Document:

Exhibit 10.3

 

SETTLEMENT AGREEMENT

 

THIS
AGREEMENT is dated as of June 30, 2009, between Hi-Shear Technology
Corporation (“HSTC”) and United Space Alliance, LLC (“USA”).

 

WHEREAS,
HSTC and USA are parties in the case of HSTC v. USA, Case No. 05-2000-CA-024754
in the Circuit Court for the Eighteenth Judicial Circuit, in and for Brevard
County, Florida (“Case No. 24754’); and

 

WHEREAS,
HSTC has filed a complaint against Pacific Scientific Energetic Materials
Company (“Pac Sci”) in Case No. 05-2004-CA-022186 in the Circuit Court of
the Eighteenth Judicial Circuit, in and for Brevard County, Florida (“Case No. 22186”),
and Case No. 22186 remains pending in that Court; and

 

WHEREAS,
appellate proceedings arising out of Case No. 24754 are currently pending
in the Florida Fifth District Court of Appeal and in the United States Supreme
Court; and

 

WHEREAS,
USA has initiated collection efforts against HSTC under the law and procedure
of the State of California (“California Collection Proceedings”); and

 

WHEREAS,
the parties desire to avoid the time and expense of further litigation and wish
to resolve all disputes with one another; and

 

WHEREAS,
on or before May 29, 2009, the parties reached a verbal agreement on the
settlement amount to be paid by HSTC, which is memorialized in Paragraph 1 of
this Agreement;

 

NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which is acknowledged by HSTC and USA, the parties agree as follows:

 

1.             Payment—HSTC shall pay USA
the total sum of $1,600,000 in four separate installments of $400,000. The
first $400,000 payment is due and payable on the Effective Date, which shall be
defined as the later of June 30, 2009, or the date of complete execution
of this Agreement. The second $400,000 payment is due and payable on September 30,
2009. The third $400,000 payment is due and payable on December 31, 2009.
The fourth and last payment is due and payable on March 31, 2010. No
interest shall be charged on the unpaid balance to be paid to USA in this
Agreement. HSTC may prepay the amount owed under this Agreement at any time.
All payments under this agreement shall be by wire transfer in accordance with
the wiring instructions attached to this Agreement as Exhibit A. The
initial payment shall be tendered to counsel for HSTC on the Effective Date.
Subsequent payments shall be made to arrive on the due date.

 

2.             Default—HSTC shall be in default of
this Settlement Agreement if (A) HSTC fails to make any payment when due
under Paragraph 1 of this Agreement; or (B) HSTC sustains a major adverse
change in its financial condition, defined as an increase in HSTC’s debt by
$1,000,000 over the amount of debt on HSTC’s financial statements as of March 19,
2009. In

 

 

the
event of a default by HSTC and a failure to cure the default within five
calendar days of receipt of a written notice of default, USA shall be entitled
to immediate entry of a Final Judgment in the amount of all sums remaining to
be paid pursuant to Paragraph 1 of this Agreement. USA shall be entitled to
post-judgment interest at the prevailing statutory rate on the Final Judgment
entered pursuant to this provision. HSTC waives any defenses to levy,
execution, and collection efforts on that Final Judgment if entered.

 

3.             General Release of HSTC—USA hereby
releases and forever discharges HSTC, and its employees, officers, agents,
predecessors, successors, insurers, legal representatives, assigns, member
companies, directors, shareholders, advisory board and members thereof,
parents, subsidiaries and affiliates, from any and all actions, causes of
action, claims, damages, executions, liens, judgments and demands whatsoever,
in law or in equity, for, upon or by reason of any matter, cause, damage, loss,
or injury of any nature occurring prior to the Effective Date, including but
not limited to all matters which were or could have been asserted in Case No. 24754,
and any obligations arising thereunder. This release extends and applies to,
and also covers and includes, all unknown, unforeseen, unanticipated and
unsuspected matters, causes, injuries, damages, loss and liability, and the
consequences thereof, as well as those now disclosed and known to exist.

 

4.            General
Release of USA—HSTC hereby releases and
forever discharges USA, and its employees, officers, agents, predecessors,
successors, insurers, legal representatives, assigns, member companies,
directors, shareholders, advisory board and members thereof, parents,
subsidiaries and affiliates, from any and all actions, causes of action,
claims, damages, executions, liens, judgments and demands whatsoever, in law or
in equity, for, upon or by reason of any matter, cause, damage, loss, or injury
of any nature occurring prior to the Effective Date, including but not limited
to all matters which were or could have been asserted in Case No. 24754,
and any obligations arising thereunder. This release extends and applies to,
and also covers and includes, all unknown, unforeseen, unanticipated and
unsuspected matters, causes, injuries, damages, loss and liability, and the consequences
thereof, as well as those now disclosed and known to exist.

 

5.             Mutual Limited Carve Out—The parties
represent that as of the Effective Date, each has received no notification of
any contemplated or pending U.S. Governmental investigation, claim, or action
related to any purchase orders between the parties for products made for use in
connection with the Space Shuttle program. However, notwithstanding anything
herein to the contrary, the mutual releases in Paragraphs 3 and 4 of this
Agreement shall not preclude either party from seeking indemnity in the event
of a subsequent U.S. Governmental action related to purchase orders that were
not involved in, are independent of, and unrelated to, any matters that were or
could have been asserted in Case No. 24754.

 

6.             Dismissals—HSTC and USA
shall immediately file an Agreement That The Case Be Dismissed in the case of
HSTC v. USA, Case No. 08-1369, in the Supreme Court of the United States.
HSTC and USA shall immediately file a Joint Notice of Settlement and Joint
Stipulation For Dismissal of HSTC’s appeal in Case No. 5D08-4282 in the
Florida Fifth District Court of Appeal. In consideration for the dismissal of
the appeal in Case No. 5D08-4282, USA and HSTC agree to submit an Agreed
Order setting aside the judgment that is the subject of the appeal in Case No. 5D08-4282,
and USA will immediately dismiss, resolve, and withdraw all

 

2

 

collection
efforts and liens in the California Collection Proceedings and will file or
record with the appropriate California court, county, and secretary of state,
all documents necessary to do so as of public record. On the Effective Date, or
as soon thereafter as practicable, the parties will submit an Agreed Order of
Abatement of Case No. 24754. Upon the full payment of the amounts due to
USA under Paragraph 1 of this Agreement, and full satisfaction of the parties’
obligations under this Agreement, the parties shall submit a Joint Stipulation
for Dismissal With Prejudice of Case No. 24754 and shall submit an Agreed
Order of Dismissal to be entered by the Court.

 

7.             Satisfaction of Judgment—HSTC
shall immediately execute a Satisfaction of Judgment regarding
Paragraph 7 of the Corrected Final Judgment rendered on March 23, 2007,
Nunc Pro Tunc, May 18, 2006 in Case No. 24754 in a form acceptable to
counsel for USA.

 

8.             Pacific Scientific—HSTC shall
immediately file a joint stipulation of voluntary dismissal with prejudice or a
notice of voluntary dismissal with prejudice of Case No. 22186. If Pac Sci
agrees, HSTC shall execute a joint mutual release with Pac Sci.

 

9.             Survival of Provisions—The  parties agree that the
covenants and agreements set forth herein will survive the execution of this
Agreement.

 

10.           No Liability—The parties agree
that this settlement and this Settlement Agreement do not constitute an
admission or concession of liability by any party.

 

11.           Inventory of Component Parts—Hi-Shear  is holding certain partially
completed Shuttle Parts along with related documentation for those parts. A
list of these parts is attached as Exhibit B. Within ninety days of the
Effective Date, USA has the option to decide whether to accept these parts. If
USA decides to accept these parts, USA shall provide written notice of its
decision, and then Hi-Shear will ship the parts and related documentation as
USA may direct. If USA decides to accept these parts, the cost of shipping the
parts and related documentation shall be at USA’s expense. If USA does not
provide written notice of a decision to accept these parts within ninety days
of the Effective Date, Hi-Shear may dispose of the parts as it sees fit.

 

12.           Settlement Documents—The
dismissal papers, orders and satisfaction of judgment required by
paragraphs 5, 6 and 7 herein shall be prepared and executed by the Effective
Date and shall be considered to be incorporated by reference herein. The
parties agree to cooperate in the drafting and to execute any instruments
necessary to give full force and effect to this settlement.

 

13.           Notices—All  notices to HSTC under this
Agreement, including notices of default, shall be made in writing by overnight
courier to Ms. Jan L. Hauhe, Chief Financial Officer, Hi-Shear Technology
Corp., 24225 Garnier St., Torrance, CA 90505. All notices to USA under this
Agreement shall be made in writing by overnight courier to United Space
Alliance, LLC, Attention: Rochelle L. Cooper,
8550 Astronaut Boulevard, MS: USK-T21, Cape Canaveral, FL 32920.

 

3

 

14.           Venue—The
parties agree that the venue for any claims or disputes concerning, relating
to, or arising out of this Settlement Agreement shall be Brevard County,
Florida; provided, however, that nothing in this Paragraph 14 requires venue in
Brevard County, Florida, for any subsequent indemnity action by either of the
parties if one arises as described in Paragraph 5 of this Agreement.

 

15.           Governing
Law—The parties agree that this
Settlement Agreement and all issues relating thereto shall be governed by the
Law of Florida.

 

16.           Counterparts—This agreement may
be executed simultaneously in two or more counterparts, each of which shall be
deemed an original, but all once together shall constitute one and the same
agreement.

 

17.           Entire
Agreement—This Agreement constitutes the entire Agreement
between the parties as to the subject matter herein, and may only be modified
by written amendment executed by both HSTC and USA.

 

Agreed to this 7th day of July, 2009 by:

 

	
  HI-SHEAR
  TECHNOLOGY CORPORATION

  	
   

  	
  UNITED
  SPACE ALLIANCE, LLC

  
	
   

  	
   

  	
   

  
	
  By

  	
  /s/
  Jan L. Hauhe

  	
   

  	
  By

  	
  /s/
  David A. Bolton

  
	
   

  	
  Jan
  L. Hauhe

  	
  (Name)

  	
   

  	
   

  	
  David
  A. Bolton

  	
  (Name)

  
	
   

  	
  its
  Chief Financial Officer 

  	
  (Title)

  	
   

  	
   

  	
  Associate
  General Counsel

  	
  (Title)

  

 

4EXHIBIT
4.1

 

SECOND
SUPPLEMENTAL INDENTURE

 

SECOND SUPPLEMENTAL INDENTURE

 

between

 

LEVEL 3 COMMUNICATIONS, INC.

 

and

 

THE BANK OF NEW YORK MELLON

 

as Trustee

 

$500,000,000

 

7% Convertible Senior Notes due 2015, Series B

 

 

Dated as of October 15, 2009

 

Supplement to Indenture dated as of December 24, 2008

(Senior Debt Securities)

 

 

THIS SECOND SUPPLEMENTAL INDENTURE, dated as
of October 15, 2009, is by and between Level 3 Communications, Inc.,
a Delaware corporation (the “Company”), and The Bank of New York Mellon,
a New York banking corporation (the “Trustee”), as Trustee under the
Indenture (defined below).

 

WHEREAS, the Company and the Trustee have, as
of December 24, 2008, entered into an indenture (as supplemented, the “Indenture”),
providing for the issuance by the Company from time to time of its senior debt
securities;

 

WHEREAS, Section 9.01 of the Indenture
provides, among other things, that the Company, when authorized by or pursuant
to a Board Resolution, and the Trustee may, without the consent of the Holders
of Securities, enter into one or more indentures supplemental to the Indenture
to establish the form or terms of Securities of any series, including the
provisions and procedures providing for the adjustment of conversion rights
with respect to Securities convertible into Common Stock, or to change or
eliminate any of the provisions of the Indenture, provided that any such change
or elimination shall become effective only when there is no Security
Outstanding of any series created prior to the execution of such supplemental
indenture which is entitled to the benefit of such provisions;

 

WHEREAS, the Company desires to issue one
series of convertible senior debt securities under the Indenture, and has duly
authorized the creation and issuance of such debt securities under the
Indenture, and has duly authorized the execution and delivery of this Second
Supplemental Indenture to modify the Indenture and to provide certain
additional provisions as hereinafter described;

 

WHEREAS, the Company has requested that the
Trustee enter into this Second Supplemental Indenture for the purposes of
establishing the terms of such convertible senior debt securities and providing
for the rights, obligations and duties of the Trustee with respect to such debt
securities;

 

WHEREAS, concurrently with the execution
hereof, the Company has delivered an Officers’ Certificate and has caused its
counsel to deliver to the Trustee an Opinion of Counsel pursuant to Sections
3.03 and 9.03 of the Indenture and a reliance letter upon an opinion of
counsel; and

 

WHEREAS, all conditions and requirements of
the Indenture necessary to make this Second Supplemental Indenture a valid,
binding and legal instrument in accordance with its terms have been performed
and fulfilled by the parties hereto, and the execution and delivery thereof
have been in all respects duly authorized by the parties hereto.

 

NOW, THEREFORE, for and in consideration of
the mutual premises and agreements herein contained, the Company and the
Trustee covenant and agree, for the equal and proportionate benefit of all
Holders of the Securities, as follows:

 

 

ARTICLE I

 

CREATION OF THE SECURITIES

 

SECTION 1.1.  Designation of the Series.  Pursuant to the terms hereof and Sections
2.01 and 3.01 of the Indenture, the Company hereby creates a series of its
convertible senior debt securities designated as the “7% Convertible Senior
Notes due 2015, Series B” (the “Notes”), which Notes shall be
deemed “Securities” for all purposes under the Indenture.

 

SECTION 1.2.  Form of Securities.  The Notes will be issued in definitive form
without coupons and the definitive form of the Notes shall be substantially in
the form set forth in Exhibit A attached hereto, which is
incorporated herein and made part hereof. 
The Notes shall bear interest, be payable and have such other terms as
are stated in the form of definitive Note or in the Indenture, as supplemented
by this Second Supplemental Indenture. 
The Stated Maturity of the Notes shall be March 15, 2015.

 

SECTION 1.3.  Limit on Amount of Securities.  The aggregate principal amount of the Notes
will not exceed $500 million and may, upon the execution and delivery of this
Second Supplemental Indenture or from time to time thereafter, be executed by
the Company and delivered to the Trustee for authentication, and the Trustee
shall thereupon authenticate and deliver said Notes to or upon the Company
Order, without further action by the Company.

