Document:

Exhibit
4.2

 

deCODE genetics,
Inc.

3.50% Senior
Convertible Notes due April 15, 2011

INDENTURE

Dated as of
November 17, 2006

The Bank of New
York

TRUSTEE

TABLE OF
CONTENTS

	
  

  	
  PAGE

  
	
   

  	
   

  
	
  ARTICLE 1

  	
   

  
	
  DEFINITIONS AND
  INCORPORATION BY REFERENCE

  	
   

  
	
   

  	
   

  
	
  Section 1.01. Definitions

  	
  1

  
	
  Section 1.02. Other Definitions

  	
  6

  
	
  Section 1.03.  Incorporation by Reference of Trust
  Indenture Act

  	
  7

  
	
  Section 1.04.  Rules of Construction

  	
  7

  
	
  Section 1.05.  Acts of Holders

  	
  7

  
	
   

  	
   

  
	
  ARTICLE 2

  	
   

  
	
  THE SECURITIES

  	
   

  
	
   

  	
   

  
	
  Section 2.01. Form and Dating

  	
  9

  
	
  Section 2.02. Execution and Authentication

  	
  10

  
	
  Section 2.03. Registrar, Paying Agent and Conversion Agent

  	
  10

  
	
  Section 2.04. Paying Agent to Hold Money and Securities in
  Trust

  	
  11

  
	
  Section 2.05. Securityholder Lists

  	
  11

  
	
  Section 2.06. Transfer and Exchange

  	
  11

  
	
  Section 2.07. Replacement Securities

  	
  14

  
	
  Section 2.08. Outstanding Securities; Determination of
  Holders’ Action

  	
  14

  
	
  Section 2.09. Temporary Securities

  	
  15

  
	
  Section 2.10. Cancellation

  	
  16

  
	
  Section 2.11. Persons Deemed Owners

  	
  16

  
	
  Section 2.12. Global Securities

  	
  16

  
	
  Section 2.13. CUSIP Numbers

  	
  23

  
	
   

  	
   

  
	
  ARTICLE 3

  	
   

  
	
  REDEMPTION AND
  PURCHASES

  	
   

  
	
   

  	
   

  
	
  Section 3.01. Company’s Right to Redeem; Notices to
  Trustee

  	
  23

  
	
  Section 3.02. Selection of Securities to Be Redeemed

  	
  24

  
	
  Section 3.03. Notice of Redemption

  	
  24

  
	
  Section 3.04.  Effect of Notice Redemption

  	
  25

  
	
  Section 3.05. Deposit of Redemption Price

  	
  25

  
	
  Section 3.06. Securities Redeemed in Part

  	
  25

  
	
  Section 3.07.  Purchase of Securities at Option of the
  Holder Upon Change of Control

  	
  25

  
	
  Section 3.08. Effect of Change of Control Purchase Notice;
  Withdrawal

  	
  30

  
	
  Section 3.09.  Deposit of Change of Control Purchase Price

  	
  31

  
	
  Section 3.10. Securities Purchased in Part

  	
  31

  
	
  Section 3.11.  Covenant to Comply With Securities Laws Upon
  Purchase of Securities

  	
  31

  
	
  Section 3.12. Repayment to the Company

  	
  31

  

 

 

 

	
  ARTICLE 4

  	
   

  
	
  COVENANTS

  	
   

  
	
   

  	
   

  
	
  Section 4.01. Payment of Securities

  	
  32

  
	
  Section 4.02. SEC and Other Reports

  	
  32

  
	
  Section 4.03. Compliance Certificate

  	
  32

  
	
  Section 4.04. Further Instruments and Acts

  	
  33

  
	
  Section 4.05. Maintenance of Office or Agency

  	
  33

  
	
  Section 4.06. Delivery of Certain Information

  	
  33

  
	
  Section 4.07. Treatment of Securities

  	
  34

  
	
  Section 4.08.  Delivery of Original Issue Discount
  Certificate

  	
  34

  
	
   

  	
   

  
	
  ARTICLE 5

  	
   

  
	
  SUCCESSOR
  CORPORATION

  	
   

  
	
   

  	
   

  
	
  Section 5.01. When Company May Merge or Transfer Assets

  	
  34

  
	
   

  	
   

  
	
  ARTICLE 6

  	
   

  
	
  DEFAULTS AND
  REMEDIES

  	
   

  
	
   

  	
   

  
	
  Section 6.01. Events of Default

  	
  35

  
	
  Section 6.02. Acceleration

  	
  37

  
	
  Section 6.03. Other Remedies

  	
  37

  
	
  Section 6.04. Waiver of Past Defaults

  	
  38

  
	
  Section 6.05. Control by Majority

  	
  38

  
	
  Section 6.06. Limitation on Suits

  	
  38

  
	
  Section 6.07. Rights of Holders to Receive Payment

  	
  39

  
	
  Section 6.08. Collection Suit by Trustee

  	
  39

  
	
  Section 6.09. Trustee May File Proofs of Claim

  	
  39

  
	
  Section 6.10. Priorities

  	
  40

  
	
  Section 6.11.  Undertaking for Costs

  	
  40

  
	
  Section 6.12. Waiver of Stay, Extension or Usury Laws

  	
  40

  
	
   

  	
   

  
	
  ARTICLE 7

  	
   

  
	
  TRUSTEE

  	
   

  
	
   

  	
   

  
	
  Section 7.01. Duties of Trustee

  	
  41

  
	
  Section 7.02. Rights of Trustee

  	
  42

  
	
  Section 7.03. Individual Rights of Trustee

  	
  44

  
	
  Section 7.04. Trustee’s Disclaimer

  	
  44

  
	
  Section 7.05. Notice of Defaults

  	
  44

  
	
  Section 7.06. Reports by Trustee to Holders

  	
  44

  
	
  Section 7.07. Compensation and Indemnity

  	
  44

  
	
  Section 7.08. Replacement of Trustee

  	
  45

  
	
  Section 7.09.  Successor Trustee by Merger

  	
  46

  
	
  Section 7.10. Eligibility; Disqualification

  	
  46

  
	
  Section 7.11. Preferential Collection of Claims Against
  Company

  	
  46

  

 

 ii
 

 

 

	
  Section 7.12. Force Majeure

  	
  47

  
	
   

  	
   

  
	
  ARTICLE 8

  	
   

  
	
  AMENDMENTS

  	
   

  
	
   

  	
   

  
	
  Section 8.01. Without Consent of Holders

  	
  47

  
	
  Section 8.02. With Consent of Holders

  	
  48

  
	
  Section 8.03. Compliance with Trust Indenture Act

  	
  49

  
	
  Section 8.04. Revocation and Effect of Consents, Waivers
  and Actions

  	
  49

  
	
  Section 8.05. Notation on or Exchange of Securities

  	
  49

  
	
  Section 8.06. Trustee to Sign Supplemental Indentures

  	
  49

  
	
  Section 8.07. Effect of Supplemental Indentures

  	
  50

  
	
   

  	
   

  
	
  ARTICLE 9

  	
   

  
	
  CONVERSIONS

  	
   

  
	
   

  	
   

  
	
  Section 9.01. Conversion Privilege

  	
  50

  
	
  Section 9.02. Conversion Procedure; Conversion Price;
  Fractional Shares

  	
  50

  
	
  Section 9.03. Adjustment of Conversion Price

  	
  51

  
	
  Section 9.04. Consolidation or Merger of the Company

  	
  61

  
	
  Section 9.05. Notice of Adjustment

  	
  63

  
	
  Section 9.06. Adjustment to Conversion Rate Upon a
  Non-Stock Change of Control

  	
  63

  
	
  Section 9.07. Notice in Certain Events

  	
  64

  
	
  Section 9.08. Company to Reserve Stock: Registration;
  Listing

  	
  65

  
	
  Section 9.09. Taxes on Conversion

  	
  66

  
	
  Section 9.10. Conversion After Record Date

  	
  66

  
	
  Section 9.11. Company Determination Final

  	
  67

  
	
  Section 9.12. Responsibility of Trustee and Conversion
  Agent for Conversion Provisions

  	
  67

  
	
  Section 9.13. Unconditional Right of Holders to Convert

  	
  67

  
	
   

  	
   

  
	
  ARTICLE 10

  	
   

  
	
  MISCELLANEOUS

  	
   

  
	
   

  	
   

  
	
  Section 10.01. Trust Indenture Act Controls

  	
  68

  
	
  Section 10.02. Notices

  	
  68

  
	
  Section 10.03. Communication by Holders with Other Holders

  	
  69

  
	
  Section 10.04.  Certificate and Opinion as to Conditions
  Precedent

  	
  69

  
	
  Section 10.05. Statements Required in Certificate or
  Opinion

  	
  69

  
	
  Section 10.06. Separability Clause

  	
  69

  
	
  Section 10.07. Rules by Trustee, Paying Agent, Conversion
  Agent and Registrar

  	
  70

  
	
  Section 10.08. Legal Holidays

  	
  70

  
	
  Section 10.09. Governing Law

  	
  70

  
	
  Section 10.10. Waiver of Jury Trial

  	
  70

  
	
  Section 10.11. No Recourse Against Others

  	
  70

  

 

 iii
 

 

 

	
  Section 10.12. Successors

  	
  70

  
	
  Section 10.13. Multiple Originals

  	
  70

  
	
  Section 10.14. Effect of Headings and Table of Contents

  	
  70

  

 

 

	
  EXHIBIT A

  	
  Form of Global Security

  
	
  EXHIBIT B

  	
  Form of Certificated Security

  
	
  EXHIBIT C

  	
  Transfer Certificate

  

 

 iv
 

 

CROSS-REFERENCE
TABLE (1)

 

	
  Trust Indenture Act Sections

  	
   

  	
  Indenture Section

  
	
   

  	
   

  	
   

  	
   

  
	
  § 310

  	
  (a)(1)

  	
   

  	
  7.10

  
	
   

  	
  (a)(2)

  	
   

  	
  7.10

  
	
   

  	
  (a)(3)

  	
   

  	
  Not Applicable

  
	
   

  	
  (a)(4)

  	
   

  	
  Not Applicable

  
	
   

  	
  (a)(5)

  	
   

  	
  7.10

  
	
   

  	
  (b)

  	
   

  	
  7.08; 7.10

  
	
   

  	
  (c)

  	
   

  	
  Not Applicable

  
	
   

  	
   

  	
   

  	
   

  
	
  § 311

  	
  (a)

  	
   

  	
  7.11

  
	
   

  	
  (b)

  	
   

  	
  7.11

  
	
   

  	
  (c)

  	
   

  	
  Not Applicable

  
	
   

  	
   

  	
   

  	
   

  
	
  § 312

  	
  (a)

  	
   

  	
  2.05

  
	
   

  	
  (b)

  	
   

  	
  10.03

  
	
   

  	
  (c)

  	
   

  	
  10.03

  
	
   

  	
   

  	
   

  	
   

  
	
  § 313

  	
  (a)

  	
   

  	
  7.06

  
	
   

  	
  (b)

  	
   

  	
  7.06

  
	
   

  	
  (c)

  	
   

  	
  Not Applicable

  
	
   

  	
  (d)

  	
   

  	
  7.06

  
	
   

  	
   

  	
   

  	
   

  
	
  § 314

  	
  (a)

  	
   

  	
  4.02; 4.03

  
	
   

  	
  (b)

  	
   

  	
  Not Applicable

  
	
   

  	
  (c)

  	
   

  	
  10.04

  
	
   

  	
  (d)

  	
   

  	
  Not Applicable

  
	
   

  	
  (e)

  	
   

  	
  10.05

  
	
   

  	
  (f)

  	
   

  	
  Not Applicable

  
	
   

  	
   

  	
   

  	
   

  
	
  § 315

  	
  (a)

  	
   

  	
  7.01

  
	
   

  	
  (b)

  	
   

  	
  7.05

  
	
   

  	
  (c)

  	
   

  	
  7.01

  
	
   

  	
  (d)

  	
   

  	
  7.01

  
	
   

  	
  (e)

  	
   

  	
  6.11

  
	
   

  	
   

  	
   

  	
   

  
	
  § 316

  	
  (a)(1)(A)

  	
   

  	
  6.05

  
	
   

  	
  (a)(1)(B)

  	
   

  	
  6.04

  
	
   

  	
  (a)(2)

  	
   

  	
  Not Applicable

  
	
   

  	
  (b)

  	
   

  	
  6.07

  
	
   

  	
  (c)

  	
   

  	
  1.05

  
	
   

  	
   

  	
   

  	
   

  
	
  § 317

  	
  (a)(1)

  	
   

  	
  6.08

  
	
   

  	
  (a)(2)

  	
   

  	
  6.09

  
	
   

  	
  (b)

  	
   

  	
  2.04

  
	
   

  	
   

  	
   

  	
   

  
	
  § 318

  	
  (a)

  	
   

  	
  10.01

  

 

(1)           This
Cross-Reference Table shall not (i) be deemed, for any purpose, to constitute
part of the Indenture, nor (ii) have any bearing on the interpretation of any
of its terms or provisions

 v

 

INDENTURE
dated as of November 17, 2006 between deCODE genetics, Inc., a Delaware
corporation (“Company”), and THE BANK OF NEW
YORK, a New York banking corporation (“Trustee”).

Each
party agrees as follows for the benefit of the other party and for the equal
and ratable benefit of the Holders of the Company’s 3.50% Senior Convertible
Notes due April 15, 2011:

ARTICLE
1

DEFINITIONS AND INCORPORATION BY REFERENCE

Section 1.01.  Definitions.

“144A Global Security” means a permanent Global Security in
the form of the Security attached hereto as Exhibit A, and that is deposited
with and registered in the name of the Depositary, representing Securities sold
in reliance on Rule 144A under the Securities Act.

“Additional Amounts” shall have the meaning ascribed to it in
the Registration Rights Agreement.

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

“Applicable Procedures” means, with respect to any transfer
or transaction involving a Global Security or beneficial interest therein, the
rules and procedures of the Depositary for such Security, in each case to the
extent applicable to such transaction and as in effect from time to time.

“Board of Directors” means either the board of directors of
the Company or any duly authorized committee of such board.

“Board Resolution” means a resolution of the Board of
Directors.

“Business Day” means, with respect to any Security, a day
that in The City of New York, is not a Saturday or Sunday or day on which
banking institutions are authorized or required by law or regulation to close.

“Capital Stock” for any corporation means any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents of or interests in (however designated) stock issued by that
corporation.

 

“Certificated Securities” means Securities that are in the
form of the Securities attached hereto as Exhibit B.

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

“Common Stock” shall mean the Common Stock, $0.001 par value
per share, of the Company existing on the date of this Indenture or any other
shares of Capital Stock of the Company into which such Common Stock shall be
reclassified or changed.

“Company” means the party named as the “Company” in the first
paragraph of this Indenture until a successor replaces it pursuant to the
applicable provisions of this Indenture and, thereafter, shall mean such
successor. The foregoing sentence shall likewise apply to any subsequent such
successor or successors.

“Company Request” or “Company Order”
means a written request or order signed in the name of the Company by any two
Officers.

“Conversion Price” means initially $14.00, subject to
adjustment as set forth herein.

“Corporate Trust Office” means the principal office of the Trustee
at which at any time its corporate trust business shall be administered, which
office at the date hereof is located at 101 Barclay Street, Floor 4 East, New
York, New York 10286 (Attention: Corporate Trust Administration), or such other
address as the Trustee may designate from time to time by notice to the Holders
and the Company, or the principal corporate trust office of any successor (or
such other address as a successor Trustee may designate from time to time by
notice to the Holders and the Company).

“Default” means an event which, with the giving of notice or
the lapse of time, or both, would become an Event of Default.

“Ex-Dividend Time” means, with respect to any issuance or
distribution on shares of Common Stock, the first date on which the shares of
Common Stock trade regular way on the principal securities market on which the
shares of

 2
 

 

Common Stock are then traded without the right to
receive such issuance or distribution.

“Global Securities” means Securities that are in the form of
the Securities attached hereto as Exhibit A, and that are registered in the
register of Securities in the name of a Depositary or a nominee thereof, and to
the extent that such Securities are required to bear the Legend required by
Section 2.06 hereof, such Securities will be in the form of a 144A Global
Security.

“Holder” or “Securityholder”
means a Person in whose name a Security is registered on the Registrar’s books.

“Indenture” means this Indenture, as amended or supplemented
from time to time in accordance with the terms hereof, including the provisions
of the TIA that are deemed to be a part hereof.

“Initial Purchasers” means Lehman Brothers Inc., and Piper
Jeffrey & Co.

“Interest Payment Date” means each
April 15 and October 15, or if such day is not a Business Day, then the next
succeeding Business Day, commencing April 15, 2007.

“Issue Date” of any Security means the date on which the
Security was originally issued or deemed issued as set forth on the face of the
Security.

“Non-Stock Change of Control” means a
transaction described under clause (i) or clause (iii) in the definition of
Change of Control pursuant to which 10% or more of the consideration for Common
Stock (other than cash payments for fractional shares, if applicable, and cash
payments made in respect of dissenters’ appraisal rights) in such transaction
consists of cash or securities (or other property) that are not shares of
common stock, depositary receipts or other certificates representing common
equity interests traded or scheduled to be traded immediately following such
transaction on a U.S. national securities exchange or The Nasdaq Global Market.

“Officer” means the Chairman of the Board, the Vice Chairman,
the Chief Executive Officer, the President, any Executive Vice President, any
Senior Vice President, the Treasurer, the Controller, or the Secretary or any
Assistant Treasurer or Assistant Secretary of the Company.

“Officers’ Certificate” means a written certificate
containing the information specified in Sections 10.04 and 10.05, signed in the
name of the Company by any two Officers, and delivered to the Trustee. An
Officers’ Certificate given pursuant to Section 4.03 shall be signed by the
principal executive Officer, principal financial Officer or principal
accounting Officer of the Company but need not contain the information
specified in Sections 10.04 and 10.05.

 3
 

 

“Opinion of Counsel” means a written opinion containing the
information specified in Sections 10.04 and 10.05, from legal counsel who is
reasonably acceptable to the Trustee. The counsel may be an employee of, or
counsel to, the Company.

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

“Redemption Date” or “redemption date”
shall mean the date specified in a notice of redemption on which the Securities
may be redeemed in accordance with the terms of the Securities and this
Indenture.

“Redemption Price” or “redemption price”
shall have the meaning set forth in Section 5 of the Securities.

“Registration Rights Agreement” means the Resale Registration
Rights Agreement, dated as of the date hereof, between the Company and Lehman
Brothers Inc. as representative of the Initial Purchasers.

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

“Restricted Security” means a Security required to bear the
restrictive legend set forth in the form of Security set forth in Exhibits A
and B of this Indenture.

“Rule 144A” means Rule 144A under the Securities Act (or any
successor provision), as it may be amended from time to time.

“Sale Price” of a security on any date of determination
means:

(i)            the
closing sales price as reported by The Nasdaq Global Market;

(ii)           if
such security is not so reported on any such date, the closing sale price as
reported in the composite transactions for the principal U.S. securities
exchange on which such security is so listed;

(iii)          if such security is not so reported, the last
price quoted by Interactive Data Corporation for such security on such date or,
if

 4
 

 

Interactive Data
Corporation is not quoting such price, a similar quotation service selected by
the Company;

(iv)          if
such security is not so quoted, the average of the mid-point of the last bid
and ask prices for such security on such date from at least two dealers
recognized as market-makers for such security selected by the Company for this
purpose; or

(v)           if
such security is not so quoted, the average of that last bid and ask prices for
such security on such date from a dealer engaged in the trading of convertible
securities selected by the Company for this purpose.

“SEC” means the Securities and Exchange Commission.

“Securities” means any of the Company’s 3.50% Senior
Convertible Notes due April 15, 2011, as amended or supplemented from time to
time, issued under this Indenture.

“Securityholder” or “Holder” means a
Person in whose name a Security is registered on the Registrar’s books.

“Significant Subsidiary” shall have the meaning ascribed to
such term in Rule 405 of the Securities Act.

“Stated Maturity”, when used with respect to any Security,
means April 15, 2011.

“Subsidiary” means any Person of which at least a majority of
the outstanding Voting Stock shall at the time directly or indirectly be owned
or controlled by the Company or by one or more Subsidiaries or by the Company
and one or more Subsidiaries.

“TIA” means the Trust Indenture Act of 1939 as in effect on
the date of this Indenture, provided, however,
that in the event the TIA is amended after such date, TIA means, to the extent
required by any such amendment, the TIA as so amended.

“Trading Day”
means a day during which trading in securities generally occurs on The Nasdaq
Global Market or, if the Common Stock is not quoted on The Nasdaq Global
Market, on the principal other national or regional securities exchange on
which the Common Stock then is listed or, if the Common Stock is not traded on The
Nasdaq Global Market or listed on a national or regional securities exchange,
on the principal other market on which the Common Stock is then traded or
quoted.

“Trustee” means the party named as the “Trustee” in the first
paragraph of this Indenture until a successor replaces it pursuant to the
applicable provisions

 5
 

 

of this Indenture and, thereafter, shall mean such
successor. The foregoing sentence shall likewise apply to any subsequent
successor or successors.

“Voting Stock” of a Person means Capital Stock of such Person
of the class or classes pursuant to which the holders thereof have the general
voting power under ordinary circumstances to elect at least a majority of the
board of directors, managers or trustees of such Person (irrespective of whether
or not at the time Capital Stock of any other class or classes shall have or
might have voting power by reason of the happening of any contingency).

Section 1.02.  Other Definitions.  

	
  Term

  	
   

  	
  Section in which

  the term is defined

  
	
   

  	
   

  	
   

  	
   

  
	
  “Act”

  	
   

  	
   

  	
  1.05

  
	
  “Agent Members”

  	
   

  	
   

  	
  2.12(e)

  
	
  “beneficial
  owner”

  	
   

  	
   

  	
  3.07(a)

  
	
  “Change of
  Control”

  	
   

  	
   

  	
  3.07(a)

  
	
  “Change of
  Control Purchase Date”

  	
   

  	
   

  	
  3.07(a)

  
	
  “Change of
  Control Purchase Notice”

  	
   

  	
   

  	
  3.07(c)

  
	
  “Change of
  Control Purchase Price”

  	
   

  	
   

  	
  3.07(a)

  
	
  “Common Stock
  Restrictive Legend”

  	
   

  	
   

  	
  2.06(e)

  
	
  “Continuing
  Director

  	
   

  	
   

  	
  3.07(a)

  
	
  “Conversion
  Agent”

  	
   

  	
   

  	
  2.03

  
	
  “Current Market
  Price”

  	
   

  	
   

  	
  9.03(g)

  
	
  “Depositary”

  	
   

  	
   

  	
  2.01(a)

  
	
  “distributed
  assets”

  	
   

  	
   

  	
  9.03(d)

  
	
  “DTC”

  	
   

  	
   

  	
  2.01(a)

  
	
  “Event of
  Default”

  	
   

  	
   

  	
  6.01

  
	
  “Exchange Act”

  	
   

  	
   

  	
  2.12(e)

  
	
  “Expiration
  Time”

  	
   

  	
   

  	
  9.03(f)

  
	
  “Fair Market
  Value”

  	
   

  	
   

  	
  9.03(g)

  
	
  “issuer tender
  offer”

  	
   

  	
   

  	
  3.11

  
	
  “Legal Holiday”

  	
   

  	
   

  	
  10.08

  
	
  “Legend”

  	
   

  	
   

  	
  2.06(e)

  
	
  “Non-Electing
  Share”

  	
   

  	
   

  	
  9.04

  
	
  “Paying Agent”

  	
   

  	
   

  	
  2.03

  
	
  “Purchased
  Shares”

  	
   

  	
   

  	
  9.03(f)

  
	
  “QIB”

  	
   

  	
   

  	
  2.01(a)

  
	
  “Record Date”

  	
   

  	
   

  	
  9.03(g)

  
	
  “Reference
  Period”

  	
   

  	
   

  	
  9.03(d)

  
	
  “Registrar”

  	
   

  	
   

  	
  2.03

  
	
  “Rule 144A
  Information”

  	
   

  	
   

  	
  4.06

  
	
  “Securities Act”

  	
   

  	
   

  	
  2.06(e)

  
	
  “Spin-Off”

  	
   

  	
   

  	
  9.03(d)

  
	
  “transfer”

  	
   

  	
   

  	
  2.12(d)

  

 

 6
 

 

	
  Term

  	
   

  	
  Section in which

  the term is defined

  
	
   

  	
   

  	
   

  	
   

  
	
  “Trigger Event”

  	
   

  	
   

  	
  9.03(d)

  

 

Section 1.03.  Incorporation by Reference of
Trust Indenture Act.  Whenever
this Indenture refers to a provision of the TIA, the provision is incorporated
by reference in and made a part of this Indenture. The following TIA terms used
in this Indenture have the following meanings:

“Commission”
means the SEC.

“indenture
securities” means the Securities.

“indenture
security holder” means a Securityholder.

“indenture
to be qualified” means this Indenture.

“indenture
trustee” or “institutional trustee” means the Trustee.

“obligor”
on the indenture securities means the Company.

All
other TIA terms used in this Indenture that are defined by the TIA, defined by
TIA reference to another statute or defined by SEC rule have the meanings
assigned to them by such definitions.

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

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

(ii)           an accounting term not
otherwise defined has the meaning assigned to it in accordance with U.S.
generally accepted accounting principles as in effect from time to time;

(iii)          “or” is not exclusive;

(iv)          “including” means
including, without limitation; and

(v)           words in the singular
include the plural, and words in the plural include the singular.

Section 1.05.  Acts of Holders.  (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by Holders may be embodied in and evidenced
by one or more instruments of substantially similar tenor signed by such
Holders in person or by an agent duly appointed in writing; and, except as
herein otherwise expressly provided, such action shall become effective when
such instrument or instruments

 7
 

 

are delivered to the Trustee and, where it is hereby
expressly required, to the Company, as described in Section 10.02.  Such instrument or instruments (and the
action embodied therein and evidenced thereby) are herein sometimes referred to
as the “Act” of Holders signing such instrument
or instruments.  Proof of execution of
any such instrument or of a writing appointing any such agent shall be
sufficient for any purpose of this Indenture and conclusive in favor of the
Trustee and the Company, if made in the manner provided in this Section.

