Document:

Exhibit 10.60

This Agreement is entered into
on 27 September 2005 by and between

 

SONY
COMPUTER ENTERTAINMENT EUROPE LIMITED

of 30 Golden Square, London W1F 9LD

(hereinafter referred to as “SCEE”)

 

- and -

 

ACTIVISION
UK LIMITED

of Parliament House, St. Laurence Way, Slough, Berks,
SL1 2BW

(hereinafter referred to as “Publisher”)

PUBLISHER AUTHORISATION #: 056

 

Recitals

 

(A)                              SCEE,
its parent company Sony Computer Entertainment Inc., and/or certain of their
affiliates and companies within the group of companies of which any of them
form part (hereinafter jointly and severally referred to as “Sony”) have
developed, and are licensing core components of, a computer entertainment
system known and hereinafter referred to as “PlayStation®
Portable” or “PSP”, and are
the owners of, or have the right to grant licences of, certain proprietary information
and intellectual property rights pertaining to PSP.

 

(B)                                Publisher
desires to be granted a non-exclusive licence, on a product by product basis,
to market, distribute and sell Licensed Products (as defined below), and for
such Licensed Products and associated materials to be manufactured by an
authorised manufacturing facility licensed by SCEE, on the terms and subject to
the conditions set forth in this Agreement.

 

(C)                                SCEE
is willing, on the terms and subject to the conditions of this Agreement, to
grant Publisher the desired non-exclusive licences.

 

In consideration of the undertakings, representations and warranties
given herein, and of other good and valuable consideration the receipt and
sufficiency of which is acknowledged, Publisher and SCEE agree as follows:

 

1.                                      Definitions

 

1.1                                 “Licensed
Products” means the PSP format Software games listed in Schedule 3, and such
further PSP format Software games as shall, from time to time, achieve
unconditional pass status under SCEE’s product assessment process, in unique
UMD format software discs and shells.

 

1.2                                 “Licensed
Territory” means the countries specified in Schedule 1.

 

1.3                                 “Sony
Intellectual Property Rights” means all worldwide current and future rights in
or in relation to the Licensed Trademarks, any patents, inventions, designs,
copyrights, rights in databases, trademarks, service marks, trade names
(including any goodwill associated with any trademarks

 

[***]      The portions of this
document marked with three asterisks represent confidential portions omitted
and filed separately with the Securities and Exchange Commission.

 

1

 

or names),
semi-conductor topography rights, Confidential Information of Sony, rights in
technical information and know-how, rights in the nature of unfair competition
rights and rights to sue for passing off and all other proprietary or
intellectual property rights (and the equivalents of each of the foregoing
under the laws of any jurisdiction) of Sony pertaining to Sony Materials and/or
PSP (including, without limitation, all registrations, applications to register
and rights to apply for registration of the same) for their full term including
all renewals and extensions thereof.

 

1.4                                 “Specifications”
means such specifications relating to the content and/or manufacture of
Licensed Products, Printed Materials, Advertising Materials and/or related
matters or materials as may from time to time be promulgated by Sony, which
specifications (and/or procedures relating to the testing or verification of
all such materials for conformity to the Specifications and/or relating to the
ordering and manufacture of Licensed Products and associated materials) are
incorporated into and form part of this Agreement and may be amended from time
to time upon reasonable notice to Publisher.

 

1.5                                 “Licensed
Trademarks” means the “PS” family logo and PlayStation Portable and “PSP” logotypes
and such other trademarks, service marks, trade dress, logos and other icons or
indicia as shall be specified in the Specifications or otherwise designated by
SCEE from time to time. SCEE may amend such Licensed Trademarks upon reasonable
notice to Publisher.

 

Publisher is not
authorised to use the PlayStation, PSone, PlayStation 2, “PS2”, playstation.com
or psp.com logos and/or logotypes or the PlayStation Shapes devices, other than
as expressly permitted by separate agreement. Nothing contained in this
Agreement shall in any way grant Publisher the right to use the trademark “Sony”
in any manner as (or as part of) a trademark, trade name, service mark or logo
or otherwise howsoever.

 

1.6                                 “Advertising
Materials” means all advertising, merchandising, promotional and display
materials of or concerning the Licensed Products.

 

1.7                                 “Printed
Materials” means all artwork and mechanicals to be set forth on the Licensed
Product itself, and on the box (or other) packaging for the Licensed Product
and all instruction manuals, inlays, inserts, stickers and other user
information and/or materials to be inserted in or affixed to such box and/or
packaging.

 

1.8                                 “Manufactured
Materials” means all units of the Licensed Products, of the Printed Materials
to be set forth on the Licensed Products themselves and of the boxes for such
Licensed Products (which expression shall include any alternative form of
container for Licensed Products subsequently introduced by SCEE).

 

1.9                                 “Licensed
Developer Software” means Licensed Developer’s application source code and data
(including audio and visual material) developed by Licensed Developer in
accordance with its LDAP which, when integrated with any software (whether in
object code or source code form) provided by SCEE, creates PSP format Software.

 

1.10                           “Licensed
Developer” means Publisher or such other third party as shall have developed
Licensed Developer Software and PSP format Software pursuant to a then current
LDAP.

 

1.11                           “LDAP”
means the PSP Licensed Developer Agreement between Licensed Developer of the applicable
PSP format Software and SCEE (or an equivalent such agreement between Licensed Developer
and an Affiliate of SCEE).

 

1.12                           ‘‘Article
6” means Article 6 of Council Directive 91/250/EEC of 14 May 1991 on the legal protection
of computer programs.

 

2

 

1.13                           “Affiliate
of SCEE” means, as applicable, either Sony Computer Entertainment Inc in Japan,
Sony Computer Entertainment America Inc in the USA, Sony Computer Entertainment
Korea or such other Sony Computer Entertainment entity as may be established by
Sony from time to time.

 

1.14                           “PSP
format Software” means Publisher’s object code software, which includes
Licensed Developer Software and any software (whether in object code or source
code form) which is provided by SCEE and intended to be combined with Licensed
Developer Software for execution on PSP and has the ability to communicate with
the software resident in PSP.

 

1.15                           “Sony
Materials” means any hardware, data, object code, source code, documentation
(or any part(s) of any of the foregoing) and related peripheral items provided
to the Licensed Developer of any PSP format Software pursuant to the LDAP
applicable for such PSP format Software.

 

1.16                           “Confidential
Information of Sony” means the content and/or substance of this Agreement (including
the Schedules hereto and the Specifications) and any and all confidential
and/or proprietary information, documents and related materials of whatever
nature (including, without limitation, all information made available to
Publisher on www.publisher.scee.net or other Sony websites or otherwise and all
processes, hardware, software, inventions, trade secrets, ideas, designs,
research, know-how, business methods, production plans and marketing plans) concerning
PSP and related products, developed or owned by, licensed to or under the
control of Sony and, without limitation, information otherwise related to Sony’s
technology, know-how, products, potential products, research projects, trials,
promotional advertising and marketing plans, schedules and budgets, licensing
terms and pricing, customer lists and details, commercial relationships or
negotiations, services, financial models and other business information,
whether relating to PSP or otherwise including relating to Sony’s “PlayStation”
and “PlayStation 2” predecessor video and computer entertainment system(s),
disclosed by whatever means, whether directly or indirectly, by or on behalf of
Sony to Publisher at any time, whether disclosed orally, in writing or in
machine-readable or other form, or otherwise discovered by Publisher (or any parent
company, subsidiary or affiliate of Publisher) as a result of any information
or materials provided (whether directly or indirectly) by or on behalf of Sony
to Publisher (or any parent company, subsidiary or affiliate of Publisher).

 

1.17                           “UMD”
means Universal Media Disc, a proprietary disc format developed by or on behalf
of Sony.

 

1.18                           “Third
Party Intellectual Property Rights” means all worldwide current and future
rights in or in relation to any patents, inventions, designs, copyrights,
rights in databases, trademarks, service marks, trade names (including any
goodwill associated with any trademarks or names), semi-conductor topography
rights, trade secret rights, technical information and know-how, rights in the
nature of unfair competition rights and rights to sue for passing off and all
other proprietary or intellectual property rights (and the equivalents of each
of the foregoing under the laws of any jurisdiction) of any third party other
than Publisher or Sony (including, without limitation, all registrations,
applications to register and rights to apply for registrations of the same) for
their full term including all renewals and extensions thereof.

 

1.19                           “Term”
means, subject to Clause 2.2, the period from [***] and continuing thereafter
unless and until terminated by not less than [***] notice on either side given
to expire on such date or any subsequent [***].

 

1.20                           “CNDA
(PSP)” means the Confidentiality & Non-Disclosure (or similar) Agreement
between Publisher and SCEE or an Affiliate of SCEE relating to PSP and to
Confidential Information of Sony and/or of Publisher thereunder.

 

1.21                           “Confidential
Information of Publisher” means any and all confidential and/or proprietary information,
documents and related materials of whatever nature (including, without
limitation,

 

[***]      The portions of this
document marked with three asterisks represent confidential portions omitted
and filed separately with the Securities and Exchange Commission.

 

3

 

all processes,
hardware, software, inventions, trade secrets, ideas, designs, research,
know-how, business methods, production plans and marketing plans) concerning
PSP format Software developed or owned by, licensed to or under the control of
Publisher and, without limitation, information otherwise related to Publisher’s
technology, know-how, products, potential products, research projects, trials,
promotional advertising and marketing plans, schedules and budgets, licensing
terms and pricing, customer lists and details, commercial relationships or
negotiations, services, financial models and other business information,
whether relating to PSP format Software or otherwise, disclosed by whatever
means, whether directly or indirectly, by or on behalf of Publisher to SCEE at
any time, whether disclosed orally, in writing or in machine-readable or other
form, or otherwise discovered by SCEE as a result of any information or
materials provided (whether directly or indirectly) by or on behalf of
Publisher to SCEE, which information is designated by Publisher as, or becomes
known to SCEE under circumstances indicating that such information is,
confidential or proprietary.

 

2.                                      Grant
of Licence

 

2.1                                 SCEE
hereby grants to Publisher, and Publisher hereby accepts, within the Licensed
Territory only and under the Sony Intellectual Property Rights, a non-exclusive
non-transferable licence, without the right to sub-license (except as
specifically provided herein), to publish Licensed Products in such genres or
categories as SCEE shall from time to time designate in the Specifications, and
the right and obligation to use the Licensed Trademarks, in the form and manner
prescribed in the Specifications, strictly, only and directly in connection
with such publication.

 

2.2                                 For
these purposes, to “publish” shall mean any or all of the following: (i)
produce Advertising Materials and Printed Materials; (ii) to issue to SCEE
purchase orders for Manufactured Materials as prescribed in Clause 6; (iii) to
market and advertise Licensed Products; (iv) to distribute and sell Licensed
Products (and to authorise others so to do) save that, until [***], such rights
shall be limited to the distribution and sale of Licensed Products to trade
only; and (iv) from [***], to sub-license to end users the right to use
Licensed Products for non-commercial purposes only and not for public
performance. Failure to take all measures necessary to ensure that Licensed
Products are not made available to consumers prior to [***] will be a material
breach of this Agreement not capable of remedy and an infringement of the
Licensed Trademarks.

 

3.                                      Limitations

 

3.1                                 Publisher
shall publish Licensed Products only if based on Licensed Developer Software developed
by a Licensed Developer strictly in accordance with all the terms and
conditions of such Licensed Developer’s LDAP and shall not, subject to Article
6, publish or attempt to publish any other software whatsoever intended for or
capable of execution on PSP.  The onus of
evidencing that each Licensed Product satisfies the foregoing criteria shall
rest on Publisher and SCEE reserves the right to require Publisher to furnish
evidence satisfactory to SCEE that the foregoing criteria are satisfied.

 

3.2                                 Publisher
shall not publish PSP format Software or Licensed Products outside the Licensed
Territory unless and until Publisher shall be authorised and licensed so to do
pursuant to a current license agreement with the applicable Affiliate of SCEE.
Further, Publisher shall not sub-publish PSP format Software or Licensed
Products through a third party either within or outside the Licensed Territory
unless and until such sub-publisher shall be authorised and licensed so to do

 

[***]      The portions of this
document marked with three asterisks represent confidential portions omitted
and filed separately with the Securities and Exchange Commission.

 

4

 

either pursuant to
a current PSP Licensed Publisher Agreement with SCEE or a current PSP licence
agreement with the applicable Affiliate of SCEE.

 

3.3                                 The
licence granted in this Agreement extends only to the publication, marketing,
distribution and sale of Licensed Products in such formats as may be designated
by SCEE. Without limiting the generality of the foregoing and except as
otherwise provided herein, Publisher and, if applicable, its sub-publishers
shall at all times and in all territories be strictly prohibited from undertaking
or authorising the distribution or transmission of PSP format Software or
Licensed Products through electronic means or any other means now known or
hereafter devised, including without limitation, via wireless, cable, fibre
optic means, telephone lines, microwave and/or radio waves, or over a network
of interconnected computers or other devices. Notwithstanding this limitation,
Publisher may (i) authorise the sharing of insubstantial parts of PSP format
Software between PSPs (so called “game sharing”) and ad hoc playing of a PSP format
Software game between PSPs and, in each case by the use of the wireless
features of the PSP and not via the internet or other publicly available
network; (ii) undertake or authorise the distribution or transmission of PSP
format Software, or user-contributed content for use with PSP format Software,
over the internet or other publicly available network, and the playing of PSP
format Software games between players via the internet or other publicly
available network strictly for non-commercial purposes (so that no rights are
granted under this Agreement where Publisher receives any direct or indirect
income from such downloads or services including, without limitation, one-off
payments, subscriptions, revenue sharing, advertising revenue or a combination
of all or any of the same); and (iii) electronically transmit PSP format
Software from site to site, or from machine to machine over a computer network,
for the sole purpose of facilitating development; provided that no right of
retransmission shall attach to any such transmission, and provided further that
Publisher shall use reasonable security measures customary within the high
technology industry to reduce the risk of unauthorised interception or retransmission
of such transmissions.

 

3.4                                 Subject
only to Article 6, Publisher and, if applicable, its sub-publishers shall at
all times be strictly prohibited from disassembling or decompiling software,
peeling semiconductor components or otherwise reverse engineering or attempting
to reverse engineer or derive source code or create derivative works from PSP
format Software, from permitting or encouraging any third party so to do, and
from acquiring or using any materials from any third party who does so.
Publisher shall in all cases be primarily liable for the payment of Platform
Charge to the applicable authorised manufacturing facility licensed by SCEE in
accordance with Clause 7 hereof in respect of any product published by
Publisher, or, if applicable, any of its sub- publishers, which utilises Sony
Materials and/or Sony Intellectual Property Rights and/or, subject to Council
Directive 91/250/EEC, Confidential Information of Sony. The onus of evidencing
that any such product is not so published shall rest on Publisher and SCEE
reserves the right to require Publisher to furnish evidence satisfactory to
SCEE that the applicable of the foregoing criteria are satisfied.

 

3.5                                 Publisher
shall inform all such sub-publishers of the obligations imposed by this
Agreement and shall obtain their commitment to abide by the same.

 

3.6                                 Publisher
acknowledges and agrees that; (i) no rights are granted under this Agreement in
respect of non-game products or products which contain significant elements of,
or are a hybrid with, audio or video profile products for UMDs; (ii) no
Licensed Product shall, except as specifically authorised in advance writing by
SCEE in each case, incorporate (in whole or in part) more than 1 (one) game
product; and (iii) it may publish, market, distribute, sell or otherwise
dispose of Licensed Products only on a standalone basis, and may not do the
same in conjunction or bundled

 

5

 

with any other
goods, products or services except as specifically authorised in advance in
writing by SCEE in each case.

 

3.7                                 Any
breach of the provisions of this Clause 3 shall be a material breach of this
Agreement not capable of remedy.

 

4.                                      Reservations

 

4.1                                 This
Agreement does not grant any right or licence, under any Sony Intellectual
Property Rights or otherwise, except as expressly provided herein, and no other
right or licence is to be implied by or inferred from any provision of this
Agreement or the conduct of the parties hereunder. Subject only to the rights
of Publisher under this Agreement, all right, title and interest in and to the
Sony Materials and the Sony Intellectual Property Rights are and shall be the
exclusive property of Sony, and Publisher shall not make use of, or do or cause
to be done any act or thing contesting or in any way impairing or tending to
impair any of Sony’s right, title or interest in or to, any of the Sony
Materials, Sony Intellectual Property Rights and PSP except as authorised by and
in compliance with the provisions of this Agreement or as may otherwise
expressly be authorised in writing by Sony; provided however that the foregoing
shall not be taken to preclude Publisher from challenging the validity of any
Sony Intellectual Property Rights. No right, licence or privilege has been
granted to Publisher hereunder concerning the development of any collateral
product or other use or purpose of any kind whatsoever which displays or depicts
any of the Licensed Trademarks. No promotional or novelty items or premium
products (including, by way of illustration but without limitation, T-shirts,
posters, stickers, etc) displaying or depicting any of the Licensed Trademarks
shall be developed, manufactured, marketed, sold and/or distributed by, with
the authority of or on behalf of, Publisher without the prior written consent
and authorisation of SCEE in each case.

 

4.2                                 The
Licensed Trademarks and the goodwill associated therewith are and shall be the
exclusive property of Sony. Nothing herein shall give Publisher any right,
title or interest in or to any of the Licensed Trademarks, other than the
non-exclusive licence and privilege to display and use the Licensed Trademarks
solely in accordance with the provisions of this Agreement. Publisher shall not
do or cause to be done any act or thing contesting or in any way impairing or
tending to impair any of Sony’s right, title or interest in or to any of the
Licensed Trademarks, nor shall Publisher register or apply to register any
trademark in its own name or in the name of any other person or entity, or
obtain or seek to obtain rights to employ internet domain name(s) or address(es),
which is or are similar to or is or are likely to be confused with any of the
Licensed Trademarks; provided however that the foregoing shall not be taken to
preclude Publisher from challenging the validity of any Licensed Trademarks.

 

4.3                                 Publisher
or Licensed Developer (as applicable) retains all right, title and interest in
and to Licensed Developer Software, including Licensed Developer’s intellectual
property rights therein and any names or other designations used as titles
therefor, and nothing in this Agreement shall be construed to restrict the
right of Licensed Developer to develop and/or the right of Publisher to publish
products incorporating Licensed Developer Software alone (which do not contain
or rely on Sony Materials and/or Sony Intellectual Property Rights and/or,
subject to Council Directive 91/250/EEC, Confidential Information of Sony),
and/or under such names or other designations, for any hardware platform or
service other than PSP.

 

4.4                                 Subject
to the proviso to Clauses 4.1 and 4.2 above, Publisher shall, at the expense of
SCEE, take all such steps as SCEE may reasonably require, including the
execution of licences and obtaining registrations, to assist SCEE in
maintaining the validity and enforceability of Sony Intellectual Property
Rights.

 

6

 

4.5                                 Without
prejudice to Clause 11, Publisher or SCEE (as applicable) shall promptly and
fully notify the other in writing in the event that it discovers or otherwise
becomes aware of any actual, threatened or suspected infringement of, or
challenge to, any of the intellectual property or trademark rights of the other
embodied in any of the Licensed Products, and of any claim of infringement or
alleged infringement by the other of any Third Party Intellectual Property
Rights, and shall at the request and expense of the other do all such things as
may reasonably be required to assist the other in taking or resisting any
proceedings in relation to any such infringement or claim.

 

5.                                      Quality
Standards

 

5.1                                 Each
Licensed Product, including without limitation the title and content thereof,
and/or Publisher’s use of any of the Licensed Trademarks, shall be required to
conform to the Specifications. Testing or verification for conformity to the
Specifications shall be conducted by SCEE or, at Publisher’s election, by an
independent external testing service (if and when such service becomes
available).

 

5.2                                 Publisher
shall submit for testing for conformity to the Specifications such information
and materials relating to the PSP format Software for each Licensed Product as
shall be specified in the Specifications. 
Such Specifications shall be comparable with the specifications applied
by Sony with respect to its own PSP format software products. SCEE acknowledges
and agrees that such Specifications shall be of prospective application only
and shall not be applied to any inventory units of the Licensed Products
manufactured prior to, or in the active process of manufacture at the date of,
the promulgation thereof by SCEE.

 

5.3                                 For
each Licensed Product, Publisher shall be responsible, at Publisher’s expense,
for the origination of all Printed Materials, and for the manufacture and
delivery to the manufacturer of such Licensed Product of all Printed Materials
other than those to be set forth on the Licensed Product itself, all of which
Printed Materials shall conform in all material respects to the Specifications.
The Specifications referred to above shall be comparable with the
specifications applied by Sony with respect to its own PSP format software
products. SCEE acknowledges and agrees that such Specifications shall be of
prospective application only and shall not be applied to any inventory units of
the Licensed Products manufactured prior to, or in the active process of manufacture
at the date of, the promulgation thereof. All materials to be submitted
pursuant to this Clause 5.3 shall be delivered by such means and in such form
as shall be prescribed in the Specifications and at Publisher’s sole risk and
expense. Publisher undertakes that the quality of such Printed Materials shall
be of the same quality as that associated with high quality consumer products.

 

5.4                                 SCEE
(or, where applicable, an independent external testing service as aforesaid)
will test or verify for conformity to the Specifications (as the case may be)
all materials submitted by Publisher pursuant to Clause 5.2 and Clause 5.3.
Where such testing or verification is conducted by SCEE, SCEE shall advise
Publisher of the results of such testing or verification within the applicable
of the timeframes specified in the Specifications. Where such testing or
verification is conducted by such independent external testing service, such
service shall advise Publisher of the results of such testing or verification
within timeframes agreed between such service and Publisher (and SCEE shall
have no responsibility or liability whatsoever arising from a failure by such
service to meet such timeframes). If any of such materials (or any element(s)
thereof) fail to conform to the Specifications, SCEE (or, where applicable,
such independent external testing service) shall specify the reasons for such
failure and state what revisions are required. 
After making the required revisions, Publisher may resubmit such
materials in such revised form for re-testing or re-verification by SCEE (or,
where applicable, such independent external testing

 

7

 

service). The
procedures described in this Clause 5.4 shall if necessary be repeated until
all such materials for each Licensed Product shall expressly have been
certified as conforming to the Specifications, such certification to be validly
given only if in writing and signed by the duly authorised representative(s) of
SCEE as specified in the Specifications (or, where applicable, by the duly
authorised representative(s) of such independent external testing service).
SCEE shall have no liability to Publisher for the accuracy or content
(including translations and localisations) of Printed Materials (except only
items required to be included in accordance with the Specifications) or in
respect of costs incurred or irrevocably committed by Publisher as a result of
any failure to conform to Specifications (even where certified for conformity)
or in relation to, or to the use of, Printed Materials which shall not have
been given a certificate of conformity by SCEE (or, where applicable, by such
independent external testing service). No production units of any Licensed Product
shall be manufactured, marketed, distributed or sold by, with the authority of
or on behalf of, Publisher unless and until such a certificate of conformity of
such Licensed Product shall first have been given by SCEE (or, where
applicable, by such independent external testing service). No certificate of
conformity from SCEE (or, where applicable, from such independent external
testing service) of any element of the materials so submitted or resubmitted
shall be deemed a certificate of conformity of any other element of such
materials, nor shall any such certificate of conformity be deemed to constitute
a waiver of any of SCEE’s rights under this Agreement.

 

The generality of
the foregoing notwithstanding, in the event that Publisher wishes to contest a
finding by SCEE of non-conformity to the Specifications as an alternate to
making required revisions and resubmissions as above, or in the event that
Publisher wishes to contest the outcome of SCEE’s product assessment process in
relation to any specific product. Publisher may have recourse to the appeals
process specified in the Specifications.

 

5.5                                 Publisher
shall not change in any material respect any of the materials for which a
certificate of conformity shall have been given by SCEE (or, where applicable,
by an independent external testing service) pursuant to Clause 5.4 (or, if
applicable, pursuant to Clause 5.6) (or, alternately, which shall have been
held to conform to the Specifications following recourse by Publisher to the
appeals process specified in the Specifications).  If any of the Licensed Products and/or related
materials published by, with the authority of or on behalf of, Publisher fail
to conform to the Specifications and the materials for which SCEE (or, where
applicable, such independent external testing service) shall from time to time
have given a certificate of conformity, then the provisions of Clause 14.2
shall apply.

 

5.6                                 SCEE
reserves the right to require that pre-production samples of all Advertising
Materials shall be submitted by Publisher to SCEE or, at Publisher’s election,
to an independent external testing service (if and when such service becomes
available), [***] and in accordance with the procedure specified in the
Specifications, for verification for conformity to the Specifications (including
specifically, but without limitation, in relation to the usage of any of the
Licensed Trademarks), prior to any actual production, use or distribution of
any such items by, with the authority or on behalf of, Publisher. No such proposed
Advertising Materials shall be produced, used or distributed directly or
indirectly by Publisher without first obtaining a certificate of conformity to
the Specifications.  Where such
verification is conducted by SCEE, SCEE shall advise Publisher of the results
of such verification within the applicable of the timeframes specified in the
Specifications.  Where such verification
is conducted by such independent external testing service, such service shall
advise Publisher of the results of such verification within timeframes agreed
between such service and Publisher (and SCEE shall have no responsibility or
liability whatsoever arising from a failure by such service to meet such timeframes).
If any such Advertising Materials (or any element(s) thereof) fail to conform
to the Specifications, SCEE (or, where applicable, such independent external
testing service) shall

 

[***]      The portions of this
document marked with three asterisks represent confidential portions omitted
and filed separately with the Securities and Exchange Commission.

 

 

8

 

specify the
reasons for such failure and state what revisions are required. After making
the required revisions, Publisher may resubmit such materials in such revised
form for re-verification by SCEE (or, where applicable, by such independent
external testing service). The procedures described in this Clause 5.6 shall if
necessary be repeated until all such Advertising Materials for each Licensed
Product shall expressly have been certified as conforming to the
Specifications, such certification to be validly given only if in writing and
signed by the duly authorised representative(s) of SCEE as specified in the
Specifications (or, where applicable, by the duly authorised representative(s)
of such independent external testing service). SCEE shall have no liability to
Publisher in respect of costs incurred or irrevocably committed by Publisher in
relation to, or to the use of, Advertising Materials which shall not have been
given a certificate of conformity by SCEE (or, where applicable, by such
independent external testing service). No certificate of conformity from SCEE
(or, where applicable, from such independent external testing service) of any
element of Advertising Materials so submitted or resubmitted shall be deemed a
certificate of conformity of any other element of such Advertising Materials,
nor shall any such certificate of conformity be deemed to constitute a waiver
of any of SCEE’s rights under this Agreement.

 

The generality of
the foregoing notwithstanding, in the event that Publisher wishes to contest a
finding of non-conformity to the Specifications by SCEE, and as an alternate to
making required revisions and resubmissions as above, Publisher may have
recourse to the appeals process specified in the Specifications.

 

Subject in each
instance to the prior written consent of SCEE, Publisher may use such textual
and/or pictorial advertising matter (if any) as may be created by, with the
authority or on behalf of, Sony pertaining to the Sony Materials and/or to the
Licensed Trademarks on such Advertising Materials as may, in Publisher’s
judgement, promote the sale of Licensed Products within the Licensed Territory.
Sony shall have the right to use Licensed Products and/or other materials
relating to Publisher’s PSP format Software games in any advertising or
promotion for PSP at Sony’s expense, subject to giving Publisher reasonable
prior notice of such advertisement or promotion. Sony shall confer with
Publisher regarding the text of any such advertisement.

 

5.7                                 No
Licensed Product may be published in any country of the Licensed Territory
unless the Licensed Product itself and associated Printed Materials bear a
consumer advisory age rating either: (i) as required by local law; or (ii)
where no such local law obtains, as prescribed under the Pan European Games
Information age rating system (“PEGI”) promulgated by the Interactive Software
Federation of Europe. Each such rating shall be displayed as prescribed by
local law or under PEGI as the case may be. Publisher shall also conform to
local law or to the requirements of PEGI as the case may be in relation to the
display of consumer advisory age ratings in Advertising Materials. No Licensed
Product, nor any Printed Materials or Advertising Materials, may bear more than
one consumer advisory age rating.

 

6.                                      Manufacture
of Licensed Products & Associated Materials

 

6.1                                 Subject
only to Article 6, Publisher acknowledges and agrees that it shall purchase
Manufactured Materials only from an authorised manufacturing facility licensed
by SCEE.  SCEE shall have the right, but
no obligation, to subcontract the whole or any part or phase of the production
of any or all of the Manufactured Materials or any part(s) thereof.

 

6.2                                 Promptly
following the giving by SCEE (or, where applicable, by an independent external
testing service as aforesaid) of a certificate of conformity to the
Specifications (or, alternately, a holding of conformity to the Specifications
following recourse by Publisher to the appeals process specified in the
Specifications) for each Licensed Product pursuant to Clause 5.4, SCEE
shall

 

9

 

create (from one
of the copies of the finally tested version of the PSP format Software as
submitted by Publisher pursuant to Clause 5.2) an encrypted copy of such PSP
format Software for transmission to the authorised manufacturing facility
licensed by SCEE for the creation of the master UMD Disc (“Master UMD Disc”)
from which all other copies of the Licensed Product are to be replicated in
compliance with the Specifications effective at the time of replication. Where
such certificate of conformity shall have been given by such an independent
external testing service, then the copy of the finally tested version of the
PSP format Software as submitted by Publisher pursuant to Clause 5.2 from which
the Master UMD Disc is to be created shall be furnished to SCEE by such
service. Publisher will retain duplicates of all such PSP format Software. SCEE
shall not be liable for loss of or damage to any copies of the PSP format
Software furnished to SCEE hereunder. There will be no technology exchange
between Sony and Publisher under this Agreement. The encryption and mastering
process being of a proprietary and commercially confidential nature, neither
SCEE nor any manufacturing subcontractor of SCEE will under any circumstances
release any Master UMD Discs or other in-process materials to Publisher. All
such physical materials shall be and remain the sole property of Sony.

 

6.3                                 Publisher
shall be solely responsible for the delivery, direct to an authorised
manufacturing facility licensed by SCEE and in accordance with Clause 6.4, of [***]
of the number of sets of the Printed Materials (other than those set forth on
the applicable Licensed Product itself) required to fulfil Publisher’s purchase
order for Manufactured Materials of each PSP format Software game, which
Printed Materials shall be in strict compliance with the Specifications.  SCEE shall, at Publisher’s request, give
Publisher all reasonable assistance in arranging the manufacture of Printed
Materials to be used in conjunction with Licensed Products not manufactured in
reliance on Article 6 through SCEE’s authorised manufacturing facility (if a
Sony company), but SCEE shall have no responsibility with respect to pricing,
delivery or any other related matter whatsoever in connection with such
manufacture.