 

SECTION 1.4.  Ranking.  The Notes will be the Company’s unsecured and
unsubordinated obligations and rank equal in right of payment with all of the
Company’s existing and future unsecured and unsubordinated indebtedness.

 

SECTION 1.5.  Certificate of Authentication.  The Trustee’s certificate of authentication
to be borne on the Notes shall be substantially as provided in the form of note
attached hereto as Exhibit A.

 

SECTION 1.6.  No Sinking Fund.  No sinking fund will be provided with respect
to the Notes (notwithstanding any provisions of the Indenture with respect to
sinking fund obligations).

 

SECTION 1.7.  No Additional Amounts.  No Additional Amounts will be payable with
respect to the Notes (notwithstanding any provisions of the Indenture with
respect to Additional Amount obligations).

 

SECTION 1.8.  Repayment at the Option of Holders.  There will be no right of repayment at the
option of the Holders pursuant to Article Thirteen of the Indenture.

 

SECTION 1.9.  Redemption of Securities.  There will be no right of redemption pursuant
to Article Eleven of the Indenture.

 

2

 

SECTION 1.10.  Definitions.  (a)  Capitalized terms used herein and
not otherwise defined shall have the respective meanings assigned thereto in
the Indenture.

 

(b)  Solely for purposes of this Second
Supplemental Indenture and the Notes, the following definitions of Section 1.01
of the Indenture are hereby amended in their entirety to read as follows:

 

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

 

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

 

“Subsidiary” of any Person means (a) a
corporation more than 50% of the combined voting power of the outstanding
Voting Stock of which is owned, directly or indirectly, by such Person or by
one or more other Subsidiaries of such Person or by such Person and one or more
Subsidiaries thereof or (b) any other Person (other than a corporation) in
which such Person, or one or more other Subsidiaries of such Person and one or
more other Subsidiaries thereof, directly or indirectly, has at least a
majority ownership and power to direct the policies, management and affairs
thereof.

 

(c)  Solely for purposes of this Second
Supplemental Indenture and the Notes, the following terms shall have the
indicated meanings:

 

“Acquired Debt” means, with respect to
any specified Person, (a) indebtedness of any other Person existing at the
time such Person merges with or into or consolidates with such specified Person
and (b) indebtedness secured by a Lien encumbering any property acquired
by such specified Person, which indebtedness in each case was not incurred in
anticipation of, and was outstanding prior to, such merger, consolidation or
acquisition.

 

“Capital Stock” of any Person means
any and all shares, interests, participations or other equivalents (however
designated) of corporate stock or other equity participations, including
partnership interests, whether general or limited, of such Person and any
rights (other than debt securities convertible and exchangeable into an equity
interest), warrants or options to acquire an equity interest in such Person.

 

“Change in Control” after the original
issuance of the Notes means the occurrence of one or more of the following
events:

 

(a) any
“person” or “group” (as such terms are used in Sections 13(d) and 14(d) of
the Exchange Act or any successor provisions to either of the foregoing),
including any group acting for the purpose of acquiring, holding, voting or
disposing of securities within the meaning of Rule 13d-5(b)(1) under
the Exchange Act, other than any one or more of the Permitted Holders, becomes
the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act,
except that 

 

3

 

a person will be deemed to have “beneficial ownership”
of all shares that any such person has the right to acquire, whether such right
is exercisable immediately or only after the passage of time), directly or
indirectly, of 35% or more of the total voting power of the Voting Stock of the
Company (other than as a result of any merger, share exchange, transfer of
assets or similar transaction solely for the purpose of changing the Company’s
jurisdiction of incorporation and resulting in a reclassification, conversion
or exchange of outstanding shares of the Common Stock solely into shares of
common stock of the surviving entity); provided, however, that
the Permitted Holders are the “beneficial owners” (as defined in Rule 13d-3
under the Exchange Act, except that a person will be deemed to have “beneficial
ownership” of all shares that any such person has the right to acquire, whether
such right is exercisable immediately or only after the passage of time),
directly or indirectly, in the aggregate of a lesser percentage of the total
voting power of the Voting Stock of the Company than such other person or group
(for purposes of this clause (a), such person or group shall be deemed to
beneficially own any Voting Stock of a corporation (the “specified
corporation”) held by any other corporation (the “parent corporation”)
so long as such person or group beneficially owns, directly or indirectly, in
the aggregate a majority of the total voting power of the Voting Stock of such
parent corporation); or

 

(b) (i) any
“person” or “group” (as such terms are used in Sections 13(d) and 14(d) of
the Exchange Act or any successor provisions to either of the foregoing),
including any group acting for the purpose of acquiring, holding, voting or
disposing of securities within the meaning of Rule 13d-5(b)(1) under
the Exchange Act, becomes the “beneficial owner” (as defined in Rule 13d-3
under the Exchange Act, except that a person will be deemed to have “beneficial
ownership” of all shares that any such person has the right to acquire, whether
such right is exercisable immediately or only after the passage of time),
directly or indirectly, of a majority of the total voting power of the Voting
Stock of the Company (other than as a result of any merger, share exchange,
transfer of assets or similar transaction solely for the purpose of changing
the jurisdiction of incorporation of the Company and resulting in a
reclassification, conversion or exchange of outstanding shares of the Common
Stock solely into shares of common stock of the surviving entity) and (ii) a
Termination of Trading shall have occurred; or

 

(c) the
Company’s consolidation or merger with or into any other Person, any merger of
another Person into the Company, or any sale, transfer, assignment, lease,
conveyance or other disposition, directly or indirectly, of all or
substantially all the assets of the Company and its Subsidiaries, considered as
a whole (other than a disposition of such assets as an entirety or virtually as
an entirety to a wholly owned Subsidiary or one or more Permitted Holders)
shall have occurred, other than (i) any transaction (A) that does not
result in any reclassification, conversion, exchange or cancellation of
outstanding shares of the Company’s Capital Stock and (B) pursuant to
which holders of the Company’s Capital Stock immediately prior to the
transaction are entitled to exercise, directly or indirectly, 50% or more of
the total voting power of all shares of Capital Stock entitled to 

 

4

 

vote generally in the election of directors of the
continuing or surviving person immediately after the transaction; or (ii) any
merger, share exchange, transfer of assets or similar transaction solely for
the purpose of changing the Company’s jurisdiction of incorporation and
resulting in a reclassification, conversion or exchange of outstanding shares
of the Common Stock solely into shares of common stock of the surviving entity;
or

 

(d) during
any period of two consecutive years, individuals who at the beginning of such
period constituted the board of directors of the Company (together with any new
directors whose election or appointment by such board or whose nomination for
election by the shareholders of the Company was approved by a vote of a
majority of the directors then still in office who were either directors at the
beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
board of directors of the Company then in office; or

 

(e) the
shareholders of the Company shall have approved any plan of liquidation or
dissolution of the Company.

 

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

 

“Conversion Agent” means the Trustee
or any other Person appointed by the Company to accept Notes presented for
conversion.

 

“Conversion Price” means $1,000
divided by the applicable Conversion Rate.

 

“Conversion Rate” is defined in Section 15.04
of the Indenture as amended by this Second Supplemental Indenture.

 

“Designated Event” means the
occurrence of a Change in Control or a Termination of Trading.

 

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

 

5

 

“Fair Market Value” has the meaning
set forth in Section 15.05(f)(2) of the Indenture as amended by this
Second Supplemental Indenture.

 

“HSR Act” means the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended.

 

“Lien”
means any mortgage or deed of trust, pledge, hypothecation, security interest,
lien, charge, encumbrance or other security agreement of any kind or nature
whatsoever; provided, however, that Liens shall not include
defeasance trusts or funds.  For purposes
of this definition, the sale, lease, conveyance or other transfer by the
Company or any of its subsidiaries of, including the grant of indefeasible
rights of use or equivalent arrangements with respect to, dark or lit
communications fiber capacity or communications conduit shall not constitute a
Lien.

 

“Permitted Holders” means the members
of the Company’s Board of Directors on April 28, 1998, and their
respective estates, spouses, ancestors, and lineal descendants, the legal
representatives of any of the foregoing and the trustees of any bona fide
trusts of which the foregoing are the sole beneficiaries or the grantors, or
any Person of which the foregoing “beneficially owns” (as defined in Rule 13d-3
under the Exchange Act) at least 66-2/3% of the total voting power of the
Voting Stock of such Person.

 

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

 

“Specified
Indebtedness” means (a) the Company’s 6.0% Convertible
Subordinated Notes due 2010, 2.875% Convertible Senior Notes due 2010, 10.0%
Convertible Senior Notes due 2011, 5.25% Convertible Senior Notes due 2011,
3.5% Convertible Senior Notes due 2012, 9% Convertible Senior Discount Notes
due 2013, 15% Convertible Senior Notes due 2013, 7% Convertible Senior Notes
due 2015 issued under the indenture
dated as of June 26, 2009 between the Company and The Bank of New York
Mellon and (b) any indebtedness of the Company for borrowed money that (i) is
in the form of, or represented by, bonds, notes, debentures or other securities
or any guarantee thereof (other than promissory notes or similar evidences of
indebtedness under bank loans, reimbursement agreements, receivables facilities
or other bank, insurance or other institutional financing agreements under Section 4(2) of
the Securities Act or any guarantee thereof) and (ii) is, or may be,
quoted, listed or purchased and sold on any stock exchange, automated
securities trading system or over-the-counter or other securities market
(including, without prejudice to the generality of the foregoing, the market
for securities eligible for resale pursuant to Rule 144A under the
Securities Act). For the avoidance of doubt, “Specified Indebtedness”
shall not include indebtedness among the Company or its Subsidiaries or among
Subsidiaries of the Company.

 

“Termination of Trading” will be
deemed to have occurred if the Common Stock (or other common stock into which
the Notes are then convertible) is not listed for trading on a U.S. national
securities exchange.

 

6

 

“Trading
Day” means (a) if the applicable security is quoted on the Nasdaq
Global Select Market, a day on which trades may be made thereon, (b) if
the applicable security is listed or admitted for trading on the New York Stock
Exchange or another national or regional securities exchange, a day on which
the New York Stock Exchange or such other national or regional securities
exchange is open for business or (c) 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.

 

“Voting Stock” of any Person means the
Capital Stock of such Person which ordinarily has voting power for the election
of directors (or persons performing similar functions) of such Person, whether
at all times or only for so long as no senior class of securities has such
voting power by reason of any contingency.

 

ARTICLE II

 

EVENTS OF DEFAULT

 

SECTION 2.1.  Amendments to Article Five.  Article Five of the Indenture is amended
in its entirety with respect to the Notes as follows:

 

“SECTION 5.01.  Events of Default.  An “Event of Default” with respect to
any Notes occurs if:

 

(a)  the Company defaults in the payment
of principal of, or premium, if any, on the Notes when due at maturity, upon
repurchase, upon acceleration or otherwise; or

 

(b)  the Company defaults in the payment
of any installment of interest on the Notes when due (including any interest
payable in connection with a repurchase pursuant to Section 10.06) and
continuance of such default for 30 days or more; or

 

(c)  (i) the Company defaults in
the payment of the Designated Event Payment in respect of the Notes on the date
therefor; or (ii) the Company fails to provide timely notice of any
Designated Event in accordance with Sections 10.06 and 10.07; or

 

(d)  the Company defaults (other than a
default set forth in clause (a), (b) or (c) above) in the performance
of, or breaches, any other covenant or warranty of the Company set forth in
this Indenture or the Notes and fails to remedy such default or breach within a
period of 60 days after the receipt of written notice (specifying such default
or breach and requiring it to be remedied and stating that such notice is a “Notice
of Default” hereunder) from the Trustee or the Holders of at least 25% in
aggregate principal amount of the then outstanding Notes; or

 

(e)  a default under any credit
agreement, 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 Material Subsidiary (or the payment of which is
guaranteed or secured by the Company or any of 

 

7

 

its Material Subsidiaries),
whether such indebtedness or guarantee exists on the date of this Indenture or
is created thereafter, which default (i) is caused by a failure to pay
when due any principal of such indebtedness within the grace period provided
for in such indebtedness, which failure continues beyond any applicable grace
period (a “Payment Default”), or (ii) results in the acceleration
of such indebtedness prior to its express maturity (without such acceleration
being rescinded or annulled) and, in each case, the principal amount of such indebtedness,
together with the principal amount of any other such indebtedness under which
there is a Payment Default or the maturity of which has been so accelerated,
aggregates $25,000,000 or its foreign currency equivalent or more and such
Payment Default is not cured or such acceleration is not annulled within 10
days after receipt of written notice (specifying such default and requiring the
Company to cause such Payment Default to be cured or cause such acceleration to
be rescinded or annulled and stating that such notice is a “Notice of Default”
hereunder) by the Company from the Trustee or by the Company and the Trustee
from any Holder of Notes; or

 

(f)  failure to pay a final,
nonappealable judgment or final, nonappealable judgments (other than any judgment
as to which a reputable insurance company has accepted full liability) for the
payment of money entered by a court or courts of competent jurisdiction against
the Company or any Material Subsidiaries of the Company, which judgments remain
unstayed, unbonded or undischarged for a period of 60 days, provided
that the aggregate amount of all such judgments exceeds $25,000,000 or its
foreign currency equivalent; or

 

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

 

(i)  commences a voluntary case,

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

8

 

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

 

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

 

(i) The Company defaults with respect to
its obligation to deliver when due all shares of Common Stock deliverable upon
conversion of the Notes which default continues for 5 Business Days.

 

SECTION 5.02.  Acceleration.  If an Event of Default (other than an Event
of Default with respect to the Company specified in clauses (g) and (h) of
Section 5.01) occurs and is continuing, then and in every such case, the
Trustee, by written notice to the Company, or the Holders of at least 25% in
aggregate principal amount of the then outstanding Notes, by written notice to
the Company and the Trustee, may declare the unpaid principal of, premium, if
any, and accrued and unpaid interest on all of the Notes to be due and
payable.  Upon such declaration, such
principal amount, premium, if any, and accrued and unpaid interest shall become
immediately due and payable, notwithstanding anything contained in this
Indenture or the Notes to the contrary. 
If any Event of Default with respect to the Company specified in clause (g) or
(h) of Section 5.01 occurs, all unpaid principal of, and premium, if
any, and accrued and unpaid interest on the Notes then outstanding shall become
automatically due and payable, without any declaration or other act on the part
of the Trustee or any Holder of Notes.

