an exercise price of $0.32/share and
expiring August 20, 2012 (the "SOA"), which SOA
was not able to be exercised until and unless the
Plan as well as the SOA were approved by
shareholders of the Corporation, and

WHEREAS, the shareholders of the Corporation have
not to date approved either the Plan nor the SOA,
and

WHEREAS, the Option Holder has voluntarily agreed
to terminate the SOA effective immediately and for
no consideration, and

WHEREAS, the Corporation accepts the voluntary
officer of the Option Holder and is agreeable to
the termination of the SOA immediately, now

THEREFORE, the Option Holder and the Corporation
agree to the termination effective immediately of
that certain Incentive Stock Option Agreement dated
August 20, 2002 with Option Holder covering an
aggregate of 900,000 shares of Common Stock of the
Corporation at an exercise price of $0.32/share.

IN WITNESS WHEREOF, the parties hereto have
executed this letter agreement effective as of
December 20, 2002.

Option Holder:

/S/ William W. Reid
William W. Reid

Corporation

/S/ William F. Pass
William F. Pass
Vice President, Chief Financial Officer and
Secretary

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