(b)   The fact and date of the
execution by any Person of any such instrument or writing may be proved by the
affidavit of a witness of such execution or by a certificate of a notary public
or other officer authorized by law to take acknowledgments of deeds, certifying
that the individual signing such instrument or writing acknowledged to such
officer the execution thereof. Where such execution is by a signer acting in a
capacity other than such signer’s individual capacity, such certificate or
affidavit shall also constitute sufficient proof of such signer’s authority.
The fact and date of the execution of any such instrument or writing, or the
authority of the Person executing the same, may also be proved in any other
manner that the Trustee deems sufficient.

(c)   The principal amount and serial
number of any Security and the ownership of Securities shall be proved by the
register for the Securities.

(d)   Any request, demand,
authorization, direction, notice, consent, waiver or other Act of the Holder of
any Security shall bind every future Holder of the same Security and the Holder
of every Security issued upon the registration of transfer thereof or in
exchange therefor or in lieu thereof in respect of anything done, omitted or
suffered to be done by the Trustee or the Company in reliance thereon, whether
or not notation of such action is made upon such Security.

(e)   If the Company shall solicit
from the Holders any request, demand, authorization, direction, notice,
consent, waiver or other Act, the Company may, at its option, by or pursuant to
a Board Resolution, fix in advance a record date for the determination of
Holders entitled to give such request, demand, authorization, direction,
notice, consent, waiver or other Act, but the Company shall have no obligation
to do so. If such a record date is fixed, such request, demand, authorization,
direction, notice, consent, waiver or other Act may be given before or after
such record date, but only the Holders of record at the close of business on
such record date shall be deemed to be Holders for the purposes of determining
whether Holders of the requisite proportion of outstanding Securities have
authorized or agreed or consented to such request, demand, authorization,
direction, notice, consent, waiver or other Act, and for that purpose the
outstanding Securities shall be computed as of such record date; provided that
no such authorization, agreement or consent by the Holders on such record date
shall be deemed effective unless it shall become effective pursuant to the
provisions of this Indenture not later than six months after the record date.

 8
 

 

ARTICLE
2

THE SECURITIES

Section 2.01.  Form and Dating.  The Securities and the Trustee’s
certificate of authentication shall be substantially in the form of Exhibits A
and B, which are a part of this Indenture. 
The Securities may have notations, legends or endorsements required by
law, stock exchange rule or usage (provided that any such notation, legend or
endorsement required by usage is in a form acceptable to the Company).  The Company shall provide any such notations,
legends or endorsements to the Trustee in writing.  Each Security shall be dated the date of its
authentication.

(a)        144A Global
Securities.  Securities
offered and sold within the United States to qualified institutional buyers as
defined in Rule 144A (“QIBs”) in
reliance on Rule 144A shall be issued initially in the form of a 144A Global
Security, which shall be deposited with the Trustee at its Corporate Trust
Office, as custodian for the Depositary (as defined below) and registered in
the name of The Depository Trust Company (“DTC”) or the
nominee thereof (DTC, or any successor thereto, and any such nominee being
hereinafter referred to as the “Depositary”),
duly executed by the Company and authenticated by the Trustee as hereinafter
provided.  The aggregate principal amount
of the 144A Global Securities may from time to time be increased or decreased
by adjustments made on the records of the Trustee and the Depositary as
hereinafter provided.

(b)        Global
Securities in General.  Each
Global Security shall represent such of the outstanding Securities as shall be
specified therein and each shall provide that it shall represent the aggregate
amount of outstanding Securities from time to time endorsed thereon and that
the aggregate amount of outstanding Securities represented thereby may from
time to time be reduced or increased, as appropriate, to reflect exchanges,
redemptions, repurchases and conversions.

Any
adjustment of the aggregate principal amount of a Global Security to reflect
the amount of any increase or decrease in the amount of outstanding Securities
represented thereby shall be made by the Trustee in accordance with
instructions given by the Holder thereof as required by Section 2.12 hereof and
shall be made on the records of the Trustee and the Depositary.

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

The
Company shall execute and the Trustee shall, in accordance with this Section 2.01(c),
authenticate and deliver initially one or more Global Securities that (a) shall
be registered in the name of the Depositary, (b) shall be delivered by the
Trustee to the Depositary or pursuant to the Depositary’s instructions and (c)
shall be substantially in the form of Exhibit A attached hereto; provided that
the Legend (other than the first and second paragraphs thereof) may be removed
from such Global Security on satisfaction of the conditions specified in this
Indenture.

 9
 

 

(d)        Certificated
Securities.  Securities not
issued as interests in the Global Securities will be issued in certificated
form substantially in the form of Exhibit B attached hereto; provided that the
Legend may be removed from such Securities on satisfaction of the conditions specified
in this Indenture.

Section 2.02.  Execution and
Authentication.  The
Securities shall be executed on behalf of the Company by any Officer.  The signature of the Officer on the
Securities may be manual or facsimile.

Securities
bearing the manual or facsimile signatures of individuals who were, at the time
of the execution of the Securities, Officers shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of authentication of such Securities.

No
Security shall be entitled to any benefit under this Indenture or be valid or
obligatory for any purpose unless there appears on such Security a certificate
of authentication substantially in the form provided for herein duly executed
by the Trustee by manual signature of an authorized signatory, and such
certificate upon any Security shall be conclusive evidence, and the only
evidence, that such Security has been duly authenticated and delivered
hereunder.

The
Trustee shall authenticate and deliver the Securities for original issue in an
aggregate principal amount of $80,000,000 (of which $65,000,000 represents the
original issue and $15,000,000 is issued pursuant to the exercise by the
Initial Purchasers of their option to purchase up to $15,000,000 aggregate
principal amount of additional Securities) upon one or more Company Orders
without any further action by the Company (other than as contemplated in Section
10.04 and Section 10.05 hereof).  The
aggregate principal amount of the Securities due at the Stated Maturity thereof
outstanding at any time may not exceed the amount set forth in the foregoing
sentence.

The
Securities shall be issued only in registered form without coupons and only in
denominations of $1,000 of principal amount and any integral multiple of
$1,000.

Section 2.03.  Registrar, Paying Agent and
Conversion Agent.  The Company
shall maintain an office or agency where Securities may be presented for
registration of transfer or for exchange (“Registrar”), an
office or agency where Securities may be presented for purchase or payment (“Paying Agent”) and an office or agency where Securities may
be presented for conversion (“Conversion Agent”).  The Registrar shall keep a register of the
Securities and of their transfer and exchange. 
The Company may have one or more co registrars, one or more additional
paying agents and one or more additional conversion agents.  The term Paying Agent includes any additional
paying agent, including any named pursuant to Section 4.05.  The term Conversion Agent includes any
additional conversion agent, including any named pursuant to Section 4.05.

 10
 

 

The
Company shall enter into an appropriate agency agreement with any Registrar,
Paying Agent, Conversion Agent or co registrar (in each case, if such
Registrar, agent or co-registrar is a Person other than the Trustee).  The agreement shall implement the provisions
of this Indenture that relate to such agent. 
The Company shall notify the Trustee in writing of the name and address
of any such agent.  If the Company fails
to maintain a Registrar, Paying Agent or Conversion Agent, the Trustee shall
act as such and shall be entitled to appropriate compensation therefor pursuant
to Section 7.07.  The Company or any
Subsidiary or an Affiliate of either of them may act as Paying Agent,
Registrar, Conversion Agent or co registrar.

The
Company initially appoints the Trustee as Registrar, Paying Agent and
Conversion Agent in connection with the Securities.

Section 2.04.  Paying Agent to Hold Money and
Securities in Trust.  Except
as otherwise provided herein, on or prior to each due date of payments in
respect of any Security, the Company shall deposit with the Paying Agent a sum
of money (in immediately available funds if deposited on the due date)
sufficient to make such payments when so becoming due.  The Company shall require each Paying Agent
(other than the Trustee) to agree in writing that the Paying Agent shall hold
in trust for the benefit of Securityholders or the Trustee all money held by
the Paying Agent for the making of payments in respect of the Securities and
shall notify the Trustee of any default by the Company in making any such
payment.  At any time during the continuance
of any such default, the Paying Agent shall, upon the written request of the
Trustee, forthwith pay to the Trustee all money so held in trust.  If the Company, a Subsidiary or an Affiliate
of either of them acts as Paying Agent, it shall segregate the money held by it
as Paying Agent and hold it as a separate trust fund.  The Company at any time may require a Paying
Agent to pay all money held by it to the Trustee and to account for any funds
and Common Stock disbursed by it.  Upon
doing so, the Paying Agent shall have no further liability for the money.

Section 2.05.  Securityholder Lists.  The Registrar shall preserve in as
current a form as is reasonably practicable the most recent list available to
it of the names and addresses of Securityholders.  If the Trustee is not the Registrar, the
Company shall cause to be furnished to the Trustee at least semiannually on
April 1 and October 1 a listing of Securityholders dated within 15 days of the
date on which the list is furnished and at such other times as the Trustee may
request in writing a list in such form and as of such date as the Trustee may
reasonably require of the names and addresses of Securityholders.

Section 2.06.  Transfer and Exchange.  Subject to Section 2.12, upon
surrender for registration of transfer of any Security, together with a written
instrument of transfer satisfactory to the Registrar duly executed by the
Securityholder or such Securityholder’s attorney duly authorized in writing, at
the office or agency of the Company designated as Registrar or co registrar
pursuant to Section 2.03, the Company shall execute, and the Trustee shall
authenticate and

 11
 

 

deliver, in the name of the designated transferee or
transferees, one or more new Securities of any authorized denomination or denominations,
of a like aggregate principal amount. 
The Company shall not charge a service charge for any registration of
transfer or exchange, but the Company may require payment of a sum sufficient
to pay all taxes, assessments or other governmental charges that may be imposed
in connection with the transfer or exchange of the Securities from the
Securityholder requesting such transfer or exchange.

At
the option of the Holder, Securities may be exchanged for other Securities of
any authorized denomination or denominations, of a like aggregate principal
amount upon surrender of the Securities to be exchanged, together with a
written instrument of transfer satisfactory to the Registrar duly executed by
the Securityholder or such Securityholder’s attorney duly authorized in
writing, at such office or agency. 
Whenever any Securities are so surrendered for exchange, the Company
shall execute, and the Trustee shall authenticate and deliver, the Securities
which the Holder making the exchange is entitled to receive.

The
Company shall not be required to make, and the Registrar need not register,
transfers or exchanges of Securities selected for redemption (except, in the
case of Securities to be redeemed in part, the portion thereof not to be
redeemed) or any Securities in respect of which a Change of Control Purchase
Notice has been given and not withdrawn by the Holder thereof in accordance
with the terms of this Indenture (except, in the case of Securities to be
purchased in part, the portion thereof not to be purchased) or any Securities
for a period of 15 days before the mailing of a notice of redemption of
Securities to be redeemed.

(a)        Notwithstanding any
provision to the contrary herein, so long as a Global Security remains
outstanding and is held by or on behalf of the Depositary, (i) transfers of
beneficial interests in a Global Security, in whole or in part, may be effected
only through a book entry system maintained by the Holder of such Global
Security (or its agent) in accordance with Applicable Procedures, (ii)
ownership of a beneficial interest in the Security shall be required to be
reflected in book entry and (iii) transfers of Global Securities or beneficial
interests in Global Securities shall be made only in accordance with Section
2.12 and this Section 2.06(a).  Transfers
of a Global Security shall be limited to transfers of such Global Security in
whole or in part, to the Depositary, to nominees of the Depositary or to a
successor of the Depositary or such successor’s nominee.

(b)        Successive registrations
and registrations of transfers and exchanges as aforesaid may be made from time
to time as desired, and each such registration shall be noted on the register
for the Securities.

(c)        Any Registrar appointed
pursuant to Section 2.03 shall provide to the Trustee such information as the
Trustee may reasonably require in connection with the delivery by such
Registrar of Securities upon transfer or exchange of Securities.

 12
 

 

(d)        No Registrar shall be
required to make registrations of transfer or exchange of Securities during any
periods designated in the text of the Securities or in this Indenture as
periods during which such registration of transfers and exchanges need not be
made.

(e)        If Securities are issued
upon the transfer, exchange or replacement of Securities subject to
restrictions on transfer and bearing the legends set forth on the forms of
Security attached hereto as Exhibits A and B setting forth such restrictions
(collectively, the “Legend”), or if
a request is made to remove the Legend on a Security, the Securities so issued
shall bear the Legend, or the Legend shall not be removed, as the case may be,
unless there is delivered to the Company and the Registrar such satisfactory
evidence, which shall include an opinion of counsel, as may be reasonably
required by the Company, that neither the Legend nor the restrictions on
transfer set forth therein are required to ensure that transfers thereof comply
with the provisions of Rule 144A or Rule 144 under the Securities Act of
1933, as amended (“Securities Act”)
or that such Securities are not “restricted” within the meaning of Rule 144
under the Securities Act.  Upon (i)
provision of such satisfactory evidence, or (ii) notification by the Company to
the Trustee and Registrar of the sale of such Security pursuant to a
registration statement that is effective at the time of such sale, the Trustee,
at the written direction of the Company, shall authenticate and deliver a
Security that does not bear the Legend. 
If the Legend is removed from the face of a Security and the Security is
subsequently held by the Company or an Affiliate of the Company, the Legend
shall be reinstated.

In
the event Rule 144(k) as promulgated under the Securities Act is amended to
shorten the two-year period under Rule 144(k), then, the references in the
Legend to “TWO YEARS”, and in the corresponding transfer restrictions described
above, will be deemed to refer to such shorter period, from and after receipt
by the Trustee of an Officers’ Certificate and an Opinion of Counsel to that
effect.  As soon as practicable after the
Company knows of the effectiveness of any such amendment to shorten the
two-year period under Rule 144(k), unless such changes would otherwise be
prohibited by, or would cause a violation of, the federal securities laws
applicable at the time, the Company will provide to the Trustee an Officers’
Certificate and an Opinion of Counsel as to the effectiveness of such amendment
and the effectiveness of such change to the restrictive legends and transfer
restrictions.

Until
the Legend on any Restricted Security has been removed in compliance with this
Section 2.06(e), all shares of Common Stock (or other securities issuable upon
conversion as a result of the provisions of this Indenture) issued upon
conversion of such Restricted Security shall bear a legend substantially in the
form of the Legend (the “Common Stock Restrictive
Legend”) and shall be subject to the same restrictions on transfer
as such Restricted Security.  At any time
following the time when the restrictions on transfer set forth in the Common
Stock Restrictive Legend shall have expired in accordance with their terms or
shall have terminated under applicable law, the

 13
 

 

holder of such Common Stock may, upon a surrender of
the certificate representing such Common Stock exchange to the Company’s
transfer agent in accordance with such agent’s customary procedures
(accompanied, in the event that such restrictions on transfer have terminated
by reason of a transfer in compliance with Rule 144 or any successor provision,
by an opinion of counsel having substantial experience in practice under the
Securities Act and otherwise reasonably acceptable to the Company, addressed to
the Company and in form acceptable to the Company, to the effect that the
transfer of such Common Stock has been made in compliance with Rule 144 or such
successor provision), may receive a new certificate representing such Common
Stock, in like amount, which shall not bear the Common Stock Restrictive
Legend.

Section 2.07.  Replacement Securities.  If any mutilated Security is
surrendered to the Trustee, or the Company and the Trustee receive evidence to
their satisfaction of the destruction, loss or theft of any Security, and there
is delivered to the Company and the Trustee such security or indemnity as may
be required by them to save each of them harmless, then, in the absence of
notice to the Company or the Trustee that such Security has been acquired by a
bona fide purchaser, the Company shall execute and upon its written request the
Trustee shall authenticate and deliver, in exchange for any such mutilated
Security or in lieu of any such destroyed, lost or stolen Security, a new
Security of like tenor and principal amount, bearing a certificate number not
contemporaneously outstanding.

In
case any such mutilated, destroyed, lost or stolen Security has become or is
about to become due and payable, or is about to be purchased by the Company
pursuant to Article 3 hereof, the Company in its discretion may, instead of
issuing a new Security, pay or purchase such Security, as the case may be.

Upon
the issuance of any new Securities under this Section 2.07, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses
(including the fees and expenses of the Trustee) connected therewith.

Every
new Security issued pursuant to this Section 2.07 in lieu of any mutilated,
destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all benefits of this Indenture equally and proportionately with any
and all other Securities duly issued hereunder.

The
provisions of this Section 2.07 are exclusive and shall preclude (to the extent
lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities.

Section 2.08.  Outstanding Securities;
Determination of Holders’ Action.  Securities
outstanding at any time are all the Securities authenticated by the

 14
 

 

Trustee except for those cancelled by it, those paid
pursuant to Section 2.07, those delivered to it for cancellation and those
described in this Section 2.08 as not outstanding.  A Security does not cease to be outstanding
because the Company or an Affiliate thereof holds the Security; provided, however, that in determining whether the Holders
of the requisite principal amount of Securities have given or concurred in any
request, demand, authorization, direction, notice, consent, waiver, or other
Act hereunder, Securities owned by the Company or any other obligor upon the
Securities or any Affiliate of the Company or such other obligor shall be
disregarded and deemed not to be outstanding, except that, in determining
whether the Trustee shall be protected in relying upon any such request,
demand, authorization, direction, notice, consent, waiver or other Act, only
Securities which a Responsible Officer of the Trustee actually knows to be so
owned shall be so disregarded.  Subject
to the foregoing, only Securities outstanding at the time of such determination
shall be considered in any such determination (including, without limitation,
determinations pursuant to Articles 6 and 8 hereof).

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

If
the Paying Agent holds, in accordance with this Indenture, on a Redemption
Date, or on the Business Day following a Change of Control Purchase Date, or on
Stated Maturity, money sufficient to pay Securities payable on that date, then
immediately after such Redemption Date, Change of Control Purchase Date or
Stated Maturity, as the case may be, such Securities shall cease to be
outstanding and interest, including Additional Amounts, if any, on such
Securities shall cease to accrue; provided, that if such Securities are to be
redeemed, notice of such redemption has been duly given pursuant to this
Indenture or provision therefor satisfactory to the Trustee has been made.

If
a Security is converted in accordance with Article 9, then from and after the
time of conversion on the date of conversion, such Security shall cease to be
outstanding and interest, including Additional Amounts, if any, shall cease to
accrue on such Security.

Section 2.09.  Temporary Securities.  Pending the preparation of
definitive Securities, the Company may execute, and upon Company Order the
Trustee shall authenticate and deliver, temporary Securities which are printed,
lithographed, typewritten, mimeographed or otherwise produced, in any
authorized denomination, substantially of the tenor of the definitive
Securities in lieu of which they are issued and with such appropriate
insertions, omissions, substitutions and other variations as the officers
executing such Securities may determine, as conclusively evidenced by their
execution of such Securities.

If
temporary Securities are issued, the Company will cause definitive Securities
to be prepared without unreasonable delay. 
After the preparation of definitive Securities, the temporary Securities
shall be exchangeable for definitive

 15
 

 

Securities upon surrender of the temporary Securities
at the office or agency of the Company designated for such purpose pursuant to
Section 2.03, without charge to the Holder. Upon surrender for cancellation of
any one or more temporary Securities, the Company shall execute and the Trustee
shall authenticate and deliver in exchange therefor a like principal amount of
definitive Securities of authorized denominations.  Until so exchanged the temporary Securities
shall in all respects be entitled to the same benefits under this Indenture as
definitive Securities.

Section 2.10.  Cancellation. If
the Company shall acquire any of the Securities, such acquisition shall not
operate as a redemption or satisfaction of the indebtedness represented by such
Securities unless the same are delivered to the Trustee for cancellation.  All Securities surrendered for payment,
purchase by the Company pursuant to Article 3, conversion, redemption or
registration of transfer or exchange shall, if surrendered to any Person other
than the Trustee, be delivered to the Trustee and shall be promptly cancelled
by it.  The Company may at any time
deliver to the Trustee for cancellation any Securities previously authenticated
and delivered hereunder which the Company may have acquired in any manner
whatsoever, and all Securities so delivered shall be promptly cancelled by the
Trustee.  The Company may not issue new
Securities to replace Securities it has paid or delivered to the Trustee for
cancellation or that any Holder has converted pursuant to Article 9.  No Securities shall be authenticated in lieu
of or in exchange for any Securities cancelled as provided in this Section,
except as expressly permitted by this Indenture.  All cancelled Securities held by the Trustee
shall be disposed of by the Trustee in accordance with the Trustee’s customary
procedure.

Section 2.11.  Persons Deemed Owners.  Prior to due presentment of a
Security for registration of transfer, the Company, the Trustee and any agent
of the Company or the Trustee may treat the Person in whose name such Security
is registered as the owner of such Security for the purpose of receiving
payment of principal of the Security or the payment of any Redemption Price or
Change of Control Purchase Price in respect thereof, and interest thereon, for
the purpose of conversion and for all other purposes whatsoever, whether or not
such Security be overdue, and neither the Company, the Trustee nor any agent of
the Company or the Trustee shall be affected by notice to the contrary.

Section 2.12.  Global Securities.  (a) Notwithstanding any other
provisions of this Indenture or the Securities, (A) transfers of a Global
Security, in whole or in part, shall be made only in accordance with Section
2.06 and Section 2.12(a)(i), (B) transfers or exchanges of a beneficial
interest in a Global Security for an interest in the same or another Global
Security shall comply with Section 2.06 and Section 2.12(a)(ii) below, (C)
transfers or exchanges of a beneficial interest in a Global Security for a
Certificated Security shall comply with Section 2.06, Section 2.12(a)(iii)
below and Section 2.12(e)(i) below, and (D) transfers or exchanges of a
Certificated Security shall comply with Section 2.06 and Sections 2.12(a)(iv)
and (a)(v) below.

 16
 

 

(i)            Transfer of
Global Security.  A Global
Security may not be transferred, in whole or in part, to any Person other than
the Depositary or a nominee or any successor thereof, and no such transfer to
any such other Person may be registered; provided that this clause (i) shall
not prohibit any transfer of a Certificated Security that is issued in exchange
for a Global Security.  No transfer of a
Global Security to any Person shall be effective under this Indenture or the
Securities unless and until such Security has been registered in the name of
such Person.  Nothing in this Section
2.12(a)(i) shall prohibit or render ineffective any transfer of a beneficial
interest in a Global Security effected in accordance with the other provisions
of this Section 2.12.

(ii)           Transfer or
Exchange of a Beneficial Interest in a Global Security for a Beneficial
Interest in the Same or Another Global Security.

(A)          A beneficial interest in
a Global Security may not be transferred or exchanged for a beneficial interest
in another Global Security except upon satisfaction of the requirements set
forth below.  Upon receipt by the Trustee
of a request to transfer or exchange of a beneficial interest in a Global
Security in accordance with Applicable Procedures for a beneficial interest in
another Global Security,  together with:

(1)       so long as the Securities
are Restricted Securities,  certification
in the form set forth in Exhibit C;

(2)       written instructions to the
Trustee to make, or direct the Registrar to make, in the case of a transfer or
exchange of a beneficial interest in a Global Security for a beneficial
interest in another Global Security, an adjustment on its books and records
with respect to such Global Securities to reflect a decrease and increase in
the aggregate principal amount of the Securities represented by such Global
Securities, such instructions to contain information regarding the Depositary
accounts to be credited with such decrease and increase; and

(3)       if the Company or the
Trustee so requests, an Opinion of Counsel or other evidence reasonably
satisfactory to it as to the compliance with the restrictions set forth in the
Legend,

then the Trustee, (x)
shall cause, or direct the Registrar to cause, in accordance with the standing
instructions and procedures existing between the Depositary and the Registrar,
the aggregate principal amount of the Securities represented by the appropriate

 17
 

 

Global Security to be
decreased by the aggregate principal amount that the other Global Security is
increased and (y) in accordance with the standing instructions and procedures
existing between the Depositary and the Registrar and Applicable Procedures,
shall debit and credit or cause to be debited or credited, as appropriate, to
the accounts of the persons specified in such instructions a beneficial
interest in the Global Security or Global Securities, as appropriate, equal to
the amount of the beneficial interests so transferred or exchanged.

(B)              Beneficial interests
in a Global Security may be transferred to Persons who take delivery in the
same Global Security in accordance with the Applicable Procedures and, if the
Global Security is a Restricted Security, in accordance with the transfer
restrictions set forth in the Legend.  No
written orders or instructions shall be required to be delivered to the
Registrar or the Trustee to effect the transactions described in this Section 2.12(a)(ii)(B).

(C)              Other than transfers
to the Company or to an Affiliate of the Company, beneficial interests in a
Global Security that is not a Restricted Security may not be transferred to a
Person who takes delivery thereof in the form of a beneficial interest in a
Global Security that is a Restricted Security.

(iii)          Transfer or
Exchange of a Beneficial Interest in a Global Security for a Certificated
Security.  A beneficial
interest in a Global Security may not be exchanged for a Certificated Security
except upon satisfaction of the requirements set forth below and in Section
2.12(e)(i) below.  Upon request to the
Trustee for a transfer of a beneficial interest in a Global Security in
accordance with Applicable Procedures for a Certificated Security, together
with:

(A)             so long as the
Securities are Restricted Securities, certification in the form set forth in
Exhibit C;

(B)              written instructions
to the Trustee to make, or direct the Registrar to make, an adjustment on its
books and records with respect to such Global Security to reflect a decrease in
the aggregate principal amount of the Securities represented by the Global
Security, such instructions to contain information regarding the Depositary
account to be debited with such decrease; and

(C)              if the Company so
requests, an Opinion of Counsel or other evidence reasonably satisfactory to it
as to the compliance with the restrictions set forth in the Legend,

 18
 

 

then the Trustee shall cause, or direct the Registrar
to cause, in accordance with the standing instructions and procedures existing
between the Depositary and the Registrar, the aggregate principal amount of the
Securities represented by the Global Security to be decreased by the aggregate
principal amount of the Certificated Security to be issued, shall issue such
Certificated Security and shall debit or cause to be debited to the account of
the person specified in such instructions a beneficial interest in the Global
Security equal to the principal amount of the Certificated Security so issued.