 

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

 

SECTION 5.03.  Other Remedies.  If an Event of Default occurs and is
continuing, the Trustee may pursue any available remedy by proceeding at law or
in equity to collect the payment of principal of or interest on the Notes or to
enforce the performance of any provision of the Notes or this Indenture.  The Trustee may maintain a proceeding even if
it does not possess any of the Notes or does not produce any of them in the
proceeding.  A delay or omission by the
Trustee or any Holder of a Note in exercising any right or remedy occurring
upon an Event of Default shall not impair the right or remedy or constitute a
waiver of or acquiescence in the Event of Default.  All remedies are cumulative to the extent
permitted by law.

 

9

 

SECTION 5.04.  Waiver of Past Defaults.  The Holders of a majority in aggregate
principal amount of the Notes then outstanding may, on behalf of the Holders of
all the Notes, waive an existing Default or Event of Default and its
consequences, except a Default or Event of Default in the payment of the
principal of, and premium, if any, or interest on the Notes (other than the
non-payment of principal of, and premium, if any, and interest on the Notes
which has become due solely by virtue of an acceleration which has been duly
rescinded as provided above), or in respect of a covenant or provision of this
Indenture which cannot be modified or amended without the consent of all
Holders of Notes.  When a Default or
Event of Default is waived, it is cured and stops continuing.  No waiver shall extend to any subsequent or
other Default or Event of Default or impair any right consequent thereon.

 

SECTION 5.05.  Control by Majority.  The Holders of a majority in aggregate
principal amount of the then outstanding Notes may direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on it. 
However, the Trustee may refuse to follow any direction that conflicts
with law or this Indenture that the Trustee determines may be unduly
prejudicial to the rights of other Holders of Notes or that may involve the
Trustee in personal liability; provided, however, that the
Trustee shall have no duty or obligation (subject to Section 6.02) to
ascertain whether or not such actions or forbearances are unduly prejudicial to
such Holders; provided  further, however that the Trustee
may take any other action the Trustee deems proper that is not inconsistent
with such directions.

 

SECTION 5.06.  Limitation on Suits.  A Holder of a Note may not pursue any remedy
with respect to this Indenture or the Notes unless:

 

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

 

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

 

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

 

(d)  the Trustee does not comply with
the request within 30 days after receipt of the request and the offer and, if
requested, the provision of indemnity; and

 

(e)  during such 30-day period the
Holders of a majority in aggregate principal amount of the then outstanding Notes
do not give the Trustee a direction inconsistent with the request.

 

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

 

SECTION 5.07.  Rights of Holders To Receive Payment.  Notwithstanding any other provision of this
Indenture, the right of any Holder of a Note to receive payment of principal,
premium, if any, and interest on the Note, on or after the 

 

10

 

respective due dates
expressed in the Note, or to bring suit for the enforcement of any such payment
on or after such respective dates, or to bring suit for the enforcement of the
right to convert the Note shall not be impaired or affected without the consent
of the Holder of a Note.

 

SECTION 5.08.  Collection Suit by Trustee.  If an Event of Default specified in Section 5.01(a),
(b) or (c)(i) occurs and is continuing, the Trustee may recover
judgment in its own name and as trustee of an express trust against the Company
for the whole amount of principal, premium, if any, and interest remaining
unpaid on the Notes and interest on overdue principal, premium, if any, and
interest and such further amount as shall be sufficient to cover the costs and,
to the extent lawful, expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel.

 

SECTION 5.09.  Trustee May File Proofs of Claim.  The Trustee may file such proofs of claim and
other papers or documents as may be necessary or advisable in order to have the
claims of the Trustee and the Holders of Notes allowed in any judicial
proceedings relative to the Company, its creditors or its property.  Nothing contained herein shall be deemed to
authorize the Trustee to authorize or consent to or accept or adopt on behalf
of any Holder of a Note any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any Holder in any such
proceeding.

 

SECTION 5.10.  Priorities.  Any money collected by the Trustee pursuant
to this Article shall be applied in the following order, at the date or
dates fixed by the Trustee and, in case of the distribution of such money on
account of principal (or premium, if any) or interest, upon presentation of the
Notes or coupons, or both, as the case may be, and the notation thereon of the
payment if only partially paid and upon surrender thereof if fully paid:

 

FIRST:  To the
payment of all amounts due the Trustee and any predecessor Trustee under Section 6.07;

 

SECOND:  To
the payment of the amounts then due and unpaid upon the Notes for principal
(and premium, if any) and interest, in respect of which or for the benefit of
which such money has been collected, ratably, without preference or priority of
any kind, according to the aggregate amounts due and payable on such Notes for
principal (and premium, if any) and interest, respectively; and

 

THIRD:  To the
payment of the remainder, if any, to the Company.

 

SECTION 5.11.  Undertaking for Costs.  In any suit for the enforcement of any right
or remedy under this Indenture or in any suit against the Trustee for any
action taken or omitted by it as a Trustee, a court in its discretion may
require the filing by any party litigant in the suit, other than the Trustee,
of an undertaking to pay the costs of the suit, and the court in its discretion
may assess reasonable costs, including 

 

11

 

reasonable attorneys fees,
against any party litigant in the suit, having due regard to the merits and
good faith of the claims or defenses made by the party litigant.  This Section does not apply to a suit by
the Trustee, a suit by a Holder pursuant to Section 5.07 or a suit by
Holders of more than 25% in principal amount of the then outstanding Notes.

 

SECTION 5.12. Restoration
of Rights and Remedies.  If the
Trustee or any Holder of a Note has instituted any proceeding to enforce any
right or remedy under this Indenture and such proceeding has been discontinued
or abandoned for any reason, or has been determined adversely to the Trustee or
to such Holder, then and in every such case, the Company, the Trustee and the
Holders of Notes shall, subject to any determination in such proceeding, be
restored severally and respectively to their former positions hereunder and
thereafter all rights and remedies of the Trustee and the Holders shall
continue as though no such proceeding had been instituted.

 

SECTION 5.13. Rights and Remedies
Cumulative.  Except as otherwise
provided with respect to the replacement or payment of mutilated, destroyed,
lost or stolen Securities or coupons in the last paragraph of Section 3.06,
no right or remedy herein conferred upon or reserved to the Trustee or to the
Holders of Notes is intended to be exclusive of any other right or remedy, and
every right and remedy shall, to the extent permitted by law, be cumulative and
in addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. 
The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any
other appropriate right or remedy.

 

SECTION 5.14. Waiver of Usury, Stay
or Extension Laws.  The Company
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any usury, stay or extension law wherever enacted, now
or at any time hereafter in force, which may affect the covenants or the
performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not hinder, delay or impede the execution of
any power herein granted to the Trustee, but will suffer and permit the
execution of every such power as though no such law had been enacted.”

 

ARTICLE III

 

CONSOLIDATION, MERGER, SALE, LEASE OR CONVEYANCE

 

SECTION 3.1.  Amendments to Article Eight.  Article Eight of the Indenture is
amended in its entirety with respect to the Notes as follows:

 

“SECTION 8.01.  When the Company May Merge, Etc.  The Company may not, in a single transaction
or series of related transactions, consolidate or merge with or into or effect
a share exchange with (whether or not the Company is the surviving
corporation), or sell, assign, transfer, lease, convey or otherwise dispose of all
or substantially all of its properties or assets as an entirety or
substantially as an entirety to, any Person unless:

 

12

 

(a)  either

 

(i)  the Company shall be the surviving or
continuing corporation, or

 

(ii)  the Person formed by or surviving any
such consolidation, merger or share exchange (if other than the Company) or the
Person which acquires by sale, assignment, transfer, lease, conveyance or other
disposition the properties and assets of the Company substantially as an
entirety:

 

(1)  shall be a corporation organized and
validly existing under the laws of the United States or any State thereof or
the District of Columbia and

 

(2)  shall expressly assume, by supplemental
indenture in form reasonably satisfactory to the Trustee, executed and
delivered to the Trustee, the due and punctual payment of the principal of, and
interest, and premium, if any, on all of the Notes and the performance of every
covenant of the Notes and this Indenture on the part of the Company to be
performed or observed, including, without limitation, modifications to rights
of Holders to cause the repurchase of Notes upon a Designated Event in
accordance with Section 10.06 and conversion rights in accordance with Section 15.06
to the extent required by such Sections;

 

(b)  immediately after giving effect to
such transaction, no Default and no Event of Default shall have occurred and be
continuing; and

 

(c)  the Company or such successor
Person shall have delivered to the Trustee an Officers’ Certificate and an
Opinion of Counsel each stating that such consolidation, merger, share
exchange, conveyance, transfer or lease and, if a supplemental indenture is
required in connection with such transaction, such supplemental indenture, comply
with this provision of this Indenture and that all conditions precedent in this
Indenture relating to such transaction have been satisfied.

 

For purposes of this Section 8.01, the
transfer (by lease, assignment, sale or otherwise, in a single transaction or
series of transactions) of all or substantially all of the properties or assets
of one or more Subsidiaries of the Company, the Capital Stock of which
individually or in the aggregate constitutes all or substantially all of the
properties and assets of the Company, shall be deemed to be the transfer of all
or substantially all of the properties and assets of the Company.

 

SECTION 8.02.  Successor Corporation Substituted.  Upon any such consolidation, merger, share
exchange, sale, assignment, conveyance, lease, transfer or other disposition in
accordance with Section 8.01, the successor Person formed by such
consolidation or share exchange or into which the Company is merged or to which
such sale, assignment, conveyance, lease, transfer or other disposition is made
will succeed to, and be substituted for, and may exercise every right and power
of, the Company under this Indenture with the same effect as if such successor
had been named as the Company 

 

13

 

herein, and thereafter
(except in the case of a lease) the predecessor corporation will be relieved of
all further obligations and covenants under this Indenture and the Notes.

 

SECTION 8.03.  Purchase Option on Change in Control.  This Article Eight does not affect the
obligations of the Company (including without limitation any successor to the
Company) under Section 10.06.”

 

ARTICLE IV

 

SUPPLEMENTAL INDENTURES

 

SECTION 4.1.  Amendments to Article Nine.  (a)  Section 9.01 is hereby amended
with respect to the Notes by deleting the “.” from the end of clause (10) thereof
and substituting “; or” in its place and by adding the following to the end
thereof:

 

“(11) 
to provide for the assumption of our obligations to Holders of Notes in
the Indenture as supplemented by Article III of the Second Supplemental
Indenture; or

 

(12) 
to provide for conversion rights or repurchase rights of Holders of
Notes in the event of consolidation, merger, share exchange or sale of all or
substantially all of the assets of the Company as required to comply with Section 8.01
or 15.06; or

 

(13) 
to reduce the Conversion Price; or

 

(14) 
to add guarantees with respect to the Notes; or

 

(15) 
to comply with the requirements of the Commission in order to effect or
maintain the qualification of this Indenture under the TIA.”

 

(b)  Section 9.02(1) is hereby
amended in its entirety with respect to the Notes to read as follows:  “(1)   
change the Stated Maturity of the principal of (or premium, if any, on)
or any installment of principal of or interest on, including Defaulted
Interest, any Note; or reduce the principal amount thereof or the rate or
amount of interest thereon or any Additional Amounts payable in respect
thereof, or any premium payable upon the redemption thereof or alter the
provisions of this Indenture with respect to the purchase of the Notes at the
option of the Holders upon a Designated Event in a manner adverse to the
Holders thereof, or change any obligation of the Company to pay Additional
Amounts pursuant to Section 10.05 (except as contemplated by Section 8.01(1) and
permitted by Section 9.01(1)), or reduce the amount of the principal of an
Original Issue Discount Security that would be due and payable upon a
declaration of acceleration of the Maturity thereof pursuant to Section 5.02
or the amount thereof provable in bankruptcy pursuant to Section 5.04, or
adversely affect any right of repayment at the option of the Holder of any
Note, or change any Place of Payment where, or the currency or currencies,
currency unit or units or composite currency or currencies in which, any Note
or any premium or the interest thereon is payable, or impair the right to
institute suit for the enforcement of any payment on or after the Stated
Maturity thereof (or, in the case of purchase at the option of the Holder, on
or after the Designated Event Purchase Date), or”.

 

14

 

(c) Section 9.02(4) is hereby
amended with respect to the Notes by deleting the “.” from the end of such
clause and substituting a “, or” in its place and by adding the following to
the end thereof:

 

“(5)  waive a Default or Event of
Default in the payment of principal of or premium, if any, or interest on the
Notes (except a rescission of acceleration of the Notes by the Holders of at
least a majority in aggregate principal amount of the Notes then outstanding
and a waiver of the payment default that resulted from such acceleration) or of
a Designated Event Payment; or

 

(6)  make any change in the provisions
of this Indenture relating to waivers of past Defaults or Events of Default or
the rights of Holders of Notes to receive payments of principal of, premium, if
any, or interest on the Notes; or

 

(7)  make any adverse change to the
abilities of Holders of Notes to enforce their rights under this Indenture; or

 

(8)  except as permitted by this
Indenture (including Section 9.01(9)), increase the Conversion Price, or
modify the provisions of this Indenture relating to conversion of the Notes in
a manner adverse to the Holders thereof or otherwise impair the right of
Holders to convert their Notes, upon the terms established pursuant to or in
accordance with the provisions of this Indenture.”

 

ARTICLE
V

 

PURCHASE AT OPTION OF
HOLDERS UPON A DESIGNATED EVENT;

LIMITATION ON LIENS

 

SECTION 5.1. 
Amendment to Article Ten. 
Article Ten is amended by adding to the end the following new
Sections 10.06 through Section 10.13, in each case with respect to the
Notes to read as follows:

 

“SECTION 10.06.  Purchase of Notes at Option of the Holders
upon a Designated Event.  (a) 
Following a Designated Event, the Company shall notify the Holders of Notes in
writing of such occurrence and shall make an offer (the “Designated Event
Offer”) to repurchase all Notes then outstanding at a repurchase price in
cash (the “Designated Event Payment”) equal to 100% of the principal
amount thereof, plus (subject to the following sentence) accrued and unpaid
interest to, but excluding, the Designated Event Purchase Date (as defined
below).  If such Designated Event
Purchase Date is after a Regular Record Date or a Special Record Date but on or
prior to the corresponding Interest Payment Date or a Defaulted Interest
payment date, however, then the Company shall pay the interest payable on such
date to the Person in whose name the Note is registered at the close of
business on the relevant Regular Record Date or Special Record Date.