 

6.4                                 Subject
to the giving by SCEE of a certificate of conformity to the Specifications (or,
alternately, a holding of conformity following recourse by Publisher to the
appeals process specified in the Specifications) for the applicable PSP format
Software and Printed Materials pursuant to Clause 5, and to the delivery to an
authorised manufacturing facility licensed by SCEE of the materials to be
delivered under Clause 6.3, the applicable authorised manufacturing facility licensed
by SCEE will, [***] and as applicable, manufacture, assemble, package and
deliver the Manufactured Materials and the Printed Materials in accordance with
the terms and conditions set forth in this Clause 6 and such other conditions
as Publisher and the applicable authorised manufacturing facility may
agree.  The delivery of the materials
specified in Clause 6.3 shall be made in accordance with the timetable for such
delivery specified in the Specifications.

 

6.5                                 Publisher
shall issue to the applicable authorised manufacturing facility licensed by
SCEE purchase order(s) via SCEE’s Electronic Order System (or otherwise as specified
by SCEE from time to time) in accordance with, and in compliance with the
timetable specified in, the Specifications. 
No such order shall be issued unless and until all necessary
certificates of conformity shall have been given (or, alternately, there shall
have been a holding of conformity following recourse by Publisher to the
appeals process specified in the Specifications) pursuant to Clause 5. Each
such order shall reference Publisher authorisation number and purchase order reference
number, specify quantities of Licensed Products by title by pack sku (in
multiples of the minimum box shipment advised from time to time by the
authorised manufacturing facility licensed by SCEE), state requested ex-factory
delivery date and all packaging information together with such other
information as SCEE shall reasonably require and shall be for not less than the
applicable minimum order quantity as specified from time to time by SCEE or the

 

[***]      The portions of this
document marked with three asterisks represent confidential portions omitted
and filed separately with the Securities and Exchange Commission.

 

 

10

 

applicable
authorised manufacturing facility licensed by SCEE. All such purchase orders
shall be subject to acceptance by the applicable authorised manufacturing
facility licensed by SCEE (and approval by SCEE), which acceptance will be
advised to Publisher not more than [***] following delivery in accordance with
Clause 6.4 of the materials required to be delivered under Clauses 6.2 and 6.3.
The applicable authorised manufacturing facility shall use all reasonable
endeavours, subject to available manufacturing capacity, to fulfil Publisher’s
purchase orders by Publisher’s requested ex-factory delivery date but does not
in any event guarantee so to do. Publisher shall have no right to cancel or
reschedule any purchase order or reorder (or any portion thereof) for any
Licensed Product unless the parties shall first have reached mutual agreement
as to Publisher’s financial liability with respect to any desired cancellation
or rescheduling of any such purchase order or reorder (or any portion thereof).

 

6.6                                 Subject
only to the provisions of Clause 6.3 in relation to Printed Materials, neither
SCEE nor any authorised manufacturing facility licensed by SCEE shall be under
any obligation to store finished units of Manufactured Materials or of
associated Printed Materials beyond the actual ex-factory delivery date
thereof. Delivery of Manufactured Materials shall be made ex-factory the applicable
authorised manufacturing facility licensed by SCEE in the Licensed Territory.
All risk of loss or damage in transit to any and all Manufactured Materials
manufactured pursuant to Publisher’s orders shall pass to Publisher forthwith
upon first handling by Publisher’s carrier.

 

6.7                                 Publisher
must advise the applicable authorised manufacturing facility in writing where
any finished units of such Manufactured Materials fail to conform to the
Specifications and/or any description(s) contained in this Agreement.  Publisher and the applicable authorised manufacturing
facility shall agree the terms, if any, for any rejection, rectification or
remedy with respect to such units.

 

6.8                                 In
no circumstances shall SCEE or its authorised manufacturing facility treat any
of Publisher’s Licensed Products in any way more or less favourably, in terms
of production turnaround times or otherwise, than the Licensed Products of any
other Licensed Publisher of SCEE or than PSP format software games published by
SCEE itself.

 

7.                                      Platform
Charge

 

7.1                                 The
all-in Platform Charge for finished units of Manufactured Materials in respect
of which the applicable authorised manufacturing facility licensed by SCEE
accepts Publisher’s purchase order in accordance with Clause 6.5 shall be as
specified in Schedule 2 (but subject to adjustment as therein provided) and
shall be paid to the applicable authorised manufacturing facility licensed by
SCEE. The all-in Platform Charge reflects monies due to SCEE in respect of each
unit manufactured and the raw materials costs and production services provided
by the applicable manufacturing facility licensed by SCEE for each such unit.
Such Platform Charge shall be subject to change by SCEE at any time upon
reasonable notice to Publisher and SCEE shall advise Publisher of such changes;
provided, however, that such Platform Charge shall not be changed with respect
to any units of Manufactured Materials which are the subject of an effective
purchase order or reorder but which have not yet been delivered by the
applicable authorised manufacturing facility licensed by SCEE. Such Platform
Charge for finished units of Manufactured Materials is exclusive of any
value-added or similar sales tax, customs and excise duties and other similar
taxes or duties, which the applicable authorised manufacturing facility
licensed by SCEE may be required to collect or pay as a consequence of the sale
or delivery of finished units of Manufactured Materials. Publisher shall be
solely responsible for the payment or reimbursement of any such taxes or
duties, and other such charges or assessments applicable to the sale and/or
purchase of finished units of Manufactured Materials.

 

[***]      The portions of this
document marked with three asterisks represent confidential portions omitted
and filed separately with the Securities and Exchange Commission.

 

11

 

The Platform
Charge for products developed utilising Sony Materials and/or Sony Intellectual
Property Rights and/or, subject to Council Directive 91/250/EEC, Confidential
Information of Sony, but manufactured in reliance on Article 6, shall be the
otherwise applicable Platform Charge less only such sum as represents from time
to time the costs of raw materials and for production services (including for
utilisation of Sony’s proprietary Disc Mastering technology) for the products
concerned whichwould otherwise have been deducted from SCEE’s receipts from its
authorised manufacturing facility (“the Article 6 Platform Charge”). If
Publisher has products so manufactured in reliance on Article 6, then Publisher
shall furnish SCEE, within [***]: (i) a written reporting of the number of
inventory units (by product title) of products so manufactured during such [***];
(ii) an external auditor’s certificate (or similar independent certificate
reasonably acceptable to SCEE) confirming the completeness and accuracy of such
reporting; (iii) Publisher’s remittance for the Article 6 Platform Charge
multiplied by the number of inventory units reflected in such reporting. Any
failure fully and promptly to comply with the foregoing reporting and payment
obligations shall constitute a breach of this Agreement not capable of remedy,
entitling SCEE forthwith to terminate the Term pursuant to Clause 13.1(i); and
upon termination by SCEE for such cause, the provisions of Clause 14.2 shall
come into effect.

 

SCEE shall upon
reasonable written request provide Publisher with details of the aforementioned
costs of raw materials and production services if Publisher has legitimately
exercised its rights under Article 6 or genuinely intends to exercise and rely
upon such rights. However, SCEE reserves the right to require Publisher to
execute a separate Non-Disclosure Agreement before making such information
available.

 

7.2                                 No
costs incurred in the development, manufacture, marketing, sale and/or
distribution of Licensed Products and/or associated materials shall be deducted
from any Platform Charge payable to the applicable authorised manufacturing
facility licensed by SCEE hereunder. Similarly, there shall be no deduction
from the Platform Charge otherwise payable to the applicable authorised
manufacturing facility licensed by SCEE hereunder as a result of any
uncollectable accounts owed to Publisher, or for any credits, discounts,
allowances or returns which Publisher may credit or otherwise grant to any
third party customer in respect of any units of Licensed Products and/or
associated materials, or for any taxes, fees, assessments, or expenses of any
kind which may be incurred by Publisher in connection with its sale and/or
distribution of any units of Licensed Products and/or associated materials,
and/or arising with respect to the payment of Platform Charge hereunder.
Publisher shall furnish to the applicable authorised manufacturing facility
licensed by SCEE official tax receipts or other such documentary evidence
issued by the applicable tax authorities sufficient to substantiate the fact of
the deduction of any withholding taxes and/or other such assessments which may
be imposed by any governmental authority with respect to such payments of
Platform Charge hereunder and the amount of each such deduction.

 

7.3                                 Publisher
shall effect payment for the Platform Charge specified in Clause 7.1 for the
finished units of Manufactured Materials the subject matter of each purchase
order issued pursuant to Clause 6.5 in accordance with the Specifications. SCEE
hereby confirms that in respect of each purchase order, the applicable
authorised manufacturing facility licensed by SCEE is entitled to collect on
behalf of SCEE the proportion of the Platform Charge due to SCEE after
deduction of the cost of raw materials and production services in respect of
Manufactured Materials. Each delivery of Manufactured Materials to Publisher
shall constitute a separate sale obligating Publisher to pay therefor, whether
said delivery be whole or partial fulfilment of any order. No claim for credit
due to shortage of Manufactured Materials as delivered to carrier will be allowed
unless it is made within [***] from the date of receipt at Publisher’s
receiving

 

[***]      The portions of this
document marked with three asterisks represent confidential portions omitted
and filed separately with the Securities and Exchange Commission.

 

12

 

destination. Title
to Manufactured Materials the subject of each such purchase order shall pass to
Publisher only upon payment in full
of the Platform Charge due in respect thereof. The receipt and deposit by SCEE
of monies in accordance with this Agreement shall be without prejudice to any
rights or remedies of SCEE and shall not restrict or prevent SCEE from
thereafter successfully challenging the basis for calculation and/or the
accuracy of such payment. SCEE reserves the right, upon reasonable notice to
Publisher, to require that such payments due to SCEE shall be made to such
other Sony entity as SCEE may designate from time to time.

 

7.4                                 SCEE
may, subject to reasonable prior notice to Publisher vary the payment process
set out in this Clause 7, including but not limited to changing the recipient
of the Platform Charge in respect of Manufactured Materials.

 

8.                                      Marketing
& Distribution

 

Publisher shall, [***],
diligently market, distribute and sell Licensed Products throughout (but only
in) the Licensed Territory, and shall use all reasonable efforts consistent
with its best business judgement to stimulate demand therefore in the Licensed
Territory and to supply any resulting demand. Publisher shall not market,
distribute or sell Licensed Products outside the Licensed Territory or to any
person, firm, corporation or entity having its place of business, or to any
purchasing agency located, outside the Licensed Territory. Publisher shall use
all reasonable efforts consistent with its best business judgement to protect
Licensed Products from and against illegal reproduction and/or copying by end
users or by any other persons or entities. Such methods of protection may
include, without limitation, markings or insignia providing identification of
authenticity and packaging seals as may be specified in the Specifications.
SCEE shall be entitled, at SCEE’s sole cost and expense, to manufacture or have
manufactured up to [***] additional units of Manufactured Materials (or such
greater number of additional units as shall be agreed by Publisher, such
agreement not unreasonably to be withheld or delayed) for each PSP format
Software game (and to purchase from Publisher, at a price equal to the actual
cost thereof to Publisher, a corresponding number of units of Printed Materials
for each such PSP format Software game), for the purposes of or in connection
with the marketing and promotion of PSP; provided however that SCEE shall not
directly or indirectly resell any such units of Manufactured Materials (and, if
applicable, of Printed Materials) within the Licensed Territory without
Publisher’s prior written consent. Further, SCEE shall be entitled to utilise
Publisher’s name and/or logo and the audio-visual content of, and/or the
Printed Materials for, PSP format Software games (not to exclude the likenesses
of any recognisable talent) for the purposes of or in connection with such
marketing and promotion.

 

9.                                      Confidentiality

 

9.1                                 All
the terms and provisions of the CNDA(PSP) shall apply to Confidential
Information of Sony and, if and to the extent applicable, Confidential
Information of Publisher.

 

9.2                                 Where
Confidential Information of Publisher is not protected by the CNDA(PSP), SCEE
shall hold the same in confidence and shall take all reasonable steps necessary
to preserve such confidentiality. Except as may expressly be authorised by
Publisher, SCEE shall not at any time, directly or indirectly: (i) disclose any
Confidential Information of Publisher to any person other than a Sony employee
who needs to know or have access to such information for the purposes of this
Agreement, and only to the extent necessary for such purposes; (ii) except for
the purposes of this Agreement, duplicate or use the Confidential Information of
Publisher for any other purpose whatsoever; or (iii) remove any copyright
notice, trademark notice and/or other proprietary legend set forth on or
contained within any of the Confidential Information of Publisher.

 

9.3                                 The
provisions of Clause 9.2 hereof shall not apply to any Confidential Information
of Publisher which: (i) has become part of information in the public domain
through no fault of SCEE; (ii) was

 

[***]      The portions of this
document marked with three asterisks represent confidential portions omitted
and filed separately with the Securities and Exchange Commission.

 

13

 

known to SCEE
prior to the disclosure thereof by Publisher; (iii) properly comes into the
possession of SCEE from a third party which is not under any obligation to
maintain the confidentiality of such information. SCEE may disclose
Confidential Information of Publisher pursuant to a judicial or governmental
order provided that SCEE promptly advises Publisher in writing prior to any
such disclosure so that Publisher may seek other legal remedies to maintain the
confidentiality of such Confidential Information of Publisher, and SCEE shall
comply with any applicable protective order or equivalent.

 

9.4                                 Unless
and until a public announcement regarding this Agreement shall have been made
by Sony (or SCEE shall otherwise have agreed in writing), the fact that the
parties have entered into this Agreement shall be Confidential Information of
Sony and shall be treated in all respects accordingly. The content of, and the
timing and method of the making of, any such public announcement shall be
determined by SCEE in its best business judgement. However, SCEE will give
reasonable consideration to any notice from Publisher requesting that no such
public announcement be made at or prior to a particular time or at all.

 

10.                               Warranties

 

10.1                           SCEE
represents and warrants solely for the benefit of Publisher that SCEE has the
right, power and authority to enter into, and fully to perform its obligations
under, this Agreement.

 

10.2                           SCEE
warrants that units of the UMDs comprising Licensed Products manufactured by
the authorised manufacturing facility licensed by SCEE for Publisher pursuant
to Clause 6 hereof shall be free from defects in materials and workmanship
under normal use and service at time of delivery in accordance with Clause 6.6.  The sole obligation of SCEE under this
warranty shall be, for a period of [***] from the date of delivery of such UMDs
in accordance with Clause 6.6, at SCEE’s election, either (i) to replace such
defective UMDs or (ii) to issue credit for, or to refund to Publisher the
Platform Charge of such defective UMDs and to reimburse Publisher its
reasonable return shipping costs.  Such
warranty is the only warranty applicable to Licensed Products manufactured by
the authorised manufacturing facility licensed by SCEE for Publisher pursuant
to Clause 6. This warranty shall not apply to damage resulting from accident,
fair wear and tear, wilful damage, alteration, negligence, abnormal conditions
of use, failure to follow directions for use (whether given in instruction
manuals or otherwise howsoever) or misuse of Licensed Products, or to UMDs
comprising less than [***] in the aggregate of the total number of Licensed
Products manufactured by the authorised manufacturing facility licensed by SCEE
for Publisher per purchase order of any PSP format Software game.  If, during such [***] period, defects appear
as aforesaid, Publisher shall notify SCEE and, upon request by SCEE (but not otherwise),
return such defective UMDs, with a written description of the defect claimed,
to such location as SCEE shall designate, SCEE shall not accept for
replacement, credit or refund as aforesaid any Licensed Products except factory
defective UMDs (i.e. UMDS that are not free from defects in materials and
workmanship under normal use and service). All returns of defective UMDs shall
be subject to prior written authorisation by SCEE, not unreasonably to be
withheld.  If no defect exists or the
defect is not such as to be covered under the above warranty, Publisher shall
reimburse SCEE for expenses incurred in processing and analysing the UMDs.

 

10.3                           Publisher
represents, warrants, covenants and agrees that: (i) Publisher has the right,
power and authority to enter into, and fully to perform its obligations under,
this Agreement; (ii) the making of this Agreement by Publisher does not violate
any separate agreement, rights or obligations existing between Publisher and
any other person, firm, corporation or entity, and, throughout the Term,
Publisher shall not make any separate agreement with any person or entity which
is inconsistent with any of the provisions hereof; (iii) both Licensed
Developer Software and, to the

 

[***]      The portions of this
document marked with three asterisks represent confidential portions omitted
and filed separately with the Securities and Exchange Commission.

 

14

 

extent not
comprised of any software provided by SCEE, PSP format Software, and any name,
designation or title used in conjunction therewith, shall be free from any
valid third party claim of infringement of any Third Party Intellectual
Property Rights; (iv) there is no litigation, proceeding or claim pending or
threatened against Publisher or any subsidiary or affiliate of Publisher which
may materially affect Publisher’s rights in and to Licensed Developer Software,
the names, designations or titles used in conjunction therewith, the works and
performances embodied therein and/or the copyrights pertaining thereto; (v)
Publisher shall have made or shall make any and all payments required to be
made to any person, firm, corporation or other entity, or to any body or group
representing authors or participants in the production of the works or
performances embodied in Licensed Developer Software and PSP format Software,
or to publishers or other persons having legal or contractual rights of any
kind to participate in any income arising in respect of the exploitation of
such works or performances; (vi) neither Publisher nor any subsidiary or
affiliate of Publisher shall make any representation or give any warranty to
any person or entity expressly or impliedly on Sony’s behalf, or to the effect
that Licensed Products are connected in any way with Sony (other than that
Licensed Products have been developed, marketed, manufactured, sold and/or
distributed under licence from Sony); (vii) each Licensed Product shall be
marketed, sold and distributed in an ethical manner and in accordance with all
applicable laws and regulations; and (viii) Publisher’s policies and practices
with respect to the marketing, sale and/or distribution of Licensed Products
shall in no manner reflect adversely upon the name, reputation or goodwill of
Sony.

 

10.4                           Further,
Publisher represents, warrants, covenants and agrees that neither Publisher nor
any parent company, subsidiary or affiliate of Publisher shall during the Term,
whether for itself or for the benefit of any other person, firm, corporation or
entity, whether by itself or by its officers, employees or agents, directly or
indirectly, induce or seek to induce, on an individually targeted basis, the
employment of, or the engagement of the services of, any Relevant Employee. For
these purposes “Relevant Employee” shall mean and include any employee of SCEE
or of any subsidiary of SCEE (or any of their subsidiaries or branch offices
outside the United Kingdom), the services of which employee are (a)
specifically engaged in product development (or directly related) functions or
(b) otherwise reasonably deemed by his/her employer to be of material
importance to the protection of its legitimate business interests, and with
which employee Publisher (or any parent company, subsidiary or affiliate of
Publisher) shall have had contact or dealings during the Term. The foregoing
provisions shall continue to apply for a period of [***] following expiry or
earlier termination of the Term and are hereby deemed substituted for any
corresponding provisions in any agreement(s) previously entered into between
the parties hereto in relation to PSP and/or to Sony’s “PlayStation 2”
predecessor computer entertainment system.

 

11.                               Indemnities

 

11.1                           SCEE
shall indemnify and hold Publisher harmless from and against any and all claims,
losses, liabilities, damages, expenses and costs, including without limitation
reasonable fees for lawyers, expert witnesses and litigation costs, and
including costs incurred in the settlement or avoidance of any such claim,
which result from or are in connection with a breach of any of the warranties
provided by SCEE herein; provided however that Publisher shall give prompt
written notice to SCEE of the assertion of any such claim, and provided further
that SCEE shall have the right to select counsel and control the defence and/or
settlement thereof, subject to the right of Publisher to participate in any
such action or proceeding at its own expense with counsel of its own choosing.
SCEE shall have the exclusive right, at its discretion, to commence and prosecute
at its own expense any lawsuit or to take such other action with respect to
such matters as shall be deemed appropriate by SCEE. Publisher shall provide
SCEE, at no expense to Publisher,

 

[***]      The portions of this
document marked with three asterisks represent confidential portions omitted
and filed separately with the Securities and Exchange Commission.

 

15

 

reasonable
assistance and co-operation concerning any such matter. Publisher shall not agree to the compromise, settlement or
abandonment of any such claim, action or proceeding without SCEE’s prior
written consent.

 

11.2                           Publisher
shall indemnify and hold SCEE harmless from and against any and all claims,
losses, liabilities, damages, expenses and costs, including without limitation
reasonable fees for lawyers, expert witnesses and litigation costs, and
including costs incurred in the settlement or avoidance of any such claim,
which result from or are in connection with (i) a breach of any of
the warranties provided by Publisher herein or any breach of Publisher’s
confidentiality obligations as referred to in Clause 9.1 hereof, or (ii)
any claim of infringement or alleged infringement of any Third Party
Intellectual Property Rights with respect to Licensed Developer Software, or
(iii) any claim of or in connection with any injury (including death) or
property damage, by whomsoever such claim is made, arising (in whole or in
part) out of the manufacture, sale and/or use of any of the Manufactured Materials
unless resulting from the proven negligence of Sony; provided however that SCEE
shall give prompt written notice to Publisher of the assertion of any such
claim, and provided further that Publisher shall have the right to select
counsel and control the defence and/or settlement thereof, subject to the right
of SCEE to participate in any such action or proceeding at its own expense with
counsel of its own choosing. Publisher shall have the exclusive right, at its
discretion, to commence and/or prosecute at its own expense any lawsuit or to
take such other action with respect to such matter as shall be deemed
appropriate by Publisher. SCEE shall provide Publisher, at no expense to SCEE,
reasonable assistance and co-operation concerning any such matter. SCEE shall
not agree to the compromise, settlement or abandonment of any such claim,
action or proceeding without Publisher’s prior written consent.

 

12.                               Limitations of Liability

 

12.1                           In
no event shall Sony or its suppliers be liable for loss of revenue, loss of
actual or prospective profits, loss of contracts, loss of anticipated savings,
loss of business opportunity, reputation or goodwill or loss of, damage to or
corruption of data (whether such loss or damage is direct, indirect special,
incidental or consequential) arising out of or in connection with this
Agreement or any collateral contract (including without limitation the breach
of this Agreement by SCEE), whether known, foreseen or foreseeable and whether
under theory of contract, tort (including negligence), indemnity, product
liability or otherwise.

 

12.2                           In
no event shall Sony or its suppliers be liable for any indirect, special,
incidental or consequential loss or damage of any kind arising out of or in
connection with this Agreement or any collateral contract (including without
limitation the breach of this Agreement by SCEE), whether known, foreseen or
foreseeable and whether under theory of contract, tort (including negligence),
indemnity, product liability or otherwise.

 

12.3                           Publisher
acknowledges and agrees that no representations were made prior to the entering
into of this Agreement and that, in entering into this Agreement, it does not
rely on any statement, representation, warranty or understanding (whether
negligently or innocently made) of any person (whether party to this Agreement
or not) other than as expressly set out in this Agreement. Publisher shall have
no remedy in respect of any representation (whether written or oral) made to it
upon which it relied in entering into this Agreement and Sony shall have no
liability to Publisher other than pursuant to the express terms of this
Agreement.

 

12.4                           Except
as expressly set forth herein, no Sony entity, nor any of their respective
directors, officers, employees or agents, shall bear any risk, or have any
responsibility or liability, of any kind to Publisher or to any third parties
with respect to the functionality and/or performance of Licensed Products.

 

16

 

12.5         In no event shall Sony’s
liability arising under or in connection with this Agreement, or any collateral
contract, exceed [***] within the [***] to the date of the first occurrence of
the event or circumstances giving rise to such liability.

 

12.6         In no event shall
Publisher be liable to SCEE for loss of revenue, loss of actual or prospective profits,
loss of contracts, loss of anticipated savings, loss of business opportunity,
reputation or goodwill or loss of, damage to or corruption of data (whether
such loss or damage is direct, indirect, special, incidental or consequential)
arising out of or in connection with this Agreement or any collateral contract
(including without limitation the breach of this Agreement by Publisher),
whether known, foreseen or foreseeable and whether under theory of contract,
tort (including negligence), indemnity, product liability or otherwise,
provided that Publisher expressly agrees that such limitations shall not apply
to damages resulting from Publisher’s breach of Clauses 2, 3, 4, 7, 9 or 11.2 of
this Agreement.

 

12.7         [***]

 

12.8         Nothing in this Agreement
shall exclude or limit Sony’s liability in relation to claims arising from deceit,
the injury or death of any person resulting from the proven negligence of Sony
or any other liability which may not be excluded or limited by applicable law.

 

13.          Termination by SCEE

 

13.1         SCEE shall have the right
forthwith to terminate this Agreement by written notice to Publisher at any
time after the occurrence of any of the following events or circumstances: (i)
any material breach of Publisher’s obligations under this Agreement or the
CNDA(PSP) (or, if Publisher shall also have executed a PlayStation Non-Disclosure Agreement and/or PlayStation 2
Confidentiality & Non-Disclosure Agreement which shall have been breached
by Publisher, or a PlayStation Licensed Developer Agreement, a PlayStation
Licensed Publisher Agreement, a PlayStation 2 Tools & Materials Loan
Agreement, a PlayStation 2 Licensed Developer Agreement, a PlayStation 2
Licensed Publisher Agreement, a PSP Tools & Materials
Loan Agreement, and/or a PSP Licensed Developer Agreement with SCEE, or a
PlayStation, PlayStation 2 or PSP non-disclosure, licensed developer,
development system or licensed publisher agreement (or equivalent) with an
Affiliate of SCEE, which shall have been terminated for breach by SCEE or by
such party) which breach, if capable of remedy, shall not have been corrected
or cured in full within [***] following notice from SCEE specifying and
requiring the correction or cure of such breach, or any repetition of a prior
material breach of any such obligation, whether or not capable of remedy; (ii)
any refusal or failure by Publisher to effect payment of Platform Charge,
promptly in accordance with Clauses 7.1 or 7.3 or at all, or a statement that
Publisher is or will be unable to pay, any sum(s) due hereunder, or Publisher
being unable to pay its debts generally as the same fall due; (iii) Publisher’s
filing of an application for, or consenting to or directing the appointment of,
or the taking of possession by, a receiver, administrator, custodian, trustee
or liquidator (or the equivalent of any of the foregoing under the laws of any
jurisdiction) of any of Publisher’s property (whether tangible or intangible
and wherever located), assets and/or

 

[***]      The portions of this
document marked with three asterisks represent confidential portions omitted
and filed separately with the Securities and Exchange Commission.

 

17

 

undertaking; (iv) the making by Publisher of a general
assignment for the benefit of creditors; (v) an adjudication in any
jurisdiction that Publisher is a bankrupt or insolvent; (vi) the commencing by
Publisher of, or Publisher’s intention to commence, a voluntary case under
applicable bankruptcy laws of any jurisdiction; (vii) the filing by Publisher
of, or Publisher’s intention to file, a petition seeking to take advantage of
any other law(s) of any jurisdiction providing for the relief of debtors;
(viii) Publisher’s acquiescence in, intention to acquiesce in, or failure to
have dismissed within [***] any petition filed against it in any involuntary case
brought pursuant to the bankruptcy or other law(s) of any jurisdiction referred
to in (vi) and (vii) above; (ix) a controlling partnership or equity interest
[or any such interest (other than an acquisition of less than [***], in the
case of a transfer to any party which (a) shall previously have executed a
PlayStation Non-Disclosure Agreement, a PlayStation 2 Confidentiality &
Non-Disclosure Agreement or a PSP Confidentiality & Non-Disclosure
Agreement which shall have been breached by such party, or a PlayStation
Licensed Developer Agreement, a PlayStation Licensed Publisher Agreement, a
PlayStation 2 Tools and Materials Loan Agreement, a PlayStation 2 Licensed Developer Agreement, a
PlayStation 2 Licensed Publisher Agreement, a PSP Tools & Materials Loan
Agreement, a PSP Licensed Developer Agreement or a PSP Licensed Publisher
Agreement, or a PlayStation, PlayStation 2 or PSP non-disclosure, licensed
developer, development system or licensed publisher agreement (or equivalent)
with an Affiliate of SCEE, which shall have been terminated for breach by SCEE
or by such party, or (b) is, or which directly or indirectly holds or acquires
a partnership or equity interest in, the developer of (or other owner of
intellectual property rights in) any interactive hardware device or product
which is or will be directly or indirectly competitive with PSP, or (c) is in
litigation with Sony concerning any proprietary technology, trade secrets
and/or intellectual property matter(s) and/or has challenged the validity of
any Sony Intellectual Property Rights] in Publisher or in all or substantially
all of Publisher’s property (whether tangible or intangible), assets and/or
undertaking, being acquired, directly or indirectly, by any person, firm,
corporation or other entity; (x) Publisher enters into any third party business
relationship pursuant to which Publisher makes a material contribution to the
development of the core components of any interactive hardware device or
product which is or will be directly or indirectly competitive with PSP, or if
Publisher directly or indirectly holds or acquires a partnership or equity
interest (other than a holding or acquisition of less than [***] in, or
otherwise forms a strategic commercial relationship with, any third party firm,
corporation or other entity which has developed or during the Term develops (or
which owns or during the Term acquires ownership of intellectual property
rights in) any such device or product; (xi) Publisher failing to submit
materials relating to any new PSP format Software in accordance with Clause
5.2, and/or failing to issue any purchase orders for Manufactured Materials in
accordance with Clause 6.5, during any period of [***]; (xii) Publisher (or any
parent company, subsidiary or affiliate of Publisher) being in litigation with
Sony concerning any proprietary technology, trade secrets and/or intellectual
property matter(s) and/or challenging the validity of any Sony Intellectual
Property Rights; or (xiii) Publisher or any of its officers or employees
engaging in so-called “hacking” of any PSP format software or in activities
which facilitate the same by any third party. As used in this Clause 13.1, “controlling
interest” means (i) in relation to a body corporate, the power of the holder of
such interest to secure - (a) by means of the holding of shares or the
possession of voting power in, or in relation to, that or any other body
corporate or (b) by virtue of any powers conferred by the Articles of
Association or other document regulating that or any other body corporate -
that the affairs of such body corporate be conducted in accordance with the
wishes of the holder of such interest, and (ii) in relation to a partnership,
the right to a share of more than [***]

 

[***]      The portions of this
document marked with three asterisks represent confidential portions omitted
and filed separately with the Securities and Exchange Commission.

 

18

 

Forthwith upon
such occurrence, Publisher shall notify SCEE of the occurrence of any of the
events or circumstances specified in (ii) to (x) or (xiii) above; and Publisher’s
failure so to do shall be a material breach of this Agreement not capable of
remedy. In the event of termination by SCEE pursuant to Clause 13.1 (xiii) SCEE
shall have the right also to terminate any prior PlayStation agreements between
SCEE and Publisher.