(iv)          Transfer and
Exchange of Certificated Securities. 
When Certificated Securities are presented to the Registrar with a
request:

(A)          to register the transfer
of such Certificated Securities; or

(B)           to exchange such
Certificated Securities for an equal principal amount of Certificated
Securities of other authorized denominations,

the Registrar shall
register the transfer or make the exchange as requested if
its reasonable requirements for such transaction are met; provided,
however, that the Certificated Securities surrendered for transfer
or exchange:

(1)           shall be duly endorsed
or accompanied by a written instrument of transfer in form reasonably
satisfactory to the Company and the Registrar, duly executed by the Holder
thereof or his attorney duly authorized in writing; and

(2)           so long as such
Securities are Restricted Securities, such Securities are being transferred or
exchanged pursuant to an effective registration statement under the Securities
Act or pursuant to clause (x), (y) or (z) below, and are accompanied by the
following additional information and documents, as applicable:

(x)             if such Certificated
Securities are being delivered to the Registrar by a Holder for registration in
the name of such Holder, without transfer, a certification from such Holder to
that effect; or

(y)            if such Certificated
Securities are being transferred to the Company, a certification to that
effect; or

(z)             if such Certificated
Securities are being transferred pursuant to an exemption

 19
 

 

from registration, (i) a certification to that effect
(in the form set forth in Exhibit C, if applicable) and (ii) if the Company so
requests, an Opinion of Counsel or other evidence reasonably satisfactory to it
as to the compliance with the restrictions set forth in the Legend.

(v)           Transfer of
a Certificated Security for a Beneficial Interest in a Global Security.  A Certificated Security may not be exchanged
for a beneficial interest in a Global Security except upon satisfaction of the
requirements set forth below.

Upon
receipt by the Trustee of a Certificated Security, duly endorsed or accompanied
by appropriate instruments of transfer, in form satisfactory to the Company and
the Trustee, together with:

(A)          so long as the
Securities are Restricted Securities, certification, in the form set forth in
Exhibit C, that such Certificated Security is being transferred to a QIB in
accordance with Rule 144A, or to an institutional accredited investor within
the meaning of Rule 501(a)(1), (2), (3) or (7) of Regulation D of the
Securities Act; and

(B)           written instructions
directing the Trustee to make, or to direct the Registrar to make, an
adjustment on its books and records with respect to such Global Security to
reflect an increase in the aggregate principal amount of the Securities
represented by the Global Security, such instructions to contain information
regarding the Depositary account to be credited with such increase, then the
Trustee shall cancel such Certificated Security and cause, or direct the
Registrar to cause, in accordance with the standing instructions and procedures
existing between the Depositary and the Registrar, the aggregate principal
amount of Securities represented by the Global Security to be increased by the
aggregate principal amount of the Certificated Security to be exchanged, and
shall credit or cause to be credited to the account of the Person specified in
such instructions a beneficial interest in the Global Security equal to the
principal amount of the Certificated Security so cancelled.  If no Global Securities are then outstanding,
the Company shall issue and the Trustee shall authenticate, upon written order
of the Company in the form of a Company Order, a new Global Security in the
appropriate principal amount.

(b)        Subject to the succeeding
Section 2.12(c), every Security shall be subject to the restrictions on
transfer provided in the Legend and herein including

 20
 

 

the delivery of an Opinion of Counsel, if so
required.  Whenever any Restricted
Security is presented or surrendered for transfer or for exchange, such
Security must be accompanied by a certificate in substantially the form set
forth in Exhibit C, dated the date of such surrender and signed by the Holder
of such Security or in the case of a transfer of a beneficial interest in a
Global Security, the DTC participant holding such interest, as to compliance
with such restrictions on transfer.  The
Registrar shall not be required to accept for such transfer or exchange any
Security not so accompanied by a properly completed certificate.

(c)        The restrictions imposed
by the Legend upon the transferability of any Security shall cease and
terminate when such Security has been sold pursuant to an effective
registration statement under the Securities Act or transferred in compliance
with Rule 144 under the Securities Act (or any successor provision thereto) or,
if earlier, upon the expiration of the holding period applicable to sales
thereof under Rule 144(k) under the Securities Act (or any successor
provision).  Any Security as to which
such restrictions on transfer shall have expired in accordance with their terms
or shall have terminated may, upon a surrender of such Security for exchange to
the Registrar in accordance with the provisions of this Section 2.12
(accompanied, in the event that such restrictions on transfer have terminated
by reason of a transfer in compliance with Rule 144 or any successor provision,
by an Opinion of Counsel having substantial experience in practice under the
Securities Act and otherwise reasonably acceptable to the Company, addressed to
the Company and in form acceptable to the Company, to the effect that the
transfer of such Security has been made in compliance with Rule 144 or such
successor provision), be exchanged for a new Security, of like tenor and
aggregate principal amount, which shall not bear the restrictive Legend.  The Company shall inform the Trustee of the
effective date of any registration statement registering the Securities under
the Securities Act.  The Trustee shall
not be liable for any action taken or omitted to be taken by it in good faith
in accordance with the aforementioned opinion of counsel or registration
statement.

(d)        As used in the preceding
two paragraphs of this Section 2.12, the term “transfer”
encompasses any sale, pledge, transfer, loan, hypothecation, or other
disposition of any interest in any Security.

(e)        The provisions of clauses
(i), (ii), (iii) and (iv) below shall apply only to Global Securities:

(i)            Notwithstanding any
other provisions of this Indenture or the Securities, a Global Security shall
not be exchanged in whole or in part for a Security registered in the name of
any Person other than the Depositary or one or more nominees thereof, provided
that a Global Security may be exchanged for Securities registered in the names
of any Person designated by the Depositary in the event that (A) the Depositary
has notified the Company that it is unwilling or unable to continue as
Depositary for such Global Security or such Depositary has ceased to be a
“clearing agency” registered under the Securities Exchange Act of 1934,

 21
 

 

as amended (the “Exchange Act”), and a successor Depositary is not appointed
by the Company within 90 days or (B) an Event of Default has occurred and is
continuing with respect to the Securities. 
Any Global Security exchanged pursuant to clause (A) above shall be so
exchanged in whole and not in part, and any Global Security exchanged pursuant
to clause (B) above may be exchanged in whole or from time to time in part as
directed by the Depositary.  Any Security
issued in exchange for a Global Security or any portion thereof shall be a
Global Security; provided that any such Security so issued that is registered
in the name of a Person other than the Depositary or a nominee thereof shall
not be a Global Security.

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

(iii)          Subject to the
provisions of clause (v) below, the registered Holder may grant proxies and
otherwise authorize any Person, including Agent Members (as defined below) and
Persons that may hold interests through Agent Members, to take any action which
a Holder is entitled to take under this Indenture or the Securities.

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

(v)           Neither any members of,
or participants in, the Depositary (collectively, the “Agent
Members”) nor any other Persons on whose behalf Agent Members may
act shall have any rights under this Indenture with respect to any Global
Security registered in the name of the Depositary or any nominee thereof, or
under any such Global Security, and the Depositary or such nominee, as the case
may be, may be treated by

 22
 

 

the Company, the Trustee
and any agent of the Company or the Trustee as the absolute owner and holder of
such Global Security for all purposes whatsoever.  Notwithstanding the foregoing, nothing herein
shall prevent the Company, the Trustee or any agent of the Company or the Trustee
from giving effect to any written certification, proxy or other authorization
furnished by the Depositary or such nominee, as the case may be, or impair, as
between the Depositary, its Agent Members and any other Person on whose behalf
an Agent Member may act, the operation of customary practices of such Persons
governing the exercise of the rights of a Holder of any Security.

(f)         By its acceptance of any
Security bearing the Legend, each Holder of such Security acknowledges the
restrictions on transfer of such Security set forth in this Indenture and
agrees that it will transfer such Security only as provided in this Indenture.

Section 2.13.  CUSIP Numbers.  The Company may issue the
Securities with one or more “CUSIP” numbers (if then generally in use), and, if
so, the Trustee shall use “CUSIP” numbers in notices of redemption as a
convenience to Holders; provided that any such notice may state that no
representation is made as to the correctness of such numbers either as printed
on the Securities or as contained in any notice of a redemption and that
reliance may be placed only on the other identification numbers printed on the
Securities, and any such redemption shall not be affected by any defect in or
omission of such numbers.  The Company
will promptly notify the Trustee in writing of any change in the CUSIP numbers.

ARTICLE
3

REDEMPTION AND PURCHASES

Section 3.01.  Company’s Right to Redeem;
Notices to Trustee.  Prior to
April 20, 2009, the Securities will not be redeemable at the Company’s
option.  Beginning on April 20, 2009, the
Company, at its option, may redeem the Securities, subject to and in accordance
with the terms and conditions of Section 5 of the Securities, for cash, as
a whole or in part, at a redemption price equal to the principal amount of
those Securities plus any accrued and unpaid interest, including Additional
Amounts, if any, on those Securities to the Redemption Date.  If the Company elects to redeem Securities
pursuant to Section 5 of the Securities, it shall notify the Trustee in
writing of the Redemption Date, the principal amount of Securities to be
redeemed and the Redemption Price.

The
Company shall give the notice to the Trustee of its intention to exercise its
right to redeem the Securities as provided for in this Section 3.01 by a
Company Order at least ten (10) Business Days prior to the day the Redemption
Notice is to be mailed.

 23

 

 

Section 3.02.  Selection of Securities to Be Redeemed.  If less than all the Securities
are to be redeemed, unless the procedures of the Depositary provide otherwise,
the Trustee shall select the Securities to be redeemed by lot, on a pro rata
basis or by another method the Trustee considers fair and appropriate (so long
as such method is not prohibited by the rules of any stock exchange on which
the Securities are then listed).  The
Trustee shall make the selection within five Business Days after it receives
the notice provided for in Section 3.01 from outstanding Securities not
previously called for redemption. The Trustee may select for redemption
portions of the principal amount of Securities that have denominations larger
than $1,000.

Securities and portions of Securities that the Trustee
selects shall be in principal amounts of $1,000 or an integral multiple of
$1,000.  Provisions of this Indenture
that apply to Securities called for redemption also apply to portions of
Securities called for redemption.  The
Trustee shall notify the Company promptly of the Securities or portions of the
Securities to be redeemed.

Securities and portions of Securities that are to be
redeemed are convertible by the Holder until the close of business on the
second Business Day prior to the Redemption Date unless the Company fails to
pay the Redemption Price on the Redemption Date.  If any Security selected for partial
redemption is converted in part before termination of the conversion right with
respect to the portion of the Security so selected, the converted portion of
such Security shall be deemed (so far as may be) to be the portion selected for
redemption.  Securities which have been
converted during a selection of Securities to be redeemed may be treated by the
Trustee as outstanding for the purpose of such selection.

Section 3.03.  Notice of Redemption.  At least 20 days but not more than
60 days before a Redemption Date, the Company shall mail a notice of redemption
by first class mail, postage prepaid, to each Holder of Securities to be
redeemed.

The notice shall identify the Securities to be
redeemed and shall state:

(a)        the Redemption Date;

(b)        the Redemption Price;

(c)        the Conversion Price;

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

(e)        that Securities called for
redemption may be converted at any time before the close of business on the
second Business Day prior to the Redemption Date;

(f)         that Holders who wish to
convert their Securities must satisfy the requirements set forth in
Section 8 of the Securities;

 24
 

 

 

(g)        that Securities called for
redemption must be surrendered to the Paying Agent to collect the Redemption
Price;

(h)        if fewer than all of the
outstanding Securities are to be redeemed, the certificate numbers, if any, and
principal amounts of the particular Securities to be redeemed;

(i)         that, unless the Company
defaults in making payment of such Redemption Price, interest, including
Additional Amounts, if any, on Securities called for redemption will cease to
accrue interest on and after the Redemption Date; and

(j)         the CUSIP number(s) of
the Securities.

At the Company’s written request, the Trustee shall
give the notice of redemption in the Company’s name and at the Company’s
expense, provided that the Company makes such request at least ten Business
Days prior to the date by which such notice of redemption is to be given to
Holders in accordance with this Section 3.03, unless the Trustee agrees in
writing to a shorter period.

Section 3.04.  Effect of Notice Redemption.  Once notice of redemption is
given, Securities called for redemption become due and payable on the
Redemption Date and at the Redemption Price stated in the notice except for
Securities which are converted in accordance with the terms of this Indenture.
Upon surrender to the Paying Agent, such Securities shall be paid at the
Redemption Price stated in the notice.

Section 3.05.  Deposit of Redemption Price.  Prior to 10:00 a.m., New York City
time, on the Business Day preceding the Redemption Date, the Company shall deposit
with the Paying Agent (or if the Company or a Subsidiary or an Affiliate of
either of them is the Paying Agent, shall segregate and hold in trust) money
sufficient to pay the applicable Redemption Price of all Securities to be
redeemed on that date other than Securities or portions of Securities called
for redemption which on or prior thereto have been delivered by the Company to
the Trustee for cancellation or have been converted.  The Paying Agent shall as promptly as
practicable return to the Company any money not required for that purpose
because of conversion of Securities pursuant to Article 9.  If such money is then held by the Company in
trust and is not required for such purpose, it shall be discharged from such
trust.

Section 3.06.  Securities Redeemed in Part.  Upon surrender of a Security that
is redeemed in part, the Company shall execute and the Trustee shall
authenticate and deliver to the Holder a new Security in an authorized
denomination equal in principal amount to the unredeemed portion of the
Security surrendered.

Section 3.07.  Purchase of Securities at Option of the
Holder Upon Change of Control.  (a)
If a Change of Control occurs (subject to certain

 25
 

 

 

exceptions set forth below), the Securities not
previously purchased by the Company shall be purchased by the Company for cash,
at the option of the Holder thereof, at a purchase price specified in
Section 6 of the Securities (the “Change
of Control Purchase Price”), as of the date that is between 30 and
60 days after the date of a notice of Change of Control delivered by the
Company pursuant to Section 3.07(b) (the “Change
of Control Purchase Date”), subject to satisfaction by or on behalf
of the Holder of the requirements set forth in Section 3.07(c).

A “Change of Control”
will be deemed to have occurred at such time after the Securities are
originally issued when any of the following events shall occur:

(i)            the
acquisition by any Person, including any syndicate or group deemed to be a
“person” under Section 13(d)(3) of the Exchange Act, of beneficial ownership,
directly or indirectly, through a purchase, merger or other acquisition
transaction or series of purchases, mergers or other acquisition transactions
of shares of the Capital Stock of the Company entitling that Person to exercise
50% or more of the total voting power of all shares of the Capital Stock of the
Company entitled to vote generally in elections of directors, other than any
acquisition by the Company, any of its subsidiaries or any of its employee
benefit plans; or

(ii)           the
first day on which a majority of the members of the Board of Directors of the
Company does not consist of Continuing Directors; or

(iii)          the Company consolidates or merges with or
into any other Person, any merger of another Person into the Company, or any
conveyance, transfer, sale, lease or other disposition of all or substantially
all of the Company’s properties and assets to another Person, other than: (A)
any transaction: (1) that does not result in any reclassification, conversion,
exchange or cancellation of outstanding shares of the Company’s Capital Stock;
and (2) pursuant to which the holders of 50% or more of the total voting power
of the Company’s Capital Stock entitled to vote generally in elections of
directors immediately prior to the transaction have the entitlement to
exercise, directly or indirectly, 50% or more of the total voting power of all
shares of Capital Stock entitled to vote generally in elections of directors of
the continuing or surviving Person immediately after giving effect to such
issuance; and (B) any merger primarily for the purpose of changing the
Company’s jurisdiction of incorporation and resulting in a reclassification,
conversion or exchange of outstanding shares of Common Stock, if at all, solely
into shares of common stock of the surviving entity.

A “Continuing
Director” shall mean, as of any date of determination, any member of
the Board of Directors who:

 26
 

 

 

(i)            was a member of the
Board of Directors of the Company on November 14, 2006; or

(ii)           was nominated for election
or elected to the Board of Directors with the approval of a majority of the
Continuing Directors who were members of the Board of Directors at the time of
the new director’s nomination or election.

(b)        Notwithstanding the
provisions of Section 3.07(a), the Company shall not be required to purchase
the Securities of the Holders upon a Change of Control pursuant to this Section
3.07 (and a Change of Control shall be deemed not to have occurred) if:

(i)            the Sale Price per
share of Common Stock for any five Trading Days within (A) the period of 10
consecutive Trading Days ending immediately after the later of the Change of
Control or the public announcement of the Change of Control, in the case of a
Change of Control under clause (i) or (ii) of the definition of “Change of
Control” above, or (B) the period of 10 consecutive Trading Days ending
immediately before the Change of Control, in the case of a Change of Control
under clause (iii) of the definition of “Change of Control” above, equals or
exceeds 110% of the Conversion Price of the Securities in effect on each of
those five Trading Days; or

(ii)           90% or more of the
consideration in the transaction or transactions (other than cash payments for
fractional shares and cash payments made in respect of dissenters’ appraisal
rights) constituting a Change of Control consists of shares of common stock
traded or to be traded immediately following a Change of Control on a national
securities exchange or The Nasdaq Global Market, and, as a result of the
transaction or transactions, the Securities become convertible solely into that
common stock (and any rights attached thereto).

For the purposes of this Section 3.07, (x) whether a
Person is a “beneficial owner” shall be determined in accordance with Rule 13d-3
and Rule 13d-5 under the Exchange Act (except that any of those Persons shall
be deemed to have beneficial ownership of all securities it has the right to
acquire, whether the right is currently exercisable or is exercisable only upon
the occurrence of a subsequent condition) and (y) the term “Person” includes
any syndicate or group that would be deemed to be a “person” under Section
13(d)(3) of the Exchange Act.

(c)        No later than 30 days
after the occurrence of a Change of Control, the Company shall mail a written
notice of the Change of Control by first class mail to the Trustee and to each
Holder (and to beneficial owners as required by applicable law).  The notice shall include a form of Change of
Control Purchase Notice to be completed by the Holder and shall state:

 27
 

 

 

(i)            briefly, the events
causing a Change of Control and the date of such Change of Control;

(ii)           the date by which the
Change of Control Purchase Notice pursuant to this Section 3.07 must be
delivered to the Paying Agent in order for a Holder to exercise the repurchase
rights;

(iii)          the Change of Control
Purchase Date;

(iv)          the Change of Control
Purchase Price;

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

(vi)          the Conversion Price and
any adjustments thereto;

(vii)         that the Securities as to
which a Change of Control Purchase Notice has been given may be converted if
they are otherwise convertible pursuant to Article 10 hereof only if the Change
of Control Purchase Notice has been withdrawn in accordance with the terms of this
Indenture;

(viii)        that the Securities must
be surrendered to the Paying Agent to collect payment;

(ix)           that the Change of
Control Purchase Price for any Security as to which a Change of Control
Purchase Notice has been duly given and not withdrawn will be paid promptly
following the later of the Change of Control Purchase Date and the time of
surrender of such Security as described in clause (8) above;

(x)            briefly, the
procedures the Holder must follow to exercise rights under this Section 3.07;

(xi)           briefly, the conversion
rights of the Securities;

(xii)          the procedures for
withdrawing a Change of Control Purchase Notice;

(xiii)         that, unless the Company
defaults in making payment of such Change of Control Purchase Price, interest,
if any, on Securities surrendered for purchase by the Company will cease to
accrue on and after the Change of Control Purchase Date; and

(xiv)        the CUSIP number(s) of the
Securities.

Without otherwise limiting the Company’s obligations
pursuant to this Section 3.07 in any way, the Company shall also issue a press
release through

 28
 

 

 

Dow Jones & Company, Inc. or Bloomberg Business
News containing the relevant information and otherwise make this information
available on the Company’s web site or through another public medium as the Company
may use at that time.

(d)           A
Holder may exercise its rights specified in Section 3.07(a) upon delivery of a
written notice of purchase (a “Change of
Control Purchase Notice”) to the Paying Agent at any time on or
prior to the close of business on the second Business Day preceding the Change
of Control Purchase Date (unless the Company shall specify a later date),
specifying:

(i)            the certificate number
of the Security which the Holder will deliver to be purchased or the
appropriate depositary procedures if Certificated Securities have not been
issued;

(ii)           the portion of the
principal amount of the Security which the Holder will deliver to be purchased,
which portion must be $1,000 or an integral multiple of $1,000; and

(iii)          that such Security shall
be purchased pursuant to the terms and conditions specified in Section 6
of the Securities and in this Indenture.

The delivery of such Security to the Paying Agent with
the Change of Control Purchase Notice (together with all necessary
endorsements) at the offices of the Paying Agent shall be a condition to the
receipt by the Holder of the Change of Control Purchase Price therefor; provided, however, that such Change of
Control Purchase Price shall be so paid pursuant to this Section 3.07 and
Section 3.08 only if the Security so delivered to the Paying Agent shall
conform in all respects to the description thereof set forth in the related
Change of Control Purchase Notice.

The Company shall purchase from the Holder thereof,
pursuant to this Section 3.07 and Section 3.08, a portion of a Security if the
principal amount of such portion is $1,000 or an integral multiple of $1,000.
Provisions of this Indenture that apply to the purchase of all of a Security
also apply to the purchase of such portion of such Security.

Any purchase by the Company contemplated pursuant to
the provisions of this Section 3.07 and Section 3.08 shall be consummated by
the delivery of the consideration to be received by the Holder.

Notwithstanding anything herein to the contrary, any
Holder delivering to the Paying Agent the Change of Control Purchase Notice
contemplated by this Section 3.07(c) shall have the right to withdraw such
Change of Control Purchase Notice at any time prior to the close of business on
the last Business Day immediately preceding the Change of Control Purchase Date
by delivery of a written notice of withdrawal to the Paying Agent in accordance
with Section 3.08.

 29
 

 

 

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

Section 3.08.  Effect of Change of Control Purchase Notice;
Withdrawal.  Upon receipt by
the Paying Agent of the Change of Control Purchase Notice specified in Section
3.07(c), the Holder of the Security in respect of which such Change of Control
Purchase Notice was given shall (unless such Change of Control Purchase Notice
is withdrawn as specified in the following two paragraphs) thereafter be
entitled to receive solely the Change of Control Purchase Price with respect to
such Security.  Such Change of Control
Purchase Price shall be paid to such Holder, subject to the receipt of funds by
the Paying Agent, promptly following the later of (x) the Change of Control
Purchase Date with respect to such Security (provided the conditions in Section
3.07(c) have been satisfied) and (y) the time of delivery of such Security to
the Paying Agent by the Holder thereof in the manner required by Section
3.07(c).  Securities in respect of which a
Change of Control Purchase Notice has been given by the Holder thereof may not
be converted pursuant to Article 9 hereof on or after the date of the delivery
of such Change of Control Purchase Notice unless such Change of Control
Purchase Notice has first been validly withdrawn as specified in the following
two paragraphs.

A Change of Control 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 Change of Control Purchase Notice, at any
time prior to the close of business on the Change of Control Purchase Date,
specifying:

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

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

(c)           the
principal amount, if any, of such Security which remains subject to the
original Change of Control Purchase Notice, and which has been or will be
delivered for purchase by the Company.

There shall be no purchase of any Securities pursuant
to Section 3.07 if there has occurred (prior to, on or after, as the case may
be, the giving, by the Holders of such Securities, of the required Change of
Control Purchase Notice) and is continuing an Event of Default (other than a
default in the payment of the Change of Control Purchase Price with respect to
such Securities). The Paying Agent will promptly return to the respective
Holders thereof any Securities (x) with respect to which a Change of Control
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 Change of Control Purchase Price with respect to such
Securities) in which case, upon such return,

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the Change of Control Purchase Notice with respect
thereto shall be deemed to have been withdrawn.

Section 3.09.  Deposit of Change of Control Purchase
Price.  Prior to 10:00 a.m.,
New York City time, on the Change of Control Purchase Date, the Company shall
deposit with the Trustee or with the Paying Agent (or, if the Company or a
Subsidiary or an Affiliate of either of them is acting as the Paying Agent,
shall segregate and hold in trust as provided in Section 2.04) an amount of
cash (in immediately available funds if deposited on such Business Day)
sufficient to pay the aggregate Change of Control Purchase Price of all the
Securities or portions thereof which are to be purchased as of the Change of
Control Purchase Date.

Section 3.10.  Securities Purchased in Part.  Any Certificated Security 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 Security, without service charge,
a new Security or Securities, 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 Security so surrendered which is not
purchased.

Section 3.11.  Covenant to Comply With Securities Laws Upon
Purchase of Securities.  When
complying with the provisions of Section 3.07 (provided that such offer or
purchase constitutes an “issuer tender 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), and subject to any exemptions available under applicable law, the
Company shall (i) comply with Rule 13e-4 and Rule 14e-1 (or any successor
provision) under the Exchange Act, (ii) file the related Schedule TO (or any
successor schedule, form or report) under the Exchange Act, and (iii) otherwise
comply with all Federal and state securities laws so as to permit the rights
and obligations under Section 3.07 to be exercised in the time and in the
manner specified in Section 3.07.

Section 3.12.  Repayment to the Company.  The Trustee and the Paying Agent
shall return to the Company any cash that remains unclaimed as provided in
Section 11 of the Securities, together with interest or dividends, if any,
thereon (subject to the provisions of Section 7.01(f)), held by them for the
payment of the Change of Control Purchase Price; provided, however, that to the extent that the aggregate
amount of cash deposited by the Company pursuant to Section 3.09 exceeds the
aggregate Change of Control Purchase Price of the Securities or portions
thereof which the Company is obligated to purchase as of the Change of Control
Purchase Date, then, unless otherwise agreed in writing with the Company,
promptly after the Business Day following the Change of Control

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Purchase Date, the Trustee shall return any such
excess to the Company together with interest thereon (subject to the provisions
of Section 7.01(f)).

ARTICLE 4

COVENANTS

Section 4.01.  Payment of Securities.  The Company shall promptly make
all payments in respect of the Securities on the dates and in the manner
provided in the Securities or pursuant to this Indenture.  Any amounts of cash to be given to the
Trustee or Paying Agent, shall be deposited with the Trustee or Paying Agent by
10:00 a.m., New York City time, on the Business Day preceding the date on which
any payment is due by the Company. 
Principal amount plus accrued interest, if any, including Additional Amounts,
if any, the Redemption Price, the Change of Control Purchase Price and cash
interest, if any, shall be considered paid on the applicable date due if on
such date the Trustee or the Paying Agent holds, in accordance with this
Indenture, cash sufficient to pay all such amounts then due.