 

(b)  Notice of a Designated Event
shall be mailed by or at the direction of the Company to the Holders of Notes
as specified in Section 10.07. 
During the period specified in such notice, Holders of Notes may elect
to tender their Notes in whole or in 

 

15

 

part in integral multiples
of $1,000 in exchange for the Designated Event Payment.  Payment shall be made by the Company in
respect of Notes properly tendered pursuant to this Section 10.06 on a
Business Day specified by the Company (the “Designated Event Purchase Date”)
which shall be no earlier than 20 Business Days and no later than
30 Business Days after the date of the notice given pursuant to Section 10.07.

 

SECTION 10.07.  Notice of Designated Event; Designated
Event Purchase Notice.

 

(a)  Within 30 days after the occurrence
of a Designated Event, the Company, or, at the written request and expense of
the Company within 30 days after such occurrence, the Trustee, shall give to
all Holders notice of the occurrence of the Designated Event and of the
purchase right set forth herein arising as a result thereof.  The Company shall also deliver a copy of such
notice of a purchase right to the Trustee. 
The notice shall include a form of Designated Event Purchase Notice to
be completed by the Holder and shall state:

 

(1)  briefly, the events causing a
Designated Event and the date of such Designated Event;

 

(2)  the date by which the Designated
Event Purchase Notice pursuant to this Section 10.07 must be given;

 

(3)  the Designated Event Purchase Date;

 

(4)  the Designated Event Payment;

 

(5)  the name and address of the Paying
Agent and the Conversion Agent;

 

(6)  that Notes as to which a Designated
Event Purchase Notice has been given may be converted pursuant to the Indenture
only if the Designated Event Purchase Notice has been withdrawn in accordance
with the terms of this Indenture;

 

(7)  that Notes must be surrendered to
the Paying Agent to collect payment;

 

(8)  that the Designated Event Payment
for any Note as to which a Designated Event Purchase Notice has been duly given
and not withdrawn will be paid promptly following the later of the Designated
Event Purchase Date and the time of surrender of such Note as described in (7) above;

 

(9)  briefly, the procedures the Holder
must follow to exercise rights under Section 10.06;

 

(10)  briefly, the conversion rights of
the Notes, including the Conversion Rate and any adjustments thereto,
including, if such Designated Event constitutes a Change in Control described
in clause (b) or (c) in the definition thereof, 

 

16

 

whether any Additional Shares (as defined in Section 15.01)
will be issued by the Company to Holders of Notes who convert their Notes in
connection with such Change in Control;

 

(11) 
the procedures for withdrawing a Designated Event Purchase Notice;

 

(12) 
the CUSIP number of the Notes;

 

(13) 
that, unless the Company defaults in making the Designated Event
Payment, any Note accepted for purchase pursuant to the Designated Event Offer
shall cease to accrue interest on the Designated Event Purchase Date and no
further interest shall accrue on or after such date; and

 

(14) 
that in the case of a Designated Event Purchase Date that occurs after a
Regular Record Date or Special Record Date and on or prior to the corresponding
Interest Payment Date or Defaulted Interest payment date, the interest due on
such date shall be paid to the Holder of such Note at the close of business on
the relevant Regular Record Date or Special Record Date.

 

(b)  A Holder may exercise its rights
specified in Section 10.06 hereof upon delivery of a written notice of
purchase (a “Designated Event Purchase Notice”) to the Paying Agent
prior to the Designated Event Purchase Date, stating:

 

(1)  the certificate number, if any, of
each Note, if any, which the Holder will deliver to be purchased;

 

(2)  the portion of the principal amount
of the Note which the Holder will deliver to be purchased, which portion must
be $1,000 or any whole multiple thereof; and

 

(3)  that such Note shall be purchased
pursuant to the terms and conditions specified on the reverse side of the Notes
and in this Indenture;

 

provided, however, that if
the Notes are not in certificated form, a Holder’s Designated Event Purchase
Notice must comply with the applicable Depositary procedures.

 

The delivery of such Note to the Paying Agent
prior to the Designated Event Purchase Date (together with all necessary
endorsements) at the offices of the Paying Agent shall be a condition to the
receipt by the Holder of the Designated Event Payment therefor; provided,
however, that such Designated Event Payment shall be so paid only if the
Note so delivered to the Paying Agent shall conform in all respects to the
description thereof set forth in the related Designated Event Purchase Notice.

 

The Company shall purchase from the Holder
thereof, pursuant to this Section 10.07, a portion of a Note so delivered
for purchase if the principal amount of such portion is $1,000 or an integral
multiple of $1,000. Provisions of this Indenture that 

 

17

 

apply to the purchase of all
of a Note also apply to the purchase of such portion of such Note.

 

Any purchase by the Company contemplated
pursuant to the provisions of this Section 10.07 shall be consummated by
the delivery of the consideration to be received by the Holder promptly
following the later of the Designated Event Purchase Date and the time of
delivery of the Note to the Paying Agent in accordance with this Section 10.07.

 

Notwithstanding anything herein to the
contrary, any Holder delivering to the Paying Agent the Designated Event
Purchase Notice contemplated by this Section 10.07(b) shall have the
right to withdraw such Designated Event Purchase Notice at any time prior to
the close of business on the Business Day immediately preceding the Designated
Event Purchase Date by delivery of a written notice of withdrawal to the Paying
Agent in accordance with Section 10.08.

 

The Paying Agent shall promptly notify the
Company of the receipt by it of any Designated Event Purchase Notice or written
withdrawal thereof.

 

SECTION 10.08.  Effect of Designated Event Purchase
Notice.  Upon receipt by the Paying
Agent of the Designated Event Purchase Notice specified in Section 10.07,
the Holder of the Note in respect of which such Designated Event Purchase
Notice was given shall (unless such Designated Event Purchase Notice is
withdrawn as specified in the following two paragraphs) thereafter be entitled
to receive solely the Designated Event Payment with respect to such Note.  Such payment shall be paid to such Holder,
subject to receipt of consideration for the Notes by the Paying Agent, promptly
following the later of (x) the Designated Event Purchase Date with respect
to such Note (provided the conditions in Section 10.07, as the case may
be, have been satisfied) and (y) the time of delivery of such Note to the
Paying Agent by the Holder thereof in the manner required by Section 10.07,
as the case may be.  Notes in respect of
which a Designated Event Purchase Notice has been given by the Holder thereof
may not be converted on or after the date of the delivery of such Designated
Event Purchase Notice unless such Designated Event Purchase Notice has first
been validly withdrawn as specified in the following two paragraphs.

 

A Designated Event Purchase Notice may be
withdrawn by means of a written notice of withdrawal delivered to the office of
the Paying Agent in accordance with the Designated Event Purchase Notice at any
time prior to the close of business on the Business Day immediately preceding
the Designated Event Purchase Date specifying:

 

(a)  the certificate number, if any, of
each Note in respect of which such notice of withdrawal is being submitted;

 

(b)  the principal amount of the Note
with respect to which such notice of withdrawal is being submitted; and

 

18

 

(c)  the principal amount, if any, of
each such Note which remains subject to the original Designated Event Purchase
Notice and which has been or will be delivered for purchase by the Company;

 

provided, however, that if
the Notes are not in certificated form, a Holder’s notice of withdrawal must
comply with the applicable Depositary procedures.

 

There shall be no purchase of any Notes
pursuant to Section 10.06 if there has occurred (prior to, on or after, as
the case may be, the giving by the Holders of such Notes of the required
Designated Event Purchase Notice) and is continuing an Event of Default (other
than a default in the payment of the Designated Event Payment with respect to
such Notes).  The Paying Agent will promptly
return to the respective Holders thereof any Notes (x) with respect to
which a Designated Event Purchase Notice has been withdrawn in compliance with
this Indenture, or (y) held by it during the continuance of an Event of
Default (other than a default in the payment of the Designated Event Payment
with respect to such Notes) in which case, upon such return, the Designated
Event Purchase Notice with respect thereto shall be deemed to have been
withdrawn.

 

SECTION 10.09.  Deposit of Designated Event Payment.  Prior to 11:00 a.m. (New York City
time) on the Designated Event Purchase Date, the Company shall deposit with the
Trustee or with the Paying Agent an amount of cash (in immediately available
funds if deposited on such Business Day) sufficient to pay the aggregate
Designated Event Payment of all the Notes or portions thereof which are to be
purchased as of the Designated Event Purchase Date.

 

If the Trustee or other Paying Agent
appointed by the Company holds cash sufficient to pay the aggregate Designated
Event Payment of all the Notes or portions thereof that are to be purchased as
of the Designated Event Purchase Date, on or after the Designated Event
Purchase Date (i) such Notes will cease to be outstanding, (ii) interest
on such Notes will cease to accrue and (iii) all other rights of the
Holders of such Notes will terminate, whether or not book-entry transfer of the
Notes has been made or the Notes have been delivered to the Trustee or Paying
Agent, other than the right to receive the Designated Event Payment upon
delivery of the Notes.

 

SECTION 10.10.  Notes Purchased in Part.  Any Note which is to be purchased only in
part shall be surrendered at the office of the Paying Agent (with, if the
Company or the Trustee so requires, due endorsement by, or a written instrument
of transfer in form satisfactory to the Company and the Trustee duly executed
by, the Holder thereof or such Holder’s attorney duly authorized in writing)
and the Company shall execute and the Trustee shall authenticate and deliver to
the Holder of such Note, without service charge, a new Note or Notes, of any
authorized denomination as requested by such Holder in aggregate principal
amount equal to, and in exchange for, the portion of the principal amount of
the Note so surrendered which is not purchased.

 

SECTION 10.11.  Covenant to Comply with Securities Laws
upon Purchase of Notes.  In
connection with any offer to purchase or purchase of Notes under Section 10.06
hereof (provided that such offer or purchase constitutes an “issuer tender

 

19

 

offer” for purposes of Rule 13e-4
(which term, as used herein, includes any successor provision thereto) under
the Exchange Act at the time of such offer or purchase), the Company shall (i) comply
with Rule 13e-4, Rule 14e-1 and any other tender offer rules under
the Exchange Act which may then be applicable, (ii) file the related
Schedule TO (or any successor schedule, form or report) or any other schedule
required under the Exchange Act, and (iii) otherwise comply with all
applicable federal and state securities laws so as to permit the rights and
obligations under Section 10.06 to be exercised in the time and in the
manner specified in Section 10.06 and 10.07.

 

SECTION 10.12.  Repayment to the Company.  The Trustee and the Paying Agent shall return
to the Company any cash or other consideration that remains unclaimed as
provided in the Notes, together with interest, if any, thereon, held by them
for the payment of the Designated Event Payment; provided, however,
that to the extent that the aggregate amount of cash deposited by the Company
pursuant to Section 10.09 exceeds the aggregate Designated Event Payment
of the Notes or portions thereof which the Company is obligated to purchase as
of the Designated Event Purchase Date then promptly after the Business Day
following the Designated Event Purchase Date the Trustee shall return any such
excess to the Company together with interest, if any, thereon.

 

SECTION 10.13.  Limitation on Liens.  The Company will not, directly or indirectly,
incur or suffer to exist any Lien (other than existing Liens) securing
Specified Indebtedness of any nature whatsoever on any of its properties or
assets, whether owned at the issue date of the Notes or thereafter acquired,
without making effective provision for securing the Notes equally and ratably
with (or, if the obligation to be secured by the Lien is subordinated in right
of payment to the Notes, prior to) the obligations so secured for so long as
such obligations are so secured.  The
Lien, if granted, to secure the Notes may also secure obligations in addition
to Specified Indebtedness.  Any Lien
created to secure the Notes pursuant to this Section 10.13 may provide by
its terms that such Lien will be automatically and unconditionally released and
discharged upon the full and unconditional release and discharge of the Lien
securing the Specified Indebtedness and that the Holders of some or all of such
Specified Indebtedness may exclusively control the disposition of property
subject to such Lien.

 

The foregoing restrictions in this Section 10.13
shall not apply to (a) Liens to secure Acquired Debt; provided, however,
that (i) such Lien attaches to the acquired property prior to the time of
the acquisition of such property and (ii) such Lien does not extend to or
cover any other property; and (b) Liens to secure indebtedness incurred to
refinance, in whole or in part, debt secured by any Lien referred to in the
foregoing clause (a) or this clause (b) so long as such Lien does not
extend to any other property (other than improvements and accessions to the
original property) and the principal amount of indebtedness so secured is not
increased.”

 

20

 

ARTICLE VI

 

COMPANY REPORTS

 

SECTION 6.1.  Amendments to Article Seven.  Section 7.03 of the Indenture is amended
in its entirety with respect to the Notes as follows:

 

“SECTION 7.03.  Reports by Company.  (a) For so long as the indentures
governing any of the Company’s outstanding 6.0% Convertible Subordinated Notes
due 2010, 2.875% Convertible Senior Notes due 2010, 10.0% Convertible Senior
Notes due 2011, 5.25% Convertible Senior Notes due 2011, 3.5% Convertible
Senior Notes due 2012 or 9% Convertible Senior Discount Notes due 2013 contain
a provision with respect to the Company’s obligation to file with the Trustee
certain information, documents and reports that are substantially identical to
the requirements set forth below in this Section 7.03(a), the Company
will:

 

(1) file with the
Trustee, within 15 days after the Company is required to file the same with the
Commission, copies of the annual reports and of the information, documents, and
other reports (or copies of such portions of any of the foregoing as the
Commission may from time to time by rules and regulations prescribe) which
the Company may be required to file with the Commission pursuant to Section 13
or Section 15(d) of the Exchange Act; or, if the Company is not
required to file information, documents or reports pursuant to either of such
Sections of the Exchange Act, then it will file with the Trustee and the
Commission, in accordance with rules and regulations prescribed from time
to time by the Commission, such of the supplementary and periodic information,
documents and reports which may be required pursuant to Section 13 of the
Exchange Act in respect of a security listed and registered on a national
securities exchange as may be prescribed from time to time in such rules and
regulations;

 

(2) file with the
Trustee and the Commission, in accordance with the rules and regulations
prescribed from time to time by the Commission, such additional information,
documents and reports with respect to compliance by the Company with the
conditions and covenants of this Indenture as may be required from time to time
by such rules and regulations; and

 

(3) transmit by mail to
the Holders of Notes, within 30 days after the filing thereof with the Trustee,
in the manner and to the extent provided in Section 313(c) of the
Trust Indenture Act, such summaries of any information, documents and reports
required to be filed by the Company pursuant to paragraphs (1) and (2) of
this Section as may be required by rules and regulations prescribed
from time to time by the Commission.