 

13.2         Further, SCEE shall have
the right by written notice to Publisher forthwith to terminate the licences
and related rights herein granted to Publisher in relation to any PSP format
Software at any time after the occurrence of any of the following events: (i)
any failure by Publisher to submit to SCEE the materials required to be
submitted under Clauses 5.2 and 5.3 (or, if applicable, under Clause 5.6) in
the form and manner and in conformity with the standards and specifications
therein prescribed; and (ii) any failure by Publisher promptly to notify SCEE
in writing of any material change to any of the materials approved by SCEE
pursuant to Clause 5.4 (or, if applicable, pursuant to Clause 5.6); provided
however that SCEE shall not be entitled to exercise such right of termination
if Publisher’s failure under (i) above is directly caused by SCEE’s failure to comply with any
of its material obligations expressly set forth herein.

 

14.          Effect of Expiration or Termination

 

14.1         Notwithstanding the
giving of notice to terminate the Term pursuant to Clause 1.19, Publisher shall
be entitled to continue to publish Licensed Products comprising PSP format
Software games the development of which shall have been approved prior to or
during the Term hereof by SCEE (or by an Affiliate of SCEE) pursuant to the
applicable LDAP, and to use the Licensed Trademarks strictly, only and directly
in connection with such publication, until the expiration of the Term or, if
later, until [***]. Upon expiration of the Term or, if applicable, such
extended period for publishing Licensed Products, Publisher may sell off
existing inventories of Licensed Products relating to the applicable PSP format
Software games, on a non-exclusive basis, for a period of [***]; provided
always that such inventory thereof shall not have been manufactured solely or
principally for sale within such sell-off period.

 

14.2         However, upon the
exercising by SCEE of its right of termination, either of this Agreement pursuant
to Clauses 13.1(i) to (viii), (xii) or (xiii) or in relation to any PSP format
Software pursuant to Clause 13.2, all rights, licences and privileges licensed
or otherwise granted to Publisher hereunder, either generally or in relation to
such PSP format Software (as applicable), shall forthwith and without further
formality revert absolutely to SCEE and Publisher shall forthwith cease and
desist from any further use of the Sony Materials, any Sony Intellectual Property
Rights related thereto and the Licensed Trademarks, and, subject to Clause
14.3, shall have no further right to continue the marketing, sale and/or
distribution of any units of Licensed Product or of any units of Licensed
Product derived from such PSP format Software (as applicable).

 

14.3         In the event of
termination by SCEE pursuant to Clause 13.1(ix), (x) or (xi) or by Publisher
pursuant to Clause 25, Publisher may sell off then unsold units of Licensed
Product(s), for a period of [***]; provided always that such inventory thereof
shall not have been manufactured solely or principally for sale within such
sell-off period. Subsequent to the expiry of such [***] sell-off period, or in
the event of termination by SCEE pursuant to Clauses 13.1(i) to (viii), (xii)
or (xiii) or Clause 13.2, any and all units of Licensed Products or the
applicable Licensed Products (as the case may be) remaining in Publisher’s
inventory and/or under its control shall be destroyed by Publisher within [***]
following such expiry or effective date of

 

[***]      The portions of this
document marked with three asterisks represent confidential portions omitted
and filed separately with the Securities and Exchange Commission.

 

19

 

termination.
Within [***], Publisher shall furnish SCEE an itemised statement, certified
accurate by a duly authorised officer, partner or other representative (as
applicable) of Publisher, specifying the number of then unsold units of
Licensed Product(s) to which such termination applies, on a PSP format Software
game-by-game basis, which remain in its inventory and/or under its control at
such date, confirming the number of units of Licensed Products destroyed, on a
PSP format Software game-by-game basis, and indicating the location and date of
such destruction and the disposition of the remains of such destroyed materials.
SCEE shall be entitled to conduct a physical inspection of Publisher’s
inventory during normal business hours in order to ascertain or verify such
inventory and/or statement.

 

14.4         Upon termination of the
Term by SCEE pursuant to Clause 13.1, Publisher shall forthwith deliver up to
SCEE (or, if so requested by SCEE in writing, destroy and promptly furnish SCEE
a certificate of such destruction signed by a duly authorised officer, partner
or other representative (as applicable) of Publisher) all Sony Materials, and
any Confidential Information of Sony of which Publisher shall have become
apprised and which has been reduced to tangible or written form, and any and
all copies thereof then in the possession, custody or control of Publisher.

 

14.5         SCEE shall be under no
obligation to renew or extend this Agreement notwithstanding any actions taken
by either of the parties prior to its expiration or earlier termination. In the
event of termination pursuant to Clauses 13.1 or 13.2, no part of any
payment(s) whatsoever theretofore made to SCEE hereunder (or, if Publisher
shall also have executed a LDAP, thereunder) shall be owed or repayable to
Publisher, and nor shall either party be liable to the other for any damages (whether
direct, consequential or incidental, and including without limitation any
expenditures, loss of profits or prospective profits) sustained or arising out
of, or alleged to have been sustained or to have arisen out of, such expiration
or earlier termination. However, the expiration or earlier termination of this
Agreement shall not excuse either party from any prior breach of any of the
terms and provisions of this Agreement or from any obligations surviving such
expiration or earlier termination, and full legal and equitable remedies shall
remain available for any breach or threatened breach of this Agreement or of
any obligations arising therefrom.

 

14.6         The expiration or earlier
termination of this Agreement (whether by SCEE pursuant to Clause 13 or
otherwise howsoever) shall be without prejudice to any and all rights and
remedies which either party may then or subsequently have against the other
party.

 

15.          Notices

 

15.1         All notices under this
Agreement shall be in writing and shall be given by courier or other personal
delivery, by registered or certified mail, by recognised international courier
service or by facsimile transmission (with an immediate confirmation copy by
regular mail or any of the methods specified above) at the appropriate address
hereinbefore specified or at a substitute address designated by notice by the
party concerned (and in the case of notices to SCEE shall be directed to its
Senior Vice President, Third Party & Business Affairs or such other Sony representative
as shall from time to time be designated by notice by SCEE). Notices given
other than by facsimile transmission shall be deemed given and effective when
delivered.  Notices given by facsimile
transmission shall be deemed given only upon receipt of confirmation copy as aforesaid
but, upon such receipt, shall be deemed effective as of the date of
transmission.

 

15.2         Whenever Publisher is
required to obtain the authorisation, consent or approval of SCEE, Publisher
shall request the same by notice to SCEE as aforesaid, and with a copy under
separate cover to its Director of Third Party Relations or such other Sony
representative as shall from time to time be designated by notice to Publisher.
Such authorisation, consent or approval shall not be deemed to be granted
unless and until SCEE shall have given a written affirmative response to

 

[***]      The portions of this
document marked with three asterisks represent confidential portions omitted
and filed separately with the Securities and Exchange Commission.

 

20

 

each request
therefor and shall in no event be implied or inferred from any delay or failure
of SCEE to give such or any response.

 

16.          Force Majeure

 

Neither SCEE nor
Publisher shall be liable for any loss or damage or be deemed to be in breach
of this Agreement if its failure to perform, or failure to cure any breach of,
its obligations under this Agreement results from any events or circumstances
beyond its reasonable control, including without limitation any natural
disaster, fire, flood, earthquake or other act of God, inevitable accidents,
lockout, strike or other labour dispute, riot or civil commotion, act of public
enemy, enactment, rule, order or act of any government or governmental
authority, failure of technical facilities, or failure or delay of transportation
facilities.

 

17.          Relationship
of the Parties

 

The relationship
hereunder between SCEE and Publisher respectively is that of licensor and
licensee. Publisher is an independent contractor and shall not in any respect
act as or be deemed to be the legal representative, agent, joint venturer,
partner or employee of SCEE for any purpose whatsoever. Neither party shall
have any right or authority to assume or create any obligations of any kind or
to make any representation or warranty (express or implied) on behalf of the
other party or to bind the other party in any respect whatsoever.

 

18           Assignability

 

SCEE has entered into
this Agreement based on the particular reputation, capabilities and experience
of Publisher and of its officers, directors and employees. Accordingly,
Publisher may not assign, pledge or otherwise dispose of this Agreement or of
any of its rights hereunder, nor delegate or otherwise transfer any of its
obligations hereunder, to any third party unless the prior written consent of SCEE
shall first have been obtained in each case. Any attempted or purported
assignment, pledge, delegation or other disposition in contravention of this
Clause 18 shall be null and void and a material breach of this Agreement not
capable of remedy, SCEE shall be entitled, without the consent of Publisher, to
assign its rights and obligations hereunder to any corporation or other entity
in which Sony Corporation (or any successor in interest thereto) holds a
controlling interest (as defined in Clause 13.1), whether directly or
indirectly. Subject to the foregoing, this Agreement shall enure to the benefit
of the parties and their respective successors and permitted assigns.

 

Save as expressly provided in this Agreement and save that Sony may
enforce the terms of Clauses 2, 3, 4, 5.6, 6.2, 7, 9, 10, 11, 12, 14, 38, 20,
21, 22, 23, 24, 25 and 27 of this Agreement, a person who is not party to this
Agreement shall have no right under the Contracts (Rights of Third Parties) Act
1999 to enforce any term of this Agreement. This provision does not affect any
right or remedy of any person which exists or is available otherwise than
pursuant to such Act.

 

19.          Compliance
with Applicable Laws

 

The parties shall at all times comply with all applicable regulations
and orders of their respective countries and all conventions and treaties to
which their countries are party or relating to or in any way affecting this
Agreement and the performance by the parties of this Agreement. Each party, at
its own expense, shall negotiate and obtain any approval, licence or permit
required for the performance of its obligations hereunder, and shall declare,
record or take such steps as may
be necessary to render this Agreement binding, including without limitation any
required filing of this Agreement with any appropriate governmental
authorities.

 

21

 

20.          Governing Law

 

This Agreement shall be governed by, construed and interpreted in
accordance with English Law, without giving effect to the conflict of laws
principles thereof. The parties irrevocably agree for the exclusive benefit of
SCEE that the English Courts shall have jurisdiction to adjudicate any
proceeding, suit or action arising out of or in connection with this Agreement.
However, nothing contained in this Clause 20 shall limit the right of SCEE to
take any such proceeding, suit or action against Publisher in any other court
of competent jurisdiction, nor shall the taking of any such proceeding, suit or
action in one or more jurisdictions preclude the taking of any other such
proceeding, suit or action in any other jurisdiction, whether concurrently or
not, to the extent permitted by the law of such other jurisdiction. Publisher
shall have the right to take any such proceeding, suit or action against SCEE
only in the English Courts.

 

21.          Remedies

 

Publisher acknowledges and agrees that any breach by Publisher of this
Agreement may cause Sony irreparable harm and damage which may not be capable
of remedy by damages alone and therefore that in the event of any such breach
SCEE may seek equitable (including injunctive) relief against Publisher in
addition to damages and/or any other remedy available to SCEE at law or in equity. Either party’s election to avail
itself of any of the remedies provided for in this Agreement shall not be
exclusive of any other remedies available hereunder or otherwise at law or in
equity, and all such remedies shall be cumulative. Publisher shall indemnify
SCEE for all losses, liabilities, damages, expenses and costs, including
without limitation reasonable fees for lawyers, expert witnesses and litigation
costs, which SCEE may sustain or incur as a result of any breach or threatened
breach by Publisher of this Agreement.

 

22.          Severability

 

In the event that any provision of this Agreement (or any part(s)
thereof), other than a provision in respect of which SCEE gives a notice of
amendment pursuant to Clause 25, is determined by a court of competent
jurisdiction to be invalid or otherwise unenforceable, such provision (or
part(s) thereof) shall be enforced to the extent possible consistent with the
stated intention of the parties or, if incapable of such enforcement, shall be
deemed to be deleted from this Agreement, but not in any way so as to affect
the validity or enforceability of any other provisions of this Agreement which
shall continue in full force and effect.

 

23.          Provisions Surviving Expiration or Termination

 

The following provisions of this Agreement shall survive and continue
in full force and effect notwithstanding its expiration or earlier termination
(whether by SCEE pursuant to Clause 13 hereof or otherwise howsoever):

 

	
  Clause
  3

  	
   

  	
  Sub-Publishers

  
	
  Clause
  4

  	
   

  	
  Reservations

  
	
  Clause
  5.7

  	
   

  	
  Consumer
  Advisory Age Ratings

  
	
  Clause
  6

  	
   

  	
  Manufacture
  of Licensed Products

  
	
  Clause
  7

  	
   

  	
  Platform
  Charge

  
	
  Clause
  9

  	
   

  	
  Confidentiality

  
	
  Clause
  10.2 to 10.4

  	
   

  	
  Warranties

  
	
  Clause
  11

  	
   

  	
  Indemnities

  
	
  Clause
  12

  	
   

  	
  Limitations
  of Liability

  
	
  Clause
  14

  	
   

  	
  Effect
  of Expiration or Termination

  
	
  Clause
  18

  	
   

  	
  Assignability

  

 

22

 

	
  Clause
  20

  	
   

  	
  Governing
  Law

  
	
  Clause
  21

  	
   

  	
  Remedies

  
	
  Clause
  22

  	
   

  	
  Severability

  

 

24.          Waiver

 

No failure or delay by either party in exercising any right, power or
remedy under this Agreement shall operate as a waiver of any such right, power
or remedy. No waiver of any provision of this Agreement shall be effective
unless in writing and signed by the party against whom it is sought to enforce
such waiver. Any waiver by either party of any provision of this Agreement
shall not be construed as a waiver of any other provision of this Agreement,
nor shall such waiver operate or be construed as a waiver of such provision in
relation to any future event or circumstance.

 

25.          Amendments

 

SCEE reserves the right, at any time upon reasonable notice to
Publisher, to amend the relevant provisions of this Agreement, the Schedules
hereto and/or the specifications herein referred to, to take account of or in
response to any decision or order of, or objection raised by, any court or
governmental or other competition authority of competent jurisdiction and/or
any statutory or similar measures which might be implemented to give effect to
any such decision, which apply to this Agreement, the Schedules hereto and/or
the Specifications herein referred to (and from which this Agreement, the
Schedules hereto and/or the Specifications herein referred to are not exempt)
or to reflect any undertaking given by Sony to any such authority in relation
to any and all such matters aforesaid. Any such amendment shall be of prospective
application only and shall not be applied to any Licensed Product materials
which shall have been submitted to SCEE by Publisher pursuant to Clause 5.2
and/or 5.3 prior to the date of SCEE’s notice of amendment. In the event that
Publisher is unwilling to accept any such amendment, then Publisher shall have
the right forthwith to terminate this Agreement by written notice to SCEE given
not more than [***] following the date of SCEE’s notice of amendment. The
provisions of Clause 14.3 shall come into effect upon any such termination by
Publisher.

 

Subject to the foregoing and except as otherwise provided herein, this
Agreement shall not be subject to amendment, change or modification other than
by another written instrument duly executed by both of the parties hereto.

 

26.          Headings

 

The clause and other headings contained in this Agreement are intended
primarily for reference purposes only and shall not alone determine the
construction or interpretation of this Agreement or any provision(s) hereof.

 

27.          Integration

 

This document (including the Schedules hereto) constitutes the entire
agreement between the parties with respect to the subject matter contained
herein, and supersedes all prior or contemporaneous agreements, proposals,
understandings and communications between Sony and Publisher, whether oral or
written, with respect to the subject matter hereof. However, the generality of
the foregoing notwithstanding, the CNDA (PSP) and, if applicable, the LDAP
executed by Publisher shall continue in full force and effect.

 

[***]      The portions of this
document marked with three asterisks represent confidential portions omitted
and filed separately with the Securities and Exchange Commission.

 

23

 

28.          Counterparts

 

This Agreement may be executed in 2 (two) counterparts, each of which
shall be deemed an original, and both of which together shall constitute one
and the same instrument.

 

IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
executed as of the date first above written.

 

	
  SONY COMPUTER ENTERTAINMENT

  	
   

  	
   

  	
  ACTIVISION UK LIMITED

  
	
  EUROPE LIMITED

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ John Brunning

  	
   

  	
   

  	
  /s/ George Rose

  
	
   

  	
   

  	
   

  	
  Signature

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  George Rose

  
	
  John Brunning

  	
   

  	
   

  	
  Signatory’s Name (please print)

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SVP, Third Party Relations and Business Affairs

  	
   

  	
   

  	
  Sr. VP & Gen. Counsel

  
	
   

  	
   

  	
   

  	
  Title

  

 

24

 

SCHEDULE 1

 

to the PSP
Licensed Publisher Agreement dated 27 September 2005 between Sony Computer
Entertainment Europe Limited and Activision UK Limited

 

Licensed Territory (Clause 1.2)

 

	
  Algeria

  	
   

  	
  Andorra

  	
   

  	
  Australia

  	
   

  	
  Austria

  
	
  Bahrain

  	
   

  	
  Belgium

  	
   

  	
  Belorussia

  	
   

  	
  Bosnia
  Herzegovina

  
	
  Bulgaria

  	
   

  	
  Croatia

  	
   

  	
  Cyprus

  	
   

  	
  Czech
  Republic

  
	
  Denmark

  	
   

  	
  Egypt

  	
   

  	
  Estonia

  	
   

  	
  Finland

  
	
  France

  	
   

  	
  Georgia

  	
   

  	
  Germany

  	
   

  	
  Greece

  
	
  Hungary

  	
   

  	
  Iceland

  	
   

  	
  India

  	
   

  	
  Iran

  
	
  Ireland

  	
   

  	
  Israel

  	
   

  	
  Italy

  	
   

  	
  Jordan

  
	
  Kenya

  	
   

  	
  Kuwait

  	
   

  	
  Latvia

  	
   

  	
  Lebanon

  
	
  Libya

  	
   

  	
  Liechtenstein

  	
   

  	
  Lithuania

  	
   

  	
  Luxembourg

  
	
  Malta & Gozo

  	
   

  	
  Monaco

  	
   

  	
  Montenegro

  	
   

  	
  Morocco

  
	
  Netherlands

  	
   

  	
  New
  Zealand

  	
   

  	
  Nigeria

  	
   

  	
  Norway

  
	
  Oman

  	
   

  	
  Pakistan

  	
   

  	
  Poland

  	
   

  	
  Portugal

  
	
  Qatar

  	
   

  	
  Romania

  	
   

  	
  Russia

  	
   

  	
  San
  Marino

  
	
  Saudi
  Arabia

  	
   

  	
  Serbia

  	
   

  	
  Slovakia

  	
   

  	
  Slovenia

  
	
  South
  Africa

  	
   

  	
  Spain

  	
   

  	
  Sweden

  	
   

  	
  Switzerland

  
	
  Syria

  	
   

  	
  Tanzania

  	
   

  	
  Tunisia

  	
   

  	
  Turkey

  
	
  Ukraine

  	
   

  	
  United
  Arab Emirates

  	
   

  	
  United
  Kingdom

  	
   

  	
  Uzbekistan

  
	
  Vatican

  	
   

  	
  Yemen

  	
   

  	
   

  	
   

  	
   

  

 

Together with:

 

(1)      All other
countries which from time to time are members of the European Union or have otherwise
implemented the Treaty on a European Economic Area or where Articles 81 & 82 of the Treaty establishing the
European Community (or provisions similar thereto) have been implemented or are
otherwise directly effective.

 

(2)      Such countries
in addition to those specified above which SCEE, in its sole discretion as representative
of Sony Computer Entertainment worldwide, determines from time to time to include
within the Licensed Territory by notice to Publisher. Without limiting the
generality of the foregoing, SCEE shall have the right not to include within
the Licensed Territory or, having included, subsequently to exclude from the
Licensed Territory by reasonable notice to Publisher (and intends so to
exclude) any such country or countries in which, in SCEE’s best business
judgement, the laws or enforcement of such laws do not adequately protect Sony Intellectual
Property Rights.  By not later than the
expiry of any such notice of exclusion, Publisher shall cease and desist, in
the country or countries concerned, from any further use of the Sony Materials,
any Sony Intellectual Property Rights related thereto and the Licensed Trademarks
and shall have no further right to continue or authorise the marketing, sale
and/or distribution of any units of Licensed Products.

 

25

 

SCHEDULE 2

 

to the PSP
Licensed Publisher Agreement dated 27 September 2005 between Sony Computer
Entertainment Europe Limited and Activision UK Limited

 

Platform Charge (Clause 7.1) (retail
products only)

 

[***]

 

For these
purposes, “maximum price to trade” shall mean -

 

Publisher’s (or,
where applicable, Publisher’s distributor’s) highest price net of trade margin
to any trade customer in the European Economic Area and Australia for Publisher’s
(or, where applicable, Publisher’s distributor’s) minimum order quantity of the
relevant inventory, net of year end (or similar) volume rebates (if any) properly
attributable to sales of Licensed Products, but prior to any credit, deduction
or rebate for co-op advertising or other marketing support, returns or
otherwise howsoever.

 

Where Publisher’s
business (with the trade or through distributors) is conducted in local
currencies other than €€, the local currency/€€ exchange rates to be applied
for purposes of conforming to maximum price to trade for any given Band will be
the closing mid-point spot rate as quoted in the London “Financial Times” on
the first business day of each 6 month period, commencing 1 September 2005.
Such exchange rate will then reset for each successive 6 month period
thereafter

 

The local currency
maximum price to trade for any given game will then be that derived by applying
the exchange rate obtaining for the 6 month period (as above) in which
Publisher places its first purchase order for the game concerned and will
continue to apply for that game unless and until Publisher places its first PO
in a different Band in a subsequent 6 month period.

 

SCEE reserves the
right to review local currency maximum prices to trade per Band applicable for
any given 6 month period (as above) in the event of a material exchange rate
fluctuation, deemed for these purposes to be +/- 5%.

 

The foregoing assumes a standard
1-disc UMD product and covers mastering, disc and shell, 4-colour disc label,
PSP box (or other packaging) and automated assembly of all components, but
excludes the cost of Printed Materials other than disc label.

 

Shrink Wrap is
available as an option subject to incremental charges (in addition to the
otherwise applicable Platform Charge specified above) of [***] (or as
individually quoted in each case for products in non-standard packaging).

 

[***]      The portions of this
document marked with three asterisks represent confidential portions omitted
and filed separately with the Securities and Exchange Commission.

 

26

 

The foregoing
assumes a standard 1-disc UMD product and covers mastering, disc and shell,
4-colour disc label, PSP box (or other packaging) and automated assembly of all
components, but excludes the cost of Printed Materials other than disc label.

 

Shrink Wrap is
available as an option subject to incremental charges (in addition to the otherwise
applicable Platform Charge specified above) of [***] (or as individually quoted
in each case for products in non-standard packaging).

 

The Platform
Charge and minimum order and reorder quantities for other “non-standard”
Manufactured Materials and/or production processes (subject to availability)
shall be as individually quoted in each case.

 

Demo
Discs

 

PSP Demo Discs are
also available. Demos must be from one game profile UMD Publisher only, and
content will be limited to a maximum of [***] playable and/or [***]
non-playable demo segments (each such segment to feature [***]. Platform Charge
is [***]. Demos will have a standard 4-colour disc label and be supplied in a
plastic pochette (included in Platform Charge). An Inlay may be provided as
Printed Materials. The charge for manual insertion of Inlays shall be as
individually quoted in each case. Order quantities shall be multiples of the
minimum box shipment advised from time to time by SCEE or the authorised
manufacturing facility licensed by SCEE. However, where a separate Demo Disc
sku is required for Germany (to comply with German law which requires consumer
advisory age ratings to appear not only on the outer packaging but also on the
disc label ~ and please note this applies only for product distributed in the
German market), the minimum order quantity for initial and reorders of that sku
is [***]. Demo discs may not be sold (directly or indirectly) or offered as
premium cost items to, or used in the redemption of paid pre-orders for retail Licensed
Products by, consumers.

 

Delivery

 

SCEE offers free
delivery to EEA countries (only) by regular road (and/or, where applicable,
sea) services, with airfreight or other expedited delivery available but the
incremental costs thereof for Publisher’s account. The minimum quantity per
game per drop is [***].

 

Audit

 

In order to verify
conformity with the Band structure for Licensed Products described above, SCEE
will require from time to time at its own expense to inspect and audit the
relevant of Publisher’s financial records (and, where applicable, those of
Publisher’s associated companies, subsidiaries and/or branch offices in the
Licensed Territory). Any such inspection and audit shall take place during
normal business hours at Publisher’s principal place of business (or such other
location as the relevant books and records are maintained) upon reasonable
prior notice and shall, at SCEE’s sole election, be conducted either by an
independent chartered or certified accountant or by an appropriately professionally
qualified member of SCEE’s staff.

 

	
  Initialled by

  	
   

  	
  Initialled by

  
	
  

  	
   

  	
  

  
	
  Sony Computer Entertainment Europe

  	
   

  	
  Activision UK Limited

  

 

[***]      The portions of this
document marked with three asterisks represent confidential portions omitted
and filed separately with the Securities and Exchange Commission.

 

27

 

SCHEDULE 3

 

to the PSP
Licensed Publisher Agreement dated 27 September 2005 between Sony Computer
Entertainment Europe Limited and Activision UK Limited

 

PSP format Software games (Clause
1.1)

 

[***]

 

[***]      The portions of this
document marked with three asterisks represent confidential portions omitted
and filed separately with the Securities and Exchange Commission.

 

28EXHIBIT 4.1
 

 

 

 

 

 

CUBIST PHARMACEUTICALS,
INC.

 

2.25% CONVERTIBLE
SUBORDINATED NOTES

DUE JUNE 15, 2013

 

 

 

INDENTURE

Dated as of June 6, 2006

 

 

 

THE BANK OF NEW YORK
TRUST COMPANY, N.A.,

As Trustee

 

   
 

TABLE OF CONTENTS

	
  

  	
   

  	
  Page

  
	
  ARTICLE 1

  	
   

  	
   

  
	
   

  	
  DEFINITIONS AND
  INCORPORATION BY REFERENCE

  	
  1

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 1.1.

  	
  DEFINITIONS

  	
  1

  
	
   

  	
  SECTION 1.2.

  	
  OTHER DEFINITIONS

  	
  9

  
	
   

  	
  SECTION 1.3.

  	
  TRUST INDENTURE ACT
  PROVISIONS

  	
  9

  
	
   

  	
  SECTION 1.4.

  	
  RULES OF CONSTRUCTION

  	
  10

  
	
   

  	
   

  	
   

  
	
  ARTICLE 2

  	
   

  	
   

  
	
   

  	
  THE SECURITIES

  	
  10

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 2.1.

  	
  FORM AND DATING

  	
  10

  
	
   

  	
  SECTION 2.2.

  	
  EXECUTION AND
  AUTHENTICATION

  	
  12

  
	
   

  	
  SECTION 2.3.

  	
  REGISTRAR, PAYING AGENT
  AND CONVERSION AGENT

  	
  13

  
	
   

  	
  SECTION 2.4.

  	
  PAYING AGENT TO HOLD
  MONEY IN TRUST

  	
  13

  
	
   

  	
  SECTION 2.5.

  	
  SECURITYHOLDER LISTS

  	
  14

  
	
   

  	
  SECTION 2.6.

  	
  TRANSFER AND EXCHANGE

  	
  14

  
	
   

  	
  SECTION 2.7.

  	
  REPLACEMENT SECURITIES

  	
  15

  
	
   

  	
  SECTION 2.8.

  	
  OUTSTANDING SECURITIES

  	
  16

  
	
   

  	
  SECTION 2.9.

  	
  TREASURY SECURITIES

  	
  16

  
	
   

  	
  SECTION 2.10.

  	
  TEMPORARY SECURITIES

  	
  16

  
	
   

  	
  SECTION 2.11.

  	
  CANCELLATION

  	
  17

  
	
   

  	
  SECTION 2.12.

  	
  ADDITIONAL TRANSFER AND
  EXCHANGE REQUIREMENTS

  	
  17

  
	
   

  	
  SECTION 2.13.

  	
  CUSIP NUMBERS

  	
  19

  
	
   

  	
   

  	
   

  
	
  ARTICLE 3

  	
   

  	
   

  
	
   

  	
  REDEMPTION AND
  PURCHASES

  	
  20

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 3.1.

  	
  OPTIONAL REDEMPTION

  	
  20

  
	
   

  	
  SECTION 3.2.

  	
  RIGHT TO REDEEM; NOTICE
  TO TRUSTEE

  	
  20

  
	
   

  	
  SECTION 3.3.

  	
  SELECTION OF SECURITIES
  TO BE REDEEMED

  	
  20

  
	
   

  	
  SECTION 3.4.

  	
  NOTICE OF REDEMPTION

  	
  21

  
	
   

  	
  SECTION 3.5.

  	
  EFFECT OF NOTICE OF
  REDEMPTION

  	
  22

  
	
   

  	
  SECTION 3.6.

  	
  DEPOSIT OF REDEMPTION
  PRICE

  	
  22

  
	
   

  	
  SECTION 3.7.

  	
  SECURITIES REDEEMED IN
  PART

  	
  22

  
	
   

  	
  SECTION 3.8.

  	
  REPURCHASE AT OPTION OF
  THE HOLDER UPON A FUNDAMENTAL CHANGE     

  	
  22

  
	
   

  	
  SECTION 3.9

  	
  ADJUSTMENT TO
  APPLICABLE CONVERSION RATE UPON A FUNDAMENTAL CHANGE

  	
  25

  
	
   

  	
  SECTION 3.10.

  	
  COMPLIANCE WITH
  SECURITIES LAWS UPON PURCHASE OF SECURITIES

  	
  27

  
	
   

  	
  SECTION 3.11.

  	
  REPAYMENT TO THE
  COMPANY

  	
  27

  
	
   

  	
   

  	
   

  

 i
 

 

	
  

  	
   

  	
  Page

  
	
  ARTICLE 4

  	
   

  	
   

  
	
   

  	
  CONVERSION

  	
  27

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 4.1.

  	
  CONVERSION RIGHT

  	
  27

  
	
   

  	
  SECTION 4.2.

  	
  CONVERSION
  CONSIDERATION

  	
  28

  
	
   

  	
  SECTION 4.3.

  	
  CONVERSION PROCEDURE

  	
  30

  
	
   

  	
  SECTION 4.4.

  	
  FRACTIONAL SHARES

  	
  31

  
	
   

  	
  SECTION 4.5.

  	
  TAXES ON CONVERSION

  	
  31

  
	
   

  	
  SECTION 4.6.

  	
  COMPANY TO PROVIDE
  STOCK

  	
  32

  
	
   

  	
  SECTION 4.7.

  	
  ANTI-DILUTION
  ADJUSTMENTS

  	
  32

  
	
   

  	
  SECTION 4.8.

  	
  NOTICE OF ADJUSTMENTS
  OF CONVERSION RATE

  	
  38

  
	
   

  	
  SECTION 4.9.

  	
  NOTICE OF CERTAIN
  CORPORATE TRANSACTIONS

  	
  39

  
	
   

  	
  SECTION 4.10.

  	
  CANCELLATION OF
  CONVERTED SECURITIES

  	
  39

  
	
   

  	
  SECTION 4.11.