Section 4.02.  SEC and Other Reports.  The Company shall file with the
Trustee, within 15 days after it files such annual and quarterly reports,
information, documents and other reports with the SEC, copies of its annual
report and of the information, documents and other reports (or copies of such
portions of any of the foregoing as the SEC may by rules and regulations
prescribe) which the Company is required to file with the SEC pursuant to
Section 13 or 15(d) of the Exchange Act. 
In the event the Company is at any time no longer subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act, it shall
continue to provide the Trustee with reports containing substantially the same
information as would have been required to be filed with the SEC had the
Company continued to have been subject to such reporting requirements.  In such event, such reports shall be provided
at the times the Company would have been required to provide reports had it
continued to have been subject to such reporting requirements.  The Company also shall comply with the other
provisions of TIA Section 314(a). 
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 conclusively on Officers’ Certificates).

Section 4.03.  Compliance Certificate.  The Company shall deliver to the Trustee
within 120 days after the end of each fiscal year of the Company (beginning
with the fiscal year ending on December 31, 2006) an Officers’
Certificate, stating whether or not to the knowledge of the signers thereof,
the Company is in default in the performance and observance of any of the
terms, provisions and conditions of this Indenture (without regard to any
period of grace or requirement of notice provided hereunder) and if the Company
shall be in

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default, specifying all such defaults and the nature
and status thereof of which they may have knowledge.

Section 4.04.  Further Instruments and Acts.  Upon request of the Trustee, the
Company will execute and deliver such further instruments and do such further
acts as may be reasonably necessary or proper to carry out more effectively the
purposes of this Indenture.

Section 4.05.  Maintenance of Office or Agency.  The Company will maintain in the
Borough of Manhattan, the City of New York, an office or agency of the Trustee,
Registrar, Paying Agent and Conversion Agent where Securities may be presented
or surrendered for payment, where Securities may be surrendered for
registration of transfer, exchange, purchase, redemption or conversion and
where notices and demands to or upon the Company in respect of the Securities
and this Indenture may be served.  The
office of The Bank of New York, 101 Barclay Street, Floor 4E, New York, New
York 10286 (Attention:  Corporate Trust
Trustee Administration), shall initially be such office or agency for all of
the aforesaid purposes.  The Company
shall give prompt written notice to the Trustee of the location, and of any
change in the location, of any such office or agency (other than a change in
the location of the office of the Trustee). 
If at any time the Company shall fail to maintain any such required
office or agency or shall fail to furnish the Trustee with the address thereof,
such presentations, surrenders, notices and demands may be made or served at
the address of the Trustee set forth in Section 10.02.

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

Section 4.06.  Delivery of Certain Information.  At any time when the Company is
not subject to Section 13 or 15(d) of the Exchange Act, upon the request of a
Holder or any beneficial owner of Securities or holder or beneficial owner of
shares of Common Stock issued upon conversion thereof, the Company will
promptly furnish or cause to be furnished Rule 144A Information (as defined
below) to such Holder or any beneficial owner of Securities or holder or
beneficial owner of shares of Common Stock, or to a prospective purchaser of
any such security designated by any such holder, as the case may be, to the
extent required to permit compliance by such Holder or holder with Rule 144A
under the Securities Act in connection with the resale of any such
security.  “Rule 144A Information” shall be such information as is
specified pursuant to Rule 144A(d)(4) under the Securities Act.  Whether a Person is a beneficial owner shall
be determined by the Company to the Company’s reasonable satisfaction.

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Section 4.07.  Treatment of Securities.  Each Holder, by acceptance of a
Security, and beneficial owner, by acceptance of a beneficial ownership
interest in a Security, agrees to treat the Securities as indebtedness of the
Company for U.S. federal income tax purposes and not to take any action
inconsistent with such treatment.

Section 4.08.  Delivery of Original Issue Discount Certificate.  On December 31 of each year, commencing
December 31, 2006, the Company shall deliver an Officer’s Certificate to the
Trustee certifying as to the accreted value of each $1,000 principal amount of
the Securities as of that date.

ARTICLE 5

SUCCESSOR CORPORATION

Section 5.01.  When Company May Merge or Transfer
Assets.  The Company shall not
consolidate with or merge with or into any other Person or convey, transfer,
sell, lease or otherwise dispose of all or substantially all of its properties
and assets to any Person, unless:

(a)        either (i) the Company
shall be the continuing corporation or (ii) the Person (if other than the
Company) formed by such consolidation or into which the Company is merged or
the Person which acquires by conveyance, transfer or lease all or substantially
all of the properties and assets of the Company substantially as an entirety
(A) shall be organized and validly existing under the laws of the United States
or any State thereof or the District of Columbia and (B)shall expressly assume,
by an indenture supplemental hereto, executed and delivered to the Trustee, in
form reasonably satisfactory to the Trustee, all of the obligations of the
Company under the Securities and this Indenture;

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

(c)        the Company shall have
delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel,
each stating that such consolidation, merger, conveyance, transfer or lease
and, if a supplemental indenture is required in connection with such
transaction, such supplemental indenture, comply with this Article 5 and that
all conditions precedent herein provided for relating to such transaction have
been satisfied.

For purposes of the foregoing, the transfer (by lease,
assignment (excluding the grant of a security interest but including any
foreclosure thereon), sale or otherwise) of the properties and assets of one or
more Subsidiaries (other than to the Company or another Subsidiary), which, if
such assets were owned by the Company, would constitute all or substantially
all of the properties and assets

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of the Company, shall be deemed to be the transfer of
all or substantially all of the properties and assets of the Company.

The successor Person formed by such consolidation or
into which the Company is merged or the successor Person to which such
conveyance, transfer or lease is made shall succeed to, and be substituted for,
and may exercise every right and power of, the Company under this Indenture
with the same effect as if such successor had been named as the Company herein;
and thereafter, except in the case of a lease and obligations the Company may
have under a supplemental indenture, the Company shall be discharged from all
obligations and covenants under this Indenture and the Securities.  Subject to Section 8.06, the Company, the
Trustee and the successor Person shall enter into a supplemental indenture to
evidence the succession and substitution of such successor Person and such
discharge and release of the Company.

ARTICLE 6

DEFAULTS AND REMEDIES

Section 6.01.  Events of Default.  So long as any Securities are
outstanding, each of the following shall be an “Event of Default”:

(a)        the Company defaults in
the payment of the principal amount on any Security when the same becomes due
and payable at its Stated Maturity;

(b)        the Company defaults in
its obligation to repurchase any Security, or any portion thereof, upon the
exercise by the Holder of such Holder’s right to require the Company to
purchase such Securities pursuant to and in accordance with Section 3.07 hereof;

(c)        the Company defaults in
its obligation to redeem any Security, or any portion thereof, called for
redemption by the Company pursuant to and in accordance with Section 3.01
hereof;

(d)        the Company defaults in
the payment of any accrued and unpaid interest, including Additional Amounts,
if any, on any Security, in each case when due and payable, and continuance of
such default for a period of 30 days;

(e)        the Company fails to
comply with any of its covenants or agreements in the Securities or this Indenture
(other than those referred to in clauses (a) through (d) above) and such
failure continues for 60 days after receipt by the Company of a Notice of
Default;

(f)         a default under any
indebtedness for money borrowed by the Company or any Significant Subsidiary in
an aggregate outstanding principal amount of $5.0 million or more, for a period
of 30 days after written notice of default is given to the Company by the
Trustee or to the Company and the Trustee

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by Holders of not less than 25% in aggregate principal
amount of the Securities then outstanding, which default (i) is caused by the
failure to pay principal or interest when due on such indebtedness by the end
of the applicable grace period, if any, unless such indebtedness is discharged,
or (ii) results in the acceleration of such indebtedness, unless such
acceleration is waived, cured, rescinded or annulled or unless such
indebtedness is discharged;

(g)        the entry by a court
having jurisdiction in the premises of (i) a decree or order for relief in respect
of the Company or any of its Subsidiaries that is a Significant Subsidiary, in
an involuntary case or proceeding under any applicable bankruptcy, insolvency,
reorganization or other similar law or (ii) a decree or order adjudging the
Company or any of its Subsidiaries that is a Significant Subsidiary, as
bankrupt or insolvent, or approving as properly filed a petition seeking
reorganization, arrangement, adjustment or composition of or in respect of the
Company or any of its Subsidiaries that is a Significant Subsidiary, under any
applicable law, or appointing a custodian, receiver, liquidator, assignee,
trustee, sequestrator or other similar official of the Company or of any
substantial part of its property, or ordering the winding up or liquidation of
its affairs, and the continuance of any such decree or order for relief or any
such other decree or order unstayed and in effect for a period of 60
consecutive days; or

(h)        the commencement by the
Company or any of its Subsidiaries that is a Significant Subsidiary, of a
voluntary case or proceeding under any applicable bankruptcy, insolvency,
reorganization or other similar law or of any other case or proceeding to be
adjudicated a bankrupt or insolvent, or the consent by the Company or any of
its Subsidiaries that is a Significant Subsidiary, to the entry of a decree or
order for relief in respect of the Company or any of its Subsidiaries that is a
Significant Subsidiary, in an involuntary case or proceeding under any
applicable bankruptcy, insolvency, reorganization or other similar law or to
the commencement of any bankruptcy or insolvency case or proceeding against the
Company, or the filing by the Company or any of its Subsidiaries that is a
Significant Subsidiary, of a petition or answer or consent seeking
reorganization or relief under any applicable law, or the consent by the
Company to the filing of such petition or to the appointment of or the taking
possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the Company or of any substantial
part of its property, or the making by the Company or any of its Subsidiaries
that is a Significant Subsidiary, of an assignment for the benefit of
creditors, or the admission by the Company or any of its Subsidiaries that is a
Significant Subsidiary, in writing of its inability to pay its debts generally
as they become due, or the taking of corporate action by the Company or any of
its Subsidiaries that is a Significant Subsidiary, expressly in furtherance of any
such action.

A Default under clause (e) above is not an Event of
Default until the Trustee notifies the Company, or the Holders of at least 25%
in aggregate principal amount of the Securities at the time outstanding notify
the Company and the Trustee, of the Default and the Company does not cure such
Default (and such

 36
 

 

 

Default is not waived) within the time specified in
clause (e) above after actual receipt of such notice.  Any such notice must specify the Default,
require that it be remedied and state that such notice is a “Notice of
Default.”

The Trustee shall, within 90 days of the occurrence of
a Default or Event of Default, give to the Holders of the Securities notice of
all uncured Defaults or Events of Default known to it, its status and what action
the Company is taking or proposes to take with respect thereto; provided, however, the Trustee shall be
protected in withholding such notice if it, in good faith, determines that the
withholding of such notice is in the best interest of such Holders, except in
the case of a Default or Event of Default under clause (a), (b), (c) or (d)
above.

Section 6.02.  Acceleration. 
If an Event of Default (other than an Event of Default
specified in Section 6.01(g) or (h) with respect to the Company) occurs and is continuing
(the Event of Default not having been cured or waived as provided in this
Article 6), the Trustee by notice to the Company, or the Holders of at least
25% in aggregate principal amount of the Securities at the time outstanding by
notice to the Company and the Trustee, may declare the principal amount plus
accrued and unpaid interest, including Additional Amounts, if any, on all the
Securities to be immediately due and payable. 
Upon such a declaration, such accelerated amount shall be due and payable
immediately.  If an Event of Default
specified in Section 6.01(g) or (h) occurs (with respect to the Company) and is
continuing, the principal amount plus accrued and unpaid interest, including
Additional Amounts, if any, on all the Securities shall become and be
immediately due and payable without any declaration or other act on the part of
the Trustee or any Securityholders.  The
Holders of a majority in aggregate principal amount of the Securities at the
time outstanding, by written notice to the Trustee (and without notice to any
other Securityholder) may rescind an acceleration and its consequences if the
rescission would not conflict with any judgment or decree and if all existing
Events of Default have been cured or waived except nonpayment of the principal
amount plus accrued and unpaid interest, including Additional Amounts, if any,
that have become due solely as a result of acceleration and if all amounts due
to the Trustee under Section 7.07 have been paid.  No such rescission shall affect any
subsequent Default or impair any right consequent thereto.

Section 6.03.  Other Remedies.  If an Event of Default occurs and
is continuing, the Trustee may pursue any available remedy to collect the
payment of the principal amount plus accrued and unpaid interest, including
Additional Amounts, if any, on the Securities or to enforce the performance of
any provision of the Securities or this Indenture.

The Trustee may maintain a proceeding even if the
Trustee does not possess any of the Securities or does not produce any of the
Securities in the proceeding.  A delay or
omission by the Trustee or any Securityholder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of, or acquiescence in, the Event of

 37
 

 

 

Default.  No
remedy is exclusive of any other remedy. 
All available remedies are cumulative.

Section 6.04.  Waiver of Past Defaults.  The Holders of a majority in
aggregate principal amount of the Securities at the time outstanding, by
written notice to the Trustee (and without notice to any other Securityholder),
may waive an existing Default and its consequences except (a) an Event of
Default described in Section 6.01(a), 6.01(b), 6.01(c) or 6.01(d), (b) a
Default in respect of a provision that under Section 8.02 cannot be amended
without the consent of each Securityholder affected or (c) a Default which
constitutes a failure to convert any Security in accordance with the terms of
Article 9.  When a Default is waived, it
is deemed cured, but no such waiver shall extend to any subsequent or other
Default or impair any consequent right. 
This Section 6.04 shall be in lieu of Section 316(a)(1)(B) of the TIA
and such Section 316(a)(1)(B) is hereby expressly excluded from this Indenture,
as permitted by the TIA.

Section 6.05.  Control by Majority.  The Holders of a majority in
aggregate principal amount of the Securities at the time outstanding may direct
the time, method and place of conducting any proceeding for any remedy
available to the Trustee or of exercising any trust or power conferred on the
Trustee. However, the Trustee may refuse to follow any direction that conflicts
with law or this Indenture or that the Trustee determines in good faith is
unduly prejudicial to the rights of other Securityholders or would involve the
Trustee in personal liability unless the Trustee is offered indemnity
satisfactory to it.  This Section 6.05
shall be in lieu of Section 316(a)(1)(A) of the TIA and such Section
316(a)(1)(A) is hereby expressly excluded from this Indenture, as permitted by
the TIA.

Section 6.06.  Limitation on Suits.  A Securityholder may not pursue
any remedy with respect to this Indenture or the Securities unless:

(a)        the Holder gives to the
Trustee written notice stating that an Event of Default is continuing;

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

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

(d)        the Trustee does not
comply with the request within 60 days after receipt of such notice, request
and offer of security or indemnity; and

(e)        the Holders of a majority
in aggregate principal amount of the Securities at the time outstanding do not
give the Trustee a direction inconsistent with the request during such 60 day
period.

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A Securityholder may not use this Indenture to
prejudice the rights of any other Securityholder or to obtain a preference or
priority over any other Securityholder.

Section 6.07.  Rights of Holders to Receive Payment.  Notwithstanding any other
provision of this Indenture, the right of any Holder to receive payment of the
principal amount, Redemption Price, Change of Control Purchase Price or
interest, including Additional Amounts, if any, in respect of the Securities
held by such Holder, on or after the respective due dates expressed in the
Securities or any Redemption Date, and to convert the Securities in accordance
with Article 9, or to bring suit for the enforcement of any such payment on or
after such respective dates or the right to convert, shall not be impaired or
affected adversely without the consent of such Holder.

Section 6.08.  Collection Suit by Trustee.  If an Event of Default described
in Section 6.01(a), (b), (c) or (d) 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 owing with respect to the Securities and the
amounts provided for in Section 7.07.

Section 6.09.  Trustee May File Proofs of Claim.  In case of the pendency of any
receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement,
adjustment, composition or other judicial proceeding relative to the Company or
any other obligor upon the Securities or the property of the Company or of such
other obligor or their creditors, the Trustee (irrespective of whether the
principal amount, Redemption Price, Change of Control Purchase Price or
interest, including Additional Amounts, if any, in respect of the Securities
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand on
the Company for the payment of any such amount) shall be entitled and
empowered, by intervention in such proceeding or otherwise,

(a)        to file and prove a claim
for the whole amount of the principal amount, Redemption Price, Change of
Control Purchase Price, or interest, including Additional Amounts, if any, and
to file such other papers or documents as may be necessary or advisable in
order to have the claims of the Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel or any other amounts due the Trustee under Section 7.07) and of the
Holders allowed in such judicial proceeding, and

(b)        to collect and receive any
moneys or other property payable or deliverable on any such claims and to
distribute the same; and any custodian, receiver, assignee, trustee,
liquidator, sequestrator or similar official in any such judicial proceeding is
hereby authorized by each Holder to make such payments to the Trustee and, in
the event that the Trustee shall consent to the making of such payments
directly to the Holders, to pay the Trustee any amount due it for

 39
 

 

 

the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel, and any other amounts due
the Trustee under Section 7.07.

Nothing herein contained shall be deemed to authorize
the Trustee to authorize or consent to or accept or adopt on behalf of any
Holder any plan of reorganization, arrangement, adjustment or composition
affecting the Securities or the rights of any Holder thereof, or to authorize
the Trustee to vote in respect of the claim of any Holder in any such
proceeding.

Section 6.10.  Priorities. 
If the Trustee collects any money pursuant to this Article 6,
it shall pay out the money in the following order:

FIRST: to the Trustee for amounts due under Section
7.07;

SECOND: to Securityholders for amounts due and unpaid
on the Securities for the principal amount, Redemption Price, Change of Control
Purchase Price or interest, including Additional Amounts, if any, as the case
may be, ratably, without preference or priority of any kind, according to such
amounts due and payable on the Securities; and

THIRD: the balance, if any, to the Company.

The Trustee may fix a record date and payment date for
any payment to Securityholders pursuant to this Section 6.10.  At least 15 days before such record date, the
Trustee shall mail to each Securityholder and the Company a notice that states
the record date, the payment date and the amount to be paid.

Section 6.11.  Undertaking for Costs.  In any suit for the enforcement of
any right or remedy under this Indenture or in any suit against the Trustee for
any action taken or omitted by it as Trustee, a court in its discretion may
require the filing by any party litigant (other than the Trustee) in the suit
of an undertaking to pay the costs of the suit, and the court in its discretion
may assess reasonable costs, including reasonable attorneys’ fees and expenses,
against any party litigant in the suit, having due regard to the merits and
good faith of the claims or defenses made by the party litigant.  This Section 6.11 does not apply to a suit by
the Trustee, a suit by a Holder pursuant to Section 6.07 or a suit by Holders of
more than 10% in aggregate principal amount of the Securities at the time
outstanding.  This Section 6.11 shall be
in lieu of Section 315(e) of the TIA and such Section 315(e) is hereby
expressly excluded from this Indenture, as permitted by the TIA.

Section 6.12.  Waiver of Stay, Extension or Usury 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 stay or extension law or any usury or other law wherever enacted, now or at
any time hereafter in force, which would prohibit or forgive the Company from
paying all or any portion of the principal amount, Redemption

 40
 

 

 

Price or Change of Control Purchase Price in respect
of Securities, or any interest, including Additional Amounts, if any, on such
amounts, as contemplated herein, or 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 7

TRUSTEE

Section 7.01.  Duties of Trustee.  (a) If an Event of Default has
occurred and is continuing, the Trustee shall exercise the rights and powers
vested in it by this Indenture and use the same degree of care and skill in its
exercise as a prudent person would exercise or use under the circumstances in
the conduct of such person’s own affairs.

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

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

(ii)          in the absence of bad
faith on its part, the Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Trustee and conforming to the
requirements of this Indenture, but in the case of any such certificates or
opinions which by any provision hereof are specifically required to be
furnished to the Trustee, the Trustee shall examine the certificates and
opinions to determine whether or not they conform to the requirements of this
Indenture, but need not confirm or investigate the accuracy of mathematical
calculations or other facts stated therein. 
This Section 7.01(b) shall be in lieu of Section 315(a) of the TIA and
such Section 315(a) is hereby expressly excluded from this Indenture, as
permitted by the TIA.

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

(i)           this Section (c) does
not limit the effect of Section (b) of this Section 7.01;

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

 41
 

 

 

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

Subparagraphs (c)(i), (ii) and (iii) shall be in lieu
of Sections 315(d)(1), 315(d)(2) and 315(d)(3) of the TIA and such Sections
315(d)(1), 315(d)(2) and 315(d)(3) are hereby expressly excluded from this
Indenture, as permitted by the TIA.

(d)        Every provision of this
Indenture that in any way relates to the Trustee is subject to paragraphs (b),
(c), (e) and (f) of this Section 7.01.

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

(f)         Money held by the Trustee
in trust hereunder need not be segregated from other funds except to the extent
required by law.  The Trustee (acting in
any capacity hereunder) shall be under no liability for interest on any money
received by it hereunder unless otherwise agreed in writing with the Company.

Section 7.02.  Rights of Trustee.  Subject to its duties and
responsibilities under the TIA,

(a)        the Trustee may
conclusively rely and shall be protected in acting or refraining from acting
upon any resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note, other
evidence of indebtedness or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or parties;

(b)        whenever in the
administration of this Indenture the Trustee shall deem it desirable that a
matter be proved or established prior to taking, suffering or omitting any
action hereunder, the Trustee (unless other evidence be herein specifically
prescribed) may, in the absence of bad faith on its part, conclusively rely
upon an Officers’ Certificate or an Opinion of Counsel;

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

(d)        the Trustee shall not be liable
for any action taken, suffered, or omitted to be taken by it in good faith
which it believes to be authorized or within its rights or powers conferred
under this Indenture;

(e)        the Trustee may consult
with counsel selected by it and any advice or Opinion of Counsel shall be full
and complete authorization and protection in

 42
 

 

 

respect of any action taken or suffered or omitted by
it hereunder in good faith and in accordance with such advice or Opinion of
Counsel;

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

(g)        any request or direction
of the Company mentioned herein shall be sufficiently evidenced by a Company
Request or Company Order and any resolution of the Board of Directors may be
sufficiently evidenced by a Board Resolution;

(h)        the Trustee shall not be
bound to make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Trustee, in its discretion,
may make such further inquiry or investigation into such facts or matters as it
may see fit, and, if the Trustee shall determine to make such further inquiry
or investigation, it shall be entitled to examine the books, records and
premises of the Company, personally or by agent or attorney at the sole cost of
the Company and shall incur no liability or additional liability of any kind by
reason of such inquiry or investigation;

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

(j)         the rights, privileges,
protections, immunities and benefits given to the Trustee, including, without
limitation, its right to be indemnified, are extended to, and shall be
enforceable by, the Trustee in each of its capacities hereunder, to each other
Paying Agent, Registrar, Conversion Agent or co-registrar appointed hereunder,
and to each agent, custodian and other Person employed to act hereunder;

(k)        in no event shall the
Trustee be responsible or liable for special, indirect or consequential loss of
damage of any kind whatsoever (including, but not limited to, loss of profit)
irrespective of whether the Trustee has been advised of the likelihood of such
loss or damage and regardless of the form of action; and

(l)         the Trustee may request
that the Company deliver an Officers’ Certificate setting forth the names of
individuals and/or titles of officers authorized at such time to take specified
actions pursuant to this Indenture, which Officers’ Certificate may be signed
by any Person authorized to sign an Officers’

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Certificate, including any Person specified as so
authorized in any such certificate previously delivered and not superseded.

Section 7.03.  Individual Rights of Trustee.  The Trustee in its individual or
any other capacity may become the owner or pledgee of Securities and may
otherwise deal with the Company or its Affiliates with the same rights it would
have if it were not Trustee.  Any Paying
Agent, Registrar, Conversion Agent or co registrar may do the same with like
rights.  However, the Trustee must comply
with Sections 7.10 and 7.11.

Section 7.04.  Trustee’s Disclaimer.  The Trustee makes no
representation as to the validity or adequacy of this Indenture, the Securities
or any offering materials, it shall not be accountable for the Company’s use or
application of the proceeds from the Securities, it shall not be responsible
for any statement in the registration statement for the Securities under the
Securities Act or in any offering document for the Securities, the Indenture or
the Securities (other than its certificate of authentication), or the
determination as to which beneficial owners are entitled to receive any notices
hereunder.

Section 7.05.  Notice of Defaults.  If a Default occurs and if it is
known to the Trustee, the Trustee shall give to each Securityholder notice of
the Default within 90 days after it occurs or, if later, within 15 days after
it is known to the Trustee, unless such Default shall have been cured or waived
before the giving of such notice. 
Notwithstanding the preceding sentence, except in the case of a Default
described in Section 6.01(a), (b), (c) or (d), the Trustee may withhold the
notice if and so long as a committee of its Responsible Officers in good faith
determines that withholding the notice is in the interest of the
Securityholders.  The preceding sentence
shall be in lieu of the proviso to Section 315(b) of the TIA and such proviso
is hereby expressly excluded from this Indenture, as permitted by the TIA.  The Trustee shall not be deemed to have
knowledge of a Default unless a Responsible Officer of the Trustee has received
written notice of such Default, which notice specifically references this
Indenture and the Securities.

Section 7.06.  Reports by Trustee to Holders.  Within 60 days after each May 15
beginning with the May 15 following the date of this Indenture, the Trustee
shall mail to each Securityholder a brief report dated as of such May 15 that
complies with TIA Section 313(a), if required by such Section 313(a).  The Trustee also shall comply with TIA
Section 313(b).

A copy of each report at the time of its mailing to
Securityholders shall be filed with the SEC and each securities exchange, if
any, on which the Securities are listed. The Company agrees to notify the
Trustee promptly in writing whenever the Securities become listed on any
securities exchange and of any delisting thereof.

Section 7.07.  Compensation and Indemnity.  The Company agrees:

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(a)        to pay to the Trustee from
time to time such compensation as the Company and the Trustee shall from time
to time agree in writing for all services rendered by it hereunder (which
compensation shall not be limited (to the extent permitted by law) by any
provision of law in regard to the compensation of a trustee of an express
trust);

(b)        to reimburse the Trustee
upon its request for all reasonable expenses, disbursements and advances
incurred or made by the Trustee in accordance with any provision of this
Indenture (including the reasonable compensation and the expenses, advances and
disbursements of its agents and counsel), except any such expense, disbursement
or advance as may be attributable to its negligence or bad faith; and

(c)        to indemnify the Trustee
or any predecessor Trustee and their agents for, and to hold them harmless
against, any loss, damage, claim, liability, cost or expense (including
attorney’s fees and expenses, and taxes (other than taxes based upon, measured
by or determined by the income of the Trustee and any and all franchise taxes
of the Trustee)) incurred without negligence or bad faith on its part, arising
out of or in connection with the acceptance or administration of this trust,
including the costs and expenses of defending itself against any claim (whether
asserted by the Company or any Holder or any other Person) or liability in
connection with the exercise or performance of any of its powers or duties
hereunder.