 

(b) From and after the
date on which Section 7.03(a) is no longer applicable to the Company
with respect to the Notes, the Company shall file with the Trustee and the
Commission such information, documents and other reports, and such summaries
thereof, as may be required pursuant to the Trust Indenture Act at the times
and in the manner provided pursuant to the Trust Indenture Act; provided that
any such information, documents or reports required to be filed with the
Commission pursuant to Section 13 or

 

21

 

15(d) of the Exchange
Act shall be filed with the Trustee within 15 days after the same is actually
filed with the Commission.  Delivery of
such reports, information and documents to the Trustee is for informational
purposes only and the Trustee’s receipt of such shall not constitute
constructive notice of any information contained therein or determinable from
information contained therein, including the Company’s compliance with any of
its covenants hereunder (as to which the Trustee is entitled to rely
exclusively on Officers’ Certificates).”

 

ARTICLE VII

 

CONVERSION OF SECURITIES

 

SECTION 7.1.  Applicability of Conversion Provisions.  Pursuant to Section 3.01(24) of the
Indenture, the Notes will be convertible in accordance with the provisions of,
and pursuant to, Article Fifteen of the Indenture, as amended hereby, and
the definitive form of the Notes; provided, however, that, prior
to any conversion, any applicable governmental consents have been received by
the Company or the Holder.

 

SECTION 7.2.  Amendments to Article Fifteen.  Article Fifteen is amended in its
entirety with respect to the Notes to read as follows:

 

“SECTION 15.01.  Right To Convert.  Subject to and upon compliance with the
provisions of this Indenture, each Holder of Notes shall have the right (upon
delivery to the Company of the HSR Certificate (a form of which is attached to
the Notes)), at his or her option, at any time on or before the close of
business on the Stated Maturity date (except that, with respect to any Note or
portion thereof subject to a duly completed election for repurchase, such right
shall terminate at the close of business on the Business Day immediately
preceding the Designated Event Purchase Date (unless the Company defaults in
the payment due upon repurchase or such Holder elects to withdraw the
submission of such election to repurchase in accordance with Section 10.08))
to convert the principal amount of any Note held by such Holder, or any portion
of such principal amount which is $1,000 or an integral multiple thereof, into
that number of fully paid and non-assessable shares of Common Stock (as such
shares shall then be constituted) obtained by dividing the principal amount of
the Note or portion thereof to be converted by the Conversion Price in effect
at such time, by surrender of the Note so to be converted in whole or in part
in the manner provided in Section 15.02. 
A Holder of Notes is not entitled to any rights of a holder of Common
Stock until such Holder of Notes has converted his or her Notes to Common
Stock, and then only to the extent such Notes are deemed to have been converted
to Common Stock under this Article Fifteen.

 

If a Change in Control described in clause (b) or
(c) of the definition thereof occurs, then the Conversion Rate per $1,000
principal amount of Notes otherwise in effect in respect of Notes for which a
conversion notice is received by the Conversion Agent during the period
beginning 10 Trading Days before the anticipated Effective Date (as defined
below) of the Change in Control and ending at the close of business on the
Trading Day immediately preceding the related Designated Event Purchase Date
shall be increased by the amount (the “Additional Shares”), if any,
determined by reference to the 

 

22

 

table below, based on the
Effective Date of such Change in Control and the Stock Price of such Change in
Control; provided, however,
that the Company shall not be required to pay the Additional Shares if a Change
in Control described in clause (c) of the definition of Change in Control
occurs and at least 90% of the consideration (excluding cash payments for
fractional shares) in the transaction or transactions constituting the Change
in Control consists of shares of common stock that are, or upon issuance will
be, traded on the New York Stock Exchange or the NYSE Alternext or approved for
trading on a Nasdaq market and as a result of such transaction or transactions
the Notes become convertible solely into such common stock and other
consideration payable in such transaction or transactions.  The Company will mail a notice to Holders and
issue a press release no later than 20 Business Days prior to the
anticipated Effective Date of such anticipated Change in Control.

 

The number of Additional Shares will be
determined by reference to the table below and is based on the date on which
the Change in Control becomes effective (the “Effective Date”) and the
price (the “Stock Price”) paid per share of Common Stock in the
transaction constituting the Change in Control. 
If holders of the Common Stock receive only cash in the transaction
constituting the Change in Control, the Stock Price shall be the cash amount
paid per share of the Common Stock. 
Otherwise, the Stock Price shall be equal to the average of the Closing
Sale Price over the five Trading Day period ending on the Trading Day
immediately preceding the Effective Date.

 

The following table sets forth the Additional
Shares, if any, issuable upon conversion of each $1,000 principal amount of
Notes in connection with such a Change in Control for each Stock Price and
Effective Date set forth below.

 

Additional Shares

 

	
   

  	
   

  	
  Effective Date

  	
   

  
	
  Stock
  Price on 

  Effective Date

  	
   

  	
  On or before

  March 15, 2010

  	
   

  	
  March 15, 2011

  	
   

  	
  March 15, 2012

  	
   

  	
  March 15, 2013

  	
   

  	
  March 15, 2014

  	
   

  	
  March 15, 2015

  	
   

  
	
  $1.33

  	
   

  	
  196.3

  	
   

  	
  196.3

  	
   

  	
  196.3

  	
   

  	
  196.3

  	
   

  	
  196.3

  	
   

  	
  196.3

  	
   

  
	
  $1.50

  	
   

  	
  167.4

  	
   

  	
  164.1

  	
   

  	
  159.3

  	
   

  	
  151.7

  	
   

  	
  138.3

  	
   

  	
  111.1

  	
   

  
	
  $1.75

  	
   

  	
  135.1

  	
   

  	
  128.1

  	
   

  	
  118.0

  	
   

  	
  101.9

  	
   

  	
  73.5

  	
   

  	
  15.9

  	
   

  
	
  $2.00

  	
   

  	
  110.8

  	
   

  	
  101.1

  	
   

  	
  87.0

  	
   

  	
  64.5

  	
   

  	
  24.8

  	
   

  	
  0.0

  	
   

  
	
  $2.25

  	
   

  	
  92.0

  	
   

  	
  80.2

  	
   

  	
  62.9

  	
   

  	
  35.4

  	
   

  	
  0.0

  	
   

  	
  0.0

  	
   

  
	
  $2.50

  	
   

  	
  76.9

  	
   

  	
  63.4

  	
   

  	
  43.6

  	
   

  	
  12.1

  	
   

  	
  0.0

  	
   

  	
  0.0

  	
   

  
	
  $2.75

  	
   

  	
  64.5

  	
   

  	
  49.6

  	
   

  	
  27.8

  	
   

  	
  0.0

  	
   

  	
  0.0

  	
   

  	
  0.0

  	
   

  
	
  $3.00

  	
   

  	
  54.3

  	
   

  	
  38.2

  	
   

  	
  14.7

  	
   

  	
  0.0

  	
   

  	
  0.0

  	
   

  	
  0.0

  	
   

  
	
  $3.50

  	
   

  	
  38.1

  	
   

  	
  20.2

  	
   

  	
  0.0

  	
   

  	
  0.0

  	
   

  	
  0.0

  	
   

  	
  0.0

  	
   

  

 

23

 

	
  $4.00

  	
   

  	
  26.0

  	
   

  	
  6.7

  	
   

  	
  0.0

  	
   

  	
  0.0

  	
   

  	
  0.0

  	
   

  	
  0.0

  	
   

  
	
  $4.50

  	
   

  	
  16.5

  	
   

  	
  0.0

  	
   

  	
  0.0

  	
   

  	
  0.0

  	
   

  	
  0.0

  	
   

  	
  0.0

  	
   

  
	
  $5.00

  	
   

  	
  9.0

  	
   

  	
  0.0

  	
   

  	
  0.0

  	
   

  	
  0.0

  	
   

  	
  0.0

  	
   

  	
  0.0

  	
   

  

 

If actual Stock Prices on the Effective Date
are not set forth on the table above and:

 

(i)  if the actual Stock Price on the Effective
Date is between two Stock Prices on the table or the actual Effective Date is
between two Effective Dates on the table, the number of Additional Shares will
be determined by a straight-line interpolation between the adjustment amounts
set forth for such two Stock Prices or such two Effective Dates on the table
based on a 360-day year, as applicable;

 

(ii)  if the Stock Price on the Effective Date
equals or exceeds $5.00 per share (subject to adjustment as described below),
no Additional Shares will be issued upon conversion; and

 

(iii)  if the Stock Price on the Effective Date
is less than $1.33 per share (subject to adjustment as described below), no
Additional Shares will be issued upon conversion.

 

The Stock Prices set forth in the first
column of the table above will be adjusted as of any date on which the
Conversion Rate is adjusted.  The
adjusted Stock Prices will equal the Stock Prices applicable immediately prior
to such adjustment multiplied by a fraction, the numerator of which is the
Conversion Rate immediately prior to the adjustment giving rise to the Stock
Price adjustment and the denominator of which is the Conversion Rate as so
adjusted.  The number of Additional
Shares set forth in the table above will be adjusted in the same manner as the
Conversion Rate as set forth in Section 15.05 hereof.

 

Notwithstanding the foregoing, in no event
will the Conversion Rate exceed 833.333 shares of Common Stock per $1,000
principal amount of Notes, subject to adjustment in the manner set forth in Section 15.05
hereof.

 

SECTION 15.02.  Exercise of Conversion Privilege; Issuance
of Common Stock on Conversion; No Adjustment for Interest or Dividends.  To exercise, in whole or in part, the
conversion privilege with respect to any Note, the Holder of such Note shall
surrender such Note, duly endorsed, at an office or agency maintained by the
Company pursuant to Section 10.02, accompanied by the funds, if any,
required by the last paragraph of this Section 15.02, and shall give
written notice of conversion in the form provided on the Notes (or such other
notice which is acceptable to the Company) to such office or agency that the
Holder of Notes elects to convert such Note or such portion thereof specified
in said notice.  Such notice shall also
state the name or names (with 

 

24

 

address or addresses) in
which the shares of Common Stock which are issuable on such conversion shall be
issued, and shall be accompanied by transfer taxes, if required pursuant to Section 15.07.  If the Notes are not in certificated form, the
Holders may exercise their right of conversion by complying with the applicable
Depositary procedures.  Each such Note
surrendered for conversion shall, unless the shares issuable on conversion are
to be issued in the same name as the registration of such Note, be duly
endorsed by, or be accompanied by instruments of transfer in form satisfactory
to the Company duly executed by, the Holder of Notes or his or her duly
authorized attorney.  The Holder of such
Notes will not be required to pay any tax or duty which may be payable in
respect of the issue or delivery of Common Stock on conversion, but will be
required to pay any tax or duty which may be payable in respect of any transfer
involved in the issue or delivery of Common Stock in a name other than the same
name as the registration of such Note.

 

As promptly as practicable after satisfaction
of the requirements for conversion set forth above, the Company shall issue the
number of full shares of Common Stock (including any full shares as a result of
rounding fractional shares up to a full number of shares pursuant to Section 15.03)
issuable upon the conversion of such Note or portion thereof in accordance with
the provisions of this Article Fifteen and a check or cash (which payment,
if any, shall be paid no later than three Business Days after satisfaction of
the requirements for conversion set forth above) in respect of any fractional
interest in respect of a share of Common Stock, pursuant to Section 15.03.  Shares of Common Stock will not be issued or
delivered unless all taxes and duties, if any, payable by the Holder have been
paid.  In case any Note of a denomination
of an integral multiple greater than $1,000 is surrendered for partial
conversion, and subject to Section 3.03, the Company shall execute, and
the Trustee shall authenticate and deliver to the Holder of the Note so
surrendered, without charge to him or her, a new Note or Notes in authorized
denominations in an aggregate principal amount equal to the unconverted portion
of the surrendered Note.

 

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

 

Any Note or portion thereof surrendered for
conversion during the period from the close of business on the Regular Record
Date for any interest payment through the close of business on the last Trading
Day immediately preceding such Interest Payment Date shall (unless the Company
has specified a Designated Event Purchase Date during such period) be
accompanied by payment, in funds acceptable to the Company, of an amount equal
to the interest otherwise payable on such Interest Payment Date on the 

 

25

 

principal amount being
converted; provided, however, that such payment may be reduced by
the amount of any existing payment default in respect of such Notes.  An amount equal to such payment shall be paid
by the Company on such Interest Payment Date to the Holder of such Note at the
close of business on such Regular Record Date. 
Except as provided above in this Section 15.02, no adjustment shall
be made for interest accrued on any Note converted or for dividends on any
shares issued upon the conversion of such Note as provided in this Article Fifteen.

 

SECTION 15.03.  Cash Payments in Lieu of Fractional
Shares.  If more than one Note shall
be surrendered for conversion at one time by the same Holder, the number of
full shares which shall be issuable upon conversion shall be computed on the
basis of the aggregate principal amount of the Notes (or specified portions
thereof to the extent permitted hereby) so surrendered for conversion.  In respect of any fractional share of stock
that otherwise would be issuable upon the conversion of any Note or Notes, the
Company shall make an adjustment therefor in cash based upon the current market
price thereof or the Company shall, at its option, round such fraction up to
the nearest whole number of shares for issuance upon conversion.  For purposes of this Section 15.03, the “current
market price” of a share of Common Stock shall be the Closing Sale Price on the
last Trading Day immediately preceding the day on which the Notes (or specified
portions thereof) are deemed to have been converted.