  	
  RIGHTS ISSUED IN
  RESPECT OF COMMON STOCK

  	
  39

  
	
   

  	
  SECTION 4.12.

  	
  TRUSTEE’S DISCLAIMER

  	
  40

  
	
   

  	
   

  	
   

  
	
  ARTICLE 5

  	
   

  	
   

  
	
   

  	
  SUBORDINATION

  	
  40

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 5.1.

  	
  AGREEMENT TO
  SUBORDINATE

  	
  40

  
	
   

  	
  SECTION 5.2.

  	
  LIQUIDATION;
  DISSOLUTION; BANKRUPTCY

  	
  40

  
	
   

  	
  SECTION 5.3.

  	
  DEFAULT ON DESIGNATED
  SENIOR INDEBTEDNESS

  	
  41

  
	
   

  	
  SECTION 5.4.

  	
  ACCELERATION OF NOTES

  	
  42

  
	
   

  	
  SECTION 5.5.

  	
  WHEN DISTRIBUTION MUST
  BE PAID OVER

  	
  42

  
	
   

  	
  SECTION 5.6.

  	
  NOTICE BY COMPANY

  	
  42

  
	
   

  	
  SECTION 5.7.

  	
  SUBROGATION

  	
  42

  
	
   

  	
  SECTION 5.8.

  	
  RELATIVE RIGHTS

  	
  43

  
	
   

  	
  SECTION 5.9.

  	
  SUBORDINATION
  MAY NOT BE IMPAIRED BY COMPANY

  	
  43

  
	
   

  	
  SECTION 5.10.

  	
  DISTRIBUTION OR NOTICE
  TO REPRESENTATIVE

  	
  43

  
	
   

  	
  SECTION 5.11.

  	
  RIGHTS OF TRUSTEE AND
  PAYING AGENT

  	
  44

  
	
   

  	
  SECTION 5.12.

  	
  AUTHORIZATION TO EFFECT
  SUBORDINATION

  	
  44

  
	
   

  	
  SECTION 5.13.

  	
  AMENDMENTS

  	
  44

  
	
   

  	
  SECTION 5.14.

  	
  AGREEMENT TO
  SUBORDINATE UNAFFECTED

  	
  44

  
	
   

  	
  SECTION 5.15.

  	
  CERTAIN CONVERSIONS
  DEEMED PAYMENT

  	
  44

  
	
   

  	
   

  	
   

  
	
  ARTICLE 6

  	
   

  	
   

  
	
   

  	
  COVENANTS

  	
  45

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 6.1.

  	
  PAYMENT OF SECURITIES

  	
  45

  
	
   

  	
  SECTION 6.2.

  	
  SEC REPORTS

  	
  45

  
	
   

  	
  SECTION 6.3.

  	
  COMPLIANCE CERTIFICATES

  	
  46

  
	
   

  	
  SECTION 6.4.

  	
  FURTHER INSTRUMENTS AND
  ACTS

  	
  46

  
	
   

  	
  SECTION 6.5.

  	
  MAINTENANCE OF
  CORPORATE EXISTENCE

  	
  46

  

 ii
 

 

	
  

  	
   

  	
  Page

  
	
   

  	
  SECTION 6.6

  	
  STAY, EXTENSION AND
  USURY LAWS

  	
  46

  
	
  ARTICLE 7

  	
   

  	
   

  
	
   

  	
  CONSOLIDATION, MERGER,
  CONVEYANCE, TRANSFER OR LEASE

  	
  47

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 7.1.

  	
  COMPANY
  MAY CONSOLIDATE, ETC, ONLY ON CERTAIN TERMS

  	
  47

  
	
   

  	
  SECTION 7.2.

  	
  SUCCESSOR SUBSTITUTED

  	
  48

  
	
   

  	
   

  	
   

  
	
  ARTICLE 8

  	
   

  	
   

  
	
   

  	
  DEFAULT AND REMEDIES

  	
  48

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 8.1.

  	
  EVENTS OF DEFAULT

  	
  48

  
	
   

  	
  SECTION 8.2.

  	
  ACCELERATION

  	
  50

  
	
   

  	
  SECTION 8.3.

  	
  OTHER REMEDIES

  	
  50

  
	
   

  	
  SECTION 8.4.

  	
  WAIVER OF DEFAULTS AND
  EVENTS OF DEFAULT

  	
  51

  
	
   

  	
  SECTION 8.5.

  	
  CONTROL BY MAJORITY

  	
  51

  
	
   

  	
  SECTION 8.6.

  	
  LIMITATIONS ON SUITS

  	
  51

  
	
   

  	
  SECTION 8.7.

  	
  RIGHTS OF HOLDERS TO
  RECEIVE PAYMENT AND TO CONVERT

  	
  52

  
	
   

  	
  SECTION 8.8.

  	
  COLLECTION SUIT BY
  TRUSTEE

  	
  52

  
	
   

  	
  SECTION 8.9.

  	
  TRUSTEE MAY FILE
  PROOFS OF CLAIM

  	
  52

  
	
   

  	
  SECTION 8.10.

  	
  PRIORITIES

  	
  53

  
	
   

  	
  SECTION 8.11.

  	
  UNDERTAKING FOR COSTS

  	
  53

  
	
   

  	
   

  	
   

  
	
  ARTICLE 9

  	
   

  	
   

  
	
   

  	
  TRUSTEE

  	
  53

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 9.1.

  	
  DUTIES OF TRUSTEE

  	
  53

  
	
   

  	
  SECTION 9.2.

  	
  RIGHTS OF TRUSTEE

  	
  54

  
	
   

  	
  SECTION 9.3.

  	
  INDIVIDUAL RIGHTS OF
  TRUSTEE

  	
  56

  
	
   

  	
  SECTION 9.4.

  	
  TRUSTEE’S DISCLAIMER

  	
  56

  
	
   

  	
  SECTION 9.5.

  	
  NOTICE OF DEFAULT OR
  EVENTS OF DEFAULT

  	
  56

  
	
   

  	
  SECTION 9.6.

  	
  REPORTS BY TRUSTEE TO
  HOLDERS

  	
  56

  
	
   

  	
  SECTION 9.7.

  	
  COMPENSATION AND
  INDEMNITY

  	
  57

  
	
   

  	
  SECTION 9.8.

  	
  REPLACEMENT OF TRUSTEE

  	
  57

  
	
   

  	
  SECTION 9.9.

  	
  SUCCESSOR TRUSTEE BY
  MERGER, ETC.

  	
  58

  
	
   

  	
  SECTION 9.10.

  	
  ELIGIBILITY;
  DISQUALIFICATION

  	
  59

  
	
   

  	
  SECTION 9.11.

  	
  PREFERENTIAL COLLECTION
  OF CLAIMS AGAINST COMPANY

  	
  59

  
	
   

  	
   

  	
   

  
	
  ARTICLE 10

  	
   

  	
   

  
	
   

  	
  SATISFACTION AND
  DISCHARGE OF INDENTURE

  	
  59

  
	
   

  	
   

  	
   

  	
   

  

 iii
 

 

	
  

  	
   

  	
  Page

  
	
   

  	
  SECTION 10.1

  	
  SATISFACTION AND
  DISCHARGE OF INDENTURE

  	
  59

  
	
   

  	
  SECTION 10.2.

  	
  APPLICATION OF TRUST
  MONEY

  	
  60

  
	
   

  	
  SECTION 10.3.

  	
  REPAYMENT TO COMPANY

  	
  60

  
	
   

  	
  SECTION 10.4.

  	
  REINSTATEMENT

  	
  61

  
	
   

  	
   

  	
   

  
	
  ARTICLE 11

  	
   

  	
   

  
	
   

  	
  AMENDMENTS, SUPPLEMENTS
  AND WAIVERS

  	
  61

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 11.1.

  	
  WITHOUT CONSENT OF
  HOLDERS

  	
  61

  
	
   

  	
  SECTION 11.2.

  	
  WITH CONSENT OF HOLDERS

  	
  62

  
	
   

  	
  SECTION 11.3.

  	
  COMPLIANCE WITH TRUST
  INDENTURE ACT

  	
  63

  
	
   

  	
  SECTION 11.4.

  	
  REVOCATION AND EFFECT
  OF CONSENTS

  	
  63

  
	
   

  	
  SECTION 11.5.

  	
  NOTATION ON OR EXCHANGE
  OF SECURITIES

  	
  64

  
	
   

  	
  SECTION 11.6.

  	
  TRUSTEE TO SIGN
  AMENDMENTS, ETC.

  	
  64

  
	
   

  	
  SECTION 11.7.

  	
  EFFECT OF SUPPLEMENTAL
  INDENTURES

  	
  64

  
	
   

  	
   

  	
   

  
	
  ARTICLE 12

  	
   

  	
   

  
	
   

  	
  MISCELLANEOUS

  	
  64

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 12.1.

  	
  TRUST INDENTURE ACT
  CONTROLS

  	
  64

  
	
   

  	
  SECTION 12.2.

  	
  NOTICES

  	
  64

  
	
   

  	
  SECTION 12.3.

  	
  COMMUNICATIONS BY
  HOLDERS WITH OTHER HOLDERS

  	
  66

  
	
   

  	
  SECTION 12.4.

  	
  CERTIFICATE AND OPINION
  AS TO CONDITIONS PRECEDENT

  	
  66

  
	
   

  	
  SECTION 12.5.

  	
  RECORD DATE FOR VOTE OR
  CONSENT OF SECURITYHOLDERS

  	
  67

  
	
   

  	
  SECTION 12.6.

  	
  RULES BY TRUSTEE,
  PAYING AGENT, REGISTRAR AND CONVERSION AGENT

  	
  67

  
	
   

  	
  SECTION 12.7.

  	
  LEGAL HOLIDAYS

  	
  67

  
	
   

  	
  SECTION 12.8.

  	
  GOVERNING LAW

  	
  67

  
	
   

  	
  SECTION 12.9.

  	
  NO ADVERSE
  INTERPRETATION OF OTHER AGREEMENTS

  	
  67

  
	
   

  	
  SECTION 12.10.

  	
  NO PERSONAL LIABILITY
  OF DIRECTORS, OFFICERS, EMPLOYEES OR STOCKHOLDERS

  	
  68

  
	
   

  	
  SECTION 12.11.

  	
  SUCCESSORS

  	
  68

  
	
   

  	
  SECTION 12.12.

  	
  MULTIPLE COUNTERPARTS

  	
  68

  
	
   

  	
  SECTION 12.13.

  	
  SEPARABILITY

  	
  68

  
	
   

  	
  SECTION 12.14.

  	
  TAX TREATMENT

  	
  68

  
	
   

  	
  SECTION 12.15.

  	
  TABLE OF CONTENTS,
  HEADINGS, ETC.

  	
  68

  
	
   

  	
  SECTION 12.16.

  	
  FORCE MAJEURE

  	
  68

  
	
   

  	
  SECTION 12.17.

  	
  WAIVER OF JURY TRIAL

  	
  69

  

 

 iv

INDENTURE, dated as of June 6, 2006, between
CUBIST PHARMACEUTICALS, INC., a Delaware corporation (the “Company”),
and THE BANK OF NEW YORK TRUST COMPANY, N.A., a national banking association,
as Trustee (the “Trustee”).

The Company and the Trustee agree as follows for the
benefit of each other and for the equal and ratable benefit of the Holders of
the Company’s 2.25% Convertible Subordinated Notes due June 15, 2013.

ARTICLE 1

DEFINITIONS AND INCORPORATION BY REFERENCE

SECTION 1.1. DEFINITIONS.

“Additional Shares Table” means the table set
forth in Schedule I hereto.

“Affiliate” means, with respect to any
specified person, 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 person, means the power to direct 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.

“Agent” means any Registrar, Paying Agent or
Conversion Agent.

“Applicable Conversion Price” means, at the
time any determination thereof is to be made, $1,000 divided by the Applicable
Conversion Rate, rounded to the nearest 1/10th of
a cent.

“Applicable Conversion Rate” means, at the time
any determination thereof is to be made, the Initial Conversion Rate as
adjusted pursuant to Sections 3.9 and 4.7, rounded to the nearest 1/1,000th of a share.

“Applicable Conversion Reference Period” means
the 10 consecutive Trading Days beginning on the third Trading Day following
the Conversion Date or, if the Company elects to pay cash to Holders in lieu of
all or a portion of the Residual Value Shares pursuant to Section 4.2(b),
the Third Trading Day after the end of the Conversion Retraction Period.

“Applicable Procedures” means, with respect to
any transfer or exchange of beneficial ownership interests in a Global Security,
the rules and procedures of the Depositary, in each case to the extent
applicable to such transfer or exchange.

“Board of Directors” means either the board of
directors of the Company or any committee of the Board of Directors authorized
to act for it with respect to this Indenture.

“Business Day” means each day that is not a
Legal Holiday.

“Capital Stock” means (a) in the case of a
corporation, corporate stock, (b) in the case of an association or
business entity, shares, interests, participations, rights or other equivalents

 

(however designated) of corporate stock, (c) in
the case of a partnership or limited liability company, partnership or
membership interests (whether general or limited) and (d) any other
interest or participation that confers on a person the right to receive a share
of the profits and losses of, or distribution of the assets of, the issuing
person.

“Cash” or “cash” means such coin or
currency of the United States as at any time of payment is legal tender for the
payment of public and private debts.

“Certificated Security” means a Security that
is in substantially the form attached hereto as Exhibit A and that
does not include the information or the schedule called for by footnotes 1 and
2 thereof.

“Closing Sale Price” of the Common Stock on any
date means the last reported sales price per share or, in case no such reported
sale takes place on such date, the average of the reported closing bid and ask
prices, in either case on the Nasdaq Stock Market, or, if the Common Stock is
not quoted on the Nasdaq Stock Market, the last reported closing price per
share on the principal national or regional securities exchange on which the
Common Stock is then listed, or, if the Common Stock is not listed on any
national or regional securities exchange, the last reported sales price per
share or, in case no such reported sale takes place on such date, the average
of the closing bid and ask prices, in either case as quoted on the National
Association of Securities Dealers Automated Quotation System or other
established automated over-the-counter trading market in the United States, or,
if the Common Stock is not quoted on the National Association of Securities
Dealers Automated Quotation System or other established automated
over-the-counter trading market in the United States, the last reported closing
price per share on the principal other market on which the Common Stock is then
traded. If no such prices are available, the Board of Directors shall make a
good faith determination of the Closing Sale Price.

“Common Stock” means the common stock of the
Company, $0.001 par value per share, as it exists on the date of this
Indenture, and any shares of any class or classes of capital stock of the
Company resulting from any reclassification or reclassifications thereof and
which have no preference in respect of dividends or of amounts payable in the
event of any voluntary or involuntary liquidation, dissolution or winding-up of
the Company and which are not subject to redemption by the Company; provided,
however, that if at any time there shall be more than one such resulting
class, the shares of each such class then so issuable on conversion of
Securities shall be substantially in the proportion which the total number of
shares of such class resulting from all such reclassifications bears to the
total number of shares of all such classes resulting from all such
reclassifications.

“Company” means the party named as such in the
first paragraph of this Indenture until a successor replaces it pursuant to the
applicable provisions of this Indenture, and thereafter “Company” shall mean
such successor Company.

“Continuing Director” means, as of any date of
determination, any member of the Board of Directors who (a) was a member
of the Board of Directors on the date of this Indenture or (b) becomes a
member of the Board of Directors subsequent to the date of this Indenture and
was appointed, nominated for election or elected to the Board of Directors with
the approval of a

 2
 

 

majority of the Continuing Directors who were members
of the Board of Directors at the time of such appointment, nomination or
election.

“Conversion Value” equals the product of (a) the
Applicable Conversion Rate and (b) the average of the Closing Sale Prices
of the Common Stock for each of the 10 consecutive Trading Days in the
Applicable Conversion Reference Period.

“Corporate Trust Office” means the office of
the Trustee at the address specified in Section 12.2 hereof or such other
address as to which the Trustee may give notice to the Company.

“Cross Payment Default Amount” means an amount,
at the time of determination, equal to:

(a)           at any time other
than as specified in the following clause (b), $25,000,000; or

(b)           at such time as the
Company’s senior unsecured indebtedness is rated BBB+ or greater by Standard &
Poor’s Ratings Services (“S&P”) or Baa1 or greater by Moody’s Investors
Service, Inc. (“Moody’s”), in each case, with a stable or positive outlook
(or if the Company’s senior unsecured indebtedness is not rated at such time by
S&P or Moody’s, the Company’s issuer rating is BBB+ or greater from S&P
or Baa1 or greater from Moody’s, in each case, with a stable or positive
outlook), $50,000,000.

“Current Market Price” of the Common Stock
means, unless otherwise stated, the average of the Closing Sale Prices of the
Common Stock for the five consecutive Trading Days ending on the Trading Day
immediately prior to the earlier of the record date or the ex-dividend Trading
Day for a distribution.

“Daily Trading Share Amount” for each day in
the Applicable Conversion Reference Period is equal to the greater of:

(a)           zero; or

(b)           a number of shares
determined by the following formula:

(Closing Sale Price x
Applicable Conversion Rate) - $1,000

10 x Closing Sale
Price

 “Default”
or “default” means, when used with respect to the Securities, any event
which is or, after notice or passage of time or both, would be an Event of
Default.

“Designated Senior Indebtedness” means any
Senior Indebtedness permitted hereunder that has been designated by the Company
as “Designated Senior Indebtedness.”

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

 3
 

 

“Final Maturity Date” means June 15, 2013.

“Fundamental Change” means the occurrence of
any of the following at a time after the Securities are originally issued:

(a)           the Common Stock (or other common
stock into which the Securities are convertible) is neither traded on the New
York Stock Exchange or another U.S. national securities exchange nor quoted on
the Nasdaq Stock Market or another established automated over-the-counter
trading market in the United States; or

(b)           any Person acquires beneficial
ownership, directly or indirectly, through a purchase, merger or other
acquisition transaction or series of transactions, of shares of the Company’s
Capital Stock entitling the Person to exercise 50% or more of the total voting
power of all shares of the Company’s Capital Stock entitled to vote generally
in elections of directors, other than an acquisition by the Company, any of its
Subsidiaries or any of its employee benefit plans; or

(c)           the Company merges or consolidates
with or into any other Person (other than a Subsidiary of the Company), another
Person merges with or into the Company or the Company conveys, sells, transfers
or leases all or substantially all of its assets to another Person, other than
any transaction:

(i)                                     that
does not result in a reclassification, conversion, exchange or cancellation of
any outstanding Common Stock;

(ii)                                  pursuant
to which the holders of Common Stock 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 the Capital Stock entitled to vote generally in
the election of directors of the continuing or surviving corporation
immediately after the transaction; or

(iii)                               that
is effected solely to change the Company’s jurisdiction of incorporation and
results in a reclassification, conversion or exchange of outstanding shares of
Common Stock solely into shares of common stock of the surviving entity; or

(d)           at any time the Continuing Directors
do not constitute a majority of the Board of Directors (or, if applicable, the
board of directors of a successor Person to the Company).

For purposes of this definition, whether a Person is a
“beneficial owner” will be determined in accordance with Rule 13d-3
under the Exchange Act and “Person” includes any syndicate or group that would
be deemed to be a “person” under Section 13(d)(3) of the Exchange
Act.

 4
 

 

“Fundamental Change
Repurchase Date” means the date specified as such in the Fundamental Change
Repurchase Right Notice delivered to Holders pursuant to Section 3.8(c) hereof.

“GAAP” means generally accepted accounting
principles in the United States of America as in effect as of the date of this
Indenture, including those set forth in (1) the opinions and
pronouncements of the Accounting Principles Board of the American Institute of
Certified Public Accountants, (2) the statements and pronouncements of the
Financial Accounting Standards Board, (3) such other statements by such
other entity as approved by a significant segment of the accounting profession
and (4) the rules and regulations of the SEC governing the inclusion
of financial statements (including pro forma financial statements) in
registration statements filed under the Securities Act and periodic reports
required to be filed pursuant to Section 13 of the Exchange Act, including
opinions and pronouncements in staff accounting bulletins and similar written
statements from the accounting staff of the SEC.

“Global Security” means a permanent Global
Security that is in substantially the form attached hereto as Exhibit A
and that includes the information and the schedule called for by footnotes 1
and 2 thereof and that is deposited with the Depositary or its custodian and
registered in the name of the Depositary or its nominee.

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

“Indebtedness” means, with respect to any
Person, without duplication, (a) all indebtedness, obligations and other
liabilities (contingent or otherwise) of such Person for borrowed money
(including obligations of such Person in respect of overdrafts, foreign
exchange contracts, currency exchange agreements, interest rate protection
agreements, and any loans or advances from banks, whether or not evidenced by
notes or similar instruments) or evidenced by credit or loan agreements, bonds,
debentures, notes or other written obligations (whether or not the recourse of
the lender is to the whole of the assets of such Person or to only a portion
thereof) (other than any accounts payable or other accrued current liability or
obligation incurred in the ordinary course of business in connection with the
obtaining of materials or services), (b) all reimbursement obligations and
other liabilities (contingent or otherwise) of such Person with respect to
letters of credit, bank guarantees or bankers’ acceptances, (c) all
obligations and liabilities (contingent or otherwise) of such Person in respect
of leases of such Person required, in conformity with GAAP, to be accounted for
as capitalized lease obligations on the balance sheet of such Person, (d) all
obligations of such Person evidenced by a note or similar instrument given in
connection with the acquisition of any business, properties or assets of any
kinds, (e) all obligations of such Person issued or assumed as the
deferred purchase price of property or services (excluding trade accounts
payable and accrued liabilities arising in the ordinary course of business), (f) all
obligations and other liabilities (contingent or otherwise) of such Person
under any lease or related document (including a purchase agreement) in
connection with the lease of real property or improvements (or any personal
property included as part of any such lease) that provides that such Person is
contractually obligated to purchase or cause a third party to purchase the
leased property and thereby guarantee a minimum residual value of the leased
property to the lessor and the obligations of such Person under such lease or
related document to

 5
 

 

purchase or to cause a third party to purchase such
leased property (whether or not such lease transaction is characterized as an
operating lease or a capitalized lease in accordance with GAAP), (g) all
obligations (contingent or otherwise) of such Person with respect to any
interest rate, currency or other swap, cap, floor or collar agreement, hedge
agreement, forward contract, or other similar instrument or agreement or
foreign currency hedge, exchange, purchase or similar instrument or agreement, (h) all
direct or indirect guarantees, agreements to be jointly liable or similar agreements
by such Person in respect of, and obligations or liabilities (contingent or
otherwise) of such Person to purchase or otherwise acquire or otherwise assure
a creditor against loss in respect of, indebtedness, obligations or liabilities
of another Person of the kind described in clauses (a) through (g), and (i) any
and all deferrals, renewals, extensions, restatements, replacements,
refinancings and refundings of, or amendments, modifications, or supplements
to, or any indebtedness or obligation issued in exchange for, any indebtedness,
obligation or liability of the kind described in clauses (a) through (h).

“Indenture” means this Indenture as amended or
supplemented from time to time pursuant to the terms of this Indenture.

“Initial Conversion Rate” means 32.4981 shares
of Common Stock per $1,000 principal amount of Securities.

 “Issuance
Date” means the date on which the Securities are first authenticated and
issued.

“Obligations” means any principal, interest,
penalties, fees, indemnifications, reimbursements, fees and expenses, damages
and other liabilities payable under the documentation governing any
Indebtedness.

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

“Officers’ Certificate” means a certificate
signed on behalf of the Company by two Officers, at least one of whom shall be
the principal executive officer, principal financial officer or principal
accounting officer of the Company.

“Opinion of Counsel” means a written opinion
that meets the requirements of Section 12.4 from legal counsel. The
counsel may be an employee of or counsel to the Company or any Subsidiary of
the Company.

“Permitted Junior Securities” means Capital
Stock in the Company or debt securities that are subordinated to all Senior
Indebtedness (and any debt securities issued in exchange for Senior Indebtedness)
to substantially the same extent as, or to a greater extent than, the
Securities are subordinated to Senior Indebtedness pursuant to the Indenture.

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

 6
 

 

“Principal” or “principal” of a debt
security, including the Securities, means the principal of the security plus,
when appropriate, the premium, if any, on the security.

“Redemption Date” when used with respect to any
Security to be redeemed, means the date fixed for such redemption pursuant to
this Indenture.

“Redemption Price” when used with respect to
any Security to be redeemed, means the price fixed for such redemption pursuant
to this Indenture, as set forth in the form of Security annexed as Exhibit A
hereto.

“Representative” means the indenture trustee or
other trustee, agent or representative for any Senior Indebtedness.

“Residual Cash Value” for each date equals the
product of (a) the percentage of each Residual Value Share otherwise
issuable upon conversion that the Company elects to pay in cash pursuant to Section 4.2(b) and
(b) the cash value of the Daily Trading Share Amount for such date. The “cash
value” of the Daily Trading Share Amount shall be determined by multiplying the
Daily Trading Share Amount for such date by the Closing Sale Price of the
Common Stock for such date.

“Responsible Officer” when used with respect to
the Trustee, means any officer within the corporate trust department of the
Trustee with direct responsibilities for the administration of this Indenture
and also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of his knowledge of and
familiarity with the particular subject and who shall have direct
responsibility for the administration of this Indenture.

“SEC” means the Securities and Exchange
Commission.

“Securities” means the 2.25% Convertible
Subordinated Notes due June 15, 2013 or any of them (each, a “Security”),
as amended or supplemented from time to time, that are issued under this
Indenture.

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

“Securities Custodian” means the Trustee, as
custodian with respect to the Securities in global form, or any successor
thereto.

“Senior Indebtedness” means (a) the
principal of, premium, if any, interest including all interest accruing
subsequent to the commencement of any bankruptcy or similar proceeding, whether
or not a claim for post-petition interest is allowable as a claim in any such
proceeding, and rent payable on or in connection with Indebtedness of the
Company (together with all fees, costs, expenses, penalties and other amounts
accrued or due on or in connection therewith) unless the instrument under which
such Indebtedness is incurred expressly provides that it is on a parity with or
subordinated in right of payment to the Securities, and (b) all
Obligations with respect to any of the foregoing, whether secured or unsecured,
absolute or contingent, due or to

 7
 

 

become due, outstanding on the date hereof or
hereafter created, incurred, assumed, guaranteed or in effect guaranteed by the
Company, including all deferrals, renewals, extensions, replacements,
refinancings and refundings of or amendments, modifications or supplements to,
or any indebtedness or obligation issued in exchange for, the foregoing. Notwithstanding
anything to the contrary in the foregoing, Senior Indebtedness shall not
include any Indebtedness of the Company to any of its Subsidiaries.

“Significant Subsidiary” means, in respect of
any Person, a Subsidiary of such Person that would constitute a “significant
subsidiary”, as such term is defined under Rule 1-02 of Regulation
S-X under the Securities Act and the Exchange Act.

“Subsidiary” means, in respect of any Person,
any corporation, association, partnership or other business entity of which
more than 50% of the total voting power of shares of Capital Stock or other
interests (including partnership interests) entitled (without regard to the
occurrence of any contingency) to vote in the election of directors, managers,
general partners or trustees thereof is at the time owned or controlled,
directly or indirectly, by (a) such Person; (b) such Person and one
or more Subsidiaries of such Person; or (c) one or more Subsidiaries of such
Person.

“TIA” means the Trust Indenture Act of 1939, as
amended, and the rules and regulations thereunder as in effect on the date
of this Indenture, except as provided in Section 11.3, and except to the
extent any amendment to the Trust Indenture Act expressly provides for
application of the Trust Indenture Act as in effect on another date.

“Trading Day” means a day during which trading
in securities generally occurs on the Nasdaq Stock Market or, if the Common
Stock is not quoted on the Nasdaq Stock Market, on the principal national or
regional securities exchange on which the Common Stock is then listed or, if
the Common Stock is not listed on a national or regional securities exchange,
on the National Association of Securities Dealers Automated Quotation System or
other established automated over-the-counter trading market in the United
States or, if the Common Stock is not quoted on the National Association of
Securities Dealers Automated Quotation System or another established automated
over-the-counter trading market in the United States, on the principal other
market on which the Common Stock is then traded (provided that no day on
which trading of the Common Stock is suspended shall count as a Trading Day).

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

“Underwriters” means Goldman, Sachs &
Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated and Pacific
Growth Equities, LLC.

“Vice President” when used with respect to the
Company or the Trustee, means any vice president, whether or not designated by
a number or a word or words added before or after the title “vice president.”

 8
 

 

SECTION 1.2.
OTHER DEFINITIONS.

	
  Term

  	
   

  	
  Defined in Section

  
	
  “Additional
  Shares”

  	
   

  	
  3.9

  	
   

  
	
  “Agent Members”

  	
   

  	
  2.1

  	
  (b)

  
	
  “Bankruptcy Law”

  	
   

  	
  8.1

  	
   

  
	
  “Cash Settlement
  Notice Period”

  	
   

  	
  4.2

  	
  (c)

  
	
  “Company Order”

  	
   

  	
  2.2

  	
   

  
	
  “Conversion
  Agent”

  	
   

  	
  2.3

  	
   

  
	
  “Conversion
  Date”

  	
   

  	
  4.3

  	
   

  
	
  “Conversion
  Retraction Period”

  	
   

  	
  4.2

  	
  (c)

  
	
  “Custodian”

  	
   

  	
  8.1

  	
   

  
	
  “Daily
  Adjustment”

  	
   

  	
  4.7

  	
  (a)

  
	
  “DTC”

  	
   

  	
  2.1

  	
  (b)

  
	
  “Depositary”

  	
   

  	
  2.1

  	
  (b)

  
	
  “Distributed
  Assets”

  	
   

  	
  4.7

  	
  (a)

  
	
  “Event of
  Default”

  	
   

  	
  8.1

  	
   

  
	
  “Fundamental
  Change Conversion Right Notice”

  	
   

  	
  3.8

  	
  (a)

  
	
  “Fundamental
  Change Repurchase Price”

  	
   

  	
  3.8

  	
  (a)

  
	
  “Fundamental
  Change Repurchase Right Notice”

  	
   

  	
  3.8

  	
  (c)

  
	
  “Legal Holiday”

  	
   

  	
  12.7

  	
   

  
	
  “Paying Agent”

  	
   

  	
  2.3

  	
   

  
	
  “Payment
  Blockage Notice”

  	
   

  	
  5.3

  	
  (a)

  
	
  “Primary
  Registrar”

  	
   

  	
  2.3

  	
   

  
	
  “Registrar”

  	
   

  	
  2.3

  	
   

  
	
  “Repurchase
  Exercise Notice”

  	
   

  	
  3.8

  	
  (d)

  
	
  “Repurchase
  Premium”

  	
   

  	
  4.7

  	
  (a)

  
	
  “Residual Value
  Shares”

  	
   

  	
  4.2

  	
  (a)

  
	
  “Spin-off”

  	
   

  	
  4.7

  	
  (a)

  
	
  “Stock Price”

  	
   

  	
  3.9

  	
  (b)

  
	
  “Trigger Event”

  	
   

  	
  4.11

  	
   

  
	
  “Underwriting
  Agreement”

  	
   

  	
  2.2

  	
   

  

SECTION 1.3.
TRUST INDENTURE ACT PROVISIONS.