To secure the Company’s payment obligations in this
Section 7.07, the Trustee shall have a lien prior to the Securities on all
money or property held or collected by the Trustee, except that held in trust
to pay the principal amount, Redemption Price, Change of Control Purchase Price
or interest, including Additional Amounts, if any, as the case may be, on
particular Securities.

The Company’s payment obligations pursuant to this
Section 7.07 shall survive the payment of the Securities, the discharge of this
Indenture and the resignation or removal of the Trustee.  When the Trustee incurs expenses or renders
services after the occurrence of a Default specified in Section 6.01(f) or (g),
the expenses including the reasonable charges and expenses of its counsel, and
the compensation for the services are intended to constitute expenses of
administration under any bankruptcy law.

Section 7.08.  Replacement of Trustee.  The Trustee may resign by so
notifying the Company; provided, however,
no such resignation shall be effective until a successor Trustee has accepted
its appointment pursuant to this Section 7.08. 
The Holders of a majority in aggregate principal amount of the
Securities at the time outstanding may remove the Trustee by so notifying the
Trustee and the Company in writing. The Company shall remove the Trustee if:

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

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(b)        the Trustee is adjudged
bankrupt or insolvent;

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

(d)        the Trustee otherwise
becomes incapable of acting.

If the Trustee resigns or is removed or if a vacancy
exists in the office of Trustee for any reason, the Company shall promptly
appoint, by resolution of its Board of Directors, a successor Trustee.

A successor Trustee shall deliver a written acceptance
of its appointment to the retiring Trustee and to the Company satisfactory in
form and substance to the retiring Trustee and the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture.  The successor
Trustee shall mail a notice of its succession to Securityholders.  The retiring Trustee shall promptly transfer
all property held by it as Trustee to the successor Trustee, subject to the
lien provided for in Section 7.07.

If a successor Trustee does not take office within 30
days after the retiring Trustee resigns or is removed, the retiring Trustee, the
Company or the Holders of a majority in aggregate principal amount of the
Securities at the time outstanding may petition any court of competent
jurisdiction at the expense of the Company for the appointment of a successor
Trustee.

If the Trustee fails to comply with Section 7.10, any
Securityholder may petition any court of competent jurisdiction for the removal
of the Trustee and the appointment of a successor Trustee.

Section 7.09.  Successor Trustee by Merger.  If the Trustee consolidates with,
merges or converts into, or transfers all or substantially all its corporate
trust business (including in its capacity as Trustee hereunder) or assets to,
another corporation, the resulting, surviving or transferee corporation without
any further act shall be the successor Trustee.

Section 7.10.  Eligibility; Disqualification.  The Trustee shall at all times
satisfy the requirements of TIA Sections 310(a)(1) and 310(b).  The Trustee (or its parent holding company)
shall have a combined capital and surplus of at least $50,000,000 as set forth
in its most recent published annual report of condition. Nothing herein
contained shall prevent the Trustee from filing with the Commission the
application referred to in the penultimate paragraph of TIA Section 310(b).

Section 7.11.  Preferential Collection of Claims Against
Company.  The Trustee shall
comply with TIA Section 311(a), excluding any creditor relationship listed in
TIA Section 311(b).  A Trustee who has
resigned or been removed shall be subject to TIA Section 311(a) to the extent
indicated therein.

 46
 

 

 

Section 7.12.  Force Majeure.  In no event shall the Trustee be
responsible or liable for any failure or delay in the performance of its
obligations under this Indenture arising out of or caused by, directly or indirectly,
forces beyond its reasonable control, including without limitation strikes,
work stoppages, accidents, acts of war or terrorism, civil or military
disturbances, nuclear or natural catastrophes or acts of god, and
interruptions, loss or malfunctions or utilities, communications or computer
(software or hardware) services.

ARTICLE 8

AMENDMENTS

Section 8.01.  Without Consent of Holders.  The Company and the Trustee may
amend, modify or supplement this Indenture or the Securities without the
consent of any Securityholder to:

(a)        add to the covenants of
the Company for the benefit of the Holders of Securities;

(b)        surrender any right or
power herein conferred upon the Company;

(c)        provide for conversion
rights of Holders of Securities if any reclassification or change of the Common
Stock or any consolidation, merger or sale of all or substantially all of the
Company’s assets occurs;

(d)        provide for the assumption
of the Company’s obligations to the Holders of Securities in the case of a
merger, consolidation, conveyance, transfer or lease pursuant to Article 5
hereof;

(e)        reduce the Conversion
Price; provided, however:  (i) that the Conversion Price shall not be
reduced below $10.37, (ii) that such reduction in the Conversion Price shall
not adversely affect the interests of the Holders of Securities (after taking
into account tax and other consequences of such reduction), and (iii) that the
Conversion Price shall not be reduced without seeking and obtaining the consent
of the holders of the Common Stock, if such consent is required pursuant to the
rules of The Nasdaq Global Market or any exchange or other market on which the
Common Stock is then listed or traded;

(f)         comply with the
requirements of the SEC in order to effect or maintain the qualification of this
Indenture under the TIA;

(g)        cure any ambiguity, to
correct or supplement any provision herein which may be inconsistent with any
other provision herein or which is otherwise defective; provided, however, that such action
pursuant to this clause (g) does not, in the good faith opinion of the Board of
Directors of the Company (as evidenced by a Board Resolution), adversely affect
the interests of the Holders of Securities in any material respect; and

 47

 

 

(h)        add or modify any other
provisions herein with respect to matters or questions arising hereunder which
the Company and the Trustee may deem necessary or desirable and that will not,
in the good faith opinion of the Board of Directors of the Company (as
evidenced by a Board Resolution), adversely affect the interests of the Holders
of Securities.

Section 8.02.  With Consent of Holders.  Except as provided below in this
Section 8.02, this Indenture or the Securities may be amended, modified or
supplemented, and noncompliance in any particular instance with any provision
of this Indenture or the Securities may be waived, in each case with the
written consent of the Holders of at least a majority of the principal amount
of the Securities at the time outstanding.

Without
the written consent or the affirmative vote of each Holder of Securities
affected thereby, an amendment or waiver under this Section 8.02 may not:

(a)        change the maturity of the
principal amount of, or the date any installment of interest, including
Additional Amounts, is due on, any Security;

(b)        reduce the principal
amount of, or interest, including Additional Amounts payable on, or the
Redemption Price or Change of Control Purchase Price of, any Security;

(c)        change the currency of any
amount owed or owing under the Security or any interest thereon from U.S.
Dollars;

(d)        impair the right of any
Holder to institute suit for the enforcement of any payment or with respect to,
or conversion of, any Security;

(e)        modify the obligation of
the Company to maintain an office or agency in The City of New York pursuant to
Section 4.05;

(f)         except as otherwise
permitted or contemplated by the provisions of this Indenture, adversely affect
the repurchase right of the Holders of the Securities as provided in Article 3
or the right of the Holders of the Securities to convert any Security as
provided in Article 9;

(g)        modify the provisions of
Article 5 in a manner adverse to the Holders of the Securities;

(h)        modify any of the
provisions of this Section 8.02, or reduce the principal amount of outstanding
Securities required to waive a default, except to provide that certain other
provisions of this Indenture cannot be modified or waived without the consent
of the Holder of each outstanding Security affected thereby; or

 48
 

 

 

(i)         reduce the percentage of
the principal amount of the outstanding Securities the consent of whose Holders
is required for any such supplemental indenture or the consent of whose Holders
is required for any waiver provided for in this Indenture.

It shall not be necessary for the consent of the
Holders under this Section 8.02 to approve the particular form of any proposed
amendment, but it shall be sufficient if such consent approves the substance
thereof.

After
an amendment under this Section 8.02 becomes effective, the Company shall mail
to each Holder a notice briefly describing the amendment.

Nothing
in this Section 8.02 shall impair the ability of the Company and the Trustee to
amend this Indenture or the Securities without the consent of any
Securityholder to provide for the assumption of the Company’s obligations to
the Holders of Securities in the case of a merger, consolidation, conveyance,
transfer or lease pursuant to Article 5 hereof.

Section 8.03.  Compliance with Trust
Indenture Act.  Every
supplemental indenture executed pursuant to this Article shall comply with the
TIA.

Section 8.04.  Revocation and Effect of
Consents, Waivers and Actions.  Until
an amendment, waiver or other action by Holders becomes effective, a consent
thereto by a Holder of a Security hereunder is a continuing consent by the
Holder and every subsequent Holder of that Security or portion of the Security
that evidences the same obligation as the consenting Holder’s Security, even if
notation of the consent, waiver or action is not made on the Security.  However, any such Holder or subsequent Holder
may revoke the consent, waiver or action as to such Holder’s Security or
portion of the Security if the Trustee receives the notice of revocation before
the date the amendment, waiver or action becomes effective.  After an amendment, waiver or action becomes
effective, it shall bind every Securityholder.

Section 8.05.  Notation on or Exchange of
Securities.  Securities
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article may, and shall if required by the Trustee, bear a
notation in form approved by the Trustee as to any matter provided for in such
supplemental indenture.  If the Company
shall so determine, new Securities so modified as to conform, in the opinion of
the Trustee and the Board of Directors, to any such supplemental indenture may
be prepared and executed by the Company and authenticated and delivered by the
Trustee in exchange for outstanding Securities.

Section 8.06.  Trustee to Sign Supplemental
Indentures.  The Trustee shall
sign any supplemental indenture authorized pursuant to this Article 8 if the
amendment contained therein does not adversely affect the rights, duties,
liabilities or immunities of the Trustee. 
If it does, the Trustee may, but need not, 

 49
 

 

 

sign such supplemental indenture.  In signing such supplemental indenture the
Trustee shall receive, and (subject to the provisions of Section 7.01) shall be
fully protected in relying upon, an Officers’ Certificate and an Opinion of
Counsel stating that such amendment is authorized or permitted by this
Indenture.

Section 8.07.  Effect of Supplemental
Indentures.  Upon the
execution of any supplemental indenture under this Article, this Indenture
shall be modified in accordance therewith, and such supplemental indenture
shall form a part of this Indenture for all purposes; and every Holder of
Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.

ARTICLE
9

CONVERSIONS

Section 9.01.  Conversion Privilege.  Subject to and upon compliance
with the provisions of this Article 9, a Holder of a Security shall have the
right, at such Holder’s option, to convert all or any portion (if the portion
to be converted is $1,000 or an integral multiple of $1,000) of such Security
into shares of Common Stock at the Conversion Price in effect on the date of
conversion, at any time prior to the close of business on the Business Day
prior to the Stated Maturity of the Securities.

Section 9.02.  Conversion Procedure;
Conversion Price; Fractional Shares.  Each
Security shall be convertible at the office of the Conversion Agent into fully
paid and nonassessable shares (calculated to the nearest 1/100th of a share) of
Common Stock.  The Security will be
converted into shares of Common Stock at the Conversion Price therefor.  No payment or adjustment shall be made in
respect of dividends on the Common Stock or accrued interest on a converted
Security, except as described in Section 9.10 hereof.  The Company shall not issue any fraction of a
share of Common Stock in connection with any conversion of Securities, but
instead shall, subject to Section 9.03(k) hereof, make a cash payment
(calculated to the nearest cent) equal to such fraction multiplied by the Sale
Price of the Common Stock on the last Trading Day prior to the date of
conversion.  Notwithstanding the
foregoing, a Security in respect of which a Holder has delivered a Change of
Control Purchase Notice exercising such Holder’s option to require the Company
to repurchase such Security may be converted only if such notice of exercise is
withdrawn in accordance with the Section 3.08 hereof.

(a)        Before any Holder of a
Security shall be entitled to convert the same into Common Stock, such Holder
shall, in the case of Global Securities, comply with the procedures of the
Depositary in effect at that time, and in the case of Certificated Securities,
surrender such Securities, duly endorsed to the Company or in blank, at the
office of the Conversion Agent, and shall give written notice to the Company at
said office or place that such Holder elects to convert the same and shall
state in writing therein the principal amount of Securities to be

 50
 

 

 

converted and the name or names (with addresses) in which
such Holder wishes the certificate or certificates for Common Stock to be
issued.

Before
any such conversion, a Holder also shall pay all funds required, if any,
relating to interest on the Securities, as provided in Section 9.10, and all
taxes or duties, if any, as provided in Section 9.09.

If
more than one Security shall be surrendered for conversion at one time by the
same Holder, the number of full shares of Common Stock which shall be
deliverable upon conversion shall be computed on the basis of the aggregate
principal amount of the Securities (or specified portions thereof to the extent
permitted thereby) so surrendered. 
Subject to the next succeeding sentence, the Company will, as soon as
practicable thereafter, issue and deliver at said office or place to such
Holder of a Security, or to such Holder’s nominee or nominees, certificates for
the number of full shares of Common Stock to which such Holder shall be
entitled as aforesaid, together with cash in lieu of any fraction of a share to
which such Holder would otherwise be entitled. 
The Company shall not be required to deliver certificates for shares of
Common Stock while the stock transfer books for such stock or the security
register are duly closed for any purpose, but certificates for shares of Common
Stock shall be issued and delivered as soon as practicable after the opening of
such books or security register.

(b)        A Security shall be deemed
to have been converted as of the close of business on the date of the surrender
of such Securities for conversion as provided above, and the Person or Persons
entitled to receive the Common Stock issuable upon such conversion shall be
treated for all purposes as the record Holder or Holders of such Common Stock
as of the close of business on such date.

(c)        In case any Security shall
be surrendered for partial conversion, the Company shall execute and the
Trustee shall authenticate and deliver to or upon the written order of the
Holder of the Security so surrendered, without charge to such Holder (subject to
the provisions of Section 9.09 hereof), a new Security or Securities in
authorized denominations in an aggregate principal amount equal to the
unconverted portion of the surrendered Securities.

Section 9.03.  Adjustment of Conversion
Price.  The Conversion Price
shall be adjusted from time to time as follows:

(a)        In case the Company shall,
at any time or from time to time while any of the Securities are outstanding,
pay a dividend or make a distribution in shares of Common Stock to all holders
of its outstanding shares of Common Stock, then the Conversion Price in effect
at the opening of business on the date following the record date fixed for the
determination of stockholders entitled to receive such dividend or other
distribution shall be reduced by multiplying such Conversion Price by a
fraction:

 51
 

 

 

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

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

Such
reduction shall become effective immediately after the opening of business on
the day following the Record Date fixed for such determination.  If any dividend or distribution of the type
described in this Section 9.03(a) is declared but not so paid or made, the
Conversion Price shall again be adjusted to the Conversion Price which would
then be in effect if such dividend or distribution had not been declared.

(b)        In case the Company shall,
at any time or from time to time while any of the Securities are outstanding,
subdivide its outstanding shares of Common Stock into a greater number of
shares of Common Stock, then the Conversion Price in effect at the opening of
business on the day following the day upon which such subdivision becomes
effective shall be proportionately reduced, and conversely, in case the Company
shall, at any time or from time to time while any of the Securities are
outstanding, combine its outstanding shares of Common Stock into a smaller
number of shares of Common Stock, then the Conversion Price in effect at the
opening of business on the day following the day upon which such combination
becomes effective shall be proportionately increased.

Such
reduction or increase, as the case may be, shall become effective immediately
after the opening of business on the day following the day upon which such
subdivision or combination becomes effective.

(c)        In case the Company shall,
at any time or from time to time while any of the Securities are outstanding,
issue rights or warrants (other than any rights or warrants referred to in
Section 9.03(d)) to all or substantially all holders of its shares of Common
Stock entitling them to subscribe for or purchase, for a period of up to 45
days, shares of Common Stock (or securities convertible into shares of Common
Stock) at a price per share (or having a conversion price per share) less than
the Sale Price on the Business Day immediately preceding the date of the
announcement of such issuance (treating the conversion price per share of the
securities convertible into Common Stock as equal to (x) the sum of (i) the
price for a unit of the security convertible into Common Stock and (ii) any
additional consideration initially payable upon the conversion of such security
into Common Stock divided by (y) the number of shares of Common Stock initially
underlying such convertible security), then the Conversion Price shall be
adjusted so that the same shall equal the price determined by multiplying the
Conversion Price in effect at the opening of business on the date after such
date of announcement by a fraction:

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(i)    the numerator of which shall
be the number of shares of Common Stock outstanding on the close of business on
the date of announcement, plus the number of shares or securities which the
aggregate offering price of the total number of shares or securities so offered
for subscription or purchase (or the aggregate conversion price of the convertible
securities so offered) would purchase at such Sale Price of the Common Stock;
and

(ii)   the denominator of which shall
be the number of shares of Common Stock outstanding at the close of business on
the date of announcement, plus the total number of additional shares of Common
Stock so offered for subscription or purchase (or into which the convertible
securities so offered are convertible).

Such
adjustment shall become effective immediately after the opening of business on
the day following the date of announcement of such issuance.  To the extent that shares of Common Stock (or
securities convertible into shares of Common Stock) are not delivered pursuant
to such rights or warrants, upon the expiration or termination of such rights
or warrants, the Conversion Price shall be readjusted to the Conversion Price
which would then be in effect had the adjustments made upon the issuance of
such rights or warrants been made on the basis of the delivery of only the
number of shares of Common Stock (or securities convertible into shares of
Common Stock) actually delivered.  In the
event that such rights or warrants are not so issued, the Conversion Price
shall again be adjusted to be the Conversion Price which would then be in
effect if the 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 Sale Price, and in determining the aggregate offering price of such
shares of Common Stock, there shall be taken into account any consideration
received for such rights or warrants, the value of such consideration if other
than cash, to be determined by the Board of Directors.

(d)        In case the Company shall,
at any time or from time to time while any of the Securities are outstanding,
by dividend or otherwise, distribute to all or substantially all holders of its
shares of Common Stock (including any such distribution made in connection with
a consolidation or merger in which the Company is the continuing corporation
and the Common Stock is not changed or exchanged), cash (other than any
dividends or distributions consisting exclusively of cash to which Section
9.03(e) applies), shares of Common Stock (other than any dividends or
distributions to which Section 9.03(a) applies), evidences of its indebtedness
or other assets, including securities, but excluding (i) any rights or warrants
referred to in Section 9.03(c) and (ii) dividends or distributions of stock,
securities or other property or assets (including cash) in connection with a
reclassification, consolidation, merger, statutory share exchange, combination,
sale or conveyance to which Section 9.04 applies (such capital stock, evidence
of its indebtedness, and other assets or securities being distributed
hereinafter in this

 53
 

 

 

Section 9.03(d) called the “distributed assets”),
then, in each such case, subject to the second and third succeeding paragraphs
and the last paragraph of this Section 9.03(d), the Conversion Price shall be
reduced so that the same shall be equal to the price determined by multiplying
the Conversion Price in effect immediately prior to the close of business on
the Record Date with respect to such distribution by a fraction:

(i)          the numerator of which
shall be the Current Market Price of the Common Stock, less the Fair Market
Value on such date of the portion of the distributed assets so distributed
applicable to one share of Common Stock (determined on the basis of the number
of shares of Common Stock outstanding on the record date) (determined as
provided in Section 9.03(g)); and

(ii)         the denominator of which
shall be such Current Market Price.

Such reduction shall become effective immediately
prior to the opening of business on the day following the Record Date for such
distribution.  In the event that such
dividend or distribution is not so paid or made, the Conversion Price shall
again be adjusted to be the Conversion Price which would then be in effect if
such dividend or distribution had not been declared.

If
the Board of Directors determines the Fair Market Value of any distribution for
purposes of this Section 9.03(d) by reference to the actual or when issued
trading market for any distributed assets comprising all or part of such
distribution, it must in doing so consider the prices in such market over the
same period (the “Reference Period”)
used in computing the Current Market Price pursuant to Section 9.03(g) to the
extent possible, unless the Board of Directors determines in good faith that
determining the Fair Market Value during the Reference Period would not be in
the best interest of the Holders.  In the
event any such distribution consists of shares of capital stock of, or similar
equity interests in, one or more of the Company’s Subsidiaries (a “Spin-Off”), the Conversion Price shall be reduced so that
the same shall be equal to the price determined by multiplying the Conversion
Price in effect immediately prior to the close of business on the Record Date
with respect to such distribution by a fraction:

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

(ii)         the denominator of which
shall be the Current Market Price of the Common Stock, plus the Fair Market
Value on such date of the portion of the distributed assets so distributed
applicable to one share of Common Stock (determined on the basis of the number
of shares of Common Stock outstanding on the record date) (determined as set
forth in the second and third succeeding sentences).

 54
 

 

 

Such reduction shall become effective immediately
prior to the opening of business on the day following the Record Date for such
distribution.  In the event that such
dividend or distribution is not so paid or made, the Conversion Price shall again
be adjusted to be the Conversion Price which would then be in effect if such
dividend or distribution had not been declared. 
In the case of a Spin-Off, the Fair Market Value of the securities to be
distributed shall equal the average of the closing sale prices of such
securities on the principal securities market on which such securities are
traded for the five consecutive Trading Days commencing on and including the
sixth day of trading of those securities after the effectiveness of the
Spin-Off, and the Current Market Price shall be measured for the same
period.  In the event, however, that an
underwritten initial public offering of the securities in the Spin-Off occurs
simultaneously with the Spin-Off, Fair Market Value of the securities
distributed in the Spin-Off shall mean the initial public offering price of
such securities and the Current Market Price shall mean the Sale Price for the
Common Stock on the same Trading Day.

Rights
or warrants distributed by the Company to all holders of its shares of Common
Stock entitling them 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 shares of Common Stock shall be deemed not to
have been distributed for purposes of this Section 9.03(d) (and no adjustment
to the Conversion Price under this Section 9.03(d) will be required) until the
occurrence of the earliest Trigger Event. 
If such right or warrant is subject to subsequent events, upon the
occurrence of which such right or warrant shall become exercisable to purchase
different distributed assets, evidences of indebtedness or other assets, or
entitle the holder to purchase a different number or amount of the foregoing or
to purchase any of the foregoing at a different purchase price, then the occurrence
of each such event shall be deemed to be the date of issuance and record date
with respect to a new right or warrant (and a termination or expiration of the
existing right or warrant without exercise by the holder 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 resulted in an adjustment to the Conversion Price under this Section 9.03(d)):

(i)          in the case of any such
rights or warrants which shall all have been redeemed or repurchased without
exercise by any holders thereof, the Conversion Price shall be readjusted upon
such final redemption or repurchase to give effect to such distribution or
Trigger Event, as the case may be, as though it were a cash distribution, equal
to the per share redemption or repurchase price received by a holder of shares
of Common Stock with respect to such rights or warrants (assuming such holder
had retained such rights or warrants), made to all holders of shares of Common
Stock as of the date of such redemption or repurchase; and

 55
 

 

 

(ii)         in the case of such
rights or warrants which shall have expired or been terminated without
exercise, the Conversion Price shall be readjusted as if such rights and
warrants had never been issued.

For
purposes of this Section 9.03(d) and Section 9.03(a), 9.03(b) and 9.03(c), any
dividend or distribution to which this Section 9.03(d) is applicable that also
includes (i) shares of Common Stock, (ii) a subdivision or combination of
shares of Common Stock to which Section 9.03(b) applies or (iii) rights or
warrants to subscribe for or purchase shares of Common Stock to which Section
9.03(c) applies (or any combination thereof), shall be deemed instead to be:

(i)          a dividend or
distribution of the evidences of indebtedness, assets, shares of capital stock,
rights or warrants, other than such shares of Common Stock, such subdivision or
combination or such rights or warrants to which Section 9.03(a), 9.03(b) and
9.03(c) apply, respectively (and any Conversion Price reduction required by
this Section 9.03(d) with respect to such dividend or distribution shall then
be made), immediately followed by

(ii)         a dividend or
distribution of such shares of Common Stock, such subdivision or combination or
such rights or warrants (and any further Conversion Price reduction required by
Section 9.03(a), 9.03(b) and 9.03(d) with respect to such dividend or
distribution shall then be made), except:

(A)        the Record Date of such
dividend or distribution shall be substituted as (1) “the date fixed for the
determination of stockholders entitled to receive such dividend or other
distribution,” “Record Date fixed for such determinations” and “Record Date”
within the meaning of Section 9.03(a) and 9.03(b), (2) “the day upon which such
subdivision becomes effective” and “the day upon which such combination becomes
effective” within the meaning of Section 9.03(b), and (3) as “the date fixed
for the determination of stockholders entitled to receive such rights or
warrants,” “the Record Date fixed for the determination of the stockholders
entitled to receive such rights or warrants” and such “Record Date” within the
meaning of Section 9.03(c); 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 9.03(a) and any reduction or increase in the number of
shares of Common Stock resulting from such subdivision or combination shall be
disregarded in connection with such dividend or distribution.

 56
 

 

 

In
the event of any distribution referred to in this Section 9.03(d) in which (i)
the value of such distributions per share of Common Stock equals or exceeds the
average of the Sale Prices of the Common Stock over the ten consecutive Trading
Day period ending on the Record Date for such distribution, or (ii) such
average of the Sale Prices of the Common Stock exceeds the Fair Market Value
applicable to one share of Common Stock (as determined by the Board of
Directors) by less than $1.00, then, in each such case, in lieu of an
adjustment to the Conversion Price, adequate provision shall be made so that
each Holder shall have the right to receive upon conversion of a Security, in
addition to shares of Common Stock, the kind and amount of such distribution
such Holder would have received had such Holder converted such Security
immediately prior to the Record Date for determining the shareholders entitled
to receive the distribution.

No
adjustment to the Conversion Price or the ability of a Holder of a Security to
convert will be made if the Holder will otherwise participate in such
distribution without conversion.

(e)        In case the Company shall,
by dividend or otherwise, distribute to all or substantially all holders of its
Common Stock cash (excluding any dividend or distribution in connection with
the liquidation, dissolution or winding up of the Company, whether voluntary or
involuntary), then, in such case, the Conversion Price shall be reduced so that
the same shall equal the rate determined by dividing the Conversion Price in
effect on the applicable record date 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 minus the amount distributed per ordinary
share of Common Stock.

Such
adjustment shall become effective immediately after the opening of business on
the day following the Record Date fixed for the determination of the
stockholders entitled to receive such cash dividend or other distribution
consisting exclusively of cash.  If any
dividend or distribution of the type described in this Section 9.03(e) is
declared but not so paid or made, the Conversion Price shall again be adjusted
to the Conversion Price which would then be in effect if such dividend or
distribution had not been declared.