 

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

 

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

 

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

 

(i)  the numerator of which shall be the sum of
the number of shares of Common Stock outstanding at the close of business on
the date fixed for the determination of stockholders entitled to receive such
dividend or other distribution plus the total number of shares of Common Stock
constituting such dividend or other distribution; and

 

(ii)  the denominator of which shall be the
number of shares of Common Stock outstanding at the close of business on the
date fixed for such determination,

 

26

 

such increase to become effective immediately after
the opening of business on the day following the date fixed for such
determination.  For the purpose of this
paragraph (a), the number of shares of Common Stock at any time outstanding
shall not include shares held in the treasury of the Company.  The Company will not pay any dividend or make
any distribution on shares of Common Stock held in the treasury of the Company.  If any dividend or distribution of the type described
in this Section 15.05 is declared but not so paid or made, the Conversion
Rate shall again be adjusted to the Conversion Rate that would then be in
effect if such dividend or distribution had not been declared.

 

(b) 
In case the Company shall issue rights or warrants to all holders of its
outstanding shares of Common Stock entitling them to subscribe for or purchase
shares of Common Stock at a price per share less than the Current Market Price
on the date fixed for determination of stockholders entitled to receive such
rights or warrants, the Conversion Rate shall be increased so that the same
shall equal the rate determined by multiplying the Conversion Rate in effect
immediately prior to the date fixed for determination of stockholders entitled to
receive such rights or warrants by a fraction,

 

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

 

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

 

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

 

27

 

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

 

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

 

(d) 
In case the Company shall pay a cash dividend to all holders of its Common
Stock or, by dividend or otherwise, distribute to all holders of its Common
Stock shares of any class of Capital Stock of the Company or evidences of its
indebtedness or assets, including cash and securities (any such distribution, a
“Distribution”; provided, however, that the term “Distribution”
shall not include, and this Section 15.05(d) shall not apply to, (x) any
rights or warrants referred to in Section 15.05(b) and (y) any
dividend or distribution referred to in Section 15.05(a)), then, in each
such case (unless the Company elects to reserve such Distribution for
distribution to the Holders upon the conversion of the Notes so that any such
Holder converting Notes will receive upon such conversion, in addition to the
shares of Common Stock to which such Holder is entitled, the amount and kind of
such Distribution which such Holder would have received if such Holder had
converted its Notes into Common Stock immediately prior to the Record Date),
the Conversion Rate shall be increased so that the same shall be equal to the
rate determined by multiplying the Conversion Rate in effect on the Record Date
with respect to such distribution by a fraction,

 

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

 

(ii)  the denominator of which shall be the
Current Market Price on such Record Date less (A) in the case of
Distributions other than cash, the Fair Market Value (as determined by the
Board of Directors, whose determination shall be conclusive, and described in a
resolution of the Board of Directors) on the Record Date of the portion of such
Distributions applicable to one share of Common Stock and (B) in the case
of Distributions of cash, the amount of such Distributions applicable to one
share of Common Stock,

 

such adjustment to become effective immediately prior
to the opening of business on the day following such Record Date; provided,
however, that if the then Fair Market Value (as so determined) of the
portion of the Distribution so distributed applicable to one share of Common
Stock is equal to or greater than the Current 

 

28

 

Market Price on the Record Date, in lieu of the
foregoing adjustment, adequate provision shall be made so that each Holder
shall have the right to receive upon conversion the amount of Distribution such
Holder would have received had such Holder converted each Note on the Record
Date.  If such Distribution is not so
paid or made, the Conversion Rate shall again be adjusted to be the Conversion
Rate that would then be in effect if such Distribution had not been
declared.  If the Board of Directors
determines the Fair Market Value of any distribution for purposes of this Section 15.05
by reference to the actual or when issued trading market for any securities, it
must in doing so consider the prices in such market over the same period used
in computing the Current Market Price on the applicable Record Date.  Notwithstanding the foregoing, if the
Distribution distributed by the Company to all holders of its Common Stock
consists of Capital Stock of, or similar equity interests in, a Subsidiary or
other business unit, the Conversion Rate shall be increased so that the same
shall be equal to the rate determined by multiplying the Conversion Rate in
effect on the Record Date with respect to such distribution by a fraction:

 

(i)  the numerator of which shall be the sum of
(x) the average Closing Sale Price of one share of Common Stock over the
ten consecutive Trading Day period (the “Spinoff Valuation Period”) commencing
on and including the fifth Trading Day after the date on which “ex-dividend
trading” commences on the Common Stock on the Nasdaq Global Select Market or
such other national or regional exchange or market on which the Common Stock is
then listed or quoted and (y) the average Fair Market Value (as determined
by the Board of Directors, whose determination shall be conclusive, and
described in a resolution of the Board of Directors) over the Spinoff Valuation
Period of the portion of the Distribution so distributed applicable to one
share of Common Stock; and

 

(ii)  the denominator of which shall be the
average Closing Sale Price of one share of Common Stock over the Spinoff
Valuation Period,

 

such adjustment to become effective immediately prior
to the opening of business on the day following such Record Date;  provided, however, that the
Company may in lieu of the foregoing adjustment make adequate provision so that
each Holder shall have the right to receive upon conversion the amount of
Distribution such Holder would have received had such Holder converted each
Note on the Record Date with respect to such Distribution.

 

Rights
or warrants distributed by the Company to all holders of Common Stock entitling
the holders thereof to subscribe for or purchase shares of the Company’s
Capital Stock (either initially or under certain circumstances), which rights
or warrants, until the occurrence of a specified event or events (“Trigger
Event”): (i) are deemed to be transferred with such shares of Common
Stock; (ii) are not exercisable; and (iii) are also issued in respect
of future issuances of Common Stock, shall be deemed not to have been
distributed for purposes of this Section 15.05 (and no adjustment to the
Conversion Rate under this Section 15.05

 

29

 

will be required) until the occurrence of the earliest
Trigger Event, whereupon such rights and warrants shall be deemed to have been
distributed and an appropriate adjustment (if any is required) to the
Conversion Rate shall be made under this Section 15.05.  If any such right or warrant, including any
such existing rights or warrants distributed prior to the date of this
Indenture, are subject to events, upon the occurrence of which such rights or
warrants become exercisable to purchase different securities, evidences of
indebtedness or other assets, then the date of the occurrence of any and each
such event shall be deemed to be the date of distribution and record date with
respect to new rights or warrants with such rights (and a termination or expiration
of the existing rights or warrants without exercise by any of the holders
thereof).  In addition, in the event of
any distribution (or deemed distribution) of rights or warrants, or any Trigger
Event or other event (of the type described in the preceding sentence) with
respect thereto that was counted for purposes of calculating a distribution
amount for which an adjustment to the Conversion Rate under this Section 15.05
was made, (1) in the case of any such rights or warrants that shall all
have been redeemed or repurchased without exercise by any holders thereof, the
Conversion Rate shall be readjusted upon such final redemption or repurchase to
give effect to such distribution or Trigger Event, as the case may be, as
though it were a cash distribution, equal to the per share redemption or
repurchase price received by a holder or holders of Common Stock with respect
to such rights or warrants (assuming such holder had retained such rights or
warrants), made to all holders of Common Stock as of the date of such
redemption or repurchase, and (2) in the case of such rights or warrants
that shall have expired or been terminated without exercise by any holders
thereof, the Conversion Rate shall be readjusted as if such rights and warrants
had not been issued.

 

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

 

For
purposes of this Section 15.05(d) and 15.05(a) and (b), any
dividend or distribution to which this Section 15.05(d) is applicable
that also includes shares of Common Stock, or rights or warrants to subscribe
for or purchase shares of Common Stock (or both), shall be deemed instead to be
(1) a dividend or distribution of the evidences of indebtedness, assets or
shares of Capital Stock other than such shares of Common Stock or rights or
warrants (and any Conversion Rate adjustment required by this Section 15.05
with respect to such dividend or distribution shall then be made) immediately
followed by (2) a dividend or distribution of such shares of Common Stock
or such rights or warrants (and any further Conversion Rate adjustment required
by Sections 15.05(a) and (b) with respect to such dividend or
distribution shall then be made), except

 

30

 

(A)  the Record Date of such dividend or
distribution shall be substituted as “the date fixed for the determination of
stockholders entitled to receive such dividend or other distribution”, “the
date fixed for the determination of stockholders entitled to receive such
rights or warrants” and “the date fixed for such determination” within the
meaning of Section 15.05(a) and (b) and

 

(B)  any shares of Common Stock included in
such dividend or distribution shall not be deemed “outstanding at the close of
business on the date fixed for such determination” within the meaning of Section 15.05(a).

 

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

 

(i)  the numerator of which shall be the sum of
(x) the Fair Market Value (determined as aforesaid) of the aggregate
consideration payable to tendering or exchanging stockholders based on the
acceptance (up to any maximum specified in the terms of the tender or exchange
offer) of all shares validly tendered or exchanged and not withdrawn as of the
Expiration Time (the shares deemed so accepted up to any such maximum, being
referred to as the “Purchased Shares”) and (y) the product of the
number of shares of Common Stock outstanding (less any Purchased Shares) at the
Expiration Time and the Closing Sale Price of a share of Common Stock on the
Trading Day next succeeding the Expiration Time, and

 

(ii) 
the denominator of which shall be the number of shares of Common Stock
outstanding (including any tendered or exchanged shares) at the Expiration Time
multiplied by the Closing Sale Price of a share of Common Stock on the Trading
Day next succeeding the Expiration Time such adjustment to become effective
immediately prior to the opening of business on the day following the
Expiration Time.  If the Company is
obligated to purchase shares pursuant to any such tender or exchange offer, but
the Company is permanently prevented by applicable law from effecting any such
purchases or all such purchases are rescinded, the Conversion Rate shall again
be adjusted to be the Conversion Rate that would then be in effect if such
tender or exchange offer had not been made.

 

31

 

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

 

(1)  “Current Market Price” shall mean,
with respect to any date, the average of the daily Closing Sale Prices per
share of Common Stock for the 10 consecutive Trading Days immediately preceding
the earlier of such date of determination and the day before the “ex” date with
respect to the issuance, distribution, subdivision or combination requiring
such computation immediately prior to the date in question.  For purpose of this paragraph, the term “ex”
date, (1) when used with respect to any issuance or distribution, means
the first date on which the Common Stock trades, regular way, on the relevant
exchange or in the relevant market from which the Closing Sale Price was obtained
without the right to receive such issuance or distribution, and (2) when
used with respect to any subdivision or combination of shares of Common Stock,
means the first date on which the Common Stock trades, regular way, on such
exchange or in such market after the time at which such subdivision or
combination becomes effective.

 

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

 

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

 

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

 

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

 

To the
extent permitted by applicable law, the Company from time to time may increase
the Conversion Rate by any amount for any period of time if the 

 

32

 

period is at least twenty (20) days, the increase is
irrevocable during the period and the Board of Directors shall have made a
determination that such increase would be in the best interests of the Company,
which determination shall be conclusive. 
Whenever the Conversion Rate is increased pursuant to the preceding
sentence, the Company shall mail to Holders of record of the Notes a notice of
the increase at least fifteen (15) days prior to the date the increased
Conversion Rate takes effect, and such notice shall state the increased
Conversion Rate and the period during which it will be in effect.

 

(h) 
No adjustment in the Conversion Rate shall be required unless such adjustment
would require an increase or decrease of at least one percent (1%) in such
rate; provided, however, that any adjustments that by reason of
this Article Fifteen are not required to be made shall be carried forward
and made (i) as part of any subsequent adjustment or (ii) at the time
the Company mails a notice of a Designated Event pursuant to Section 10.06(b).  All calculations under this Article Fifteen
shall be made by the Company and shall be made to the nearest cent or to the
nearest one-ten thousandth (1/10,000) of a share, as the case may be.  No adjustment need be made for rights to
purchase Common Stock pursuant to a Company plan for reinvestment of dividends
or interest.  To the extent the Notes
become convertible into cash, assets, property or securities (other than
capital stock), no adjustment need be made thereafter as to the cash, assets,
property or such securities.  Interest
will not accrue on any cash into which the Notes are convertible.  The Conversion Rate shall be adjusted only
once for a single event or occurrence that would require an adjustment under
more than one of Section 15.05(a), (b), (c), (d) or (e).

 

(i) 
Whenever the Conversion Rate is adjusted as herein provided, the Company shall
promptly file with the Trustee and any Conversion Agent other than the Trustee
an Officers’ Certificate setting forth the Conversion Rate after such
adjustment and setting forth a brief statement of the facts requiring such
adjustment.  Unless and until a
Responsible Officer of the Trustee shall have received such Officers’
Certificate, the Trustee shall not be deemed to have actual knowledge of any
adjustment of the Conversion Rate and may assume that the last Conversion Rate
of which it has knowledge is still in effect. 
Promptly after delivery of such certificate, the Company shall prepare a
notice of such adjustment of the Conversion Rate setting forth the adjusted
Conversion Rate and the date on which each adjustment becomes effective and
shall mail such notice of such adjustment of the Conversion Rate to the Holder
of each Note, within twenty (20) days after execution thereof.  Failure to deliver such notice shall not
affect the legality or validity of any such adjustment.