Whenever this Indenture refers to a provision of the
TIA, that provision is incorporated by reference in and made a part of this
Indenture. The Indenture shall also include those provisions of the TIA
required to be included herein by the provisions of the Trust Indenture Reform
Act of 1990. The following TIA terms used in this Indenture have the following
meanings:

“indenture securities” means the Securities;

“indenture security holder” means a Securityholder;

“indenture to be qualified” means this Indenture; and

 9
 

 

“indenture trustee” or “institutional trustee” means
the Trustee; and “obligor” on the indenture securities means the Company or any
other obligor on the Securities.

All other terms used in this Indenture that are
defined in the TIA, defined by TIA reference to another statute or defined by
any SEC rule and not otherwise defined herein have the meanings assigned
to them therein.

SECTION 1.4. RULES OF CONSTRUCTION.

Unless the context otherwise requires:

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

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

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

(D)          provisions apply to
successive events and transactions;

(E)           the term “merger”
includes a statutory share exchange and the term “merged” has a correlative
meaning;

(F)           the masculine gender
includes the feminine and the neuter;

(G)           references to
agreements and other instruments include subsequent amendments thereto; and

(H)          “herein,” “hereof”
and other words of similar import refer to this Indenture as a whole and not to
any particular Article, Section or other subdivision.

ARTICLE 2

THE SECURITIES

SECTION 2.1. FORM AND DATING.

(a)           General. The
Securities and the Trustee’s certificate of authentication shall be
substantially in the respective forms set forth in Exhibit A, which
Exhibit is incorporated in and made part of this Indenture. The Securities
may have notations, legends or endorsements required by law, stock exchange rule or
usage. 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. The terms and provisions contained in the Securities shall
constitute, and are hereby expressly made, a part of this Indenture, and the
Company and the Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound thereby. However,
to the extent any provision of any Security conflicts with the express
provisions of this Indenture, the provisions of this Indenture shall govern and
be controlling.

 10

 

(b)           Global Securities.
All of the Securities shall be issued initially in the form of one or more
Global Securities, which shall be deposited on behalf of the purchasers of the
Securities represented thereby with the Trustee, at its Corporate Trust Office,
as custodian for the depositary, The Depository Trust Company (“DTC”)
(such depositary, or any successor thereto, being hereinafter referred to as
the “Depositary”), and registered in the name of its nominee,  Cede & Co., duly executed by the
Company and authenticated by the Trustee as hereinafter provided.

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, purchases or conversions of
such Securities. 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.

Members of, or participants in, the Depositary (“Agent
Members”) shall have no rights under this Indenture with respect to any
Global Security held on their behalf by the Depositary or under the Global
Security, and the Depositary (including, for this purpose, its nominee) may be
treated by 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 (1) 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 (2) impair, as between the Depositary and its Agent
Members, the operation of customary practices governing the exercise of the
rights of a Holder of any Security.

(c)           Book Entry
Provisions. The Company shall execute and the Trustee shall, in accordance
with this Section 2.1(c), authenticate and deliver initially one or more
Global Securities that (1) shall be registered in the name of the
Depositary, (2) shall be delivered by the Trustee to the Depositary or
pursuant to the Depositary’s instructions and (3) shall bear a legend
substantially to the following effect:

“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. THIS NOTE IS A GLOBAL SECURITY WITHIN THE

 11
 

 

MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND
IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS NOTE IS
EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE
DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE AND UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR
SECURITIES IN DEFINITIVE FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS
A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE
DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE
DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH
SUCCESSOR DEPOSITARY.”

SECTION 2.2. EXECUTION AND
AUTHENTICATION.

An Officer shall sign the Securities for the Company
by manual or facsimile signature attested by the manual or facsimile signature
of the Secretary or an Assistant Secretary of the Company. Typographic and
other minor errors or defects in any such facsimile signature shall not affect
the validity or enforceability of any Security which has been authenticated and
delivered by the Trustee.

If an Officer whose signature is on a Security no
longer holds that office at the time the Trustee authenticates the Security,
the Security shall be valid nevertheless.

A Security shall not be valid until an authorized
signatory of the Trustee manually signs the certificate of authentication on
the Security. The signature shall be conclusive evidence that the Security has
been authenticated under this Indenture.

The Trustee shall authenticate and make available for
delivery Securities for original issue in the aggregate principal amount of up
to $325,000,000 (or such greater amount necessary to reflect the exercise by
the Underwriters of their option to purchase additional Securities in
compliance with the Underwriting Agreement, dated May 31, 2006, between
the Company and the Underwriters (the “Underwriting Agreement”) but not
to exceed $350,000,000 in aggregate principal amount) upon receipt of a written
order or orders of the Company signed by two Officers, at least one of whom
shall be the principal executive officer, principal financial officer or
principal accounting officer of the Company (a “Company Order”). The
Company Order shall specify the amount of Securities to be authenticated, shall
provide that all such Securities will be represented by a Global Security and
the date on which each original issue of Securities is to be authenticated. The
Company at any time or from time to time may, without the consent of any
Holder, issue additional Securities having the same terms as the Securities
initially issued hereunder, and entitled to all of the benefits of this
Indenture. Such additional Securities will be deemed Securities for all
purposes hereunder, including without limitation in determining the necessary
Holders who may take the actions or consent to the taking of actions as
specified in this Indenture.

The Trustee shall act as the initial authenticating
agent. Thereafter, the Trustee may appoint an authenticating agent acceptable
to the Company to authenticate Securities. An authenticating agent may
authenticate Securities whenever the Trustee may do so. Each

 12
 

 

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

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

SECTION 2.3. REGISTRAR, PAYING AGENT AND
CONVERSION AGENT.

The Company shall maintain one or more offices or
agencies where Securities may be presented for registration of transfer or for
exchange (each, a “Registrar”), one or more offices or agencies where
Securities may be presented for payment (each, a “Paying Agent”), one or
more offices or agencies where Securities may be presented for conversion
(each, a “Conversion Agent”) and one or more offices or agencies where
notices and demands to or upon the Company in respect of the Securities and
this Indenture may be served. The Company will at all times maintain a Paying
Agent, Conversion Agent, Registrar and an office or agency where notices and
demands to or upon the Company in respect of the Securities and this Indenture
may be served in the Borough of Manhattan, The City of New York. One of the
Registrars (the “Primary Registrar”) shall keep a register of the
Securities and of their registration of transfer and exchange. The Company
shall give prompt written notice to the Trustee of the location, and any change
in the location, of such office or agency.

The Company shall enter into an appropriate agency
agreement with any Agent not a party to this Indenture. The agreement shall
implement the provisions of this Indenture that relate to such Agent. The
Company shall give prompt written notice to the Trustee of the name and address
of any Agent not a party to this Indenture. If the Company fails to maintain a
Registrar, Paying Agent, Conversion Agent or agent for service of notices and
demands in any place required by this Indenture, or fails to give the foregoing
notice, the Trustee shall act as such. The Company or any Affiliate of the
Company may act as Paying Agent (except for the purposes of Section 6.1
and Article 10).

The Company hereby initially designates the Trustee as
Paying Agent, Registrar, Custodian and Conversion Agent and each of the
Corporate Trust Office of the Trustee and the office or agency of the Trustee
in the Borough of Manhattan, The City of New York, as an office or agency of
the Company for each of the aforesaid purposes.

SECTION 2.4. PAYING AGENT TO HOLD MONEY
IN TRUST.

Prior to 11:00 a.m., New York City time, on each
due date of the principal of, premium, if any, or interest on any Securities,
the Company shall deposit with a Paying Agent a sum sufficient to pay such
principal, premium or interest so becoming due. A Paying Agent shall hold in
trust for the benefit of Securityholders or the Trustee all money held by the
Paying Agent for the payment of principal of, premium or interest on the
Securities, and shall notify the Trustee of any default by the Company (or any
other obligor on the Securities) in making any such payment. If the Company or
an Affiliate of the Company acts as Paying Agent, it shall, before 11:00 a.m.,
New York City time, on each due date of the principal of, premium, if any, or
interest on any Securities, segregate the money and hold it as a separate trust
fund for the benefit

 13
 

 

of the Securityholders. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee, and the
Trustee may at any time during the continuance of any default, upon written
request to a Paying Agent, require such Paying Agent to pay forthwith to the
Trustee all sums so held in trust by such Paying Agent. Upon doing so, the
Paying Agent (other than the Company) shall have no further liability for the
money.

SECTION 2.5. SECURITYHOLDER LISTS.

The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of Securityholders, and the Trustee shall otherwise comply with TIA Section 312(a).
If the Trustee is not the Primary Registrar, the Company shall furnish to the
Trustee at least seven Business Days before each semiannual interest payment
date, and at such other times as the Trustee may request in writing, a list in
such form and as of such date as the Trustee may reasonably require of the
names and addresses of Securityholders, and the Company shall otherwise comply
with TIA Section 312(a).

SECTION 2.6. TRANSFER AND EXCHANGE.

(a)           Subject to
compliance with any applicable additional requirements contained in Section 2.12,
when a Security is presented to a Registrar with a request to register a
transfer thereof or to exchange such Security for an equal principal amount of
Securities of other authorized denominations, the Registrar shall register the
transfer or make the exchange as requested; provided, however,
that every Security presented or surrendered for registration of transfer or
exchange shall be duly endorsed or accompanied by an assignment form and, if
applicable, a transfer certificate each in the form included in Exhibit A,
and in form satisfactory to the Registrar duly executed by the Holder thereof
or its attorney duly authorized in writing. To permit registration of transfers
and exchanges, upon surrender of any Security for registration of transfer or
exchange at an office or agency maintained pursuant to Section 2.3, the
Company shall execute and the Trustee shall authenticate Securities of a like
aggregate principal amount at the Registrar’s request. Any exchange or
registration of transfer shall be without charge, except that the Company or
the Registrar may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto, and provided, that
this sentence shall not apply to any exchange pursuant to Section 2.7, 2.10,
3.7, 4.3 (last paragraph) or 11.6.

Neither the Company, any Registrar nor the Trustee
shall be required to exchange or register a transfer of (i) any Securities
for a period of 15 days next preceding any mailing of a notice of Securities to
be redeemed, (ii) any Securities or portions thereof selected or called
for redemption (except, in the case of redemption of a Security in part, the
portion thereof not to be redeemed) or (iii) any Securities or portions
thereof in respect of which a Repurchase Exercise Notice pursuant to Section 3.8(d) hereof
has been delivered and not withdrawn by the Holder thereof (except, in the case
of the purchase of a Security in part, the portion thereof not to be
purchased).

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

 14
 

 

(b)           Any
Registrar appointed pursuant to Section 2.3 hereof 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.

(c)           Each Holder agrees
to indemnify the Company, each Registrar and the Trustee against any liability
that may result from the registration of transfer, exchange or assignment of
such Holder’s Security in violation of any provision of this Indenture and/or
applicable United States federal or state securities law.

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

SECTION 2.7. REPLACEMENT SECURITIES.

If any mutilated Security is surrendered to the
Company, a Registrar or the Trustee, or the Trustee receives evidence to its
satisfaction of the destruction, loss or theft of any Security, and there is
delivered to the Company, the applicable Registrar and the Trustee such
security or indemnity as will be required by them to save each of them
harmless, then, in the absence of notice to the Company, such Registrar or the
Trustee that such Security has been acquired by a protected 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 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
redeemed or purchased by the Company pursuant to Article 3, the Company in
its discretion may, instead of issuing a new Security, pay, redeem or purchase
such Security, as the case may be.

Upon the issuance of any new Securities under this Section 2.7,
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
reasonable expenses (including the reasonable fees and expenses of the Trustee
or the Registrar) in connection therewith.

Every new Security issued pursuant to this Section 2.7
in lieu of any mutilated, destroyed, lost or stolen Security shall constitute
an original additional contractual obligation of the Company, whether or not
the mutilated, 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.

 15
 

 

The provisions of this Section 2.7 are (to the
extent lawful) 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 2.8. OUTSTANDING SECURITIES.

Securities outstanding at any time are all Securities
authenticated by the Trustee, except for those canceled by it, those converted
pursuant to Article 4, those delivered to it for cancellation or
surrendered for transfer or exchange and those described in this Section 2.8
as not outstanding.

If a Security is replaced pursuant to Section 2.7,
it ceases to be outstanding unless the Trustee receives proof satisfactory to
it that the replaced Security is held by a protected purchaser.

If a Paying Agent (other than the Company or an
Affiliate of the Company) holds on a Redemption Date, a Fundamental Change
Repurchase Date or the Final Maturity Date money sufficient to pay the
principal of, premium, if any, and accrued interest on Securities (or portions
thereof) payable on that date, then on and after such Redemption Date,
Fundamental Change Repurchase Date or the Final Maturity Date, as the case may
be, such Securities (or portions thereof, as the case may be) shall cease to be
outstanding and interest on them 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 therefore satisfactory to the
Trustee has been made.

Subject to the restrictions contained in Section 2.9,
a Security does not cease to be outstanding because the Company or an Affiliate
of the Company holds the Security.

SECTION 2.9. TREASURY SECURITIES.

In determining whether the Holders of the required
principal amount of Securities have concurred in any notice, direction, waiver
or consent, Securities owned by the Company or any other obligor on the
Securities or by any Affiliate of the Company or of such other obligor shall be
disregarded, except that, for purposes of determining whether the Trustee shall
be protected in relying on any such notice, direction, waiver or consent, only
Securities that a Responsible Officer of the Trustee actually knows are so
owned shall be so disregarded. Securities so owned that have been pledged in
good faith shall not be disregarded if the pledgee establishes to the
satisfaction of the Trustee the pledgee’s right so to act with respect to the
Securities and that the pledgee is not the Company or any other obligor on the
Securities or any Affiliate of the Company or of such other obligor.

SECTION 2.10. TEMPORARY SECURITIES.

Until definitive Securities are ready for delivery,
the Company may prepare and execute, and, upon receipt of a Company Order, the
Trustee shall authenticate and deliver, temporary Securities. Temporary
Securities shall be substantially in the form of definitive Securities but may
have variations that the Company considers appropriate for temporary Securities
and as

 16
 

 

shall be reasonably acceptable to the Trustee. Without
unreasonable delay, the Company shall prepare and the Trustee, upon receipt of
a Company Order, shall authenticate and deliver definitive Securities in
exchange for temporary Securities.

Holders of temporary Securities shall be entitled to
all the benefits of this Indenture.

SECTION 2.11. CANCELLATION.

The Company at any time may deliver Securities to the
Trustee for cancellation. The Registrar, the Paying Agent and the Conversion
Agent shall forward to the Trustee or its agent any Securities surrendered to
them for registration of transfer, exchange, redemption, payment or conversion.
The Trustee and no one else shall cancel, in accordance with its standard
procedures, all Securities surrendered for registration of transfer, exchange,
redemption, payment, conversion or cancellation and shall dispose of canceled
Securities (subject to the record retention requirements of the Exchange Act),
in accordance with its standard procedures. All Securities that are redeemed,
purchased or otherwise acquired by the Company or any of its Subsidiaries prior
to the Final Maturity Date shall be delivered to the Trustee for cancellation. The
Company may not hold or resell such Securities or issue new Securities to
replace Securities that it has purchased or otherwise acquired or that have
been delivered to the Trustee for cancellation.

SECTION 2.12. ADDITIONAL TRANSFER AND
EXCHANGE REQUIREMENTS.

(a)           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 the foregoing shall
not prohibit any transfer of a Security that is issued in exchange for a Global
Security but is not itself a Global Security. No transfer of a 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. Notwithstanding
any other provisions of this Indenture or the Securities, transfers of a Global
Security, in whole or in part, shall be made only in accordance with this Section 2.12.

(b)           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 Exchange Act, and a successor Depositary is not
appointed by the Company within 90 days, (B) the Company has provided the
Depositary with written notice that it has decided to discontinue use of the
system of book-entry transfer through the Depositary or

 17
 

 

any successor Depositary
or (C) an Event of Default has occurred and is continuing. Any Global
Security exchanged pursuant to clauses (A) or (B) above shall be so
exchanged in whole and not in part, and any Global Security exchanged pursuant
to clause (C) 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 book entry 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 any
applicable legend 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;
provided, however, that any Global Security surrendered for
exchange shall be duly endorsed or accompanied by a written instrument of
transfer in accordance with the proviso to the first paragraph of Section 2.6(a).

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

 18
 

 

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.

(c)           In the event that
Certificated Securities are issued in exchange for beneficial interests in
Global Securities and, thereafter, the events or conditions specified in Section 2.12(b)(i) which
required such exchange shall cease to exist, the Company shall deliver notice
to the Trustee and to the Holders stating that Holders may exchange
Certificated Securities for interests in Global Securities by complying with
the procedures set forth in this Indenture and briefly describing such
procedures and the events or circumstances requiring that such notice be given.
Thereafter, if Certificated Securities are presented by a Holder to a Registrar
with a request:

(i)            to register the transfer of such
Certificated Securities to a person who will take delivery thereof in the form
of a beneficial interest in a Global Security; or

(ii)           to exchange such Certificated
Securities for an equal principal amount of beneficial interests in a Global
Security, which beneficial interests will be owned by the Holder transferring
such Certificated Securities,

the Registrar shall register the transfer or make the
exchange as requested by canceling such Certificated Securities and causing, or
directing the Custodian to cause, the aggregate principal amount of the
applicable Global Security to be increased accordingly and, if no such Global
Security is then outstanding, the Company shall issue and the Trustee, upon
receipt of a Company Order, shall authenticate and deliver a new Global
Security; provided, however, that the Certificated Securities
presented or surrendered for registration of transfer or exchange shall be duly
endorsed or accompanied by a written instrument of transfer in accordance with
the proviso to the first paragraph of Section 2.6(a).

SECTION 2.13. CUSIP NUMBERS.

The Company in issuing the Securities may use one or
more “CUSIP” numbers (if then generally in use), and, if so, the Trustee shall
use “CUSIP” numbers in notices of redemption or purchase 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 or purchase and that
reliance may be placed only on the other identification numbers printed on the
Securities, and any such redemption or purchase shall not be affected by any
defect in or omission of such numbers. The Company will promptly notify the
Trustee of any change in the “CUSIP” numbers.

 19
 

 

ARTICLE 3

REDEMPTION AND PURCHASES

SECTION 3.1. OPTIONAL REDEMPTION

(a)           The Company shall not have the option
to redeem the Securities pursuant to this Section 3.1 prior to June 20,
2011. The Securities are subject to redemption, at the option of the Company,
on or after June 20, 2011, in whole or in part, but only if the Closing
Sale Price of the Common Stock for at least 20 Trading Days in the 30
consecutive Trading Day period ending on the date one day prior to the day the
Company gives a notice of redemption is greater than 150% of the Applicable
Conversion Price on the date of such notice, at a Redemption Price in cash
equal to 100% of the principal amount of the Securities to be redeemed together
with accrued and unpaid interest, if any, on the principal amount of the
Securities redeemed to the date of redemption.

(b)           Any redemption pursuant to this Section 3.1
shall be made pursuant to the provisions of Section 3.2 through 3.7
hereof.

SECTION 3.2. RIGHT TO REDEEM; NOTICE TO
TRUSTEE.

If the Company elects to redeem Securities pursuant to
Section 3.1 and paragraph 5 of the Securities, it shall furnish to the
Trustee at least 25 but not more than 60 days prior to the Redemption Date as
fixed by the Company (unless a shorter notice shall be satisfactory to the
Trustee) an Officers’ Certificate setting forth the Redemption Date and the
principal amount of Securities to be redeemed. If fewer than all of the
Securities are to be redeemed, the record date relating to such redemption
shall be selected by the Company and given to the Trustee, which record date
shall not be less than 10 days after the date of notice to the Trustee.

SECTION 3.3. SELECTION OF SECURITIES TO
BE REDEEMED.

If less than all of the Securities are to be redeemed,
unless the procedures of the Depositary provide otherwise, the Trustee shall,
at least 10 days but not more than 60 days prior to the Redemption Date, select
the Securities to be redeemed and promptly notify the Company in writing of its
selection. The Trustee shall make the selection from the Securities outstanding
and not previously called for redemption, by lot, on a pro rata basis or by any
other method the Trustee considers fair and appropriate. Securities in
denominations of $1,000 may only be redeemed in whole. The Trustee may select
for redemption portions (equal to $1,000 or any integral multiple thereof) of
the principal of Securities that have denominations larger than $1,000. Provisions
of this Indenture that apply to Securities called for redemption also apply to
portions of Securities called for redemption.

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 to be the portion selected for redemption. Securities which
have been converted during a selection of Securities to be redeemed shall be
treated by the Trustee as outstanding for the purpose of such selection.

 20

 

 

SECTION 3.4. NOTICE OF REDEMPTION.

At least 10 days but not more than 60 days before a
Redemption Date, the Company shall deliver a notice of redemption to each
Holder of Securities to be redeemed at such Holder’s registered address.

The notice shall identify the Securities (including
CUSIP numbers) to be redeemed and shall state:

(1)           the Redemption Date;

(2)           the Redemption
Price;

(3)           the Applicable
Conversion Rate;

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

(5)           that Securities called
for redemption must be presented and surrendered to a Paying Agent to collect
the Redemption Price;

(6)           that Holders who
wish to convert Securities must surrender such Securities for conversion no
later than the close of business on the Business Day immediately preceding the
Redemption Date and must satisfy the other requirements set forth in paragraph
8 of the Securities;

(7)           whether the Company
has elected to deliver cash and Residual Value Shares pursuant to Section 4.2(a),
or pay cash for any portion of the Residual Value Shares pursuant to Section 4.2(b),
with respect to any Securities or portions thereof converted prior to the
Redemption Date;

(8)           that, unless the
Company defaults in making the payment of the Redemption Price, interest on
Securities called for redemption shall cease accruing on and after the
Redemption Date and the only remaining right of the Holder shall be to receive
payment of the Redemption Price plus accrued interest, if any, up to but not
including the Redemption Date, upon presentation and surrender to a Paying
Agent of the Securities; and

(9)           if any Security is
being redeemed in part, the portion of the principal amount of such Security to
be redeemed and that, after the Redemption Date, upon presentation and
surrender of such Security, a new Security or Securities in aggregate principal
amount equal to the unredeemed portion thereof will be issued.

If any of the Securities to be redeemed is in the form
of a Global Security, then the Company shall modify such notice to the extent
necessary to accord with the procedures of the Depositary applicable to
redemptions. At the Company’s written request to the Trustee, upon reasonable
prior notice, which request shall (i) be irrevocable once given and (ii) set
forth all relevant information required by clauses (1) through (9) of
the preceding paragraph, the Trustee shall give the notice of redemption in the
Company’s name and at the Company’s expense.

 21
 

 

 

SECTION 3.5. EFFECT OF NOTICE OF
REDEMPTION.

Once notice of redemption is mailed, Securities called
for redemption become due and payable on the Redemption Date and at the
Redemption Price stated in the notice, together with accrued and unpaid
interest, if any, except for Securities that are converted in accordance with
the provisions of Article 4. Upon presentation and surrender to a Paying
Agent, Securities called for redemption shall be paid at the Redemption Price,
plus accrued interest up to but not including the Redemption Date; provided
that if the Redemption Date falls after an interest payment record date and on
or before an interest payment date, then the interest will be payable to the
Holders in whose name the Securities are registered at the close of business on
the interest payment record date.

SECTION 3.6. DEPOSIT OF REDEMPTION
PRICE.

At least one Business Day prior to the Redemption
Date, the Company shall deposit with a Paying Agent (or, if the Company acts as
Paying Agent, shall segregate and hold in trust) an amount of money sufficient
to pay the Redemption Price of and accrued interest on all Securities to be
redeemed on that date, other than Securities or portions thereof called for
redemption on that date which 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 the conversion of Securities pursuant to Article 4 or, if such
money is then held by the Company in trust and is not required for such
purpose, it shall be discharged from the trust.

SECTION 3.7. SECURITIES REDEEMED IN
PART.

Upon presentation and surrender of a Security that is
redeemed in part, the Company shall execute and, upon the Company’s written
request, the Trustee shall authenticate and deliver to the Holder, at the
expense of the Company, a new Security equal in principal amount to the
unredeemed portion of the Security surrendered.

SECTION 3.8. REPURCHASE AT OPTION OF THE
HOLDER UPON A FUNDAMENTAL CHANGE.

(a)           Subject
to the satisfaction of the requirements of this Section 3.8, if a
Fundamental Change occurs at any time prior to the Final Maturity Date, each
Holder will, upon receipt of the notice of the occurrence of a Fundamental
Change described in Section 3.8(c), have the right to require the Company
to repurchase any or all of such Holder’s Securities for cash in an amount
equal to 100% of the principal amount of the Securities to be repurchased plus
accrued and unpaid interest, if any, to (but not including) the Fundamental
Change Repurchase Date (the “Fundamental Change Repurchase Price”),
unless such Fundamental Change Repurchase Date falls after an interest payment
record date and on or prior to the corresponding interest payment date, in
which case the Fundamental Change Repurchase Price will include the full amount
of accrued and unpaid interest payable on such interest payment date to the
Holder of record at the close of business on the corresponding interest payment
record date. At least 15 Business Days prior to the anticipated effective date
of the Fundamental Change (or, if the Company does not have actual notice of a
Fundamental Change, as soon as practicable 

 22
 

 

thereafter), the Company shall provide to all Holders
of the Securities, the Trustee, the Paying Agent and the Conversion Agent a
conversion right notice (the “Fundamental Change Conversion Right Notice”)
stating:

(1)           if applicable,
whether the Company will adjust the Applicable Conversion Rate and related
conversion obligation pursuant to Section 3.9 hereof;

(2)           whether the Company
expects that Holders will have the right to require the Company to repurchase
their Securities as described in this Section 3.8; and

(3)           that the Holders of
the Securities have the right to convert their Securities in accordance with Article 4
hereof.

(b)           Notwithstanding the
foregoing, Holders will not have the right to require the Company to repurchase
any Securities if a Fundamental Change described in clause (b), (c) or (d) in
the definition of Fundamental Change occurs (and the Company will not be required
to deliver the notice described in Section 3.8(c)), if either:

(1)           the Closing Sale
Price for any five Trading Days within the period of 10 consecutive Trading
Days ending immediately after the later of the effective date of the
Fundamental Change or the date of the public announcement of the Fundamental
Change, in the case of a Fundamental Change relating to an acquisition of
Capital Stock under clause (b) of the definition of Fundamental Change, or
the period of 10 consecutive Trading Days ending immediately before the
effective date of the Fundamental Change, in the case of a Fundamental Change
relating to a merger, consolidation, asset sale or otherwise under clause (c) of
the definition of Fundamental Change or a change in the Board of Directors
under clause (d) of the definition of Fundamental Change, equals or
exceeds 105% of the Applicable Conversion Price in effect on each of those five
Trading Days; or

(2)           at least 90% of the
consideration paid for the Common Stock (excluding cash payments for fractional
shares and cash payments made pursuant to dissenters’ or appraisal rights) in a
merger or consolidation or a conveyance, sale, transfer or lease otherwise
constituting a Fundamental Change under clause (b) and/or (c) of the
definition of Fundamental Change consists of shares of common stock traded on
the New York Stock Exchange or another U.S. national securities exchange or
quoted on the Nasdaq Stock Market or another established automated
over-the-counter trading market in the United States (or will be so traded or
quoted immediately following the merger or consolidation) and, as a result of
the merger or consolidation, the Securities become convertible into shares of
such common stock.

(c)           Subject to Section 3.8(b),
on or before the 15th Business Day after the effective date of a Fundamental
Change (which Fundamental Change results in the Holders of such Securities
having the right to cause the Company to repurchase their Securities), the
Company will provide to all Holders of the Securities, the Trustee and the
Paying Agent a notice of the occurrence of the Fundamental Change and of the
resulting repurchase right (the “Fundamental Change Repurchase Right Notice”).
The Fundamental Change Repurchase Right Notice shall state:

 23
 

 

 

(1)           the
event or events giving rise to the Fundamental Change;

(2)           if the Company will
adjust the Applicable Conversion Rate and related conversion obligations as
described in Section 3.9 hereof pursuant to a Fundamental Change that
falls under clause (b), (c) or (d) of the definition of Fundamental
Change, the Applicable Conversion Rate and any adjustments to the Applicable
Conversion Rate;

(3)           the effective date
of the Fundamental Change, if applicable;

(4)           the last date on
which a Holder may exercise its repurchase right;

(5)           the Fundamental
Change Repurchase Price;

(6)           the Fundamental
Change Repurchase Date;

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

(8)           that the Securities
with respect to which a Repurchase Exercise Notice has been given by the Holder
may be converted only if the Holder withdraws the Repurchase Exercise Notice as
described in Section 3.8(d); and

(9)           the procedures that
Holders must follow to require the Company to repurchase their Securities and
to withdraw any Repurchase Exercise Notice.

Substantially simultaneously with providing the
Fundamental Change Repurchase Right Notice, the Company will issue a press
release and publish the information through a public medium customary for such
press releases.

(d)           To exercise the
repurchase right in connection with a Fundamental Change, a Holder must, prior
to 5:00 p.m., New York City time, on the second Business Day immediately
preceding the Fundamental Change Repurchase Date, deliver the Securities to be
purchased to the Paying Agent, duly endorsed for transfer, or effect book-entry
transfer of the Securities to the Paying Agent, and must deliver a written
notice of repurchase (a “Repurchase Exercise Notice”), substantially in
the form included in Exhibit A hereto, duly completed to the Paying Agent.
The Repurchase Exercise Notice must state:

(1)           if
the Securities are certificated, the certificate numbers of the Securities to
be delivered for repurchase;

(2)           the
portion of the principal amount of the Securities to be repurchased, which must
be equal to $1,000 or an integral multiple thereof; and

(3)           that
the Securities are to be repurchased by the Company as of the Fundamental
Change Repurchase Date pursuant to the applicable provisions of the Securities
and this Indenture.

If the Securities are not in certificated form, the
Repurchase Exercise Notice must comply with the Applicable Procedures.

 24
 

 

 

A Holder may withdraw any Repurchase Exercise Notice
(in whole or in part) by a written notice of withdrawal delivered to the Paying
Agent prior to 5:00 p.m., New York City time, on the second Business Day
prior to the Fundamental Change Repurchase Date. The notice of withdrawal must
state:

(1)           the principal amount
of the Securities for which the Repurchase Exercise Notice has been withdrawn;

(2)           if certificated
Securities have been issued, the certificate numbers of the withdrawn
Securities; and

(3)           the principal
amount, if any, that remains subject to the Repurchase Exercise Notice.