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

 57
 

 

 

next succeeding the Expiration Time, the Conversion
Price shall be reduced so that the same shall equal the price determined by
multiplying the Conversion Price in effect immediately prior to the Expiration
Time by a fraction,

(i)    the numerator 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 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; and

(ii)   the denominator of which shall
be the sum of (x) the Fair Market Value (determined as aforesaid) of the
aggregate consideration payable to stockholders based on the acceptance (up to
any maximum specified in the terms of the tender or exchange offer) of all
shares validly tendered or exchanged and not withdrawn as of the Expiration
Time (the shares deemed so accepted up to any such maximum, being referred to
as the “Purchased Shares”) and (y) the product
of the number of shares of Common Stock outstanding (less any Purchased Shares)
at the Expiration Time and the Sale Price of a share of Common Stock on the
Trading Day next succeeding 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 Price shall again be adjusted to be the
Conversion Price that would then be in effect if such tender or exchange offer
had not been made.

(g)        For purposes of this
Article 9, the following terms shall have the meanings indicated:

“Current Market Price” on any date means the average of the
daily Sale Prices per share of Common Stock for the ten consecutive Trading
Days immediately prior to such date; provided, however,
that if:

(i)    the “ex” date (as hereinafter
defined) for any event (other than the issuance or distribution requiring such
computation) that requires an adjustment to the Conversion Price pursuant to
Section 9.03(a), (b), (c), (d), (e) or (f) occurs during such ten consecutive
Trading Days, the Sale Price for each Trading Day prior to the “ex” date for
such other event shall be adjusted by dividing such Sale Price by the same
fraction by which the Conversion Price is so required to be adjusted as a
result of such other event;

(ii)   the “ex” date for any event
(other than the issuance or distribution requiring such computation) that
requires an adjustment to the Conversion Price pursuant to Section 9.03(a),
(b), (c), (d), (e) or (f) occurs

 58
 

 

 

on or after the “ex” date
for the issuance or distribution requiring such computation and prior to the
day in question, the Sale Price for each Trading Day on and after the “ex” date
for such other event shall be adjusted by dividing such Sale Price by the
reciprocal of the fraction by which the Conversion Price is so required to be
adjusted as a result of such other event; and

(iii)        the “ex” date for the
issuance or distribution requiring such computation is prior to the day in
question, after taking into account any adjustment required pursuant to clause
(1) or (2) of this proviso, the Sale Price for each Trading Day on or after
such “ex” date shall be adjusted by adding thereto the amount of any cash and
the Fair Market Value (as determined by the Board of Directors in a manner
consistent with any determination of such value for purposes of Section
9.03(d), (e) or (f)) of the evidences of indebtedness, shares of capital stock
or assets being distributed applicable to one share of Common Stock as of the
close of business on the day before such “ex” date.

For purposes of any computation under Section 9.03(f),
if the “ex” date for any event (other than the tender offer requiring such
computation) that requires an adjustment to the Conversion Price pursuant to
Section 9.03(a), (b), (c), (d), (e) or (f) occurs on or after the Expiration
Time for the tender or exchange offer requiring such computation and prior to
the day in question, the Sale Price for each Trading Day on and after the “ex”
date for such other event shall be adjusted by dividing such Sale Price by the
reciprocal of the fraction by which the Conversion Price is so required to be
adjusted as a result of such other event. 
For purposes of this paragraph, the term “ex” date, when used:

(i)          with respect to any
issuance or distribution, means the first date on which the shares of Common
Stock trade regular way on the relevant exchange or in the relevant market from
which the Sale Price was obtained without the right to receive such issuance or
distribution;

(ii)         with respect to any subdivision
or combination of shares of Common Stock, means the first date on which the
shares of Common Stock trade regular way on such exchange or in such market
after the time at which such subdivision or combination becomes effective; and

(iii)        with respect to any tender
or exchange offer, means the first date on which the shares of Common Stock
trade regular way on such exchange or in such market after the Expiration Time
of such offer.

Notwithstanding the foregoing, whenever successive
adjustments to the Conversion Price are called for pursuant to this Section
9.03, such adjustments shall be made to the Current Market Price as may be
necessary or appropriate to effectuate the intent of this Section 9.03 and to
avoid unjust or inequitable results as determined in good faith by the Board of
Directors.

 59
 

 

 

“Fair Market Value” shall mean the amount that a willing
buyer would pay a willing seller in an arm’s-length transaction (as determined
by the Board of Directors, whose determination shall be conclusive).

“Record Date” shall mean, with respect to any dividend,
distribution or other transaction or event in which the holders of shares of
Common Stock have the right to receive any cash, securities or other property
or in which the shares of 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).

(h)        The Company shall be
entitled to make such additional reductions in the Conversion Price, in
addition to those required by Section 9.03(a), (b), (c), (d), (e) or (f), as
shall be necessary in order that any dividend or distribution of Common Stock,
any subdivision, reclassification or combination of shares of Common Stock or
any issuance of rights or warrants referred to above shall not be taxable to
the holders of Common Stock for United States Federal income tax purposes.

(i)         To the extent permitted
by applicable law, the Company may, from time to time, reduce the Conversion
Price by any amount for any period of time, if such period is at least 20 days
and the reduction is irrevocable during the period.  Whenever the Conversion Price is reduced
pursuant to the preceding sentence, the Company shall mail to the Trustee and
each Holder at the address of such Holder as it appears in the register of the
Securities maintained by the Registrar, at least 15 days prior to the date the
reduced Conversion Price takes effect, a notice of the reduction stating the
reduced Conversion Price and the period during which it will be in effect.

(j)         In any case in which this
Section 9.03 shall require that any adjustment be made effective as of or
retroactively immediately following a Record Date, the Company may elect to
defer (but only for five Trading Days following the filing of the statement
referred to in Section 9.05) issuing to the Holder of any Securities converted
after such Record Date the shares of Common Stock issuable upon such conversion
over and above the shares of Common Stock issuable upon such conversion on the
basis of the Conversion Price prior to adjustment; provided,
however, that the Company shall deliver to such Holder a due bill or
other appropriate instrument evidencing such Holder’s right to receive such
additional shares upon the occurrence of the event requiring such adjustment.

(k)        All calculations under
this Section 9.03 shall be made to the nearest cent or one hundredth of a
share, with one half cent and 0.005 of a share, respectively, being rounded
upward.

 60

 

(l)         In the event that at any time, as a
result of an adjustment made pursuant to this Section 9.03, the Holder of any
Securities thereafter surrendered for conversion shall become entitled to
receive any shares of stock of the Company other than shares of Common Stock
into which the Securities originally were convertible, the Conversion Price of
such other shares so receivable upon conversion of any such Security shall be
subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to Common Stock
contained in subparagraphs (a) through (k) of this Section 9.03, and the
provision of Sections 9.01, 9.02 and 9.04 through 9.10 with respect to the
Common Stock shall apply on like or similar terms to any such other shares and
the determination of the Board of Directors as to any such adjustment shall be
conclusive.

(m)       No adjustment shall be made pursuant to
this Section 9.03 (i) if the effect thereof would be to reduce the Conversion
Price below $10.37, or (ii) if the Holders of the Securities may participate in
the transaction that would otherwise give rise to an adjustment pursuant to
this Section 9.03, or (iii) if the consent of the holders of the Common Stock
would be required for the issuance of, or the Company’s agreement to issue, the
Common Stock at the adjusted Conversion Price pursuant to the rules of The
Nasdaq Global Market or any exchange or other market on which the Common Stock
is then listed or traded and the Company has not obtained such consent in
compliance with the applicable rules.

Section 9.04.  Consolidation or Merger of the
Company.  If any of the
following events occurs, namely:

(a)        any reclassification or change of the
outstanding 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);

(b)        any merger, consolidation, statutory
share exchange or combination of the Company with another corporation as a
result of which holders of Common Stock shall be entitled to receive stock,
securities or other property or assets (including cash) with respect to or in
exchange for such Common Stock; or

(c)        any sale or conveyance of the properties
and assets of the Company as, or substantially as, an entirety to any other
corporation as a result of which holders of Common Stock shall be entitled to
receive stock, securities or other property or assets (including cash) with
respect to or in exchange for such Common Stock;

the
Company or the successor or purchasing corporation, as the case may be, shall
execute with the Trustee a supplemental indenture (which shall comply with the
Trust Indenture Act as in force at the date of execution of such supplemental
indenture, if such supplemental indenture is then required to so comply)
providing that such Securities shall be convertible into the kind and amount of
shares of stock and other securities or property or assets (including

 61
 

 

cash) which such Holder would have been entitled to
receive upon such reclassification, change, merger, consolidation, statutory
share exchange, combination, sale or conveyance had such Securities been
converted into Common Stock immediately prior to such reclassification, change,
merger, consolidation, statutory share exchange, combination, sale or
conveyance assuming such holder of Common Stock did not exercise its rights of
election, if any, as to the kind or amount of securities, cash or other
property receivable upon such merger, consolidation, statutory share exchange,
sale or conveyance (provided, that if the kind or amount of securities, cash or
other property receivable upon such merger, consolidation, statutory share
exchange, sale or conveyance is not the same for each share of Common Stock in
respect of which such rights of election shall not have been exercised (“Non-Electing Share”), then for the purposes of this Section
9.04, the kind and amount of securities, cash or other property receivable upon
such merger, consolidation, statutory share exchange, sale or conveyance for
each Non-Electing Share shall be deemed to be the kind and amount so receivable
per share by a plurality of the Non-Electing Shares).  Such supplemental indenture shall provide for
adjustments which shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Article 9. 
In the event holders of Common Stock have the opportunity to elect the
form of consideration to be received in such transaction, then from and after the
effective date of such transaction, the Securities shall be convertible into
the consideration that a majority of the holders of Common Stock who made such
an election received in such transaction. 
If, in the case of any such reclassification, change, merger,
consolidation, statutory share exchange, combination, sale or conveyance, the
stock or other securities and assets receivable thereupon by a holder of Common
Stock includes shares of stock or other securities and assets of a corporation
other than the successor or purchasing corporation, as the case may be, in such
reclassification, change, merger, consolidation, statutory share exchange,
combination, sale or conveyance, then such supplemental indenture shall also be
executed by such other corporation and shall contain such additional provisions
to protect the interests of the Holders of the Securities as the Board of
Directors shall reasonably consider necessary by reason of the foregoing,
including to the extent practicable the provisions providing for the conversion
rights set forth in this Article 9.

The
Company shall cause notice of the execution of such supplemental indenture to
be mailed to each Holder, at the address of such Holder as it appears on the
register of the Securities maintained by the Registrar, 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 9.04 shall similarly apply to successive
reclassifications, mergers, consolidations, statutory share exchanges,
combinations, sales and conveyances.

If
this Section 9.04 applies to any event or occurrence, Section 10.03 shall not
apply.

 62
 

 

Section 9.05.  Notice of Adjustment.  Whenever an adjustment in the
Conversion Price or the conversion rate with respect to the Securities is
required:

(a)        the Company shall forthwith place on
file with the Trustee and any Conversion Agent for such securities a
certificate of the Treasurer of the Company, stating the adjusted Conversion
Price determined as provided herein and setting forth in reasonable detail such
facts as shall be necessary to show the reason for and the manner of computing
such adjustment; and

(b)        a notice stating that the Conversion
Price has been adjusted and setting forth the adjusted Conversion Price shall
forthwith be given by the Company or, at the Company’s request, by the Trustee
in the name and at the expense of the Company, to each Holder in the manner
provided in Section 10.02.  Any notice so
given shall be conclusively presumed to have been duly given, whether or not
the Holder receives such notice.

In addition, whenever an adjustment in the Conversion
Price with respect to the Securities is required, the Company will issue a
press release through Dow Jones & Company, Inc. or Bloomberg Business News
containing the relevant information and make this information available on the
Company’s web site or through another public medium as it may use at that time.

Section 9.06.  Adjustment to Conversion Rate
Upon a Non-Stock Change of Control.  If
and only to the extent a holder elects to convert Securities at any time
subsequent to the date on which a Non-Stock Change of Control becomes effective
(the “Effective Date”) but before 5:00 p.m.,
New York City time, on the Business Day immediately preceding the related
Change of Control Purchase Date, the Company shall increase the number of
shares of Common Stock issuable upon conversion of the Securities by a number
of additional shares of Common Stock as set forth below.  The number of additional shares of Common
Stock shall be determined by reference to the table below, based on the
Effective Date and the price (the “Stock Price”)
paid per share for the Common Stock in the Non-Stock Change of Control.  If holders of Common Stock receive only cash
in the Non-Stock Change of Control, the Stock Price shall be the cash amount
paid per share. Otherwise, the Stock Price shall be the average of the Closing
Sale Prices of the Common Stock on the five Trading Days prior to but not
including the Effective Date of such Non-Stock Change of Control.

The
numbers of additional shares of Common Stock set forth in the table below shall
be adjusted as of any date on which the conversion rate is adjusted in the same
manner in which the conversion rate is adjusted.  The Stock Prices set forth in the table below
shall be adjusted, as of any date on which the conversion rate is adjusted, to
equal the Stock Price applicable immediately prior to such adjustment
multiplied by a fraction, of which

(a)        the numerator shall be the conversion
rate immediately prior to the adjustment and

 63
 

 

(b)        the denominator shall be the conversion
rate as so adjusted.

The
following table sets forth the Stock Price and number of additional shares by
which the conversion rate shall be adjusted: 

	
  Effective 

  Date

  	
   

  	
  $   10.37

  	
   

  	
  $  14.00

  	
   

  	
  $  17.50

  	
   

  	
  $  20.00

  	
   

  	
  $  22.50

  	
   

  	
  $  25.00

  	
   

  	
  $  27.50

  	
   

  	
  $  30.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  November 15,
  2006

  	
   

  	
  17.8715

  	
   

  	
  9.3848

  	
   

  	
  5.7771

  	
   

  	
  4.3455

  	
   

  	
  3.4039

  	
   

  	
  2.7539

  	
   

  	
  2.2859

  	
   

  	
  1.9362

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  April 20, 2007

  	
   

  	
  17.7273

  	
   

  	
  8.8603

  	
   

  	
  5.2290

  	
   

  	
  3.8428

  	
   

  	
  2.9587

  	
   

  	
  2.3656

  	
   

  	
  1.9492

  	
   

  	
  1.6445

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  April 20, 2008

  	
   

  	
  17.1526

  	
   

  	
  7.0083

  	
   

  	
  3.3974

  	
   

  	
  2.2376

  	
   

  	
  1.5998

  	
   

  	
  1.2271

  	
   

  	
  0.9934

  	
   

  	
  0.8361

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  April 20, 2009

  	
   

  	
  17.3460

  	
   

  	
  2.9519

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  

 

If
the Stock Price and Effective Date are not set forth on the table above and the
Stock Price is:

(i)    between two Stock Prices on the table or the
Effective Date is between two days on the table, the number of additional
shares of Common Stock shall be determined by the Company by straight-line
interpolation between the number of additional shares of Common Stock set forth
for the higher and lower Stock Price and the two Effective Dates, as
applicable, based on a 360-day year;

(ii)   in excess of $30.00 per share (subject to
adjustment), no additional shares of Common Stock shall be issued upon
conversion; or

(iii)  less than $10.37 per share (subject to
adjustment), no additional shares of Common Stock shall be issued upon
conversion.

Notwithstanding
the foregoing, in no event will the total number of shares of Common Stock
issuable upon conversion exceed 197.6285 per $1,000 principal amount of the
Securities, subject to adjustments in the same manner as the number of
additional shares of Common Stock as set forth in this Section 9.06(b).

The
Company shall provide written notice to all Holders and to the Trustee at least
20 calendar days prior to the anticipated Effective Date of a Non-Stock Change
of Control.  The Company must also
provide written notice to all Holders and to the Trustee upon the effectiveness
of such Non-Stock Change of Control.

Section 9.07.  Notice in Certain Events.  In case:

 64
 

 

(a)        of a consolidation or merger to which
the Company is a party and for which approval of any stockholders of the
Company is required, or of the sale or conveyance to another Person or entity
or group of Persons or entities acting in concert as a partnership, limited
partnership, syndicate or other group (within the meaning of Rule 13d-3
under the Exchange Act) of all or substantially all of the property and assets
of the Company; or

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

(c)        of any action triggering an adjustment
of the Conversion Price referred to in clauses (x) or (y) below;

then, in each case, the Company shall cause to be
filed with the Trustee and the Conversion Agent, and shall cause to be given,
to the Holders of the Securities in the manner provided in Section 10.02, at
least 15 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 any
distribution or grant of rights or warrants triggering an adjustment to the
Conversion Price pursuant to this Article 9, or, if a record is not to be
taken, the date as of which the holders of record of Common Stock entitled to
such distribution, rights or warrants are to be determined, or (y) the date on
which any reclassification, consolidation, merger, sale, conveyance,
dissolution, liquidation or winding up triggering an adjustment to the
Conversion Price pursuant to this Article 9 is expected to become effective,
and the date as of which it is expected that holders of Common Stock of record
shall be entitled to exchange their Common Stock for securities or other property
deliverable upon such reclassification, consolidation, merger sale, conveyance,
dissolution, liquidation or winding up.

Failure
to give such notice or any defect therein shall not affect the legality or
validity of the proceedings described in clause (a), (b) or (c) of this Section
9.07.

Section 9.08.  Company to Reserve Stock:
Registration; Listing.

(a)        The Company shall, in accordance with
the laws of the State of Delaware, at all times reserve and keep available,
free from preemptive rights, out of its authorized but unissued shares of
Common Stock, for the purpose of effecting the conversion of the Securities,
such number of its duly authorized shares of Common Stock as shall from time to
time be sufficient to effect the conversion of all Securities then outstanding
into such Common Stock at any time (assuming that, at the time of the
computation of such number of shares or securities, all such Securities would
be held by a single Holder); provided, however,
that nothing contained herein shall preclude the Company from satisfying its
obligations in respect of the conversion of the Securities by delivery of
purchased shares of Common Stock which are then held in the treasury of the
Company.  The Company covenants that all
shares of Common Stock which may

 65
 

 

be issued upon conversion of Securities will upon
issue be fully paid and nonassessable and free from all liens and charges and,
except as provided in Section 9.09, taxes with respect to the issue thereof.

(b)        If any shares of Common Stock which would
be issuable upon conversion of Securities hereunder require registration with
or approval of any governmental authority before such shares or securities may
be issued upon such conversion, the Company will in good faith and as
expeditiously as possible endeavor to cause such shares or securities to be
duly registered or approved, as the case may be.  The Company further covenants that so long as
the Common Stock shall be listed on The Nasdaq Global Market, the Company will,
if permitted by the rules of such exchange, list and keep listed all Common
Stock issuable upon conversion of the Securities, and the Company will endeavor
to list the shares of Common Stock required to be delivered upon conversion of
the Securities prior to such delivery upon any other national securities
exchange upon which the outstanding Common Stock is listed at the time of such
delivery.

Section 9.09.  Taxes on Conversion.  The issue of stock certificates on
conversion of Securities shall be made without charge to the converting Holder
for any documentary, stamp or similar issue or transfer taxes in respect of the
issue thereof, and the Company shall pay any and all documentary, stamp or
similar issue or transfer taxes that may be payable in respect of the issue or
delivery of shares of Common Stock on conversion of Securities pursuant hereto.
The Company shall not, however, be required to pay any such tax which may be
payable in respect of any transfer involved in the issue or delivery of shares
of Common Stock or the portion, if any, of the Securities which are not so
converted in a name other than that in which the Securities so converted were
registered, and no such issue or delivery shall be made unless and until the
Person requesting such issue has paid to the Company the amount of such tax or
has established to the satisfaction of the Company that such tax has been paid.

Section 9.10.  Conversion After Record
Date.  Except as provided
below, if any Securities are surrendered for conversion on any day other than
an Interest Payment Date, the Holder of such Securities shall not be entitled
to receive any interest that has accrued on such Securities since the prior
Interest Payment Date.  By delivery to
the Holder of the number of shares of Common Stock or other consideration issuable
upon conversion in accordance with this Article 9, any accrued and unpaid
interest on such Securities will be deemed to have been paid in full.

If
any Securities are surrendered for conversion subsequent to the Record Date
preceding an Interest Payment Date but on or prior to such Interest Payment
Date, the Holder of such Securities at the close of business on such Record
Date shall receive the interest payable on such Securities on such Interest
Payment Date notwithstanding the conversion thereof.  Securities surrendered for conversion during
the period from the close of business on any Record Date preceding any Interest
Payment Date to the opening of business on such Interest

 66
 

 

Payment Date shall (except in the case of Securities
which have been called for redemption on a Redemption Date between such Record
Date and the third Business Day after such Interest Payment Date) be
accompanied by payment by Holders, for the account of the Company, in New York
Clearing House funds or other funds of an amount equal to the interest payable
on such Interest Payment Date on the Securities being surrendered for
conversion.  Except as provided in this
Section 9.10, no adjustments in respect of payments of interest on Securities surrendered
for conversion or any dividends or distributions or interest on the Common
Stock issued upon conversion shall be made upon the conversion of any
Securities.

Section 9.11.  Company Determination
Final.  Any determination that
the Company or the Board of Directors must make pursuant to this Article 9
shall be conclusive if made in good faith and in accordance with the provisions
of this Article, absent manifest error, and set forth in a Board Resolution.

Section 9.12.  Responsibility of Trustee and
Conversion Agent for Conversion Provisions. 
Neither the Trustee nor the Conversion Agent has the duty to
make any calculation, any determination when an adjustment under this Article 9
should be made, how it should be made or what it should be, or any other
determination under this Article 9.  Neither the Trustee nor the Conversion Agent
makes any representation as to the validity or value of any securities or
assets issued upon conversion of Securities. 
The Company shall, in each case where a calculation, adjustment or other
determination is required hereunder, make such calculation, adjustment or
determination and promptly notify the Conversion Agent in writing of such
calculation, adjustment or determination. 
If any payment is required to be made by the Company pursuant to this
Article 9, the Company shall provide the Conversion Agent with written
instructions relating to such payment. Neither the Trustee nor the Conversion
Agent shall be responsible for any failure of the Company to comply with this
Article 9.  Each Conversion Agent other than
the Company shall have the same protection under this Section 9.12.

The
rights, privileges, protections, immunities and benefits given to the Trustee
under the Indenture including, without limitation, its rights to be
indemnified, are extended to, and shall be enforceable by, the Trustee in each
of its capacities hereunder, and each Paying Agent or Conversion Agent acting
hereunder.

Section 9.13.  Unconditional Right of Holders
to Convert.  Notwithstanding
any other provision in this Indenture, the Holder of any Security shall have
the right, which is absolute and unconditional, to convert its Security in
accordance with this Article 9 and to bring an action for the enforcement of
any such right to convert, and such rights shall not be impaired or affected
without the consent of such Holder.

 67
 

 

ARTICLE
10

MISCELLANEOUS

Section 10.01.  Trust Indenture Act
Controls.  If any provision of
this Indenture limits, qualifies, or conflicts with another provision which is
required to be included in this Indenture by the TIA, the required provision
shall control.

Section 10.02.  Notices.  Any request, demand,
authorization, notice, waiver, consent or communication shall be in writing and
delivered in person or mailed by first class mail, postage prepaid, addressed
as follows or transmitted by facsimile transmission (followed by a hard copy
delivered by overnight courier) to the following facsimile numbers:

if
to the Company:

deCODE genetics Inc.

Sturlungata 8

Reykjavik, Iceland

Attention:         Corporate Counsel

Facsimile No.:  +354-570-1806

With
a copy  to:

Stevens & Lee, P.C.

600 College Road East

Suite 4400

Attention:         Marsha E. Novick

Facsimile No.:  (610) 371-7929

if
to the Trustee:

The Bank of New York

101 Barclay Street, Floor 4 East

New York, New York 10286

Facsimile No. (212) 815-5008/5603

Attention:  Corporate Trust
Administration

The
Company or the Trustee by notice given to the other in the manner provided
above may designate additional or different addresses for subsequent notices or
communications.

Any
notice or communication given to a Securityholder shall be mailed to the
Securityholder, by first class mail, postage prepaid, at the Securityholder’s
address as it appears on the registration books of the Registrar and shall be
sufficiently given if so mailed within the time prescribed.

Failure
to mail a notice or communication to a Securityholder or any defect in it shall
not affect its sufficiency with respect to other Securityholders.  If

 68
 

 

a notice or communication is mailed in the manner
provided above, it is duly given, whether or not received by the addressee;
provided that all notices to the Trustee shall be deemed effective upon actual
receipt thereof.

If
the Company mails a notice or communication to the Securityholders, it shall
mail a copy to the Trustee and each Registrar, Paying Agent, Conversion Agent
or co registrar.

Section 10.03.  Communication by Holders with
Other Holders.  Securityholders
may communicate pursuant to TIA Section 312(b) with other Securityholders with
respect to their rights under this Indenture or the Securities.  The Company, the Trustee, the Registrar, the
Paying Agent, the Conversion Agent and anyone else shall have the protection of
TIA Section 312(c).

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

(a)        an Officers’ Certificate stating that,
in the opinion of the signatories, all conditions precedent, if any, provided
for in this Indenture relating to the proposed action have been complied with;
and

(b)        an Opinion of Counsel stating that, in
the opinion of such counsel, all such conditions precedent have been complied
with.

Section 10.05.  Statements Required in
Certificate or Opinion.  Each
Officers’ Certificate or Opinion of Counsel with respect to compliance with a
covenant or condition provided for in this Indenture shall include:

(a)        a statement that each Person making such
Officers’ Certificate or Opinion of Counsel has read such covenant or
condition;

(b)        a brief statement as to the nature and
scope of the examination or investigation upon which the statements or opinions
contained in such Officers’ Certificate or Opinion of Counsel are based;

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

(d)        a statement that, in the opinion of such
Person, such covenant or condition has been complied with.

Section 10.06.  Separability Clause.  In case any provision in this
Indenture or in the Securities shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.

 69
 

 

Section 10.07.  Rules by Trustee, Paying
Agent, Conversion Agent and Registrar.  The
Trustee may make reasonable rules for action by or a meeting of
Securityholders. The Registrar, the Conversion Agent and the Paying Agent may
make reasonable rules for their functions.

Section 10.08.  Legal Holidays.  A “Legal
Holiday” is any day other than a Business Day. If any specified date
(including a date for giving notice) is a Legal Holiday, the action shall be
taken on the next succeeding day that is not a Legal Holiday, and, if the
action to be taken on such date is a payment in respect of the Securities, no
interest, if any, shall accrue for the intervening period.