 

(j) 
In any case in which this Section 15.05 provides that an adjustment shall
become effective immediately after (1) a record date or Record Date for an
event, (2) the date fixed for the determination of stockholders entitled
to receive a dividend or distribution pursuant to Section 15.05(a), (3) a
date fixed for the determination of stockholders entitled to receive rights or
warrants pursuant to Section 15.05(b), or (4) the Expiration Time for
any tender or exchange offer 

 

33

 

pursuant to Section 15.05, (each a “Determination
Date”), the Company may elect to defer until the occurrence of the
applicable Adjustment Event (as hereinafter defined) (x) issuing to the
Holder of any Note converted after such Determination Date and before the
occurrence of such Adjustment Event, the additional shares of Common Stock or
other consideration issuable upon such conversion by reason of the adjustment
required by such Adjustment Event over and above the Common Stock issuable upon
such conversion before giving effect to such adjustment and (y) paying to
such Holder any amount in cash in lieu of any fractional share pursuant to Section 15.03.  For purposes of this Section 15.05(j),
the term “Adjustment Event” shall mean:

 

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

 

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

 

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

 

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

 

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

 

SECTION 15.06.  Effect of Reclassification, Consolidation,
Merger or Sale.  If any of the
following events occur (each, a “Business Combination”): (i) any
reclassification or change of the outstanding shares of Common Stock (other
than a change in par value, or from par value to no par value, or from no par
value to par value, or as a result of a subdivision or combination), (ii) any
consolidation, merger, share exchange or combination of the Company with
another Person or (iii) any sale or conveyance of all or substantially all
of the properties and assets of the Company as an entirety or substantially as
an entirety, in each case as a result of which holders of Common Stock shall
receive stock, securities or other property or assets (including cash) with
respect to or in exchange for such Common Stock, then the Company or the
successor or purchasing Person, as the case may be, shall execute with the
Trustee a supplemental indenture (which shall comply with the TIA as in force
at the date of execution of such supplemental indenture if such supplemental
indenture is then required to so comply) providing that the Holders of the
Notes then outstanding will be entitled thereafter to convert such Notes into
the kind and amount of shares of stock, other securities or other property or
assets (including cash or any combination thereof) which 

 

34

 

they would have owned or
been entitled to receive upon such Business Combination had such Notes been
converted into Common Stock (without giving effect to any adjustment to the
Conversion Rate with respect to a Business Combination constituting a Change in
Control) immediately prior to such Business Combination, except that such
Holders will not receive the Additional Shares if such Holder does not convert
during the period set forth in the second paragraph of Section 15.01.  In the event holders of Common Stock have the
opportunity to elect the form of consideration to be received in such Business
Combination, the Company shall make adequate provision whereby the Notes shall
be convertible from and after the effective date of such Business Combination
into the form of consideration received in such Business Combination by Holders
of the greatest number of shares of Common Stock who made a given election with
respect to the form of consideration. 
The Company may not become a party to any Business Combination unless
its terms are consistent with this Section 15.06.  Such supplemental indenture shall provide for
adjustments which shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Article Fifteen.  If, in the case of any such Business
Combination, the stock or other securities and assets receivable thereupon by a
holder of shares of Common Stock includes shares of stock or other securities
and assets of a Person other than the successor or purchasing Person, as the
case may be, in such Business Combination, then such supplemental indenture
shall also be executed by such other Person and shall contain such additional
provisions to protect the interests of the Holders of the Notes as the Board of
Directors shall reasonably consider necessary by reason of the foregoing,
including to the extent practicable the provisions providing for the purchase
rights set forth in Section 10.06 hereof.  Notwithstanding anything
contained in this Section, and for the avoidance of doubt, this Section shall
not affect the right of a Holder to convert its Notes into shares of Common
Stock prior to the effective date of the Business Combination.

 

The Company shall cause notice of the
execution of such supplemental indenture to be mailed to each Holder of Notes
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 15.06
shall similarly apply to successive reclassifications, changes, consolidations,
mergers, share exchanges, combinations, sales and conveyances.

 

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

 

SECTION 15.07.  Taxes on Shares Issued.  The issue of shares on conversions of Notes
shall be made without charge to the converting Holder for any tax in respect of
the issue thereof.  The Company shall
not, however, be required to pay any tax which may be payable in respect of any
transfer involved in the issue and delivery of stock in any name other than
that of the Holder of any Note converted, and the Company shall not be required
to issue or deliver any such shares unless and until the Person or Persons
requesting the issue thereof shall have paid to the Company the amount of such 

 

35

 

tax or shall have
established to the satisfaction of the Company that such tax has been paid.

 

SECTION 15.08.  Reservation of Shares; Shares to Be Fully
Paid; Listing of Common Stock.  The
Company shall provide, free from preemptive rights, out of its authorized but
unissued shares or shares held in treasury, sufficient shares of Common Stock
to provide for the conversion of the Notes from time to time as such Notes are
presented for conversion.  Before taking
any action which would cause an adjustment increasing the Conversion Rate to an
amount that would cause the Conversion Price to be reduced below the then par
value, if any, of the shares of Common Stock issuable upon conversion of the
Notes, the Company shall take all corporate action which may, in the opinion of
its counsel, be necessary in order that the Company may validly and legally
issue shares of such Common Stock at such adjusted Conversion Rate.

 

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

 

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

 

SECTION 15.09.  Responsibility of Trustee.  The Trustee and any Conversion Agent shall
have no duty, responsibility or liability to any Holder to determine whether
any facts exist which may require any adjustment of the Conversion Rate, or
with respect to the nature or extent 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. 
Neither the Trustee nor any Conversion Agent shall be accountable with
respect to the registration under securities laws, listing, validity or value
(or the kind or amount) of any shares of Common Stock, or of any other
securities or property, which may at any time be issued or delivered upon the
conversion of any Note, and neither the Trustee nor any Conversion Agent makes
any representation with respect thereto. 
Neither the Trustee nor any Conversion Agent shall be responsible for
any failure of the Company to make any cash payment or to issue, transfer or
deliver any shares of stock or stock certificates or other securities or
property upon the surrender of any Note for the purpose of conversion; and the
Trustee and any Conversion Agent shall not be responsible for any failure of
the Company to comply with any of the covenants of the Company contained in
this Article Fifteen.

 

SECTION 15.10.  Notice to Holders Prior to Certain
Actions.  If:

 

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

 

36

 

(b)  the Company authorizes the granting
to the holders of its Common Stock of rights or warrants to subscribe for or
purchase any share of any class of Common Stock or any other rights or warrants
(other than rights or warrants referred to in the second paragraph of Section 15.05(d));

 

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

 

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

 

then the Company shall cause to be filed with
the Trustee and at the office or agency maintained for the purpose of
conversion of the Notes pursuant to Section 10.02, and shall caused to be
mailed to each Holder of Notes, at their last addresses as they shall appear on
the Security Register of the Company as promptly as possible but in any event
at least 10 days prior to the applicable date hereinafter specified, a notice
stating (x) the date on which a record is to be taken for the purpose of
such dividend or distribution of rights or warrants, or, if a record is not to
be taken, the date as of which the holders of Common Stock of record to be
entitled to such dividend or distribution are to be determined or (y) the
date on which such reclassification, consolidation, merger, share exchange,
sale, transfer, dissolution, liquidation or winding-up is expected to become
effective or occur, and the date as of which it is expected that holders of
Common Stock of record shall be entitled to exchange their Common Stock for securities
or other property deliverable upon such reclassification, consolidation,
merger, share exchange, sale, transfer, dissolution, liquidation or
winding-up.  Failure to give such notice,
or any defect therein, shall not affect the legality or validity of such
dividend, distribution, reclassification, consolidation, merger, share
exchange, sale, transfer, dissolution, liquidation or winding-up.  The Company shall also disseminate a press
release through Dow Jones & Company Inc., Bloomberg Business News, PR
Newswire or another comparable news service containing this information.

 

SECTION 15.11.  Rights Issued in Respect of Common Stock
Issued Upon Conversion.  If the
Company has a stockholder rights plan in effect on any Conversion Date, the
Company shall issue, in addition to the Common Stock, the rights under the
rights plan unless the rights have separated from the Common Stock at the time
of conversion, in which case the Conversion Rate will be adjusted as if the
Company had distributed to all holders of the Common Stock, shares of the
Capital Stock, evidences of indebtedness or assets as set forth in Section 15.05,
subject to readjustment in the event of the expiration, termination or
redemption of such rights.”

 

37

 

ARTICLE VIII

 

MISCELLANEOUS

 

SECTION 8.1.  Application of Second Supplemental
Indenture.  Each and every term and
condition contained in this Second Supplemental Indenture that modifies, amends
or supplements the terms and conditions of the Indenture shall apply only to
the Notes created hereby and not to any future series of Securities established
under the Indenture.

 

SECTION 8.2.  Benefits of Second Supplemental Indenture.  Nothing contained in this Second Supplemental
Indenture shall or shall be construed to confer upon any Person other than a
Holder of the Notes, the Company or the Trustee any right or interest to avail
itself or himself, as the case may be, of any benefit under any provision of
the Indenture or this Second Supplemental Indenture.

 

SECTION 8.3.  Effective Date.  This Second Supplemental Indenture shall be
effective as of the date first above written and upon the execution and
delivery hereof by each of the parties hereto.

 

SECTION 8.4.  Governing Law.  This Second Supplemental Indenture shall be
governed by, and construed in accordance with, the laws of the State of New
York, without regard to conflicts of laws principles thereof.

 

SECTION 8.5.  Counterparts.  This Second Supplemental Indenture may be
executed in any number of counterparts, each of which so executed shall be
deemed to be an original, but all such counterparts shall together constitute
but one and the same instrument.

 

SECTION 8.6.  Trustee Not Responsible for Recitals or
Issuance of Securities.  The recitals
contained herein and in the Notes, except the Trustee’s certificates of
authentication, shall be taken as the statements of the Company and the Trustee
assumes no responsibility for their correctness.  The Trustee makes no representations as to
the validity or sufficiency of this Second Supplemental Indenture or of the
Notes.  The Trustee shall not be
accountable for the use or application by the Company of Notes or the proceeds
thereof.

 

38

 

IN WITNESS WHEREOF, the parties hereto have
caused this Second Supplemental Indenture to be duly executed by their
respective officers hereunto duly authorized, all as of the day and year first
above written.

 

 

	
   

  	
  LEVEL
  3 COMMUNICATIONS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Robin E. Grey

  
	
   

  	
   

  	
  Name:

  	
  Robin
  E. Grey

  
	
   

  	
   

  	
  Title:

  	
  Senior
  Vice President and Corporate Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  THE
  BANK OF NEW YORK MELLON, as Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Geovanni Barris

  
	
   

  	
   

  	
  Name: 

  	
  Geovanni
  Barris

  
	
   

  	
   

  	
  Title:

  	
  Vice
  President

  

 

39

 

EXHIBIT A

(Face of Security)

 

[Global Securities Legend]

 

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

 

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

 

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

 

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

 

 

	
  No.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  $

  	
   

  	
  CUSIP 52729NBP4

  

 

Level 3 Communications, Inc.

 

 

7% CONVERTIBLE SENIOR NOTE DUE 2015, SERIES B

 

Level
3 Communications, Inc. promises to pay to Cede & Co. or
registered assigns, the principal sum of                    Dollars on March 15,
2015.

 

Interest
Payment Dates:        March 15 and September 15,
commencing March 15, 2010

Regular
Record Dates:          March 1 and September 1

 

Dated:

	
   

  	
  Level 3
  Communications, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

Certificate of
Authentication

 

This is one of the Convertible Senior Notes
referred to in the within-mentioned Indenture.

 

Date:

	
   

  	
  The Bank of New York
  Mellon, as Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Authorized Signatory

  

 

2

 

(Back of Security)

 

3

 

Level 3 Communications, Inc.

 

7% CONVERTIBLE SENIOR NOTE DUE 2015, SERIES B

 

1.                                       INTEREST.  Level 3 Communications, Inc., a Delaware
corporation (the “Company”), promises to pay interest on the principal amount
of this Note at the rate per annum shown above. 
The Company will pay interest semi-annually in arrears on March 15
and September 15 of each year, beginning March 15, 2010.  Interest on the Notes will accrue from the
most recent Interest Payment Date to which interest has been paid or, if no
interest has been paid, from October 15, 2009.  Interest will be computed on the basis of a
360-day year composed of twelve 30-day months.

 

2.                                       METHOD OF PAYMENT.  The Company will pay interest on the Notes
(except Defaulted Interest) to the Person in whose name each Note is registered
at the close of business on the March 1 or September 1 immediately
preceding the relevant Interest Payment Date (each a “Regular Record Date”).  The Holder must surrender Notes to a Paying
Agent to collect principal payments.  The
Company will pay the principal of, premium, if any, and interest on the Notes
at the office or agency of the Company maintained for such purpose, in money of
the United States that at the time of payment is legal tender for payment of
public and private debts.  Until
otherwise designated by the Company, the Company’s office or agency maintained
for such purpose will be the principal Corporate Trust Office of the Trustee
(as defined below).  However, the Company
may pay principal, premium, if any, and interest by check payable in such
money, and may mail such check to the Holders of the Notes at their respective
addresses as set forth in the Security Register of Holders of Notes.

 

3.                                       PAYING AGENT, CONVERSION
AGENT AND REGISTRAR.  The Bank of New
York Mellon (together with any successor Trustee under the Indenture referred
to below, the “Trustee”) will act as Paying Agent, Conversion Agent and
Security Registrar.  The Company may
change the Paying Agent, Conversion Agent, Registrar or co-registrar without
prior notice.  Subject to certain
limitations in the Indenture, the Company or any of its subsidiaries may act in
any such capacity.

 

4.                                       INDENTURE.  This is one of a duly authorized issue of
securities of the Company designated as its “7% Convertible Senior Notes Due
2015, Series B” issued under an indenture dated as of December 24,
2008 (the “Base Indenture”), between the Company and the Trustee, and a second
supplemental indenture dated as of October 15, 2009 (the “Supplemental
Indenture”), between the Company and the Trustee (the Base Indenture as
supplemented by the Supplemental Indenture, the “Indenture”).  The terms of the Notes include those stated
in the Indenture and those made part of the Indenture by reference to the 

 

4

 

Trust Indenture Act of 1939
(the “TIA”) as in effect on the date of the Indenture.  The Notes are subject to, and qualified by,
all such terms, certain of which are summarized hereon, and Holders are
referred to the Indenture and the TIA for a statement of such terms.  The Notes are unsecured and unsubordinated
obligations of the Company limited to (except as otherwise provided in the
Indenture) up to $500,000,000 in aggregate principal amount.  Capitalized terms not defined below have the
same meaning as is given to them in the Indenture.

 

5.                                       [RESERVED].

 

6.                                       DESIGNATED EVENT.  Upon the occurrence of a Designated Event,
the Company shall make a Designated Event Offer to repurchase all outstanding
Notes at a price equal to 100% of the aggregate principal amount of the Notes,
plus accrued and unpaid interest to, but excluding, the date of repurchase,
such offer to be made as provided in the Indenture.  To accept the Designated Event Offer, the
Holder hereof must comply with the terms thereof, including surrendering this
Note, with the “Designated Event Purchase Notice” portion hereof completed, to
the Company, a depositary, if appointed by the Company, or a Paying Agent, at
the address specified in the notice of the Designated Event Offer mailed to
Holders as provided in the Indenture, prior to the close of business on the
Business Day immediately preceding the Designated Event Purchase Date.

 

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

 

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

 

9.                                       AMENDMENTS AND WAIVERS.  Subject to certain exceptions, the Indenture
or the Notes may be amended or supplemented with the consent of the Holders of
at least a majority in principal amount of all Outstanding Securities affected
thereby, and any existing default may be waived with the consent of the Holders
of a majority in principal amount of the then outstanding Notes.