If the Securities are not in certificated form, the
withdrawal notice must comply with the Applicable Procedures.

(e)           The Company must
repurchase the Securities for which a Fundamental Change repurchase notice has
been delivered and not withdrawn no less than 20 and no more than 35 Business
Days after the date of the Fundamental Change Repurchase Right Notice with
respect to the occurrence of the relevant Fundamental Change, subject to
extension to comply with applicable law. To receive payment of the Fundamental
Change Repurchase Price, a Holder must either effect book-entry transfer or
deliver the Securities, together with necessary endorsements, to the office of
the Paying Agent after delivery of the Repurchase Exercise Notice. Holders will
receive payment of the Fundamental Change Repurchase Price promptly following the
later of the Fundamental Change Repurchase Date or the time of book-entry
transfer or the delivery of the Securities. If the Paying Agent holds money
sufficient to pay the Fundamental Change Repurchase Price of the Securities on
or prior to the Business Day following the Fundamental Change Repurchase Date,
then:

(1)           the Securities will
cease to be outstanding and Interest, if any, will cease to accrue (whether or
not book-entry transfer of the Securities is made or whether or not the
Securities are delivered to the Paying Agent); and

(2)           all other rights of
the Holder will terminate (other than the right to receive the Fundamental
Change Repurchase Price upon delivery or transfer of the Securities).

SECTION 3.9. ADJUSTMENT TO APPLICABLE
CONVERSION RATE UPON A FUNDAMENTAL CHANGE.

(a)           If
and only to the extent that a Holder converts Securities in connection with a
Fundamental Change described in clause (b), (c) or (d) of the
definition of Fundamental Change, the Company will increase the Applicable
Conversion Rate for the Securities surrendered for conversion by a number of
additional shares (the “Additional Shares”) as described in this Section 3.9;
provided, however, that no increase will be made in the case of a
Fundamental Change if at least 90% of the consideration paid for the Common
Stock (excluding cash payments for fractional shares and cash payments made
pursuant to dissenters’ or appraisal

 25
 

 

rights’) in such Fundamental Change transaction
consists of shares of common stock traded on the New York Stock Exchange or
another U.S. national securities exchange or quoted on the Nasdaq Stock Market
or another established automated over-the-counter trading market in the United
States (or that will be so traded or quoted immediately following the
transaction) and, as a result of the transaction, the Securities become
convertible into shares of such common stock.

(b)           The
number of Additional Shares will be determined by reference to the Additional
Shares Table, based on the effective date of the Fundamental Change transaction
and the price (the “Stock Price”) paid per share of Common Stock in such
Fundamental Change transaction. If holders of Common Stock receive only cash in
such Fundamental Change transaction, the Stock Price will be the cash amount
paid per share of Common Stock. Otherwise, the Stock Price will be the average
of the Closing Sale Prices of the Common Stock on each of the five consecutive
Trading Days prior to but not including the effective date of the Fundamental
Change.

(c)           A
conversion of Securities by a Holder will be deemed for these purposes to be “in
connection with” a Fundamental Change if the conversion notice is received by
the Conversion Agent on or subsequent to the date that is 15 Business Days
prior to the expected effective date of the Fundamental Change and prior to the
45th day following the effective date of the Fundamental Change (or, if earlier
and to the extent applicable, the close of business on the second Business Day
immediately preceding the Fundamental Change Repurchase Date).

(d)           The
Stock Prices set forth in the first row of the Additional Shares Table (i.e.,
the column headings) will be adjusted as of any date on which the Applicable
Conversion Rate is adjusted, as described in Section 4.7. The adjusted
Stock Prices will equal (1) the Stock Prices applicable immediately prior
to such adjustment, multiplied by (2) an adjustment factor equal to a
fraction, (A) the numerator of which is the Applicable Conversion Rate
immediately prior to the adjustment giving rise to the Stock Price adjustment
and (B) the denominator of which is the Applicable Conversion Rate as so
adjusted. The number of Additional Shares will be adjusted in the same manner
and for the same events as the Applicable Conversion Rate as set forth in Section 4.7.

(e)           The exact Stock
Price and effective date of the Fundamental Change may not be set forth on the
Additional Shares Table, in which case, if the Stock Price is:

(1)           between two Stock
Price amounts on the Additional Shares Table or the effective date of the
Fundamental Change is between two dates on the Additional Shares Table, the
number of Additional Shares will be determined by straight-line interpolation
between the number of Additional Shares set forth for the higher and lower
Stock Price amounts and the two dates, as applicable, based on a 365-day
year;

(2)           more
than $100.00 per share (subject to adjustment), no Additional Shares will be
issued upon conversion; and

(3)           less
than $23.67 per share (subject to adjustment), no Additional Shares will be
issued upon conversion.

 26
 

 

 

(f)            Notwithstanding
the foregoing, in no event will the total number of shares of Common Stock
issuable upon conversion exceed 42.2476 per $1,000 principal amount of
Securities, subject to adjustment in the same manner and for the same events as
the Applicable Conversion Rate as set forth in Section 4.6.

SECTION 3.10. COMPLIANCE WITH SECURITIES
LAWS UPON PURCHASE OF SECURITIES.

In connection with any offer to purchase or purchase
of Securities under Section 3.8, the Company shall comply with all tender
offer rules applicable to the Company under the Exchange Act. The Company
shall (a) comply with Rule 13e-4 and Rule 14e-l (or any
successor to either such Rule), if applicable, under the Exchange Act, (b) file
the related Schedule TO (or any successor or similar schedule, form or report)
if required under the Exchange Act, and (c) otherwise comply with all
federal and state securities laws in connection with such offer to purchase or
purchase of Securities, all so as to permit the rights of the Holders and
obligations of the Company under Sections 3.8 and 3.9 to be exercised in the
time and in the manner specified therein. To the extent that the provisions of
any securities laws or regulations conflict with the provisions of this Section 3.10,
the Company, will comply with the applicable securities laws and regulations
and will not be deemed to have breached its obligations under this Section 3.10
by virtue of such conflict.

SECTION 3.11. REPAYMENT TO THE COMPANY.

To the extent that the aggregate amount of cash
deposited by the Company pursuant to Section 3.8 exceeds the aggregate
Fundamental Change Repurchase Price together with interest, if any, thereon of
the Securities or portions thereof that the Company is obligated to purchase,
then promptly after the Fundamental Change Repurchase Date, the Trustee or a
Paying Agent, as the case may be, shall return any such excess cash to the
Company.

ARTICLE
4

CONVERSION

SECTION 4.1. CONVERSION RIGHT.

Subject to the further provisions of this Article 4
and paragraph 8 of the Securities, a Holder of a Security may convert the
principal amount of such Security (or any portion thereof equal to $1,000 or
any integral multiple of $1,000 in excess thereof) into Common Stock at any
time prior to the close of business on the last Business Date prior to the
Final Maturity Date, at the Applicable Conversion Rate in effect on the
Conversion Date; provided, however, that, if such Security is
called for redemption or submitted or presented for purchase pursuant to Article 3,
such conversion right shall terminate at the close of business on the Business
Day immediately preceding the Redemption Date or Fundamental Change Repurchase
Date, as the case may be, for such Security or such earlier date as the Holder
presents such Security for redemption or for purchase (unless the Company shall
default in making the redemption payment or Fundamental Change Repurchase Price
payment when due, as the case may be, in which case the conversion right shall
terminate at the close of business on the date such default is cured and such
Security is redeemed or purchased, as the case may be). The Initial Conversion
Rate is subject to

 27
 

 

adjustment as provided in this Article 4. Upon
surrender of Securities for conversion, the Company will have the right to
deliver, in lieu of shares of Common Stock, cash or a combination of cash and
shares of Common Stock as provided in Section 4.2

Provisions of this Indenture that apply to conversion
of all of a Security also apply to conversion of a portion of a Security.

A Security in respect of which a Holder has delivered
a Repurchase Exercise Notice pursuant to Section 3.8 exercising the option
of such Holder to require the Company to purchase such Security may be
converted only if such notice is withdrawn by a written notice of withdrawal
delivered to a Paying Agent prior to the close of business on the second
Business Day immediately preceding the Fundamental Change Repurchase Date in
accordance with Section 3.8.

A Holder of Securities is not entitled to any rights
of a holder of Common Stock until such Holder has converted its Securities to
Common Stock, and only to the extent such Securities are deemed to have been
converted into Common Stock pursuant to this Article 4.

SECTION 4.2. CONVERSION CONSIDERATION.

(a)           Upon surrender of
any Securities for conversion, the Company shall have the right, at its option,
to deliver to the Holder of such Securities, in lieu of the shares of Common
Stock otherwise issuable, in respect of each $1,000 principal amount of
Securities:

(1)           cash in the amount
equal to the lesser of:

(A)          the principal amount of each Security,
or

(B)           the Conversion Value; and

(2)           to the extent the
Conversion Value exceeds $1,000, a number of shares of Common Stock (the “Residual
Value Shares”) equal to the sum of the Daily Trading Share Amounts for each
of the 10 consecutive Trading Days in the Applicable Conversion Reference
Period; provided, however,
that the Company will pay cash in lieu of fractional shares otherwise issuable
upon conversion of the Securities in accordance with Section 4.4.

(b)           Notwithstanding Section 4.2(a)(2),
the Company may elect to pay cash to Holders of Securities surrendered for
conversion in lieu of all or a portion of the Residual Value Shares issuable
upon conversion of such Securities. The amount of cash payable in respect of
each Residual Value Share otherwise issuable upon conversion shall equal the
sum of the Residual Cash Value for such share calculated for each day of the
Applicable Conversion Reference Period.

(c)           Upon
an election to deliver cash and Residual Value Shares pursuant to Section 4.2(a),
or pay cash for any portion of the Residual Value Shares pursuant to Section 4.2(b),
the Company shall provide notice to the relevant Holders on or before the date
that is three Business Days following the Conversion Date (the “Cash
Settlement Notice Period”). If the Company

 28
 

 

elects to pay cash for any portion of the Residual
Value Shares pursuant to Section 4.2(b), such notice shall specify the
amount to be satisfied in cash (expressed as a percentage of each Residual
Value Share that will be paid in cash in lieu of Common Stock). If the Company
timely elects to deliver cash and Residual Value Shares pursuant to Section 4.2(a),
or pay cash for any portion of the Residual Value Shares pursuant to Section 4.2(b),
a Holder may retract the conversion notice at any time during the two Business
Day period immediately following the Cash Settlement Notice Period (the “Conversion
Retraction Period”). If the Company does not make an election to deliver
cash and Residual Value Shares pursuant to Section 4.2(a), or pay cash for
any portion of the Residual Value Shares pursuant to Section 4.2(b), no
retraction can be made and the conversion notice shall be irrevocable.

(d)           If
the Company elects to deliver cash and Residual Value Shares pursuant to Section 4.2(a),
or pay cash for any portion of the Residual Value Shares pursuant to 4.2(b), in
connection with conversions within 20 days prior to the Final Maturity Date,
the Company shall deliver, on or prior to the Final Maturity Date, a single
notice to the Trustee of its election and, if applicable, the amount of
Residual Value Shares to be satisfied in cash (expressed as a percentage of
each Residual Value Share that will be paid in cash in lieu of Common Sock). If
the Company elects to deliver cash and Residual Value Shares pursuant to Section 4.2(a),
or pay cash for any portion of the Residual Value Shares pursuant to Section 4.2(b),
in connection with conversions after delivery of a notice of redemption and
prior to the stated Redemption Date, the notice of redemption shall inform
Holders of the Company’s election and, if applicable, the amount of Residual
Value Shares to be satisfied in cash (expressed as a percentage of each
Residual Value Share that will be paid in cash in lieu of Common Stock).

(e)           At
any time prior to the Final Maturity Date, the Company may irrevocably elect,
in its sole discretion without the consent of the Holders of the Securities, by
notice to the Holders, to satisfy in cash 100% of the principal amount of the
Securities converted after the date of such election. After making such an
election, the Company shall retain the option pursuant to Section 4.2(b) to
pay cash in lieu of all or a portion of any Residual Value Shares otherwise
issuable to the extent the Conversion Value exceeds the principal amount of
Securities converted. If the Company elects to pay cash in lieu of all or a
portion of any Residual Value Shares pursuant to Section 4.2(b), the Company
shall provide notice of its election in the manner described in Section 4.2(c) or
(d), as the case may be. If the Company irrevocably elects to satisfy in cash
100% of the principal amount of the Securities converted after the date of such
election and, for Securities subsequently converted, issues Residual Value
Shares to the extent the Conversion Value exceeds the principal amount of
Securities converted, notice of the Company’s election to deliver cash for the
principal amount shall be deemed to have been provided on the last date of the
Cash Settlement Notice Period and a Holder’s conversion notice shall be
irrevocable.

(f)            The
Company shall determine the Conversion Value, the Daily Trading Share Amount,
the calculation of the excess of the Conversion Value over the principal amount
and the number of shares of Common Stock deliverable to Holders upon conversion
pursuant to Section 4.2(a) (assuming the Company does not elect to
pay such excess in cash pursuant to Section 4.2(b)).

 29
 

 

 

SECTION 4.3. CONVERSION PROCEDURE.

To convert a Security, a Holder must (a) complete
and manually sign the conversion notice on the back of the Security and deliver
such notice to a Conversion Agent, (b) surrender the Security to a
Conversion Agent, (c) furnish appropriate endorsements and transfer
documents if required by a Registrar or a Conversion Agent, and (d) pay
any transfer or similar tax, if required. The date on which the Holder
satisfies all of those requirements is the “Conversion Date.”  Anything herein to the contrary
notwithstanding, in the case of Global Securities, conversion notices may be
delivered and such Securities may be surrendered for conversion in accordance
with the Applicable Procedures as in effect from time to time.

The Company shall deliver any shares of Common Stock
and cash deliverable upon conversion to the Conversion Agent no later than the
third Business Day following the Applicable Conversion Reference Period; provided,
however, that if the Company does not elect to satisfy any portion of the
conversion obligation in cash pursuant to Section 4.2(a) or (b) (other
than cash in lieu of any fractional shares), delivery of the shares of Common
Stock and cash in lieu of any fractional shares shall occur through the
Conversion Agent or in accordance with the Applicable Procedures, as the case
may be, as soon as practicable on or after the Conversion Date.

The person in whose name the Common Stock certificate
is registered shall be deemed to be a stockholder of record on the Conversion
Date; provided, however, that no surrender of a Security on any
date when the stock transfer books of the Company shall be closed shall be
effective to constitute the person or persons entitled to receive the shares of
Common Stock upon such conversion as the record holder or holders of such
shares of Common Stock on such date, but such surrender shall be effective to
constitute the person or persons entitled to receive such shares of Common
Stock as the record holder or holders thereof for all purposes at the close of
business on the next succeeding day on which such stock transfer books are
open; provided, further, that such conversion shall be at the
Applicable Conversion Rate in effect on the Conversion Date as if the stock
transfer books of the Company had not been closed. Upon conversion of a
Security, such person shall no longer be a Holder of such Security. No payment
or adjustment will be made for dividends or distributions on shares of Common
Stock issued upon conversion of a Security.

Securities so surrendered for conversion (in whole or
in part) during the period from the close of business on any regular record
date to the opening of business on the next succeeding interest payment date
(excluding Securities or portions thereof called for redemption or presented
for purchase upon a Fundamental Change on a Redemption Date or Fundamental
Change Repurchase Date, as the case may be, during the period beginning at the
close of business on a regular record date and ending at the opening of
business on the first Business Day after the next succeeding interest payment
date, or if such interest payment date is not a Business Day, the second such
Business Day) shall also be accompanied by payment in funds acceptable to the
Company of an amount equal to the interest payable on such interest payment
date on the principal amount of such Security then being converted, and such
interest shall be payable to such registered Holder notwithstanding the
conversion of such Security, subject to the provisions of this Indenture
relating to the payment of defaulted interest by the Company. Except as 

 30
 

 

otherwise provided in this Section 4.3, no
payment or adjustment will be made for accrued interest on a converted Security.
If the Company defaults in the payment of interest payable on such interest
payment date, the Company shall promptly repay such funds to such Holder.

Except as otherwise provided in this Section 4.3,
the Company’s delivery to the Holder of the full number of shares of Common
Stock into which the Security is convertible, or cash or a combination of cash
and shares of Common Stock pursuant to Section 4.2(a) or (b), as the
case may be, in lieu of such full number of shares, together with any cash
payment for such Holder’s fractional shares pursuant to Section 4.4, shall
be deemed to satisfy the Company’s obligation to pay the principal amount of
the Security and accrued but unpaid interest, if any, attributable to the
period from the most recent interest payment date to the conversion date. As a
result, accrued but unpaid interest, if any, to the conversion date is deemed
to be paid in full rather than cancelled, extinguished or forfeited.

Nothing in this Section 4.3 shall affect the
right of a Holder in whose name any Security is registered at the close of
business on a record date to receive the interest payable on such Security on
the related interest payment date in accordance with the terms of this
Indenture and the Securities. If a Holder converts more than one Security at
the same time, the number of shares of Common Stock issuable upon the
conversion shall be based on the aggregate principal amount of Securities
converted.

Upon surrender of a Security that is converted in
part, the Company shall execute, and, upon the Company’s written request, the
Trustee shall authenticate and deliver to the Holder, at the expense of the
Company, a new Security equal in principal amount to the unconverted portion of
the Security surrendered.

SECTION 4.4. FRACTIONAL SHARES.

The Company will not issue fractional shares of Common
Stock upon conversion of Securities. In lieu thereof, the Company will pay an
amount in cash for the current market value of the fractional shares. The
current market value of a fractional share shall be determined, (calculated to
the nearest l/1000th of a share) by multiplying the Closing Sale
Price of the Common Stock on the Trading Day immediately prior to the
Conversion Date by such fractional share and rounding the product to the
nearest whole cent.

SECTION 4.5. TAXES ON CONVERSION.

If a Holder converts a Security, the Company shall pay
any documentary, stamp or similar issue or transfer tax due on the issue of
shares of Common Stock upon such conversion. However, the Holder shall pay any
such tax which is due because the Holder requests the shares to be issued in a
name other than the Holder’s name. The Conversion Agent may refuse to deliver
the certificate representing the Common Stock being issued in a name other than
the Holder’s name until the Conversion Agent receives a sum sufficient to pay
any tax which will be due because the shares are to be issued in a name other
than the Holder’s name. Nothing herein shall preclude any tax withholding
required by law or regulation.

 31

 

SECTION 4.6. COMPANY TO PROVIDE STOCK.

The Company shall, prior to issuance of any Securities
hereunder, and from time to time as may be necessary, reserve, out of its
authorized but unissued Common Stock, a sufficient number of shares of Common
Stock to permit the conversion of all outstanding Securities into shares of
Common Stock.

All shares of Common Stock delivered upon conversion
of the Securities shall be newly issued shares, shall be duly authorized,
validly issued, fully paid and nonassessable and shall be free from preemptive
rights and free of any lien or adverse claim.

The Company will endeavor promptly to comply with all
federal and state securities laws regulating the offer and delivery of shares
of Common Stock upon conversion of Securities, if any, and will list or cause
to have quoted such shares of Common Stock on each national securities exchange
or on the Nasdaq Stock Market or other over-the-counter market or such other
market on which the Common Stock is then listed or quoted; provided, however,
that if rules of such automated quotation system or exchange permit the
Company to defer the listing of such Common Stock until the first conversion of
the Securities into Common Stock in accordance with the provisions of this
Indenture, the Company covenants to list such Common Stock issuable upon
conversion of the Securities in accordance with the requirements of such
automated quotation system or exchange at such time.

In no event will the Company take any action that
would require adjustment to the Applicable Conversion Rate, nor will the
Company adjust the Applicable Conversion Rate, if such Applicable Conversion
Rate adjustment would require the Company to issue, upon conversion of the
Securities, a number of shares of Common Stock that would require the Company
to obtain prior stockholder approval under the rules and regulations of
the Nasdaq Stock Market, and, if applicable, the rules of the exchange or
quotation system on which the Common Stock is then traded, without obtaining
such prior stockholder approval.

SECTION 4.7. ANTI-DILUTION ADJUSTMENTS.

(a)           The Applicable
Conversion Rate shall be subject to adjustment, without duplication, upon the
occurrence of any of the following events:

(1)           In the event the
Company pays a dividend or makes a distribution on the Common Stock, payable
exclusively in shares of Common Stock, the Applicable Conversion Rate in effect
immediately before the close of business on the record date fixed for
determination of stockholders entitled to receive that dividend or distribution
shall be increased by multiplying:

(x)                                   the
Applicable Conversion Rate, by

(y)                                 a
fraction, (A) the numerator of which shall be the sum of the number of
shares of Common Stock outstanding immediately before the close of business on
such record date and the total number of shares constituting such dividend or
other distribution, and (B) the denominator of which

 32
 

 

shall be the number of
shares of Common Stock outstanding immediately before the close of business on
such record date.

(2)           In the event the
Company issues to all or substantially all holders of Common Stock rights or
warrants that allow such holders to purchase shares of Common Stock for a
period expiring within 60 days from the date of issuance of the rights or
warrants at a price per share less than the Current Market Price per share of
the Common Stock, the Applicable Conversion Rate in effect immediately before
the close of business on the date fixed for the determination of stockholders
entitled to receive such rights or warrants shall be increased by multiplying:

(x)                                   the
Applicable Conversion Rate, by

(y)                                 a
fraction, (A) the numerator of which shall be the sum of the number of
shares of Common Stock outstanding immediately before the close of business on
the date fixed for such determination and the total number of shares of Common
Stock offered for purchase, and (B) the denominator of which shall be the
sum of the number of shares of Common Stock outstanding immediately before the
close of business on the date fixed for such determination and the total number
of shares of Common Stock that could be purchased at the Current Market Price
with the aggregate purchase price for the total number of shares of Common
Stock so offered for purchase.

The increase in the Applicable Conversion Rate shall
take effect immediately after the date fixed for the determination of
stockholders entitled to receive such rights or warrants. If the rights or
warrants are not exercised prior to their expiration and as a result no
additional shares of Common Stock are delivered or issued pursuant to such
rights or warrants, the Applicable Conversion Rate shall be readjusted as if
such issuance had not occurred.

(3)           In the event the
Company:

(A)          subdivides or splits the outstanding
shares of Common Stock into a greater number of shares, the Applicable
Conversion Rate shall be proportionally increased immediately after the
effective date of such subdivision or split;

(B)           combines or reclassifies the
outstanding shares of Common Stock into a smaller number of shares, the
Applicable Conversion Rate shall be proportionally reduced immediately after
the effective date of such combination or reclassification; or

(C)           issues by reclassification of the
shares of Common Stock any shares of the Capital Stock of the Company, the
Applicable Conversion Rate in effect immediately after the effective date of
such reclassification shall be proportionally applied to the class or classes
of shares of Capital Stock of the Company into which the Common Stock was
reclassified.

 33
 

 

(4)           In the event the Company distributes
to all or substantially all holders of Common Stock evidences of indebtedness,
securities, assets or rights, options or warrants to purchase its securities (provided,
however, that if these rights are only exercisable upon the occurrence
of specified triggering events, then the Applicable Conversion Rate shall not
be adjusted until the triggering events occur), but excluding:

(A)          dividends or distributions described
in Section 4.7(a)(1);

(B)           rights or warrants described in Section 4.7(a)(2);

(C)           dividends or distributions paid
exclusively in cash described in Section 4.7(a)(6), (7) or (8),

(the “Distributed Assets”), the conversion rate
in effect immediately before the close of business on the record date fixed for
determination of stockholders entitled to receive that distribution shall be
increased, other than in the case of a Spin-off as described below, by
multiplying:

(x)                                   the
Applicable Conversion Rate, by

(y)                                 a
fraction, (A) the numerator of which shall be the Current Market Price of
the Common Stock and (B) the denominator of which shall be the Current
Market Price of the Common Stock minus the fair market value, as determined by
the Board of Directors, whose determination in good faith will be conclusive,
of the portion of those Distributed Assets applicable to one share of Common
Stock.

The increase in the Applicable Conversion Rate shall
take effect immediately after the record date fixed for determination of the
stockholders entitled to receive such distribution.

Notwithstanding the foregoing, in cases where (i) the
fair market value per share of Common Stock of the Distributed Assets equals or
exceeds the Current Market Price of the Common Stock, or (ii) the Current
Market Price of the Common Stock exceeds the fair market value per share of
Common Stock of the Distributed Assets by less than $1.00, in lieu of the
foregoing adjustment, the Holder shall have the right to receive upon
conversion, in addition to shares of Common Stock, if any, or other
consideration as provided in Section 4.2(a) or (b), as the case may
be, the Distributed Assets the Holder would have received if the Holder had
converted the Securities immediately prior to the record date.

(5)           In the event the
Company distributes to all or substantially all holders of Common Stock shares
of Capital Stock of any class or series, or similar equity interests, of or
relating to a Subsidiary of the Company or other business unit (a “Spin-off”),
the Applicable Conversion Rate in effect immediately before the close of
business on the record date fixed for determination of stockholders entitled to
receive that distribution shall be increased by multiplying:

(x)                                   the
Applicable Conversion Rate, by

 34
 

 

(y)                                 an
adjustment factor equal to the sum of the Daily Adjustments for each of the 10
consecutive Trading Days beginning on the effective day of the Spin-off.

The “Daily Adjustment” for any given Trading
Day shall be equal to a fraction, the numerator of which shall be the Closing
Sale Price of the Common Stock on that Trading Day plus the closing price of
the portion of those shares of Capital Stock or similar equity interests so
distributed applicable to one share of the Common Stock on that Trading Day,
and the denominator of which shall be the product of 10 and the Closing Sale
Price of the Common Stock on that Trading Day.

The increase in the Applicable Conversion Rate in the
event of a Spin-off shall take effect on the tenth Trading Day from, and
including, the effective date of the Spin-off.

(6)           In the event the
Company makes a distribution consisting exclusively of cash to all or
substantially all holders of Common Stock, the Applicable Conversion Rate in
effect immediately before the close of business on the record date fixed for
determination of stockholders entitled to receive that distribution shall be
adjusted by multiplying:

(x)                                   the
Applicable Conversion Rate, by

(y)                                 a
fraction, (A) the numerator of which shall be the Current Market Price of
the Common Stock, and (B) the denominator of which shall be the Current
Market Price of the Common Stock, minus the amount per share of such
distribution.

The adjustment to the Applicable Conversion Rate shall
take effect immediately after the record date fixed for determination of the
stockholders entitled to receive such distribution.

For purposes of this paragraph (6), the “Current
Market Price” of the Common Stock means the average of the Closing Sale
Prices of the Common Stock for the five consecutive Trading Days ending on the
Trading Day prior to the ex-dividend Trading Day for such cash distribution.

Notwithstanding the foregoing, in cases where (i) the
amount per share of Common Stock of such distribution equals or exceeds the
Current Market Price of the Common Stock or (ii) the Current Market Price
of the Common Stock exceeds the amount per share of Common Stock of such
distribution by less than $1.00, in lieu of the foregoing adjustment, the
Holder shall have the right to receive upon conversion, in addition to shares
of Common Stock, if any, or other consideration as provided in Section 4.2(a) or
(b), as the case may be, such distribution the Holder would have received if
the Holder had converted the Securities immediately prior to the record date.

(7)           In the event the
Company or one of its Subsidiaries makes a payment in respect of a tender offer
or exchange offer for Common Stock, to the extent the cash and value of any
other consideration included in the payment per share of the Common Stock
exceeds the Closing Sale Price of the Common Stock on the Trading Day next succeeding
the last date on

 35
 

 

which tenders or exchanges may be made pursuant to
such tender offer or exchange offer, as the case may be, the Applicable
Conversion Rate in effect immediately before the close of business on the date
of the expiration of the tender or exchange offer shall be adjusted by
multiplying:

(x)                                   the
Applicable Conversion Rate, by

(y)                                 a
fraction, (A) the numerator of which shall be the sum of (i) the fair
market value, as determined by the Board of Directors, of the aggregate
consideration payable for all shares of Common Stock purchased by the Company
or any such Subsidiary in the tender or exchange offer and (ii) the
product of (x) the number of shares of Common Stock outstanding less any
such purchased shares and (y) the Closing Sale Price of the Common Stock
on the Trading Day next succeeding the date of the expiration of the tender or
exchange offer, and (B) the denominator of which shall be the product of (i) the
number of shares of Common Stock outstanding, including any such purchased shares,
and (ii) the Closing Sale Price of the Common Stock on the Trading Day
next succeeding the date of expiration of the tender or exchange offer.

The adjustment to the Applicable Conversion Rate shall
take effect immediately after the Trading Day next succeeding the date of the
expiration of the tender or exchange offer.

(8)           In the event the
Company or one of its Subsidiaries makes a payment in respect of a repurchase
of the Common Stock, the consideration for which exceeds the then-prevailing
market price of the Common Stock (such amount, the “Repurchase Premium”),
and that repurchase, together with any other repurchases of Common Stock by the
Company or a Subsidiary involving a Repurchase Premium concluded within the
preceding 12 months, results in the payment by the Company and its Subsidiaries
of an aggregate consideration exceeding an amount equal to 10% of the market
capitalization of the Common Stock, the Applicable Conversion Rate shall be
adjusted by multiplying:

(x)                                   the
Applicable Conversion Rate, by

(y)                                 a
fraction, (A) the numerator of which shall be the Current Market Price of
the Common Stock and (B) the denominator of which shall be (i) the
Current Market Price of the Common Stock, minus (ii) the quotient of (x) the
aggregate amount of all of the Repurchase Premiums paid in connection with such
repurchases and (y) the number of shares of Common Stock outstanding on
the day next succeeding the date of the repurchase triggering the adjustment,
as determined by the Board of Directors;

provided that no adjustment to the
Applicable Conversion Rate shall be made to the extent the Applicable
Conversion Rate is not increased as a result of the above calculation; and, provided
further that the repurchases of Common Stock effected by the Company,
its Subsidiaries or their respective agents in conformity with Rule 10b-18
under the Exchange Act shall not be included in any adjustment to the
Applicable Conversion Rate made under this paragraph (8).

 36
 

 

For purposes of this
paragraph (8):

(A)          the “market capitalization” of the
Common Stock shall be calculated by multiplying (A) the Current Market
Price of the Common Stock by (B) the number of shares of Common Stock then
outstanding on the date of the repurchase triggering the adjustment;

(B)           the “Current Market Price” means the
average of the Closing Sale Prices of the Common Stock for the five consecutive
Trading Days beginning on the Trading Day next succeeding the date of the
repurchase triggering the adjustment; and

(C)           in determining the Repurchase
Premium, the “then-prevailing market price” of the Common Stock means the
average of the Closing Sale Prices of the Common Stock for the five consecutive
Trading Days ending on the relevant repurchase date.