Section 10.09.  Governing Law.  THIS INDENTURE SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

Section 10.10.  Waiver of Jury Trial.  EACH OF THE COMPANY AND THE
TRUSTEE HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATING TO THIS INDENTURE, THE SECURITIES OR THE TRANSACTIONS CONTEMPLATED
HEREBY.

Section 10.11.  No Recourse Against
Others.  A director, officer,
employee or stockholder, as such, of the Company shall not have any liability
for any obligations of the Company under the Securities or this Indenture or
for any claim based on, in respect of or by reason of such obligations or their
creation.  By accepting a Security, each
Securityholder shall waive and release all such liability.  The waiver and release shall be part of the
consideration for the issue of the Securities.

Section 10.12.  Successors.  All agreements of the Company in
this Indenture and the Securities shall bind its successor.  All agreements of the Trustee in this
Indenture shall bind its successor.

Section 10.13.  Multiple Originals.  The parties may sign any number of
copies of this Indenture. Each signed copy shall be an original, but all of
them together represent the same agreement. 
One signed copy is enough to prove this Indenture.

Section 10.14.  Effect of Headings and Table
of Contents.  The Article and
Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.

 70
 

 

IN
WITNESS WHEREOF, the undersigned, being duly authorized, have executed this
Indenture on behalf of the respective parties hereto as of the date first above
written.

	
  

  	
  deCODE genetics,
  Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
    /s/
  Kari Stefansson

  
	
   

  	
   

  	
  Name:

  	
  Kari Stefansson

  
	
   

  	
   

  	
  Title:

  	
  President and
  Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  THE BANK OF NEW YORK

  As Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
    /s/
  Lici Zhu

  
	
   

  	
   

  	
  Name:

  	
  Lici Zhu

  
	
   

  	
   

  	
  Title:

  	
  Assistant
  Treasurer

  
					

 

 71

 

EXHIBIT
A

[FORM OF FACE OF GLOBAL
SECURITY]

UNLESS
THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY 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 AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

TRANSFERS
OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS TO NOMINEES OF THE
DEPOSITORY TRUST COMPANY, OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE
AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS
MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN ARTICLE TWO OF THE
INDENTURE REFERRED TO ON THE REVERSE HEREOF.

THE
NOTES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “SECURITIES ACT”).
NEITHER THIS NOTE NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED,
SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN
THE ABSENCE OF SUCH REGISTRATION OR UNLESS THE TRANSACTION IS EXEMPT FROM, OR
NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.

EACH
PURCHASER OF THE SECURITY EVIDENCED HEREBY IS NOTIFIED THAT THE SELLER MAY BE
RELYING ON THE EXEMPTION FROM SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE
144A THEREUNDER. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF:

(1)           REPRESENTS THAT (A) IT IS A
“QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT) OR (B) IT IS NOT A U.S. PERSON AND IS ACQUIRING ITS NOTE IN AN “OFFSHORE
TRANSACTION” PURSUANT TO RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, 

 A-1
 

 

 

(2)           AGREES THAT IT WILL NOT PRIOR TO (X)
THE DATE WHICH IS TWO YEARS (OR SUCH SHORTER PERIOD OF TIME AS PERMITTED BY
RULE 144(K) UNDER THE SECURITIES ACT OR ANY SUCCESSOR PROVISION THEREUNDER)
AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF (OR OF ANY PREDECESSOR OF
THIS NOTE) OR THE LAST DAY ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY
WAS THE OWNER OF THIS NOTE (OR ANY PREDECESSOR OF THIS NOTE) AND (Y) SUCH LATER
DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE LAW (THE “RESALE RESTRICTION
TERMINATION DATE”), OFFER, SELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO
THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE NOTES ARE ELIGIBLE
FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A
“QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS
THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER
THE SECURITIES ACT OR (E) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, AND

(3)           AGREES THAT IT WILL GIVE TO EACH
PERSON TO WHOM THIS NOTE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF
THIS LEGEND; PROVIDED THAT THE COMPANY, THE TRUSTEE AND THE REGISTRAR SHALL
HAVE THE RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (D)
OR (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/ OR
OTHER INFORMATION SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE REMOVED
UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.
AS USED HEREIN, THE TERMS “OFFSHORE TRANSACTION”, “UNITED STATES” AND “U.S.
PERSON” HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES
ACT. 

The
foregoing legend may be removed from this Security on satisfaction of the
conditions specified in the Indenture.

 A-2
 

 

 

THIS SECURITY HAS
BEEN ISSUED WITH ORIGINAL ISSUE DISCOUNT FOR PURPOSES OF SECTIONS 1272, 1273
AND 1275 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED; FOR EACH $1,000
PRINCIPAL AMOUNT OF THIS SECURITY, THE ISSUE PRICE IS $700.00, THE AMOUNT OF ORIGINAL
ISSUE DISCOUNT IS $300.00, THE ISSUE DATE IS NOVEMBER 17, 2006 AND THE YIELD TO
MATURITY IS 12.6% PER ANNUM.

	
  deCODE genetics, Inc.

  
	
   

  
	
  3.50% Senior
  Convertible Notes due April 15, 2011

  
	
   

  	
   

  
	
  No.:                             

  	
  CUSIP:  243586
  AC8

  
	
  Issue Date:
  November 17, 2006

  	
  ISIN: 
  US243586AC87

  
	
   

  	
  Principal Amount: 
  $                     

  

 

deCODE
genetics, Inc., a Delaware corporation, promises to pay to Cede & Co. or
registered assigns, the principal amount of                       
dollars ($                     )
on April 15, 2011.

Interest
Payment Dates:  April 15 and October 15,
commencing April 15, 2007.

Record
Dates:  April 1 and October 1.

Reference
is hereby made to the further provisions of this Security set forth on the
reverse side of this Security, which further provisions shall for all purposes
have the same effect as if set forth at this place.

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

	
  Dated:                       ,
  200   

  	
   

  
	
   

  	
  deCODE genetics, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Title:

  

 

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

THE BANK OF NEW YORK,

as Trustee, certifies that this is one

of the Securities referred to in the

within mentioned Indenture.

	
  By:

  	
   

  	
   

  
	
   

  	
  Authorized Signatory

  
	
   

  
	
  Dated:          ,
  200  

  

 

 A-3
 

 

 

[FORM OF REVERSE OF GLOBAL SECURITY]

3.50% Senior Convertible Notes due April 15, 2011

This
Security is one of a duly authorized issue of the 3.50% Senior Convertible
Notes due April 15, 2011 (the “Securities”) of
deCODE genetics, Inc., a Delaware corporation (including any successor
corporation under the Indenture hereinafter referred to, the “Company”), issued under an Indenture, dated as of November
17, 2006 (the “Indenture”), between the Company
and The Bank of New York, as trustee (the “Trustee”).  The terms of the Security include those
stated in the Indenture, those made part of the Indenture by reference to the
Trust Indenture Act of 1939, as amended (“TIA”), and
those set forth in this Security.  This
Security is subject to all such terms, and Holders are referred to the
Indenture and the TIA for a statement of all such terms.  To the extent permitted by applicable law, in
the event of any inconsistency between the terms of this Security and the terms
of the Indenture, the terms of the Indenture shall control.  Capitalized terms used but not defined herein
have the meanings assigned to them in the Indenture referred to above unless
otherwise indicated.

1.             Interest.

The
Company promises to pay interest on the principal amount of the Securities at
the interest rate of 3.50% (the “Interest Rate”)
from the date of issuance until repayment in full at April 15, 2011, or until
an earlier conversion, redemption or repurchase.  The Company will pay interest on this
Security semi annually in arrears on April 15 and October 15 of each year
(each, an “interest payment date”),
commencing April 15, 2007.

The
Securities shall bear interest from October 15, 2006 until the principal amount
thereof is paid or made available for payment, or until such date on which the
Securities are converted, redeemed or purchased as provided herein at a rate of
3.50% per annum.

Interest
on the Securities shall be computed (i) for any full semi-annual period for
which a particular Interest Rate is applicable, on the basis of a 360-day year
of twelve 30 day months and (ii) for any period for which a particular Interest
Rate is applicable for less than a full semiannual period for which interest is
calculated, on the basis of a 30-day month and, for such periods of less than a
month, the actual number of days elapsed over a 30-day month.  

If
this Security is redeemed or repurchased by the Company on a date that is after
the record date and prior to the corresponding interest payment date, interest
and Additional Amounts, if any, accrued and unpaid hereon to but not including
the applicable Redemption Date or Change of Control Purchase Date, as the case
may be, will be paid to the same Holder to whom the Company pays the principal
of this Security.

 A-4
 

 

 

Interest
on Securities converted after a record date but prior to the corresponding
interest payment date will be paid to the Holder of the Securities on the
record date but, upon conversion, the Holder must pay the Company the interest
and Additional Amounts, if any, which have accrued and will be paid on such
interest payment date; provided, that
no such payment need be made with respect to Securities which will be redeemed
by the Company after a record date and prior to the third Business Day after
the corresponding interest payment date.

If
the principal amount hereof or any portion of such principal amount or any
interest, including Additional Amounts, if any, on any Security is not paid
when due (whether upon acceleration pursuant to Section 6.02 of the Indenture,
upon the date set for payment of the Redemption Price pursuant to Section 5
hereof or the Change of Control Purchase Price pursuant to Section 6 hereof or
upon the Stated Maturity of this Security), then in each such case the overdue
amount shall, to the extent permitted by law, bear interest at the Interest
Rate, compounded semi annually, which interest shall accrue from the date on
which such overdue amount was originally due until the date on which payment of
such amount, including interest thereon, has been made or duly provided
for.  All such interest shall be payable
on demand.

2.             Method of
Payment.

Except
as provided below, interest will be paid (i) on the Global Securities to The
Depository Trust Company (“DTC”) or its
nominee in immediately available funds, (ii) on any definitive Securities
having an aggregate principal amount of $5,000,000 or less, by check mailed to
the Holders of such Securities, and (iii) on any definitive Securities having
an aggregate principal amount of more than $5,000,000, by wire transfer in
immediately available funds at the election of the Holders of such Securities.

At
Stated Maturity, the Company will pay interest on definitive Securities at the
Company’s office or agency in New York City, which initially will be the
Corporate Trust Office of the Trustee in New York City. 

Principal
on Global Securities will be paid to DTC or its nominee in immediately
available funds.  Principal on definitive
Securities will be payable, upon Stated Maturity or when due, at the office or
agency of the Company in New York City, maintained for such purpose, initially
the Corporate Trust Office of the Trustee in New York City.  

Subject
to the terms and conditions of the Indenture, the Company will make payments in
cash in respect of Redemption Prices, Change of Control Purchase Prices and at
Stated Maturity to Holders who surrender Securities to a Paying Agent to
collect such payments in respect of the Securities. The Company will pay cash
amounts in money of the United States that at the time of payment is legal
tender for payment of public and private debts. However, the Company may make
such cash payments by check payable in such money.

 A-5
 

 

 

3.             Paying Agent,
Conversion Agent and Registrar.

Initially,
The Bank of New York will act as Paying Agent, Conversion Agent and Registrar.
The Company may appoint and change any Paying Agent, Conversion Agent or
Registrar without notice, other than notice to the Trustee; provided that the
Company will maintain at least one Paying Agent in the State of New York, City
of New York, Borough of Manhattan, which shall initially be an office or agency
of the Trustee. The Company or any of its Subsidiaries or any of their Affiliates
may act as Paying Agent, Conversion Agent or Registrar. 

4.             Indenture.

The
Securities are senior unsecured obligations of the Company limited to
$80,000,000 aggregate principal amount (of which $65,000,000 represents the
original issue and $15,000,000 is issued pursuant to the exercise by the
Initial Purchasers of their option to purchase up to $15,000,000 aggregate
principal amount of additional Securities). 
The Indenture does not limit other indebtedness of the Company, secured
or unsecured.

5.             Redemption at
the Option of the Company.

No
sinking fund is provided for the Securities. The Securities are not redeemable
by the Company prior to April 20, 2009. 
The Securities are redeemable for cash at the option of the Company, in
whole or in part, at any time or from time to time, on or after April 20, 2009
upon not less than 20 nor more than 60 days’ notice (the “Redemption
Notice”) by mail for a redemption price equal to the principal
amount of those Securities plus accrued and unpaid interest, including Additional
Amounts, if any, up to the Redemption Date.

6.             Purchase by the Company at the Option of the Holder.

At
the option of the Holder and subject to the terms and conditions of the
Indenture, the Company shall become obligated to offer to purchase the
Securities held by such Holder within 30 days after the occurrence of a Change
of Control of the Company for a Change of Control Purchase Price equal to the
principal amount plus accrued and unpaid interest, including Additional
Amounts, if any, of such Security on the Change of Control Purchase Date.  The Change of Control Purchase Date shall be
between 30 and 60 days of the Company’s delivery of the notice described in the
preceding sentence. The Change of Control Purchase Price shall be paid in cash.

Holders
have the right to withdraw any Change of Control Purchase Notice, as the case
may be, by delivering to the Paying Agent a written notice of withdrawal in
accordance with the provisions of the Indenture.

If
cash sufficient to pay the Change of Control Purchase Price of all Securities,
or portions thereof to be purchased as of the Change of Control Purchase Date,
is deposited with the Paying Agent on the Business Day following

 A-6
 

 

 

the Change of Control Purchase Date, interest will
cease to accrue on such Securities (or portions thereof) immediately after such
Change of Control Purchase Date, and the Holder thereof shall have no other
rights as such other than the right to receive the Change of Control Purchase
Price upon surrender of such Security.

7.             Notice of
Redemption.

Notice
of redemption pursuant to Section 5 of this Security will be mailed at least 20
days but not more than 60 days before the Redemption Date to each Holder of
Securities to be redeemed at the Holder’s registered address. If money sufficient
to pay the Redemption Price of all Securities (or portions thereof) to be
redeemed on the Redemption Date is deposited with the Paying Agent prior to or
on the Redemption Date, immediately after such Redemption Date interest ceases
to accrue on such Securities or portions thereof. Securities in denominations
larger than $1,000 of principal amount may be redeemed in part but only in
integral multiples of $1,000 of principal amount.

8.             Conversion.

Subject
to and in compliance with the provisions of the Indenture, a Holder is
entitled, at such Holder’s option, to convert the Holder’s Security (or any
portion of the principal amount thereof that is $1,000 or an integral multiple
of $1,000), into fully paid and nonassessable shares of Common Stock at the Conversion
Price in effect at the time of conversion.

A
Security in respect of which a Holder has delivered a Change of Control
Purchase Notice, exercising the option of such Holder to require the Company to
purchase such Security, may be converted only if such Change of Control
Purchase Notice is withdrawn in accordance with the terms of the Indenture.

The
initial Conversion Price is $14.00, subject to adjustment in certain events
described in the Indenture. No fractional shares of Common Stock shall be issued
upon conversion of any Security. A Holder that surrenders Securities for
conversion will receive cash or a check in lieu of any fractional share of
Common Stock.

To
surrender a Security for conversion, a Holder must (i) complete and manually
sign the conversion notice below (or complete and manually sign a facsimile of
such notice) and deliver such notice to the Conversion Agent, (ii) surrender
the Security to the Conversion Agent, (iii) furnish appropriate endorsements
and transfer documents and (iv) pay any transfer or similar tax, if required by
the Indenture.

If and only to the extent holders elect to convert the
Securities in connection with certain types of Change of Control pursuant to
which 10% or more of the consideration for the Common Stock (other than cash
payments for fractional shares and cash payments made in respect of dissenters’
appraisal

 A-7
 

 

 

rights) consists of cash
or securities (or other property) that are not common equity interests traded
or scheduled to be traded immediately following such transaction on a U.S.
national securities exchange or The Nasdaq Global Market, such a transaction
being referred to as a “Non-Stock Change of Control,” the Company will increase
the number of shares of Common Stock issuable upon conversion.

If
the Company (i) is a party to a consolidation, merger or binding share
exchange, (ii) reclassifies the Common Stock or (iii) conveys, transfers or
leases its properties and assets substantially as an entirety to any Person,
the right to convert a Security into shares of Common Stock may be changed into
a right to convert it into securities, cash or other assets of the Company or
such other Person, in each case in accordance with the Indenture.

9.             Denominations;
Transfer; Exchange.

The
Securities are in fully registered form, without coupons, in denominations of
$1,000 of principal amount and integral multiples of $1,000.  A Holder may transfer or exchange Securities
in accordance with the Indenture.  The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture.  The
Registrar need not transfer or exchange any Securities selected for redemption
(except, in the case of a Security to be redeemed in part, the portion of the
Security not to be redeemed) or any Securities in respect of which a Change of
Control Purchase Notice has been given and not withdrawn (except, in the case
of a Security to be purchased in part, the portion of the Security not to be
purchased) or any Securities for a period of 15 days before the mailing of a
notice of redemption of Securities to be redeemed.

10.           Persons Deemed
Owners.

The
registered Holder of this Security may be treated as the owner of this Security
for all purposes.

11.           Unclaimed Money
or Securities.

The
Trustee and the Paying Agent shall return to the Company upon written request
any money held by them for the payment of any amount with respect to the
Securities that remains unclaimed for two years, subject to applicable
unclaimed property law.  After return to
the Company, Holders entitled to the money or securities must look to the
Company for payment as general creditors unless an applicable abandoned
property law designates another Person.

12.           Amendment; Waiver.

Subject
to certain exceptions set forth in the Indenture, (i) the Indenture or the
Securities may be amended with the written consent of the Holders of at least a
majority in aggregate principal amount of the outstanding Securities and (ii)

 A-8
 

 

 

certain Defaults may be waived with the written
consent of the Holders of a majority in aggregate principal amount of the
outstanding Securities.  The Indenture
and the Securities may also be amended by the Company and the Trustee, without
the consent of any Holder, in certain circumstances set forth in the Indenture;
provided, that certain provisions of the Indenture and the Securities may not
be amended without the consent of each affected 
Holder.

13.           Defaults and
Remedies.

If
any Event of Default with respect to Securities shall occur and be continuing,
the principal of all the Securities may be declared due and payable in the
manner and with the effect provided in the Indenture.

14.           Trustee Dealings
with the Company.

Subject
to certain limitations imposed by the TIA, the Trustee under the Indenture, in
its individual or any other capacity, may become the owner or pledgee of
Securities and may otherwise deal with and collect obligations owed to it by
the Company or its Affiliates and may otherwise deal with the Company or its
Affiliates with the same rights it would have if it were not Trustee.

15.           No Recourse
Against Others.

A
director, officer, employee or shareholder, as such, of the Company shall not
have any liability for any obligations of the Company under the Securities or
the Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation.  By
accepting a Security, each Securityholder waives and releases all such liability.  The waiver and release are part of the
consideration for the issue of the Securities.

16.           Treatment of
Securities.

Each
holder, by acceptance of a Security, and beneficial owner, by acceptance of a
beneficial ownership interest in a Security, agrees to treat the Securities as
indebtedness of the Company for U.S. federal income tax purposes and to not
take any action inconsistent with such treatment.

17.           Authentication.

This
Security shall not be valid until an authorized signatory of the Trustee
manually signs the Trustee’s Certificate of Authentication on the other side of
this Security.

18.           Abbreviations.

Customary
abbreviations may be used in the name of a Securityholder or an assignee, such
as TEN COM (=tenants in common), TEN ENT (=tenants by the entireties), JT TEN
(=joint tenants with right of survivorship and not as

 A-9
 

 

 

tenants in common), CUST (=custodian), and U/G/M/A
(=Uniform Gift to Minors Act).

19.           GOVERNING LAW.

THIS
SECURITY AND THE INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.

The
Company will furnish to any Securityholder upon written request and without
charge a copy of the Indenture which has in it the text of this Security in
larger type. Requests may be made to:

deCODE genetics, Inc.

Sturlungata 8

Reykjavik, Iceland

Attn:       Corporate Counsel

Facsimile No.:  +354-570-1806

20.           Registration
Rights.

The
Holders of the Securities are entitled to the benefits of the Registration
Rights Agreement, dated as of November 17, 2006, between the Company, and
Lehman Brothers Inc., as representative of the Initial Purchasers including the
receipt of Additional Amounts upon a registration default (as defined in such
agreement).

 A-10
 

 

 

	
  ASSIGNMENT FORM

  	
   

  	
  CONVERSION NOTICE

  
	
   

  	
   

  	
   

  
	
  To assign this
  Security, fill in the form

  below:

  	
   

  	
  To convert this Security into Common Stock of the
  Company, check the box o

  
	
   

  	
   

  	
   

  
	
  I or we assign
  and transfer this Security to 

                                                  
                                                      

  (Insert assignee’s soc. sec. or tax ID no.) 

                                                      

                                                      
  

                                                      

  (Print or type assignee’s name,

  address and zip code)

  

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

  	
   

  	
  To convert only part of this Security, state the
  principal amount to be converted (which must be $1,000 or an integral
  multiple of $1,000):

  $                                                                                                

  

  If you want the stock certificate made out in another person’s name fill in
  the form below:

                                                                                                  

  (Insert the other person’s soc. sec. tax ID no.) 

   

                                                      
  

                                                       
  

                                                        
  

                                                        
  

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

  

 

	
  Date:
                                                 Your
  Signature:

  	
   

  
	
   

  	
   

  
	
   

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

  
	
   

  
	
  Signature
  Guaranteed

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Participant in a
  Recognized Signature

  	
   

  	
   

  
	
  Guarantee
  Medallion Program

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
    By:

  	
   

  	
   

  	
   

  
	
              Authorized
  Signatory

  	
   

  	
   

  
				

 

 A-11
 

 

 

SCHEDULE OF INCREASES AND DECREASES OF GLOBAL SECURITY

Initial Principal
Amount of Global Security:                
($                  ).

	
  Date

  	
   

  	
  Amount of

  Increase in

  Principal

  Amount of

  Global

  Security

  	
   

  	
  Amount of

  Decrease in

  Principal

  Amount of

  Global

  Security

  	
   

  	
  Principal

  Amount of

  Global

  Security After

  Increase or

  Decrease

  	
   

  	
  Notation by

  Registrar or

  Security

  Custodian

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 A-12

 

EXHIBIT B

[FORM OF FACE OF CERTIFICATED SECURITY]

THE
NOTES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “SECURITIES ACT”).
NEITHER THIS NOTE NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED,
SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN
THE ABSENCE OF SUCH REGISTRATION OR UNLESS THE TRANSACTION IS EXEMPT FROM, OR
NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.

EACH
PURCHASER OF THE SECURITY EVIDENCED HEREBY IS NOTIFIED THAT THE SELLER MAY BE
RELYING ON THE EXEMPTION FROM SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE
144A THEREUNDER. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF:

(1)           REPRESENTS THAT (A) IT IS A “QUALIFIED
INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B)
IT IS NOT A U.S. PERSON AND IS ACQUIRING ITS NOTE IN AN “OFFSHORE TRANSACTION”
PURSUANT TO RULE 904 OF REGULATION S UNDER THE SECURITIES ACT,

(2)           AGREES THAT IT WILL NOT PRIOR TO (X)
THE DATE WHICH IS TWO YEARS (OR SUCH SHORTER PERIOD OF TIME AS PERMITTED BY
RULE 144(K) UNDER THE SECURITIES ACT OR ANY SUCCESSOR PROVISION THEREUNDER)
AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF (OR OF ANY PREDECESSOR OF
THIS NOTE) OR THE LAST DAY ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY
WAS THE OWNER OF THIS NOTE (OR ANY PREDECESSOR OF THIS NOTE) AND (Y) SUCH LATER
DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE LAW (THE “RESALE RESTRICTION
TERMINATION DATE”), OFFER, SELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO
THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE NOTES ARE ELIGIBLE
FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED
INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT
PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL
BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR
OUTSIDE THE UNITED STATES WITHIN THE MEANING OF

 B-1
 

 

REGULATION S UNDER THE SECURITIES ACT OR (E) PURSUANT
TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT, AND

(3)           AGREES THAT IT WILL GIVE TO EACH
PERSON TO WHOM THIS NOTE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF
THIS LEGEND; PROVIDED THAT THE COMPANY, THE TRUSTEE AND THE REGISTRAR SHALL
HAVE THE RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (D)
OR (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/ OR
OTHER INFORMATION SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE REMOVED
UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.
AS USED HEREIN, THE TERMS “OFFSHORE TRANSACTION”, “UNITED STATES” AND “U.S.
PERSON” HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES
ACT.

The
foregoing legend may be removed from this Security on satisfaction of the
conditions specified in the Indenture.

 B-2
 

 

THIS SECURITY HAS
BEEN ISSUED WITH ORIGINAL ISSUE DISCOUNT FOR PURPOSES OF SECTIONS 1272, 1273
AND 1275 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED; FOR EACH $1,000
PRINCIPAL AMOUNT OF THIS SECURITY, THE ISSUE PRICE IS $700.00, THE AMOUNT OF
ORIGINAL ISSUE DISCOUNT IS $300.00, THE ISSUE DATE IS NOVEMBER 17, 2006 AND THE
YIELD TO MATURITY IS 12.6% PER ANNUM.

deCODE genetics, Inc.

3.50% Senior Convertible Notes due April 15, 2011

	
  No.:

  	
   

  	
  CUSIP: [      ]

  	
   

  
	
  Issue Date: [·]

  	
   

  	
  ISIN:  [   ]

  	
   

  
	
   

  	
   

  	
  Principal Amount: $

  	
   

  

 

deCODE
genetics, Inc., a Delaware corporation, promises to pay to                    .
or registered assigns, the principal amount of [          dollars
($          )] on [·].

Interest
Payment Dates:  April 15 and October 15,
commencing April 15, 2007.

Record
Dates:  April 1 and October 1.

Reference
is hereby made to the further provisions of this Security set forth on the
reverse side of this Security, which further provisions shall for all purposes
have the same effect as if set forth at this place.