 

Without the consent of any Holder, the Indenture or the Notes may be
amended to, among other things: (a) cure any ambiguity or correct or
supplement any defective or inconsistent provision contained in the Indenture,
or make any other changes in the provisions in the Indenture with respect to
matters or 

 

5

 

questions
arising under the Indenture which are not inconsistent with the other
provisions of the Indenture, provided such amendment does not materially and
adversely affect the legal rights under the Indenture of the Holders of Notes; (b) provide
for uncertificated Notes in addition to or in place of certificated Notes; (c) evidence
the succession of another Person to the Company and provide for the assumption
by such successor of the covenants and obligations of the Company thereunder
and in the Notes as permitted by Section 8.01 of the Indenture; (d) provide
for conversion rights or repurchase rights of Holders of Notes in the event of
consolidation, merger, share exchange or sale of all or substantially all of
the assets of the Company as required to comply with Sections 8.01 or 15.06 of
the Indenture; (e) reduce the Conversion Price; (f) add guarantees
with respect to the Notes; (g) evidence and provide for the acceptance of
the appointment under the Indenture of a successor Trustee or to provide for or
facilitate the administration of the trusts by more than one Trustee; (h) make
any change that would provide any additional rights or benefits to the Holders
of Notes or that does not adversely affect the legal rights under the Indenture
of any such Holder; (i) comply with the requirements of the Commission in
order to effect or maintain the qualification of the Indenture under the TIA; (j) secure
the Notes; or (k) permit or facilitate the defeasance and discharge of
Notes.

 

Without the consent of each Holder affected, an amendment or waiver may
not (with respect to any Notes held by a nonconsenting Holder): (a) reduce
the principal amount of Notes whose Holders must consent to an amendment,
supplement or waiver; (b) change the stated maturity of the principal of
or any installment of interest on, any Note; (c) reduce the principal
amount of any Note or the rate or amount of interest thereon or alter the
provisions with respect to the purchase of Notes at the option of the Holders
upon a Designated Event in a manner adverse to the Holders thereof; (d) waive
a Default or Event of Default in the payment of principal of or premium, if
any, or interest on the Notes (except a rescission of acceleration of the Notes
by the Holders of at least a majority in aggregate principal amount of the
Notes then outstanding and a waiver of the payment default that resulted from
such acceleration) or of a Designated Event Payment; (e) make the
principal of, or interest on, any Note payable in money other than as provided
for in the Indenture and in the Notes; (f) make any change in the
provisions of the Indenture relating to waivers of past Defaults or Events of
Default or the rights of Holders of Notes to receive payments of principal of,
premium, if any, or interest on the Notes; (g) make any adverse change to
the abilities of Holders of Notes to enforce their rights under the Indenture; (h) impair
the right to institute suit for the enforcement of any payment on or with
respect to any Note; or (i) except as permitted by the Indenture
(including Section 9.01(9)), increase the Conversion Price, or modify the
provisions of the Indenture relating to conversion of the Notes in a manner
adverse to the Holders thereof or otherwise impair the right of Holders to
convert their Notes, upon the terms established pursuant to or in accordance
with the provisions of the Indenture.

 

10.                                 DEFAULTS AND REMEDIES.  An Event of Default is: (a) default in
payment of the principal of, or premium, if any, on the Notes, when due at
maturity, upon 

 

6

 

repurchase, upon
acceleration or otherwise; (b) default for 30 days or more in payment of
any installment of interest on the Notes; (c) default in the payment of
the Designated Event Payment in respect of the Notes on the date therefor or
failure to provide timely notice of a Designated Event; (d) default by the
Company (other than a default set forth in clause (a), (b) or (c) above)
for 60 days or more after notice in the observance or performance of any other
covenants in the Indenture; (e) default under any credit agreement,
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 Material Subsidiaries (or the payment of which is
guaranteed or secured by the Company or any of its Material Subsidiaries),
whether such indebtedness or guarantee exists on the date of the Indenture or
is created thereafter, which default (i) is caused by a failure to pay
when due any principal of such indebtedness within the grace period provided
for in such indebtedness, which failure continues beyond any applicable grace
period (a “Payment Default”), or (ii) results in the acceleration of such
indebtedness prior to its express maturity (without such acceleration being
rescinded or annulled) and, in each case, the principal amount of such indebtedness,
together with the principal amount of any other such indebtedness under which
there is a Payment Default or the maturity of which has been so accelerated,
aggregates $25,000,000 (or its foreign currency equivalent) or more and such
Payment Default is not cured or such acceleration is not annulled within 10
days after notice; (f) failure by the Company or any Material Subsidiary
of the Company to pay final, nonappealable judgments (other than any judgment
as to which a reputable insurance company has accepted full liability)
aggregating in excess of $25,000,000 (or its foreign currency equivalent),
which judgments are not stayed, bonded or discharged within 60 days after
their entry; (g) certain events involving bankruptcy, insolvency or
reorganization of the Company or any Material Subsidiary; or (h) default
for more than 5 Business Days of the delivery of shares of Common Stock upon
conversion of the Notes.  If an Event of
Default occurs and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the then outstanding Notes may declare the unpaid principal
of, premium, if any, and accrued and unpaid interest on all Notes then
outstanding to be due and payable immediately, except that in the case of an
Event of Default arising from certain events of bankruptcy, insolvency, or
reorganization with respect to the Company, all outstanding Notes become due
and payable without further action or notice. 
Holders of Notes may not enforce the Indenture or the Notes except as
provided in the Indenture.  The Trustee
may require an indemnity reasonably satisfactory to it before it enforces the
Indenture or the Notes.  Subject to
certain limitations, Holders of a majority in principal amount of the then
outstanding Notes may direct the Trustee in its exercise of any trust or
power.  The Trustee may withhold from
Holders notice of any continuing default (except, among other things, a default
in payment of principal, premium, if any, or interest) if it determines that
withholding notice is in their interests. 
The Company must furnish annual compliance certificates to the Trustee.

 

11.                                 TRUSTEE DEALINGS WITH THE
COMPANY.  The Trustee or any of its
Affiliates, in their individual or any other capacities, may make or continue
loans 

 

7

 

to or guaranteed by, accept
deposits from and perform services for the Company or its Affiliates and may
otherwise deal with the Company or its Affiliates as if it were not Trustee.

 

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

 

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

 

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

 

15.                                 CONVERSION.  Subject to and upon compliance with the
provisions of the Indenture, the registered holder of this Note has the right
(upon delivery to the Company of the HSR Certificate (a form of which is
attached to the Notes)) at any time on or before the close of business on the
Stated Maturity date (or in case this Note or any portion hereof is subject to
a duly completed election for repurchase, on or before the close of business on
the Business Day immediately preceding the Designated Event Purchase Date
(unless the Company defaults in payment due upon repurchase or such Holder
elects to withdraw the submission of such election to repurchase)) to convert
the principal amount hereof, or any portion of such principal amount which is
$1,000 or an integral multiple thereof, into that number of fully paid and
non-assessable shares of common stock of the Company (“Common Stock”) obtained
by dividing the principal amount of the Note or portion thereof to be converted
by the conversion price of $1.80 per share (the “Conversion Price”) (which is
equivalent to a conversion rate of 555.5556 shares per $1,000 of notes (the “Conversion
Rate”), as adjusted from time to time as provided in the Indenture), upon
surrender of this Note to the Company at the office or agency maintained for
such purpose (and at such other offices or agencies designated for such purpose
by the Company), accompanied by written notice of conversion duly executed (and
if the shares of Common Stock to be issued on conversion are to be issued in
any name other than that of the registered holder of this Note by instruments
of transfer, in form satisfactory to the Company, duly executed by the
registered holder or its duly authorized attorney) and, in case such surrender
shall be made during the period from the close of business on the Regular
Record Date immediately preceding any Interest Payment Date through the close
of business on the last Trading Day immediately preceding such Interest Payment
Date (unless a Designated Event Purchase Date has been specified by the Company
during such period), also accompanied by payment, in 

 

8

 

funds acceptable to the
Company, of an amount equal to the interest otherwise payable on such Interest
Payment Date on the principal amount of this Note then being converted.  Subject to the aforesaid requirement for a
payment in the event of conversion after the close of business on a Regular
Record Date immediately preceding an Interest Payment Date, no adjustment shall
be made on conversion for interest accrued hereon or for dividends on Common
Stock delivered on conversion.  The right
to convert this Note is subject to the provisions of the Indenture relating to
conversion rights in the case of certain consolidations, mergers, share
exchanges or sales or transfers of substantially all the Company’s assets.

 

The Conversion Rate on any Notes converted in connection with
certain  specified Changes in Control as
designated in the Indenture may be increased by an amount, if any, determined
in accordance with Article Fifteen of the Indenture.

 

The Company shall, in respect of fractional shares representing
fractions of shares of Common Stock upon any such conversion, make an
adjustment in cash based upon the current market price of the Common Stock on
the last Trading Day prior to the date of conversion or round such fraction up
to the nearest whole number of shares.

 

The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture.  Requests
may be made to: Level 3 Communications, Inc., 1025 Eldorado Boulevard,
Broomfield, Colorado 80021, Attention: Vice President, Investor Relations, or
by telephone at (720) 888-1000.

 

The Indenture and this Note shall be governed by, and construed in
accordance with, the laws of the State of New York, without regard to conflicts
of laws principles thereof.

 

9

 

FORM OF CONVERSION
NOTICE

 

To:  Level 3 Communications, Inc.

 

The undersigned owner of the Note hereby
irrevocably exercises the option to convert this Note, or portion hereof (which
is $1,000 or an integral multiple thereof) below designated, into shares of
Common Stock of Level 3 Communications, Inc., in accordance with the terms
of the Indenture referred to in this Note, and directs that the shares issuable
and deliverable upon the conversion, together with any check in payment for
fractional shares and Notes representing any unconverted principal amount
hereof, be issued and delivered to the owner hereof unless a different name has
been indicated below.  If shares or any
portion of this Note not converted are to be issued in the name of a Person
other than the undersigned, the undersigned will pay all transfer taxes payable
with respect thereto.  Any amount
required to be paid by the undersigned on account of interest and taxes
accompanies this Note.

 

	
  Dated:

  	
   

  	
   

  	
   

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

  (Please Print):  

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Signature

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

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

  
	
   

  	
  (Name)

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  $        ,000

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (Street Address)

  	
   

  	
  Social Security or
  other Taxpayer Identification Number

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (City, State and
  Zip Code)

  	
   

  	
   

  
					

 

Signature
Guarantee:

 

	
   

  	
   

  	
   

  

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

 

10

 

ASSIGNMENT FORM

 

To assign this Note, fill in the form below:

 

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

 

	
   

  

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

 

	
   

  
	
   

  
	
   

  

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

 

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

 

	
  Your Signature:

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  Date:

  	
   

  	
   

  
	
   

  	
   

  
	
  Medallion
  Signature Guarantee:

  	
   

  
					

 

11

 

 

DESIGNATED EVENT PURCHASE
NOTICE

 

If you wish to have this Note repurchased by
the Company pursuant to Section 10.06 of the Indenture, check the Box: [   ]

 

If you wish to have a portion of this Note
purchased by the Company pursuant to Section 10.06 of the Indenture, state
the amount (in multiples of $1,000):
$          .

 

	
  Date:

  	
   

  	
   

  	
  Your
  Signature:

  	
   

  
	
   

  	
   

  	
   

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

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Medallion
  Signature Guarantee:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
						

 

12

 

HSR
ACT CERTIFICATE

 

To: Level 3 Communications, Inc.

 

The undersigned beneficial owner of this Note
(the “Owner”) has delivered herewith a conversion notice pursuant to which it
is irrevocably exercising the option to convert this Note, or portion hereof
designated in such conversion notice, into shares of Common Stock of Level 3
Communications, Inc. (the “Company”), in accordance with the terms of the
Indenture referred to in this Note.  As a
condition to the Company’s obligation to effect such conversion pursuant to the
term of Indenture, the undersigned Owner of the Note, represents and warrants
to the Company as follows:

 

EITHER:

 

(1) That:

 

(  )           such Owner or its “ultimate parent
entity”, if any, is an “institutional investor” (as defined by 16 C.F.R.
§802.64(a)) and any entity controlled by such Owner, or its “ultimate parent
entity”, if any, that holds Voting Stock is an “institutional investor”.

 

(  )           such Owner or its “ultimate parent
entity” (as defined by 16 C.F.R. §801.1(a)(3)), if any, is acquiring Common
Stock issuable on the conversion of its Note or a portion of the principal
amount thereof (i) for its own account, (ii) in the ordinary course
of business and (iii) “solely for the purpose of investment” (as defined
by 16 C.F.R. §801.1(i)(1)), and as a result of such acquisition, such Owner, or
its “ultimate parent entity”, if any, including the holdings of its controlled
subsidiaries, will hold fifteen percent (15%) or less of the outstanding Voting
Stock.

 

OR

 

(2) That:

 

(  )           such Owner or its “ultimate parent
entity”, if any, is acquiring Common Stock issuable on the conversion of its
Note or a portion of the principal amount thereof “solely for the purpose of
investment” (as defined in 16 C.F.R. §801.1(i)(1)), and as a result of such
acquisition, such Owner, or its “ultimate parent entity”, if any, including the
holdings of its controlled subsidiaries, will hold ten percent (10%) or less of
the outstanding Voting Stock.

 

OR

 

(3) That:

 

(  )           such Owner has filed with the Federal
Trade Commission and the United States Department of Justice all reports and
other documents required to be filed under the HSR Act with respect to the Common
Stock issuable upon conversion of the 

 

13

 

Note and the applicable
waiting period with the HSR Act shall have expired or been terminated.

 

OR

 

(4) That:

 

(  )           as a result of the conversion of its
Note, such Owner or its “ultimate parent entity”, if any, will hold Voting
Stock of the Company valued at not more than $63.1 million, as determined
pursuant to 16 C.F.R. Section 801.13.

 

Capitalized terms used herein and not otherwise
defined herein shall have the meanings ascribed to them in the Second
Supplemental Indenture, dated as of October 15, 2009, by and between Level
3 Communications, Inc. and The Bank of New York Mellon.

 

Certificate Number:

 

	
  Date:

  	
   

  	
   

  
	
   

  	
   

  
	
  Name
  of Owner:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
						

 

14

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