If a payment would cause an adjustment to the
Applicable Conversion Rate under both paragraph (7) and paragraph (8) of
this Section 4.7(a), the provisions of Section 4.7(a)(8) shall
control.

(b)           In addition to the
adjustments set forth in Section 4.7(a), the Company may increase the
Applicable Conversion Rate as the Board of Directors considers advisable to
avoid or diminish any income tax to holders of Common Stock or rights to
purchase Common Stock resulting from any dividend or distribution of Capital
Stock (or rights to acquire Capital Stock) or from any event treated as such
for income tax purposes. The Company may also, from time to time, to the extent
permitted by applicable law, increase the Applicable Conversion Rate by any
amount for any period of at least 20 days if the Board of Directors has
determined that such increase would be in the Company’s best interests. If the
Board of Directors makes such a determination, it will be conclusive. The
Company will give Holders at least 15 days’ notice of such an increase in the
Applicable Conversion Rate. No such increase shall be taken into account for
purposes of determining whether the Closing Sale Price of the Common Stock
equals or exceeds 105% of the Applicable Conversion Price in connection with an
event that otherwise would be a Fundamental Change.

(c)           No adjustment to the
Applicable Conversion Rate or a Holder’s ability to convert its Securities will
be made if the Holder otherwise participated in the distribution without
conversion or in certain other cases.

The Applicable Conversion Rate shall not be adjusted:

(1)           upon the issuance of
any shares of Common Stock pursuant to any present or future plan providing for
the reinvestment of dividends or interest payable on the Company’s securities
and the investment of additional optional amounts in shares of Common Stock
under any plan;

(2)           upon the issuance of
any shares of Common Stock or options or rights to purchase those shares
pursuant to any present or future employee, director or consultant benefit plan
or program of or assumed by the Company or any of its Subsidiaries;

 37
 

 

(3)           upon the issuance of
any shares of Common Stock pursuant to any option, warrant, right or
exercisable, exchangeable or convertible security not described in the
preceding clause (2) and outstanding as of the date the Securities were
first issued;

(4)           for a change in the
par value of the Common Stock; or

(5)           for accrued and
unpaid interest, if any.

(d)           If a Holder will
receive shares of Common Stock upon conversion of Securities, then the Holder
will also receive any associated rights under any stockholder rights plan the
Company may adopt, whether or not the rights have separated from the Common
Stock at the time of conversion unless the rights would be void pursuant to the
terms of any such stockholder rights plan if issued to such Holder or, prior to
conversion, the rights have expired, terminated or been redeemed or exchanged.

SECTION 4.8. NOTICE OF ADJUSTMENTS OF
CONVERSION RATE.

Whenever the Conversion Rate is adjusted pursuant to Section 4.7(a) hereof:

(a)           the Company shall
compute the adjusted Applicable Conversion Rate in accordance with Section 4.7(a) hereof
and shall prepare an Officers’ Certificate setting forth (1) the adjusted
Applicable Conversion Rate, (2) the clause of Section 4.7(a) pursuant
to which such adjustment has been made, showing in reasonable detail the facts
upon which such adjustment is based, (3) the calculation of such
adjustment and (4) the date as of which such adjustment is effective, and
such certificate shall promptly be delivered to the Trustee and each Conversion
Agent (which certificates shall be conclusive evidence of the accuracy of such
adjustment absent manifest error); and

(b)           as soon as
practicable after each such adjustment, the Company shall deliver to the
Holders a notice stating that the Applicable Conversion Rate has been adjusted
and setting forth the adjusted Applicable Conversion Rate.

Unless and until a Responsible Officer of the Trustee
shall receive an Officers’ Certificate with respect to an adjustment of the
Applicable Conversion Rate, the Trustee may assume without inquiry that the
Applicable Conversion Rate has not been adjusted and that the last Applicable
Conversion Rate of which it has knowledge remains in effect.

Neither the Trustee nor any Conversion Agent shall be
under any duty or responsibility with respect to any such certificate or the
information and calculations contained therein, except to exhibit the same to
any Holder of Securities desiring inspection thereof at its office during
normal business hours.

Substantially simultaneously with an adjustment of the
Applicable Conversion Rate, the Company will disseminate a press release
detailing the new Applicable Conversion Rate and other relevant information.

 38
 

 

SECTION 4.9.
NOTICE OF CERTAIN CORPORATE TRANSACTIONS.

In the event the Company:

(a)           issues to all or
substantially all holders of Common Stock rights or warrants that allow such
holders to purchase shares of Common Stock for a period expiring within 60 days
from the date of issuance of the rights or warrants at a price per share less
than the Current Market Price per share of the Common Stock; or

(b)           distributes to all
or substantially all holders of Common Stock evidence of indebtedness,
securities, assets or rights, options or warrants to purchase its securities,
which distribution has a per share value exceeding 10% of the Closing Sale
Price of the Common Stock on the day preceding the declaration date for such
distribution,

in each case, other than pursuant to Section 4.11
hereof, the Company shall deliver written notice to the Conversion Agent, and
shall deliver to the Holders, at least 15 days prior to the record or
ex-dividend date for such distribution, a notice of such distribution.

At any time that the Trustee is not also the
Conversion Agent, the Company shall forthwith deliver a copy of any notice
required pursuant to this Section 4.9 to the Trustee.

Failure to deliver such notice or any defect therein
shall not affect the validity of any transaction referred to in paragraph (a) or
(b).

SECTION 4.10. CANCELLATION OF CONVERTED
SECURITIES.

All Certificated Securities delivered for conversion
shall be delivered to the Trustee or its agent to be canceled by or at the
direction of the Trustee, which shall dispose of the same as provided in this
Indenture. Upon conversions of beneficial interests in any Global Security, the
Trustee or the Custodian, at the direction of the Trustee, shall reduce the
aggregate principal amount of outstanding Securities represented by such Global
Security to reflect the conversion pursuant to Section 2.1(b).

SECTION 4.11. RIGHTS ISSUED IN RESPECT
OF COMMON STOCK.

Rights, options or warrants distributed by the Company
to all or substantially holders of Common Stock that allow such holders to
purchase shares of the Company’s capital stock (either initially or under
certain circumstances), which rights, options or warrants, until the occurrence
of a specified event or events (each a “Trigger Event”):

(1)           are deemed to be
transferred with such shares of Common Stock;

(2)            are not
exercisable; and

(3)           are also issued in
respect of future issuances of Common Stock,

shall not be deemed distributed for purposes of Section 4.7
until the occurrence of the earliest Trigger Event. In addition, in the event
of any distribution of rights, options or warrants, or any

 39
 

 

Trigger Event with respect thereto, that shall have
resulted in an adjustment to the Conversion Rate under Section 4.7(a), (A) in
the case of any such rights, options or warrants that shall all have been
redeemed or repurchased without exercise by any holders thereof, the Conversion
Rate shall be readjusted upon such final redemption or repurchase to give
effect to such distribution or Trigger Event, as the case may be, as though it
were a cash distribution, equal to the per share redemption or repurchase price
received by a holder of Common Stock with respect to such rights, options or
warrants (assuming such holder had retained such rights, options or warrants),
made to all holders of Common Stock as of the date of such redemption or
repurchase, and (B) in the case of any such rights, options or warrants
all of which shall have expired without exercise by any holder thereof, the
Conversion Price shall be readjusted as if such issuance had not occurred.

SECTION 4.12. TRUSTEE’S DISCLAIMER.

The Trustee shall have no duty to determine when an
adjustment under this Article 4 should be made, how it should be made or
what such adjustment should be, but may accept as conclusive evidence of that
fact or the correctness of any such adjustment, and shall be protected in
relying upon, the Officers’ Certificate that the Company is obligated to
deliver to the Trustee pursuant to Section 4.8. The Trustee makes no
representation as to the validity or value of any securities or assets issued
upon conversion of Securities, and the Trustee shall not be responsible for the
Company’s failure to comply with any provisions of this Article 4.

The Trustee shall not be under any responsibility to
determine the correctness of any provisions contained in any supplemental
indenture executed pursuant to Section 7.1, but may accept as conclusive
evidence of the correctness thereof, and shall be fully protected in relying
upon, the Officers’ Certificate with respect thereto which the Company is
obligated to file with the Trustee pursuant to Section 7.1.

ARTICLE 5

SUBORDINATION

SECTION 5.1. AGREEMENT TO SUBORDINATE.

The Company agrees, and each Holder by accepting a
Security agrees, that the Indebtedness evidenced by the Securities (including
the principal of, premium, if any, and interest on all the Securities and the
Redemption Price with respect to any Securities being called for redemption and
the Fundamental Change Repurchase Price with respect to all Securities subject
to repurchase pursuant to Section 3.8 hereof) is subordinated in right of
payment, to the extent and in the manner provided in this Article 5, to
the prior payment in full of all Senior Indebtedness (whether outstanding on
the date hereof or hereafter created, incurred, assumed or guaranteed), and
that the subordination is for the benefit of the holders of Senior Indebtedness.
No provision of this Article 5 shall prevent the occurrence of any Default
or Event of Default.

SECTION 5.2. LIQUIDATION; DISSOLUTION;
BANKRUPTCY.

Upon any distribution to creditors of the Company in a
liquidation or dissolution of the Company or in a bankruptcy, reorganization,
insolvency, receivership or similar proceeding

 40
 

 

relating to the Company
or its property, in an assignment for the benefit of creditors or any
marshaling of the Company’s assets and liabilities:

(a)           holders of Senior
Indebtedness shall be entitled to receive payment in full of all Obligations
due in respect of such Senior Indebtedness (including interest after the
commencement of any such proceeding at the rate specified in the applicable
Senior Indebtedness) before Holders of the Securities shall be entitled to
receive any payment with respect to the Securities (except that Holders may
receive Permitted Junior Securities); and

(b)           until all
Obligations with respect to Senior Indebtedness (as provided in paragraph (a) above)
are paid in full, any distribution to which Holders would be entitled but for
this Article 5 shall be made to holders of Senior Indebtedness (except
that Holders of Securities may receive Permitted Junior Securities), as their
interests may appear.

SECTION 5.3. DEFAULT ON DESIGNATED
SENIOR INDEBTEDNESS.

(a)           The Company may not
make any payment or distribution to the Trustee or any Holder in respect of
Obligations with respect to the Securities and may not acquire from the Trustee
or any Holder any Securities for cash or property (other than Permitted Junior
Securities) until all principal and other Obligations with respect to the
Senior Indebtedness have been paid in full if:

(1)           a default in the
payment of any principal or other Obligations with respect to Designated Senior
Indebtedness occurs and is continuing beyond any applicable grace period in the
agreement, indenture or other document governing such Designated Senior
Indebtedness; or

(2)           a default, other
than a payment default, on Designated Senior Indebtedness occurs and is
continuing that then permits holders of the Designated Senior Indebtedness to
accelerate its maturity and the Trustee receives a notice of the default (a “Payment
Blockage Notice”) from a Person who may give it pursuant to Section 5.12
hereof. If the Trustee receives any such Payment Blockage Notice, no subsequent
Payment Blockage Notice shall be effective for purposes of this Section unless
and until (A) at least 360 days shall have elapsed since the effectiveness
of the immediately prior Payment Blockage Notice and (B) all scheduled
payments of principal, premium, if any, and interest on the Securities that
have come due have been paid in full in cash. No nonpayment default that existed
or was continuing on the date of delivery of any Payment Blockage Notice to the
Trustee shall be, or be made, the basis for a subsequent Payment Blockage
Notice, unless such default shall have been waived for a period of not less
than 180 days.

(b)           The Company may and
shall resume payments on and distributions in respect of the Securities and may
acquire them upon the earlier of:

(A)          the date upon which
the Trustee receives notice from the Company that the default is cured or
waived or ceases to exist, or

 

 41

 

(B)           in the case of a
default referred to in clause (2) of Section 5.3(a) hereof, 179
days pass after the Payment Blockage Notice is received if the maturity of such
Designated Senior Indebtedness has not been accelerated, if this Article 5
otherwise permits the payment, distribution or acquisition at the time of such
payment or acquisition.

SECTION 5.4. ACCELERATION OF NOTES.

If payment of the Securities is accelerated because of
an Event of Default, the Company shall promptly notify holders of Senior Indebtedness
of the acceleration.

SECTION 5.5. WHEN DISTRIBUTION MUST BE
PAID OVER.

In the event that the Trustee or any Holder receives
any payment of any Obligations or distribution of assets of the Company of any
kind or character (other than Permitted Junior Securities pursuant to Section 5
hereof), whether in cash, property or securities (including, without
limitation, by way of setoff or otherwise) with respect to the Securities at a
time when the Trustee or such Holder, as applicable, has actual knowledge that
such payment is prohibited by Section 5.3 hereof, such payment shall be
held by the Trustee or such Holder, in trust for the benefit of, and shall be
paid forthwith over and delivered, upon written request, to, the holders of
Senior Indebtedness as their interests may appear or their Representative under
the indenture or other agreement (if any) pursuant to which Senior Indebtedness
may have been issued, as their respective interests may appear, for application
to the payment of all Obligations with respect to Senior Indebtedness remaining
unpaid to the extent necessary to pay such Obligations in full in accordance
with their terms, after giving effect to any concurrent payment or distribution
to or for the holders of Senior Indebtedness.

With respect to the holders of Senior Indebtedness,
the Trustee undertakes to perform only such obligations on the part of the
Trustee as are specifically set forth in this Article 5, and no implied
covenants or obligations with respect to the holders of Senior Indebtedness
shall be read into this Indenture against the Trustee. The Trustee shall not be
deemed to owe any fiduciary duty to the holders of Senior Indebtedness, and
shall not be liable to any such holders if the Trustee shall pay over or
distribute to or on behalf of Holders or the Company or any other Person money
or assets to which any holders of Senior Indebtedness shall be entitled by
virtue of this Article 5.

SECTION 5.6. NOTICE BY COMPANY.

The Company shall promptly notify the Trustee and the
Paying Agent of any facts known to the Company that would cause a payment of
any Obligations with respect to the Securities to violate this Article 5,
but failure to give such notice shall not affect the subordination of the
Securities to the Senior Indebtedness as provided in this Article 5.

SECTION 5.7. SUBROGATION.

After all Senior Indebtedness is paid in full in cash
or other payment satisfactory to the holders of the Senior Indebtedness and
until the Securities are paid in full, Securityholders shall be subrogated
(equally and ratably with all other Indebtedness pari passu with the Securities and

 42
 

 

entitled to similar rights of subrogation) to the
rights of holders of Senior Indebtedness to receive payments or distributions
applicable to Senior Indebtedness to the extent that payments or distributions
otherwise payable to the Securityholders have been applied to the payment of
Senior Indebtedness. A distribution made under this Article 5 to holders
of Senior Indebtedness that otherwise would have been made to Securityholders
(whether by the Company, any Holder, the Trustee or otherwise) is not, as
between the Company and Holders, a payment by the Company on the Securities.

SECTION 5.8. RELATIVE RIGHTS.

This Article 5 defines the relative rights of
Holders of Securities and holders of Senior Indebtedness. Nothing in this
Indenture shall:

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

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

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

If the Company fails because of this Article 5 to
pay principal of, premium, if any, or interest on a Security on the due date,
the failure is still a Default or Event of Default.

SECTION 5.9. SUBORDINATION MAY NOT
BE IMPAIRED BY COMPANY.

No right of any holder of Senior Indebtedness to
enforce the subordination of the Indebtedness evidenced by the Securities shall
be impaired by any act or failure to act by the Company or any Holder or by the
failure of the Company or any Holder to comply with this Indenture.

SECTION 5.10. DISTRIBUTION OR NOTICE TO
REPRESENTATIVE.

Whenever a distribution is to be made or a notice
given to holders of Senior Indebtedness, the distribution may be made and the
notice given to their Representative. Upon any payment or distribution of
assets of the Company referred to in this Article 5, the Trustee and the
Holders of Securities shall be entitled to rely upon any order or decree made
by any court of competent jurisdiction or upon any certificate of such
Representative or of the liquidating trustee or agent or other Person making
any distribution to the Trustee or to the Holders of Securities for the purpose
of ascertaining the Persons entitled to participate in such distribution, the
holders of the Senior Indebtedness and other Indebtedness of the Company, the
amount thereof or payable thereon, the amount or amounts paid or distributed
thereon and all other facts pertinent thereto or to this Article 5.

 43
 

 

SECTION 5.11. RIGHTS OF TRUSTEE AND PAYING
AGENT.

Notwithstanding the provisions of this Article 5
or any other provision of this Indenture, the Trustee shall not be charged with
knowledge of the existence of any facts that would prohibit the making of any
payment or distribution by the Trustee, and the Trustee and the Paying Agent
may continue to make payments on the Securities, unless the Trustee shall have
received at its Corporate Trust Office at least two Business Days prior to the
date of such payment written notice of facts that would cause the payment of
any Obligations with respect to the Securities to violate this Article 5. Only
the Company, a Representative or a holder of Designated Senior Indebtedness may
give the notice. Nothing in this Article 5 shall impair the claims of, or
payments to, the Trustee under or pursuant to Section 9.7 hereof.

The Trustee in its individual or any other capacity
may hold Senior Indebtedness with the same rights it would have if it were not
Trustee. Any Agent may do the same with like rights.

SECTION 5.12. AUTHORIZATION TO EFFECT
SUBORDINATION.

Each Securityholder, by the Holder’s acceptance thereof,
authorizes and directs the Trustee on such Holder’s behalf to take such action
as may be necessary or appropriate to effectuate the subordination as provided
in this Article 5, and appoints the Trustee to act as such Holder’s
attorney-in-fact for any and all such purposes. If the Trustee does not file a
proper proof of claim or proof of debt in the form required in any proceeding
referred to in Section 8.9 hereof at least 30 days before the expiration
of the time to file such claim, the holders of any Designated Senior
Indebtedness are hereby authorized to file an appropriate claim for and on
behalf of the Securityholders.

SECTION 5.13. AMENDMENTS.

The provisions of this Article 5 shall not be
amended or modified in any manner adverse to the holders of Senior Indebtedness
without the written consent of the holders of all Senior Indebtedness.

SECTION 5.14. AGREEMENT TO SUBORDINATE
UNAFFECTED.

The provisions of this Article 5 shall remain in
full force and effect irrespective of (a) any amendment, modification, or
supplement of, or any waiver or consent to, any of the terms of the Senior
Indebtedness or the agreement or instrument governing the Senior Indebtedness, (b) the
release or non-perfection of any collateral securing the Senior Indebtedness or
(c) the manner of sale or other disposition of the collateral securing the
Senior Indebtedness or the application of the proceeds upon such sale.

SECTION 5.15. CERTAIN CONVERSIONS DEEMED
PAYMENT.

For the purposes of this Article 5 only, (1) the
issuance and delivery of Permitted Junior Securities upon conversion of
Securities in accordance with Article 4 shall not be deemed to constitute
a payment or distribution on account of the principal of, or premium, if any,
or interest on the Securities or on account of the purchase or other
acquisition of Securities, and (2) the

 44
 

 

payment, issuance or delivery of cash (except in
satisfaction of fractional shares pursuant to Section 4.4), property or
securities (other than Permitted Junior Securities) upon conversion of a
Security shall be deemed to constitute payment on account of the principal of
such Security. Nothing contained in this Article 5 or elsewhere in this
Indenture or in the Securities is intended to or shall impair, as among the
Company, its creditors other than holders of Senior Indebtedness and the
Holders, the right, which is absolute and unconditional, of the Holder of any
Security to convert such Security in accordance with Article 4.

ARTICLE 6

COVENANTS

SECTION 6.1. 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 and this Indenture. Principal, premium, if any, and interest, shall
be considered paid on the date it is due if the Paying Agent (if other than the
Company or an Affiliate thereof) holds as of 11:00 a.m., New York City
time, on the due date money, deposited by the Company or an Affiliate thereof
in immediately available funds, designated for and sufficient to pay all
principal, premium, if any, and interest then due. The Company shall, to the
fullest extent permitted by law, pay interest on overdue principal (including
premium, if any) and overdue installments of interest at the rate borne by the
Securities per annum.

Payment of the principal of, premium, if any, and
interest on the Securities shall be made at the office or agency of the Company
maintained for that purpose in the Borough of Manhattan, The City of New York
(which shall initially be the office or agency of the Trustee in the Borough of
Manhattan, The City of New York); provided, however, that at the
option of the Company payment of interest may be made by check mailed to the
address of the Person entitled thereto as such address appears in the Register;
provided  further that a Holder with an aggregate principal amount
in excess of $2,000,000 will be paid by wire transfer in immediately available
funds at the election of such Holder if such Holder has provided wire transfer
instructions to the Company and the Trustee at least 10 Business Days prior to
the payment date.

SECTION 6.2. SEC REPORTS.

The Company shall file all reports and other
information and documents that it is required to file with the SEC pursuant to Section 13
or 15(d) of the Exchange Act, and within 15 days after it files them with
the SEC, the Company shall file copies of all such reports, information and
other documents with the Trustee. It is agreed that the filing of such reports
via the SEC’s EDGAR system shall constitute “filing” of such reports with the
Trustee for purposes of this Section 5.2. The Company shall at all times
comply with 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

 45
 

 

Company’s compliance with any of its covenants
hereunder (as to which the Trustee is entitled to rely exclusively on Officers’
Certificates).

SECTION 6.3. COMPLIANCE CERTIFICATES.

(a)           The Company shall
deliver to the Trustee, within 90 days after the end of each fiscal year, an
Officers’ Certificate stating that a review of the activities of the Company
and its Subsidiaries during the preceding fiscal year has been made under the
supervision of the signing Officers with a view to determining whether the
Company has kept, observed, performed and fulfilled its obligations under this
Indenture, and further stating, as to each such Officer signing such
certificate, that to the best of his or her knowledge, in such Officer’s
capacity as an officer of the Company:

(1)            the Company has
kept, observed, performed and fulfilled each and every covenant contained in
this Indenture and is not in default (without regard to grace periods or notice
requirements) in the performance or observance of any of the terms, provisions
and conditions of this Indenture, or, if a Default or Event of Default shall
have occurred, describing all such Defaults or Events of Default of which he or
she may have knowledge and what action the Company is taking or proposes to
take with respect thereto; and

(2)           no event has
occurred and remains in existence by reason of which payments on account of the
principal of, premium, if any, or interest on the Securities is prohibited or
if such event has occurred, a description of the event and what action the
Company is taking or proposes to take with respect thereto.

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

SECTION 6.4. 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 6.5. MAINTENANCE OF CORPORATE
EXISTENCE.

Subject to Article 6, the Company will do or
cause to be done all things necessary to preserve and keep in full force and
effect its corporate existence.

SECTION 6.6. STAY, EXTENSION AND USURY
LAWS.

The Company covenants (to the extent that it may
lawfully do so) that it shall not at any time insist upon, plead, or in any
manner whatsoever claim or take the benefit or advantage of, any stay,
extension or usury law or other law which would prohibit or forgive the Company
from paying all or any portion of the principal of, premium, if any, or
interest on the Securities as

 46
 

 

contemplated herein, wherever enacted, now or at any
time hereafter in force, or which may affect the covenants or the performance of
this Indenture, and the Company (to the extent it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law and covenants that it
will not, by resort to any such law, hinder, delay or impede the execution of
any power herein granted to the Trustee, but will suffer and permit the
execution of every such power as though no such law had been enacted.

ARTICLE 7

CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE

SECTION 7.1. COMPANY MAY CONSOLIDATE,
ETC, ONLY ON CERTAIN TERMS.

The Company shall not, directly or indirectly
consolidate with or merge into any other Person (in a transaction in which the
Company is not the surviving corporation) or convey, transfer or lease its
properties and assets substantially as an entirety to any Person, unless:

(1)           in case the Company
shall consolidate with or merge into another Person (in a transaction in which
the Company is not the surviving corporation) or convey, transfer or lease its
properties and assets substantially as an entirety to any Person, the Person
formed by such consolidation or into which the Company is merged or the Person
which acquires by conveyance or transfer, or which leases, the properties and
assets of the Company substantially as an entirety shall be a corporation
organized and validly existing under the laws of the United States of America,
any State thereof or the District of Columbia and shall expressly assume, by an
indenture supplemental hereto, executed and delivered to the Trustee, in form
satisfactory to the Trustee, the due and punctual payment of the principal of,
premium, if any, and interest on all the Securities and the performance or
observance of every covenant of this Indenture on the part of the Company to be
performed or observed and the conversion rights shall be provided for in
accordance with Article 4, by supplemental indenture satisfactory in form
to the Trustee, executed and delivered to the Trustee, by the Person (if other
than the Company) formed by such consolidation or into which the Company shall have
been merged or by the Person which shall have acquired the Company’s assets;

(2)           immediately after
giving effect to such transaction, no Event of Default, and no event which,
after notice or lapse of time or both, would become an Event of Default, shall
have happened and be continuing; and

(3)           the Company has
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 and
that all conditions precedent herein provided for relating to such transaction
have been complied with.

This Section 7.1 shall not apply to a merger of
the Company with an Affiliate solely for the purpose of reincorporating the
Company in another jurisdiction.

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In the case of a reclassification, consolidation,
merger, sale or transfer of assets or other transactions pursuant to which all
or substantially all of the Common Stock would be converted into other
securities, cash or property, the right to convert Securities into Common Stock
will be changed into a right to convert Securities into the kind and amount of
other securities, cash or property that the Holder would have received had the
Holder converted such Securities immediately prior to the transaction; provided
that if the Common Stock is converted into the right to receive more than a
single type of consideration (determined in part upon any form of stockholder
election), the kind and amount of consideration that the Holder would have
received had the Holder converted such Securities immediately prior to the
transaction shall be deemed to be the weighted average of the kind and amounts
of consideration received by the holders of any Common Stock that affirmatively
make such an election.

SECTION 7.2. SUCCESSOR SUBSTITUTED.

Upon any consolidation of the Company with, or merger
of the Company into, any other Person or any conveyance, transfer or lease of
the properties and assets of the Company substantially as an entirety in
accordance with Section 6.1, there shall be an adjustment to the
Applicable Conversion Rate and the successor Person formed by such
consolidation or into which the Company is merged or 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 Person had been named as the Company herein, and
thereafter, except in the case of a lease, the predecessor Person shall be
relieved of all obligations and covenants under this Indenture and the
Securities.

ARTICLE 8

DEFAULT AND REMEDIES

SECTION 8.1. EVENTS OF DEFAULT.

An “Event of Default” shall occur if:

(1)           the Company defaults
in the payment of any interest on any Security when the same becomes due and
payable and the default continues for a period of 30 days;

(2)           the Company defaults
in the payment of any principal of (including, without limitation, premium, if
any, on) any Security when the same becomes due and payable (whether at
maturity, upon redemption, on a Fundamental Change Repurchase Date or
otherwise);

(3)           the Company fails to
comply with any of its other agreements contained in the Securities or this
Indenture and the default continues for the period and after the notice
specified below;

(4)           the Company defaults
in the payment of the purchase price of any Security when the same becomes due
and payable;

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(5)           the Company fails to
provide notice of a Fundamental Change to the Trustee and to each Holder if
required by Section 3.9 for a period of 30 days after notice of failure to
do so;

(6)           any Indebtedness of
the Company or any Significant Subsidiary (all or substantially all of the
outstanding voting securities of which are owned, directly or indirectly, by
the Company) with an aggregate principal amount then outstanding in excess of
the Cross Payment Default Amount, whether such Indebtedness now exists or shall
hereafter be created, is not paid at final maturity (either at its stated
maturity or upon acceleration thereof), and such Indebtedness is not
discharged, or such acceleration is not rescinded or annulled, within a period
of 30 days after there shall have been given to the Company by the Trustee or
to the Company and the Trustee by the Holders of at least 25% in aggregate
principal amount of the outstanding Securities a written notice specifying such
default and requiring the Company to cause such Indebtedness to be discharged
or cause such default to be cured or waived or such acceleration to be
rescinded or annulled and stating that such notice is a “Notice of Default”
hereunder;

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

(A)          commences a voluntary case or
proceeding;

(B)           consents to the entry of an order for
relief against it in an

(C)           involuntary case or proceeding;

(D)          consents to the appointment of a
Custodian of it or for all or

(E)           substantially all of its property; or

(F)           makes a general assignment for the
benefit of its creditors; or

(8)           a court of competent
jurisdiction enters an order or decree under any Bankruptcy Law that:

(A)          is for relief against the Company or
any Significant Subsidiary in an involuntary case or proceeding;

(B)           appoints a Custodian of the Company
or any Significant Subsidiary or for all or substantially all of the property
of the Company or any Significant Subsidiary; or

(C)           orders the liquidation of the Company
or any Significant Subsidiary; and in each case the order or decree remains
unstayed and in effect for 60 consecutive days.

The term “Bankruptcy Law” means Title 11 of the United
States Code (or any successor thereto) or any similar federal or state law for
the relief of debtors. The term “Custodian” means

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any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.

A default under clause (3) 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 then outstanding notify the
Company and the Trustee, in writing of the default, and the Company does not
cure the default within 60 days after receipt of such notice. The notice given
pursuant to this Section 8.1 must specify the default, demand that it be
remedied and state that the notice is a “Notice of Default.”  When any default under this Section 8.1
is cured, it ceases.

The Trustee shall not be charged with knowledge of any
Event of Default unless written notice thereof shall have been given to a Trust
Officer at the Corporate Trust Office of the Trustee by the Company, a Paying
Agent, any Holder or any agent of any Holder.

SECTION 8.2. ACCELERATION.

If an Event of Default (other than an Event of Default
specified in clause (7) or (8) of Section 8.1) occurs and is
continuing, the Trustee may, by notice to the Company, or the Holders of at
least 25% in aggregate principal amount of the Securities then outstanding may,
by notice to the Company and the Trustee, declare all unpaid principal to the
date of acceleration on the Securities then outstanding (if not then due and
payable) to be due and payable upon any such declaration, and the same shall
become and be immediately due and payable. If an Event of Default specified in
clause (7) or (8) of Section 8.1 occurs, all unpaid principal of
the Securities then outstanding shall ipso facto become and be immediately due
and payable without any declaration or other act on the part of the Trustee or
any Holder. The Holders of a majority in aggregate principal amount of the
Securities then outstanding by notice to the Trustee may rescind an
acceleration and its consequences if (a) all existing Events of Default,
other than the nonpayment of the principal of the Securities which has become
due solely by such declaration of acceleration, have been cured or waived; (b) to
the extent the payment of such interest is lawful, interest (calculated at the
rate per annum borne by the Securities) on overdue installments of interest and
overdue principal, which has become due otherwise than by such declaration of
acceleration, has been paid; (c) the rescission would not conflict with
any judgment or decree of a court of competent jurisdiction; and (d) all
payments due to the Trustee and any predecessor Trustee under Section 9.7
have been made. No such rescission shall affect any subsequent default or
impair any right consequent thereto.