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

	
  Dated:        ,
  200 

  	
   

  
	
  

  	
  deCODE genetics, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Title:

  

 

	
  TRUSTEE’S CERTIFICATE OF
  AUTHENTICATION

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  THE BANK OF NEW
  YORK,

  as Trustee, certifies that this is one

  of the Securities referred to in the

  within mentioned Indenture.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
    Authorized
  Signatory

  	
   

  	
   

  
					

 

 B-3
 

 

[FORM OF REVERSE
OF CERTIFICATED SECURITY IS IDENTICAL TO EXHIBIT A]

 B-4

 

EXHIBIT C

3.50% Senior Convertible Notes due April 15, 2011

Transfer Certificate

In
connection with any transfer of any of the Securities or beneficial interest in
a Global Security that is a Restricted Security within the period prior to the
expiration of the holding period applicable to the sales thereof under Rule
144(k) under the Securities Act of 1933, as amended (the “Securities
Act”) (or any successor provision), the undersigned registered owner
or beneficial owner of this Security hereby certifies with respect to $            
principal amount of the above captioned Securities (the “Surrendered
Securities”) presented or surrendered on the date hereof  for registration of transfer, or for exchange
or conversion where the securities issuable upon such exchange or conversion
are to be registered in a name other than that of the undersigned registered or
beneficial owner (each such transaction being a “transfer”),
that such transfer complies with the restrictive legend set forth on the face
of the Surrendered Securities for the reason checked below:

o            A transfer of the Surrendered
Securities is made to the Company or any subsidiaries; or

o            The transfer of the Surrendered
Securities complies with Rule 144A under the Securities Act; or

o            The transfer of the Surrendered
Securities complies with Rule 501(a)(1), (2), (3) or (7) of Regulation D under
the Securities Act; or

o            The transfer of the Surrendered
Securities is pursuant to an effective registration statement under the
Securities Act; or

o            The transfer of the Surrendered
Securities is pursuant to another available exemption from the registration
requirement of the Securities Act;

and unless the box below is checked, the undersigned
confirms that, to the undersigned’s knowledge, such Securities are not being
transferred to an “affiliate” of the Company as defined in Rule 144 under the
Securities Act (an “Affiliate”).

o            The transferee is an Affiliate of
the Company.

	
  Dated:
        , 200 

  

 C-1
 

 

 

	
  

  	
   

  	
   

  
	
  Signature
  Guarantee:

  
	
   

  
	
   

  
	
   

  	
   

  
	
  Signature must
  be guaranteed by a

  	
   

  
	
  participant in a
  recognized signature

  	
   

  
	
  guaranty
  medallion program or other

  	
   

  
	
  signature
  guarantor acceptable to the

  	
   

  
	
  Trustee.

  

 

 C-2Exhibit 10.7

EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the “Agreement”), dated as May 1, 2006 between Ceragenix Pharmaceuticals, Inc. a Delaware corporation with its principal offices at 1444 Wazee Street, Denver, Colorado (the “Company”) and Peter M. Elias, M.D.  of San Francisco, California(“Executive”).
RECITALS
A.    The Company is in the business of discovering, developing and commercializing prescription products for dermatology and infectious diseases.  The Company, in its business, develops and uses certain Confidential Information (as defined in Paragraph 8(b) below).  Such Confidential Information will necessarily be communicated to or acquired by Executive by virtue of his employment with the Company, and the Company has spent time, effort and money to develop such Confidential Information and to promote and increase its goodwill; and
B.    The Company desires to retain the services of, and employ, Executive on its own behalf and on behalf of its affiliated companies for the period provided in this Agreement and, in so doing, to protect its Confidential Information and goodwill, and Executive is willing to accept employment by the Company on an exclusive basis for such period, upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants herein contained, the parties hereto agree as follows:
1.                            Employment.  Subject to the terms and conditions of this Agreement, the Company agrees to employ Executive, and Executive agrees to accept employment from, and remain in the employ of, the Company for the period stated in Paragraph 3 hereof.
2.                            Position and Responsibilities.  During the period of his employment hereunder, Executive agrees to serve the Company, and the Company shall employ Executive, as its Chief Scientific Officer. As Chief Scientific Officer, Executive shall be responsible for: (a) assisting management in the development of new products and the reformulation of existing products; (b) advising management on its clinical trial strategies and assisting in the recruitment of investigators; (c) developing clinical trial protocols; (d) attending scientific conferences and presenting data related to the Company’s products; (e) evaluating the scientific merits of new technologies or products that the Company may seek to develop; and (f) such additional duties and responsibilities consistent with the position of Chief Scientific Officer as may reasonably be assigned to Executive.
 
 
 

3.     Term
and Duties.

 

 
(a)  Term of Employment.  The period of Executive’s employment under this Agreement shall be deemed to have commenced on the date of this Agreement and shall continue until May 1, 2008 and may continue thereafter from year to year upon mutual consent of the parties.
(b)  Duties.  During the period of his employment hereunder and except for illness, reasonable vacation periods, and reasonable leaves of absence, Executive shall devote his best efforts and at least 50% of his time during normal business hours, attention, skill and efforts to the business and affairs of the Company and its affiliated companies, as such business and affairs now exist and as they may be hereafter changed or added to, under and pursuant to the general direction of the Board of Directors of the Company (the “Board”). The Company shall retain full direction and control of the means and methods by which Executive performs the services for which he is employed hereunder. Unless and until otherwise mutually agreed to between the Company and Executive, Executive shall not be required to relocate to Denver, Colorado and may maintain a residence in the location of his choice. Executive shall be provided with suitable administrative support and support personnel customary in the industry.
4.     Compensation and Reimbursement of Expenses; Other Benefits.
(a)  Compensation.
(1) Regular Compensation. During the period of his employment hereunder, Executive shall be paid a salary, in semi-monthly installments (in accordance with the Company’s normal payroll practices for senior executive officers), at the rate of Ninety Thousand Dollars ($90,000.00) per year, or such higher salary as may be from time to time approved by the Board (or any duly authorized Committee thereof) (any such higher salary so approved to be thereafter the minimum salary payable to Executive during the remainder of the term hereof), plus such additional incentive compensation, if any, as may be awarded to him yearly by the Board (or any duly authorized Committee thereof). Upon the Company consummating a financing transaction of at least $10 million or consummating an out-license transaction in which it will receive at least $10 million in licensing fees, Executive’s annual salary shall be increased to One Hundred Twenty Thousand Dollars ($120,000).
(b)  Reimbursement of Expenses.  The Company shall pay or reimburse Executive, in accordance with its normal policies and practices, for all reasonable travel and other expenses incurred by Executive in performing his obligations hereunder. The Company further agrees to furnish Executive with such assistance and accommodations as shall be suitable to the character of Executive’s position with the Company and adequate for the performance of his duties hereunder.
(c)  Other Benefits.  During the period of his employment hereunder Executive shall be entitled to receive all other benefits of employment generally available to other members of the Company’s management and those benefits for which key executives are or shall become eligible, when and as he becomes eligible therefore, including without limitation,  life insurance benefits, short and long-term disability plans, deferred compensation plans, and 

 

 
participation in the Company’s Bonus Plan and any Stock Option plans. The Company agrees that none of such benefits shall be altered in any manner or in such a way as to reduce any then existing entitlement of Executive thereunder. Notwithstanding the foregoing, it is specifically agreed to by the parties that Executive shall obtain and pay for his own health insurance.
(d)  Executive shall be entitled to annual vacation of 2 weeks.
5.  Assignment of Patent Rights to inventions.
In the event that Executive develops any inventions while in the Company’s employ, Executive agrees to promptly disclose such invention to Company, assist in the development of such invention and assign the rights to such invention to the Company.
6.   Benefits Payable Upon Disability or Death.
     (a)  Disability Benefits.  If, during the term of this Agreement, Executive shall be prevented from properly performing services hereunder by reason of his illness or other physical or mental incapacity, the Company shall continue to pay Executive his then current salary hereunder during the period of such disability; or, if less, for a period of (12) calendar months, at which time the Company’s obligations hereunder shall cease and terminate.
     (b)  Death Benefits.  In the event of the death of Executive during the term of this Agreement, Executive’s salary payable hereunder shall continue to be paid to Executive’s surviving spouse, or if there is no spouse surviving, then to Executive’s designee or representative (as the case may be) through the six-month period following the end of the calendar month in which Executive’s death occurs. Thereafter, all of the Company’s obligations hereunder shall cease and terminate.
     (c)  Other Plans.  The provisions of this Paragraph 6 shall not affect any rights of Executive’s heirs, administrators, executors, legatees, beneficiaries or assigns under the Company’s Profit-Sharing Investment Plan, ESBP, Restricted Stock and Stock Option Plan (or any other similar plan or arrangement), any stock purchase plan or any other employee benefit plan of the Company, and any such rights shall be governed by the terms of the respective plans.
7.   Obligations of Executive During and After Employment.
(a) Noncompetition. During the Employment Period and until the 12-month anniversary of the Executive’s Date of Termination if the Executive’s employment is terminated by the Company for Cause or the Executive terminates employment without Good Reason, the Executive shall not engage in or become associated with any Competitive Activity. For purposes of this Section 7(a), a “Competitive Activity” shall mean any business or other endeavor that engages in any country in which the Company has significant business operations to a significant degree in a business that directly competes with all or any substantial part of the Company’s business. The Executive shall be considered to have become “associated with a Competitive Activity” if he becomes involved as an owner, employee, officer, director, independent 

 

 
contractor, agent, partner, advisor, or in any other capacity calling for the rendition of the Executive’s personal services, with any individual, partnership, corporation or other organization that is engaged in a Competitive Activity and his involvement relates to a significant extent to the Competitive Activity of such entity; provided, however, that the Executive shall not be prohibited from (a) owning less than one percent (1%) of any publicly traded corporation, whether or not such corporation is in competition with the Company; (b) serving as a director of a corporation or other entity the primary business of which is not a Competitive Activity or (c) serving as a consultant to other non-competitive companies provided however that such consulting activities, in total, do not exceed 25% of normal work hours. If, at any time, the provisions of this Section 8(a) shall be determined to be invalid or unenforceable, by reason of being vague or unreasonable as to area, duration or scope of activity, this Section 7(a) shall be considered divisible and shall become and be immediately amended to only such area, duration and scope of activity as shall be determined to be reasonable and enforceable by the court or other body having jurisdiction over the matter; and the Executive agrees that this Section 7(a) as so amended shall be valid and binding as though any invalid or unenforceable provision had not been included herein.
     (b)  Unauthorized Use of Confidential Information.  Executive acknowledges and agrees that (i) during the course of his employment Executive will have produced and/or have access to Confidential Information (as defined in subparagraph (c) hereof), of the Company and its affiliated companies, and (ii) the unauthorized use or sale of any of such confidential or proprietary information at any time would harm the Company and would constitute unfair competition with the Company. Executive promises and agrees not to engage in any unfair competition with the Company either during or after the term of this Agreement. Therefore, during and subsequent to his employment by the Company and its affiliated companies, Executive agrees to hold in confidence and not, directly or indirectly, disclose, use, copy or make lists of any such information, except to the extent expressly authorized by the Company in writing or as required by law. All records, files, drawings, documents, equipment, and the like, or copies thereof, relating to the Company’s business, or the business of any of its affiliated companies, which Executive shall prepare, use, or come into contact with, shall be and remain the sole property of the Company, and shall not be removed (except to allow Executive to perform his responsibilities hereunder while traveling for business purposes or otherwise working away from his office) from the Company’s or the affiliated company’s premises without its prior written consent, and shall be promptly returned to the Company upon termination of employment with the Company and its affiliated companies. This paragraph 7(b) shall survive the termination or expiration of this Agreement.
     (c)  Confidential Information Defined.  For purposes of this Agreement, “Confidential Information” means all information (whether reduced to written, electronic, magnetic or other tangible form) acquired in any way by Executive during the course of his employment with the Company or any of its affiliated companies concerning the products, projects, activities, business or affairs of the Company and its affiliated companies, or the Company’s or any of its affiliated company’s customers, including, without limitation, (i) all information concerning trade secrets of the Company and its affiliated companies, including computer programs, system documentation, special hardware, product hardware, related software development, manuals, formulae, processes, 

 

 
methods, machines, compositions, ideas, improvements or inventions of the Company and its affiliated companies, (ii) all sales and financial information concerning the Company and its affiliated companies, (iii) all customer and supplier lists of the Company and its affiliated companies, (iv) all information concerning products or projects under development by the Company or any of its affiliated companies or marketing plans for any of those products or projects, and (v) all information in any way concerning the products, projects, activities, business or affairs of customers of the Company or any of its affiliated companies which was furnished to him by the Company or any of its agents or customers; provided, however, that Confidential Information does not include information which (A) becomes available to the public other than as a result of a disclosure by Executive, (B) was available to him on a non-confidential basis outside of his employment with the Company, or (C) becomes available to him on a non- confidential basis from a source other than the Company or any of its agents, creditors, suppliers, lessors, lessees or customers.
     (d)  Nonsolicitation.  Executive recognizes and acknowledges that it is essential for the proper protection of the business of the Company and its affiliated companies that Executive be restrained for a reasonable period following the termination of Executive’s employment with the Company and its affiliated companies from: (i) soliciting or inducing any employee of the Company or any of its affiliated companies to leave the employ of the Company or any of its affiliated companies; (ii) hiring or attempting to hire any employee of the Company or any of its affiliated companies; or (iii) soliciting the trade of or trading with the customers of the Company or any of its affiliated companies for any competitive business purpose. Accordingly, Executive agrees that during the term of his employment hereunder, and for the Restricted Period thereafter following the termination of Executive’s employment with the Company and its affiliated companies for any reason, Executive shall not, directly or indirectly, (x) hire, solicit, aid in or encourage the hiring and/or solicitation of, contract with, aid in or encourage the contracting with, or induce or encourage to leave the employment of the Company or any of its affiliated companies, any employee of the Company or any of its affiliated companies; and (y) solicit, aid in or encourage the solicitation of, contract with, aid in or encourage the contracting with, service, or contact any person or entity which is, or was, within three years prior to the termination of Executive’s employment with the Company and its affiliated companies, a customer  of the Company or any of its affiliated companies for the purpose of offering or selling a product or service competitive with any of those offered by the Company of any of its affiliated companies. For purposes of this Paragraph 7(d), the “Restricted Period” shall be deemed to be the longer of (i) one(1) year following termination of Executive’s employment for any reason or (ii) the period during which Executive is receiving salary continuation payments hereunder. This Paragraph 8(d) shall survive the termination or expiration of this Agreement.
     (e)  Remedy for Breach.  Executive agrees that in the event of a breach or threatened breach of any of the covenants contained in this Paragraph 7, the Company shall have the right and remedy to have such covenants specifically enforced by any court having jurisdiction, it being acknowledged and agreed that any material breach of any of the covenants will cause irreparable injury to the Company and that money damages will not provide an adequate remedy to the Company.

 

 
     8. Termination.
     (a)  For Cause.  Notwithstanding anything herein to the contrary, the Company may, without liability, terminate Executive’s employment hereunder for Cause (as defined below) at any time upon written notice from the Board (or any duly authorized Committee thereof) specifying such Cause, and thereafter, the Company’s obligations hereunder shall cease and terminate; provided, however, that such written notice shall not be delivered until after the Board (or any duly authorized Committee thereof) shall have given Executive written notice specifying the conduct alleged to have constituted such Cause and Executive has failed to cure such conduct, if curable, within fifteen (15) days following receipt of such notice. As used herein, the term “Cause” shall mean (i) Executive’s willful misconduct, habitual neglect, dishonesty or other intentional actions (or failures to act) which are materially and demonstrably injurious to the Company, or (ii) a material breach by Executive of one or more terms of this Agreement.
     (b)  Arbitration Required to Confirm Cause.  In the event of a termination  for Cause pursuant to subparagraph (a) above, the Company shall continue to pay Executive’s then current compensation as specified in this Agreement until the issuance of an arbitration award affirming the Company’s action. Such arbitration shall be held in accordance with the provisions of Paragraph 9(d) below. In the event the award upholds the action of the Company, Executive shall promptly repay to the Company any sums received pursuant to this subparagraph 8(b), following termination of employment.
     (c)  Other than for Cause; Performance, Reorganization.  Notwithstanding anything herein to the contrary, the Company may also terminate Executive’s employment (without regard to any general or specific policies of the Company relating to the employment or termination of its employees) (i) should Executive fail to perform his duties hereunder in a manner satisfactory to the Board, provided that 
Executive shall first be given written notice of such unsatisfactory performance and a period of ninety (90) days to improve such performance to a level deemed acceptable to the Board, (ii) should  Executive’s position be eliminated as a result of a reorganization or restructuring of the Company or any of its affiliated companies or (iii) for any other reason or reasons.
     (d)  Obligations of the Company on Termination of Employment.
            i)    If the Company terminates Executive’s employment pursuant to subparagraph 89(a) above and the Company’s action is affirmed as specified in subparagraph 8(b) above or Executive terminates his employment with the Company other than for Good Reason (as defined in subparagraph (d)(iii)), then all of the Company’s obligations hereunder shall immediately cease and terminate. Executive shall thereupon have no further right or entitlement to additional salary, incentive compensation payments or awards, or any perquisites from the Company whatsoever, and Executive’s rights, if any, under the Company’s employee and executive benefit plans shall be deter-mined solely in accordance with the express terms of the 

 

 
respective plans;
          ii)   If the Company terminates Executive’s employment pursuant to subparagraph 8(c) above or Executive terminates his employment with the Company for Good Reason prior to the expiration of this Agreement, then in lieu of any benefits payable pursuant to the Company’s Executive Severance Policy (so long as the compensation and benefits payable hereunder equal or exceed those payable under said Policy) and in complete satisfaction and discharge of all of its obligations to Executive hereunder (with the exception of Paragraph 6), the Company shall, provided Executive is not in breach of the provisions of Paragraph 7 hereof, and except as provided in Paragraph 9(c) below, (A) continue Executive’s then base salary, without increase, for the remainder of the term of this Agreement, (B) continue Executive’s incentive award compensation under the terms of the Company’s Bonus Plan for each fiscal year ending with or within the term of this Agreement, such Bonus awards to be equal, in each  case, to Executive’s Individual Target Award existing at the time of his termination of employment, (C) accelerate the vesting of all stock options granted to Executive and (D) terminate Executive’s participation in the Company’s tax-qualified profit-sharing plans and stock purchase plans, pursuant to the terms of the respective plans, as of the date of Executive’s termination of employment.
        (iii)   For purposes of this Agreement, “Good Reason” shall mean any of  the following actions, if taken without the express written consent of Executive, (A) any material change by the Company in Executive’s functions, duties or responsibilities, which change would cause Executive’s position with the Company to become of less dignity, responsibility, importance, or scope as compared to the position and attributes that applied to Executive as of the Effective Date; (B) any significant reduction in Executive’s base salary, other than a reduction effected as part of an across-the-board reduction affecting all executive employees of the Company; C) any material failure by the Company to comply with any of the provisions of the Agreement; (D) the Company’s requiring Executive to be based at any office or location more than 25 miles from the office at which Executive is based as of the Effective Date, except for travel reasonably required in the performance of Executive’s responsibilities; or (E) any failure by the Company to obtain the express assumption of the Agreement by any successor or assign of the Company.
9.  General Provisions.
(a) Executive’s rights and obligations hereunder shall not be transferable by assignment or otherwise. Nothing in this Agreement shall prevent the consolidation of the Company with, or its merger into, any other corporation, or the sale by the Company of all or substantially all of its properties or assets; and this Agreement shall inure to the benefit of, be binding upon and be enforceable by, any successor surviving or resulting corporation, or other entity to which such assets shall be transferred. This Agreement shall not be terminated by the voluntary or involuntary dissolution of the Company.

 

 
(b)  This Agreement (together with the Termination Agreement between the parties of even date herewith) and the rights of Executive with respect to the benefits of employment referred to in Paragraph 4(c) constitute the entire agreement between the parties hereto in respect of the employment of Executive by the Company. Unless specifically stated, nothing whatsoever in this Agreement shall diminish, impair, or in any manner adversely affect Executive’s right to receive any benefits that Executive had accrued or to which he was otherwise entitled as of the date immediately prior to the Effective Date as a result of his previous employment by, or retirement from, the Company.
     (c) In the event Executive’s employment with the Company shall terminate under circumstances otherwise providing Executive with a right to benefits under both Section 5 of the Termination Agreement and Paragraph 7(d)(ii) of this Agreement, Executive shall be entitled to receive the greater of the benefits provided therein or herein, calculated individually, without duplication.
     (d)  Any dispute, controversy or claim arising under or in connection with this Agreement, or the breach hereof, shall be settled exclusively by arbitration in accordance with the Rules of the American Arbitration Association then in effect. Judgment upon the award rendered by the arbitrator may be entered in any court of competent jurisdiction. Any arbitration held pursuant to this paragraph in connection with any termination of Executive’s employment shall take place in Denver, Colorado at the earliest possible date. If any proceeding is necessary to enforce or interpret the terms of this Agreement, or to recover damages for breach thereof, the prevailing party shall be entitled to reasonable attorneys fees and necessary costs and disbursements, not to exceed in the aggregate one percent (1%) of the net worth of the other party, in addition to any other relief to which he or it may be entitled.
     (e)  The provisions of this Agreement shall be regarded as divisible, and if any of said provisions or any part hereof are declared invalid or unenforceable by a court of competent jurisdiction, the validity and enforceability of the remainder of such provisions or parts hereof and the applicability hereof shall not be affected thereby.
     (f)  This Agreement may not be amended or modified except by a written instrument executed by the Company and Executive.
     (g)  This Agreement and the rights and obligations hereunder shall be governed by and construed in accordance with the laws of the State of Colorado without regard to its principles of conflict of laws.
10.  Indemnification.
         (a) General. The Company agrees that if the Executive is made a party or is threatened to be made a party to any action, suit or proceeding, whether civil, criminal, administrative or investigative (a “Proceeding”), by reason of the fact that the Executive is or was a director or officer of the Company or any of their affiliates or is or was serving at the request of the Company or any of their affiliates as a trustee, director, officer, member, employee or agent of another corporation or a partnership, joint venture, limited liability company, trust or other enterprise, including, without limitation, 

 

 
service with respect to employee benefit plans, whether or not the basis of such Proceeding is alleged action in an official capacity as a trustee, director, officer, member, employee or agent while serving as a trustee, director, officer, member, employee or agent, the Executive shall be indemnified and held harmless by the Company to the fullest extent authorized by Delaware law, as the same exists or may hereafter be amended, against all Expenses incurred or suffered by the Executive in connection therewith, and such indemnification shall continue as to the Executive even if the Executive has ceased to be an officer, director, trustee or agent, or is no longer employed by the Company and shall inure to the benefit of her heirs, executors and administrators.
         (b) Expenses. As used in this Agreement, the term “Expenses” shall include, without limitation, damages, losses, judgments, liabilities, fines, penalties, excise taxes, settlements, and costs, attorneys’ fees, accountants’ fees, and disbursements and costs of attachment or similar bonds, investigations, and any expenses of establishing a right to indemnification under this Agreement.
         (c) Enforcement. If a claim or request under this Section 10 is not paid by the Company or on its behalf, within thirty (30) days after a written claim or request has been received by the Company, the Executive may at any time thereafter bring suit against the Company to recover the unpaid amount of the claim or request and if successful in whole or in part, the Executive shall be entitled to be paid also the expenses of prosecuting such suit. All obligations for indemnification hereunder shall be subject to, and paid in accordance with, applicable Delaware law.
         (d) Partial Indemnification. If the Executive is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of any Expenses, but not, however, for the total amount thereof, the Company shall nevertheless indemnify the Executive for the portion of such Expenses to which the Executive is entitled.
         (e) Advances of Expenses. Expenses incurred by the Executive in connection with any Proceeding shall be paid by the Company in advance upon request of the Executive that the Company pay such Expenses, but only in the event that the Executive shall have delivered in writing to the Company (i) an undertaking to reimburse the Company for Expenses with respect to which the Executive is not entitled to indemnification and (ii) a statement of his good faith belief that the standard of conduct necessary for indemnification by the Company has been met.
         (f) Notice of Claim. The Executive shall give to the Company notice of any claim made against him for which indemnification will or could be sought under this Agreement. In addition, the Executive shall give the Company such information and cooperation as it may reasonably require and as shall be within the Executive’s power and at such times and places as are convenient for the Executive.
         (g) Defense of Claim. With respect to any Proceeding as to which the Executive notifies the Company of the commencement thereof:
                  (i) The Company will be entitled to participate therein at its own expense;

 

 
                  (ii) Except as otherwise provided below, to the extent that it may wish, the Company will be entitled to assume the defense thereof, with counsel reasonably satisfactory to the Executive, which in the Company’s sole discretion may be regular counsel to the Company and may be counsel to other officers and directors of the Company or any subsidiary. The Executive also shall have the right to employ his own counsel in such action, suit or proceeding if she reasonably concludes that failure to do so would involve a conflict of interest between the Company and the Executive, and under such circumstances the fees and expenses of such counsel shall be at the expense of the Company.
                  (iii) The Company shall not be liable to indemnify the Executive under this Agreement for any amounts paid in settlement of any action or claim effected without its written consent. The Company shall not settle any action or claim in any manner which would impose any penalty that would not be paid directly or indirectly by the Company or limitation on the Executive without the Executive’s written consent. Neither the Company nor the Executive will unreasonably withhold or delay their consent to any proposed settlement.
         (h) Non-exclusivity. The right to indemnification and the payment of expenses incurred in defending a Proceeding in advance of its final disposition conferred in this Section 10 shall not be exclusive of any other right which the Executive may have or hereafter may acquire under any statute or certificate of incorporation or by-laws of the Company or any subsidiary, agreement, vote of shareholders or disinterested directors or trustees or otherwise.
         11. Legal Fees and Expenses. If any contest or dispute shall arise
between the Company and the Executive regarding any provision of this Agreement, the Company shall reimburse the Executive for all legal fees and expenses reasonably incurred by the Executive in connection with such contest or dispute, but only if the Executive prevails to a substantial extent with respect to the Executive’s claims brought and pursued in connection with such contest or dispute. Such reimbursement shall be made as soon as practicable following the resolution of such contest or dispute (whether or not appealed) to the extent the Company receives reasonable written evidence of such fees and expenses.
         12. Successors; Binding Agreement.
         No rights or obligations of the Company under this Agreement may be assigned or transferred, except that the Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, “Company” shall include any successor to its business and/or assets (by merger, purchase or otherwise) which executes and delivers the agreement provided for in this Section 12 or which otherwise becomes bound by all the terms and provisions of this Agreement by operation of law.

 

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

	
  

  	
  Ceragenix Pharmaceuticals, Inc.

  
	
   

  	
   

  
	
   

  	
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  Executive

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