SECTION 8.3. OTHER REMEDIES.

If an Event of Default occurs and is continuing, the
Trustee may, but shall not be obligated to, pursue any available remedy by
proceeding at law or in equity to collect the payment of the principal of or
interest 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 it does
not possess any of the Securities or does not produce any of them 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 Default. No

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remedy is exclusive of any other remedy. All available
remedies are cumulative to the extent permitted by law.

SECTION 8.4. WAIVER OF DEFAULTS AND
EVENTS OF DEFAULT.

Subject to Sections 8.7 and 11.2, the Holders of a
majority in aggregate principal amount of the Securities then outstanding by
notice to the Trustee may waive an existing default or Event of Default and its
consequence, except a default or Event of Default in the payment of the
principal of, premium, if any, or interest on any Security, a failure by the
Company to convert any Securities into Common Stock in accordance with the
provisions of the Securities and this Indenture or any default or Event of
Default in respect of any provision of this Indenture or the Securities which,
under Section 11.2, cannot be modified or amended without the consent of
the Holder of each Security affected. When a default or Event of Default is
waived, it is cured and ceases.

SECTION 8.5. CONTROL BY MAJORITY.

The Holders of a majority in aggregate principal
amount of the Securities then outstanding may direct the time, method and place
of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on it. However, the Trustee may refuse
to follow any direction that conflicts with law or this Indenture, that the
Trustee, in its sole discretion, determines may be unduly prejudicial to the
rights of another Holder or the Trustee, or that may involve the Trustee in
personal liability unless the Trustee is offered indemnity satisfactory to it; provided,
however, that the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.

SECTION 8.6. LIMITATIONS ON SUITS.

A Holder may not pursue any remedy with respect to
this Indenture or the Securities (except actions for payment of overdue
principal or interest or for the conversion of the Securities pursuant to Article 4)
unless:

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

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

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

(4)           the Trustee does not
comply with the request within 60 days after receipt of the request and the
offer of indemnity; and

(5)           no direction
inconsistent with such written request has been given to the Trustee during
such 60-day period by the Holders of a majority in aggregate principal
amount of the Securities then outstanding.

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

SECTION 8.7. RIGHTS OF HOLDERS TO
RECEIVE PAYMENT AND TO CONVERT.

Notwithstanding any other provision of this Indenture,
the right of any Holder of a Security to receive payment of the principal of
and interest on the Security, on or after the respective due dates expressed in
the Security and this Indenture, to convert such Security in accordance with Article 4
and to bring suit for the enforcement of any such payment on or after such
respective dates or the right to convert, is absolute and unconditional and
shall not be impaired or affected without the consent of the Holder.

SECTION 8.8. COLLECTION SUIT BY TRUSTEE.

If an Event of Default in the payment of principal or
interest specified in clause (1) or (2) of Section 8.1 occurs
and is continuing, the Trustee may recover judgment in its own name and as
trustee of an express trust against the Company or another obligor on the
Securities for the whole amount of principal and accrued interest remaining
unpaid, together with, to the extent that payment of such interest is lawful,
interest on overdue principal and on overdue installments of interest, in each
case at the rate per annum borne by the Securities and such further amount as
shall be sufficient to cover the costs and expenses of collection, including
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel.

SECTION 8.9. TRUSTEE MAY FILE
PROOFS OF CLAIM.

The Trustee may file such proofs of claim and other
papers or documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel)
and the Holders allowed in any judicial proceedings relative to the Company (or
any other obligor on the Securities), its creditors or its property and shall
be entitled and empowered to collect and receive any money or other property
payable or deliverable on any such claims and to distribute the same, and any
Custodian 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 to the
Trustee any amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any
other amounts due the Trustee under Section 9.7, and to the extent that
such payment of the reasonable compensation, expenses, disbursements and
advances in any such proceedings shall be denied for any reason, payment of the
same shall be secured by a lien on, and shall be paid out of, any and all
distributions, dividends, money, securities and other property which the
Holders may be entitled to receive in such proceedings, whether in liquidation
or under any plan of reorganization or arrangement or otherwise. Nothing herein
contained shall be deemed to authorize the Trustee to authorize or consent to,
or, on behalf of any Holder, to authorize, accept or adopt 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.

 52
 

 

 

SECTION 8.10. PRIORITIES.

If the Trustee collects any money pursuant to this Article 8,
it shall pay out the money in the following order, subject to the provisions of
Article 5:

First, to the Trustee for amounts
due under Section 9.7;

Second, to Holders for amounts due
and unpaid on the Securities for principal, premium, if any, and interest,
ratably, without preference or priority of any kind, according to the amounts
due and payable on the Securities for principal, premium, if any, and interest,
respectively; and

Third, to the Company or such party
as a court of competent jurisdiction shall direct.

The Trustee may fix a record date and payment date for
any payment to Holders pursuant to this Section 8.10.

SECTION 8.11. 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 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 8.11 does not apply to a suit
made by the Trustee, a suit by a Holder pursuant to Section 8.7, or a suit
by Holders of more than 10% in aggregate principal amount of the Securities
then outstanding.

ARTICLE 9

TRUSTEE

SECTION 9.1. DUTIES OF TRUSTEE.

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

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

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

(2)           in the absence of
bad faith on its part, the Trustee may conclusively rely, as to the truth of
the statements and the correctness of the opinions expressed therein, upon certificates
or opinions furnished to the Trustee and conforming to the requirements of this

 53
 

 

Indenture. The Trustee, however, shall examine any
certificates and opinions which by any provision hereof are specifically
required to be delivered to the Trustee to determine whether or not they
conform to the requirements of this Indenture (but need not confirm or
investigate the accuracy of mathematical calculations or other facts stated
therein).

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

(1)           this paragraph does
not limit the effect of subsection (b) of this Section 9.1;

(2)           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

(3)           the Trustee shall
not be liable with respect to any action it takes or omits to take in good
faith in accordance with a direction received by it pursuant to Section 8.5.

(d)           No provision of this
Indenture shall require the Trustee to expend or risk its own funds or incur
any liability unless the Company or Holders shall have offered to the Trustee
security and indemnity satisfactory to it against such cost or liability. The
Trustee shall be under no obligation to exercise any of its rights and powers
under this Indenture at the request of any Holders, unless such Holder shall
have offered to the Trustee security and indemnity satisfactory to it against
any loss, liability or expense.

(e)           Every provision of
this Indenture that in any way relates to the Trustee is subject to subsections
(a), (b), (c) and (d) of this Section 9.1.

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

SECTION 9.2. RIGHTS OF TRUSTEE.

Subject to Section 9.1:

(a)           The
Trustee may rely conclusively on any document believed by it to be genuine and
to have been signed or presented by the proper person. The Trustee need not
investigate any fact or matter stated in the document.

(b)           Before
the Trustee acts or refrains from acting, it may require an Officers’
Certificate or an Opinion of Counsel, which shall conform to Section 12.4(b).
The Trustee shall not be liable for any action it takes or omits to take in
good faith in reliance on such Officers’ Certificate or Opinion of Counsel.

(c)           The
Trustee may act through its agents and shall not be responsible for the
misconduct or negligence of any agent appointed with due care.

 54
 

 

(d)           The Trustee shall
not be liable for any action it takes or omits to take in good faith which it
believes to be authorized or within its rights or powers conferred upon it by
this Indenture.

(e)           The Trustee may
consult with counsel of its selection, and the advice or opinion of such
counsel as to matters of law shall be full and complete authorization and
protection from liability in respect of any such action taken, omitted or
suffered by it hereunder in good faith and in accordance with the advice or
opinion of such 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 or direction of any of the Holders pursuant to
this Indenture, unless such Holders shall have offered to the Trustee security
or indemnity satisfactory to the Trustee against the costs, expenses and liabilities
that might be incurred by it in compliance with such request or direction.

(g)           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.

(h)           The Trustee shall
not be deemed to have notice of any Default or Event of Default unless a
Responsible Officer 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, and such notice references the Securities and this
Indenture.

(i)            The rights,
privileges, protections, immunities and benefits given to the Trustee,
including, without limitation, its right to be indemnified, are extended to,
and shall be enforceable by, the Trustee in each of its capacities hereunder,
and to each agent, custodian and other Person employed to act hereunder.

(j)            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’
Certificate, including any person specified as so authorized in any such
certificate previously delivered and not superseded.

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

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SECTION 9.3. 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 an Affiliate of the Company with the same rights it would have if it
were not Trustee. However, in the event that the Trustee acquires any
conflicting interest it must eliminate such conflict within 90 days, apply to
the SEC for permission to continue as trustee or resign. Any Agent may do the
same with like rights and duties. The Trustee is also subject to Sections 9.10
and 9.11.

SECTION 9.4. TRUSTEE’S DISCLAIMER.

The Trustee shall not be responsible for and makes no
representation as to the validity, priority or adequacy of this Indenture or
the Securities, it shall not be accountable for the Company’s use of the
proceeds from the Securities or any money paid to the Company or upon the
Company’s direction under any provision of this Indenture, it shall not be
responsible for the use or application of any money received by any Paying
Agent (other than the Trustee) and it shall not be responsible for any
statement or recital herein or any statement in the Securities or any other
document in connection with the sale of the Securities or pursuant to this
Indenture other than its certificate of authentication.

SECTION 9.5. NOTICE OF DEFAULT OR EVENTS
OF DEFAULT.

If a Default or an Event of Default occurs and is
continuing and if it is known to the Trustee, the Trustee shall mail to each
Securityholder notice of the Default or Event of Default within 90 days after
it occurs. However, the Trustee may withhold the notice if and so long as a
committee of its Responsible Officers in good faith determines that withholding
notice is in the interests of Securityholders, except in the case of a Default
or an Event of Default in payment of the principal of, premium, if any, or
interest on any Security.

SECTION 9.6. REPORTS BY TRUSTEE TO
HOLDERS.

If such report is required by TIA Section 313,
within 60 days after each May 15, beginning with the May 15 following
the date of this Indenture, and for so long as Securities remain outstanding,
the Trustee shall mail to each Securityholder a brief report dated as of such May 15
that complies with TIA Section 313(a) (but if no event described in
TIA Section 313(a) has occurred within the twelve months preceding the
reporting date, no report need be transmitted). The Trustee also shall comply
with TIA Section 313(b)(2) and (c).

A copy of each report at the time of its mailing to
Securityholders shall be mailed to the Company and filed with the SEC and each
stock exchange, if any, on which the Securities are listed. The Company shall
promptly notify the Trustee whenever the Securities become listed on any stock
exchange or listed or admitted to trading on any quotation system and any
changes in the stock exchanges or quotation systems on which the Securities are
listed or admitted to trading and of any delisting thereof.

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SECTION 9.7. COMPENSATION AND INDEMNITY.

The Company shall pay to the Trustee from time to time
such compensation (as agreed to from time to time by the Company and the
Trustee in writing) for its services (which compensation shall not be limited
by any provision of law in regard to the compensation of a trustee of an
express trust). The Company shall reimburse the Trustee promptly upon request
for all reasonable disbursements, expenses and advances incurred or made by it
in addition to the compensation for its services. Such expenses may include the
reasonable compensation, disbursements and expenses of the Trustee’s agents and
counsel.

The Company shall indemnify each of the Trustee and
any predecessor Trustee against any and all losses, liabilities, damages,
claims or expenses incurred by it arising out of or in connection with the
acceptance or administration of its duties under this Indenture, including the
costs and expenses (including taxes, other than taxes based upon, measured by
or determined by the income of the Trustee) of enforcing this Indenture against
the Company (including this Section 9.7) and 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. The Trustee, upon receiving written notice thereof, shall
notify the Company promptly of any claim for which it may seek indemnity. Failure
by the Trustee to so notify the Company shall not relieve the Company of its
obligations hereunder. The Company shall defend the claim and the Trustee shall
cooperate in the defense. The Trustee may have separate counsel and the Company
shall pay the reasonable fees and expenses of such counsel. The Company need
not pay for any settlement made without its written consent, which consent
shall not be unreasonably withheld.

The Company need not reimburse the Trustee for any
expense or indemnify it against any loss or liability incurred by it resulting
from its negligence or bad faith.

To secure the Company’s payment obligations in this Section 9.7,
the Trustee shall have a senior claim to which the Securities are hereby made
subordinate on all money or property held or collected by the Trustee, except
such money or property held in trust to pay the principal of and interest on
the Securities.

When the Trustee incurs expenses or renders services
after an Event of Default specified in clause (7) or (8) of Section 8.1
occurs, the expenses and the compensation for the services (including the fees
and expenses of its agents and counsel) are intended to constitute expenses of
administration under any Bankruptcy Law. The obligations of the Company under
this Section 8.7 shall survive the termination or satisfaction and
discharge of this Indenture or the resignation or removal of the Trustee for
any reason.

SECTION 9.8. REPLACEMENT OF TRUSTEE.

The Trustee may resign by so notifying the Company in
writing. The Holders of a majority in aggregate principal amount of the
Securities then outstanding may remove the Trustee by so notifying the Trustee
and the Company in writing and may, with the Company’s written consent, appoint
a successor Trustee. The Company may remove the Trustee if:

 57
 

 

(1)           the Trustee fails to
comply with Section 9.10;

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

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

(4)           the Trustee becomes
incapable of acting.

If the Trustee resigns or is removed or if a vacancy
exists in the office of Trustee for any reason, the Company shall promptly
appoint a successor Trustee. The resignation or removal of a Trustee shall not
be effective until a successor Trustee shall have delivered the written
acceptance of its appointment as described below.

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

If the Trustee fails to comply with Section 9.10,
any Holder who has been a Holder for at least six months may petition any court
of competent jurisdiction for the removal of the Trustee and the appointment of
a successor Trustee.

A successor Trustee shall deliver a written acceptance
of its appointment to the retiring Trustee and to the Company. Immediately
after that, the retiring Trustee shall transfer all property held by it as
Trustee to the successor Trustee (provided that all sums owing to the
Trustee hereunder have been paid) and be released from its obligations
(exclusive of any liabilities that the retiring Trustee may have incurred while
acting as Trustee) hereunder, 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. A successor
Trustee shall mail notice of its succession to each Holder.

A retiring Trustee shall not be liable for the acts or
omissions of any successor Trustee after its succession.

Notwithstanding replacement of the Trustee pursuant to
this Section 9.8, the Company’s obligations under Section 9.7 shall
continue for the benefit of the retiring Trustee.

SECTION 9.9. SUCCESSOR TRUSTEE BY MERGER,
ETC.

If the Trustee consolidates with, merges or converts
into, or transfers all or substantially all of its corporate trust assets
(including the administration of this Indenture) to, another corporation, by
sale or otherwise, the resulting, surviving or transferee corporation, without
any further act, shall be the successor Trustee, provided such
transferee corporation shall qualify and be eligible under Section 9.10. Such
successor Trustee shall promptly mail notice of its succession to the Company
and each Holder.

 58
 

 

SECTION 9.10. ELIGIBILITY; DISQUALIFICATION.

The Trustee shall always satisfy the requirements of
paragraphs (1), (2) and (5) of TIA Section 310(a). The Trustee
(or its parent holding company) shall have a combined capital and surplus of at
least $50,000,000. If at any time the Trustee shall cease to satisfy any such
requirements, it shall resign immediately in the manner and with the effect
specified in this Article 8. The Trustee shall be subject to the
provisions of TIA Section 310(b). Nothing herein shall prevent the Trustee
from filing with the SEC the application referred to in the penultimate
paragraph of TIA Section 310(b).

SECTION 9.11. 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.

ARTICLE
10

SATISFACTION AND DISCHARGE OF INDENTURE

SECTION 10.1. SATISFACTION AND DISCHARGE
OF INDENTURE.

This Indenture shall be discharged and shall cease to
be of further effect (except as to any surviving rights of conversion,
registration of transfer or exchange of Securities herein expressly provided
for and except as further provided below), and the Trustee, on demand of and at
the expense of the Company, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture, when:

(1)           either

(A)          all Securities theretofore
authenticated and delivered (other than Securities that have been destroyed,
lost or stolen and that have been replaced or paid as provided in Section 2.7)
have been delivered to the Trustee for cancellation; or

(B)           all such Securities not theretofore
delivered to the Trustee for cancellation:

(i)            have become due and payable; or

(ii)           will become due and payable at the
Final Maturity Date within one year; or

(iii)          are to be called for redemption within
one year under arrangements satisfactory to the Trustee for the giving of
notice of redemption by the Trustee in the name, and at the expense, of the
Company,

 59
 

 

and the Company, in the
case of clause (i), (ii) or (iii) above, has irrevocably deposited or
caused to be irrevocably deposited with the Trustee or a Paying Agent (other
than the Company or any of its Affiliates) as trust funds in trust solely for
the purpose cash in an amount sufficient to pay and discharge the entire
indebtedness on such Securities not theretofore delivered to the Trustee for
cancellation, for principal, premium, if any, and interest to the date of such
deposit (in the case of Securities which have become due and payable) or to the
Final Maturity Date or Redemption Date, as the case may be;

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

(2)           the Company has
delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel,
each stating that all conditions precedent herein provided for relating to the
satisfaction and discharge of this Indenture have been complied with.

Notwithstanding the satisfaction and discharge of this
Indenture, the obligations of the Company to the Trustee under Section 8.7
shall survive and, if money shall have been deposited with the Trustee pursuant
to paragraph (B)(1) of this Section, the provisions of Sections 10.2 and
10.4 shall survive until the Securities have been paid in full.

SECTION 10.2. APPLICATION OF TRUST
MONEY.

Subject to the provisions of Section 10.3, the
Trustee or a Paying Agent shall hold in trust, for the benefit of the Holders,
all money deposited with it pursuant to Section 10.1 and shall apply the
deposited money in accordance with this Indenture and the Securities to the
payment of the principal of, premium, if any, and interest on the Securities; provided
that such money need not be segregated from other funds except to the extent
required by law.

SECTION 10.3. REPAYMENT TO COMPANY.

The Trustee and each Paying Agent shall promptly pay
to the Company upon request any excess money (i) deposited with them pursuant
to Section 10.1 and (ii) held by them at any time.

The Trustee and each Paying Agent shall pay to the
Company upon request any money held by them for the payment of principal or
interest that remains unclaimed for two years after a right to such money has
matured; provided, however, that the Trustee or such Paying
Agent, before being required to make any such payment, may at the expense of
the Company cause to be mailed to each Holder entitled to such money notice
that such money remains unclaimed and that after a date specified therein,
which shall be at least 30 days from the date of such mailing, any unclaimed
balance of such money then remaining will be repaid to the Company. After
payment to the Company, Holders entitled to money must look to the Company for
payment as general creditors unless an applicable abandoned property law
designates another person. In the absence of a written request from the Company
to return unclaimed funds to the Company, the Trustee shall from time to time
deliver all unclaimed funds to or as directed by applicable escheat
authorities, as determined by the Trustee in its sole discretion, in accordance
with the customary practices and procedures of the Trustee. Any unclaimed funds
held by the Trustee pursuant to this Section 10.3 shall be held uninvested
and without any liability for interest.

 60
 

 

SECTION 10.4. REINSTATEMENT.

If the Trustee or any Paying Agent is unable to apply
any money in accordance with Section 10.2 by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application,
then the Company’s obligations under this Indenture and the Securities shall be
revived and reinstated as though no deposit had occurred pursuant to Section 10.1
until such time as the Trustee or such Paying Agent is permitted to apply all
such money in accordance with Section 10.2; provided, however,
that if the Company has made any payment of the principal of or interest on any
Securities because of the reinstatement of its obligations, the Company shall
be subrogated to the rights of the Holders of such Securities to receive any
such payment from the money held by the Trustee or such Paying Agent.

ARTICLE 11

AMENDMENTS, SUPPLEMENTS AND WAIVERS

SECTION 11.1. WITHOUT CONSENT OF
HOLDERS.

The Company and the Trustee may amend or supplement
this Indenture or the Securities without notice to or consent of any
Securityholder:

(a)           to comply with Section 7.1;

(b)           to cure any
ambiguity, defect or inconsistency;

(c)           to make any other
change that does not adversely affect the rights of any Securityholder:

(d)           to provide for
uncertificated Securities in addition to or in place of Certificated
Securities;

(e)           to provide for the
assumption of the Company’s obligations to the Holders of the Securities by a
successor to the Company pursuant to Article 8 hereof;

(f)            to comply with the
provisions of the TIA;

(g)           to add to the
covenants of the Company for the equal and ratable benefit of the
Securityholders or to surrender any right, power or option conferred upon the
Company;

(h)           to secure the
Company’s obligations with respect to the Securities;

(i)            to appoint a
successor Trustee; or

(j)            to provide for the
issuance of additional Securities having the same terms as the Securities
initially issued hereunder.

Upon the request of the Company accompanied by a
resolution of its Board of Directors authorizing the execution of any such
amended or supplemental indenture, and upon receipt by

 61
 

 

the Trustee of the documents described in Section 9.2
hereof, the Trustee shall join with the Company in the execution of any amended
or supplemental indenture authorized or permitted by the terms of this
Indenture and to make any further appropriate agreements and stipulations that
may be therein contained, but the Trustee shall not be obligated to enter into
such amended or supplemental indenture that affects its own rights, duties or
immunities under this Indenture or otherwise.

SECTION 11.2. WITH CONSENT OF HOLDERS.

The Company and the Trustee may amend or supplement
this Indenture or the Securities with the written consent of the Holders of at
least a majority in aggregate principal amount of the Securities then
outstanding. The Holders of at least a majority in aggregate principal amount
of the Securities then outstanding may waive compliance in a particular
instance by the Company with any provision of this Indenture or the Securities
without notice to any Securityholder. However, notwithstanding the foregoing
but subject to Section 11.4, without the written consent of each
Securityholder affected, an amendment, supplement or waiver, including a waiver
pursuant to Section 8.4, may not:

(a)           change the stated
maturity of the principal of, or interest on, any Security;

(b)           reduce the principal
amount of, or any premium or interest on, any Security;

(c)           reduce the amount of
principal payable upon acceleration of the maturity of any Security;

(d)           change the place or
currency of payment of principal of, or any premium or interest on, any
Security;

(e)           impair the right to
institute suit for the enforcement of any payment on, or with respect to, any
Security;

(f)            modify the
provisions with respect to the Company’s obligation to repurchase Securities
pursuant to Article 3 upon a Fundamental Change in a manner adverse to
Holders;

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

(h)           adversely affect the
right of Holders to convert Securities other than as provided in or under Article 4
of this Indenture:

(i)            reduce the percentage
of the aggregate principal amount of the outstanding Securities whose Holders
must consent to a modification or amendment;

(j)            reduce the
percentage of the aggregate principal amount of the outstanding Securities
necessary for the waiver of compliance with certain provisions of this
Indenture or the waiver of certain defaults under this Indenture; and

 62

 

 

(k)           modify any of the
provisions of this Section or Section 8.4, except to increase any
such percentage or to provide that certain provisions of this Indenture cannot
be modified or waived without the consent of the Holder of each outstanding
Security affected thereby.

It shall not be necessary for the consent of the
Holders under this Section 11.2 to approve the particular form of any
proposed amendment, supplement or waiver, but it shall be sufficient if such
consent approves the substance thereof.

Upon the request of the Company accompanied by a
resolution of its Board of Directors authorizing the execution of any such
amended or supplemental indenture, and upon the filing with the Trustee of
evidence satisfactory to the Trustee of the consent of the Holders as
aforesaid, and upon receipt by the Trustee of the documents described in Section 12.4
hereof, the Trustee shall join with the Company in the execution of such
amended or supplemental indenture unless such amended or supplemental indenture
directly affects the Trustee’s own rights, duties or immunities under this
Indenture or otherwise, in which case the Trustee may in its discretion, but
shall not be obligated to, enter into such amended or supplemental indenture.

After an amendment, supplement or waiver under this Section 11.2
becomes effective, the Company shall mail to the Holders affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amendment, supplement or
waiver.

To the extent that the Company or any of the
Subsidiaries hold any Securities, such Securities shall be disregarded for
purposes of voting in connection with any notice, waiver, consent or direction
requiring the vote or concurrence of Securityholders.

SECTION 11.3. COMPLIANCE WITH TRUST
INDENTURE ACT.

Every amendment to or supplement of this Indenture or
the Securities shall comply with the TIA as in effect at the date of such
amendment or supplement.

SECTION 11.4. REVOCATION AND EFFECT OF
CONSENTS.

Until an amendment, supplement or waiver becomes
effective, a consent to it by a Holder is a continuing consent by the Holder
and every subsequent Holder of a Security or portion of a Security that
evidences the same debt as the consenting Holder’s Security, even if notation
of the consent is not made on any Security. However, any such Holder or
subsequent Holder may revoke the consent as to its Security or portion of a
Security if the Trustee receives the notice of revocation before the date the
amendment, supplement or waiver becomes effective.

After an amendment, supplement or waiver becomes
effective, it shall bind every Security holder, unless it makes a change
described in any of clauses (a) through (k) of Section 11.2. In
that case the amendment, supplement or waiver shall bind each Holder of a
Security who has consented to it and every subsequent Holder of a Security or
portion of a Security that evidences the same debt as the consenting Holder’s
Security.

 63
 

 

 

SECTION 11.5. NOTATION ON OR EXCHANGE OF
SECURITIES.

The Trustee may place an appropriate notation about an
amendment, supplement or waiver on any Security thereafter authenticated. The
Company in exchange for all Securities may issue and the Trustee shall, upon
receipt of a Company Order, authenticate new Securities that reflect the
amendment, supplement or waiver.

Failure to make the appropriate notation or issue a
new Security shall not affect the validity and effect of such amendment,
supplement or waiver.

SECTION 11.6. TRUSTEE TO SIGN
AMENDMENTS, ETC.

The Trustee shall sign any amendment or supplemental
indenture authorized pursuant to this Article 11 if the amendment or
supplemental indenture does not adversely affect the rights, duties,
liabilities or immunities of the Trustee. If it does, the Trustee may, in its
sole discretion, but need not sign it. In signing or refusing to sign such
amendment or supplemental indenture, the Trustee shall be provided with and,
subject to Section 9.1, shall be fully protected in relying upon in
addition to the documents required by Section 12.4, an Officers’
Certificate and an Opinion of Counsel stating that such amendment or
supplemental indenture is authorized or permitted by this Indenture. The
Company may not sign an amendment or supplement indenture until the Board of
Directors approves it.

SECTION 11.7. 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 12

MISCELLANEOUS

SECTION 12.1. TRUST INDENTURE ACT
CONTROLS.

If any provision of this Indenture limits, qualifies
or conflicts with the duties imposed by TIA Section 318(c) such
imposed duties shall control.

SECTION 12.2. NOTICES.

Any notice or communication to the Company or the
Trustee under this Indenture shall be given in writing and delivered in person
or by first-class mail (registered or certified, return receipt requested),
facsimile transmission (confirmed by delivery in person or by first-class mail (registered
or certified, return receipt requested)) or guaranteed overnight courier, as
follows:

 64
 

 

 

If to the Company, to:

Cubist Pharmaceuticals, Inc.

65 Hayden Avenue

Lexington, Massachusetts 02421

Facsimile No.: (781) 861-1150

Attention:  Chief Financial Officer

With a copy to:

Bingham McCutchen LLP

Facsimile No.: (617) 951-8736

Attention: Julio E. Vega, Esq. and Matthew J. Cushing, Esq.

If to the Trustee, to:

The Bank of New York Trust Company, N.A.

222 Berkeley Street

2nd Floor

Boston, Massachusetts 02116

Facsimile No.: (617) 351-2401

Attention: Corporate Trust Administration

All notices and communications (other than those sent
to Holders) shall be deemed to have been duly given at the time delivered by
hand, if personally delivered; five Business Days after being deposited in the
mail, if mailed by first-class mail (registered or certified, return receipt
requested); upon acknowledgment of receipt, if transmitted by facsimile; and
the next Business Day after timely delivery to the courier, if sent by guaranteed
overnight courier.

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

Any notice or communication mailed to a Securityholder
shall be mailed by first-class mail or delivered by guaranteed overnight
courier or by other electronic means to it at its address shown on the register
kept by the Primary Registrar. Any notice or communication shall also be so
mailed to any Person described in TIA Section 313(c), to the extent
required by the TIA.

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 a notice or communication to a
Securityholder is mailed in the manner provided above, it is duly given,
whether or not the addressee receives it.

If the Company mails a notice or communication to
Holders, it shall mail a copy to the Trustee and each Agent at the same time.

 65
 

 

 

SECTION 12.3. COMMUNICATIONS 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 and any other person shall
have the protection of TIA Section 312(c).

SECTION 12.4. CERTIFICATE AND OPINION AS
TO CONDITIONS PRECEDENT.

(a)           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 at the request
of the Trustee:

(1)           an Officers’
Certificate in form and substance reasonably satisfactory to the Trustee
stating that, in the opinion of the signers, all conditions precedent
(including any covenants, compliance with which constitutes a condition
precedent), if any, provided for in this Indenture relating to the proposed
action have been complied with; and

(2)           an Opinion of
Counsel in form and substance reasonably satisfactory to the Trustee stating
that, in the opinion of such counsel, all such conditions precedent (including
any covenants, compliance with which constitutes a condition precedent) have
been complied with; provided, however, that with respect to the
authentication and execution by the Trustee of the Security and this
Indenture, the opinion that all such conditions precedent have been
complied with, will not be required.

(b)           Each Officers’ Certificate and Opinion of Counsel with
respect to compliance with a condition or covenant provided for in this
Indenture shall include:

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

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

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

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

provided  however, that with
respect to matters of fact an Opinion of Counsel may rely on an Officers’
Certificate or certificates of public officials.

 66
 

 

 

SECTION 12.5. RECORD DATE FOR VOTE OR
CONSENT OF SECURITYHOLDERS.

The Company (or, in the event deposits have been made
pursuant to Section 10.1, the Trustee) may set a record date for purposes
of determining the identity of Holders entitled to vote or consent to any
action by vote or consent authorized or permitted under this Indenture, which
record date shall not be more than thirty (30) days prior to the date of the
commencement of solicitation of such action. Notwithstanding the provisions of Section 11.4,
if a record date is fixed, those persons who were Holders of Securities at the
close of business on such record date (or their duly designated proxies), and
only those persons, shall be entitled to take such action by vote or consent or
to revoke any vote or consent previously given, whether or not such persons
continue to be Holders after such record date.

SECTION 12.6. RULES BY TRUSTEE, PAYING
AGENT, REGISTRAR AND CONVERSION AGENT.

The Trustee may make reasonable rules (not
inconsistent with the terms of this Indenture) for action by or at a meeting of
Holders. Any Registrar, Paying Agent or Conversion Agent may make reasonable rules for
its functions.

SECTION 12.7. LEGAL HOLIDAYS.

A “Legal Holiday” is a Saturday, Sunday or a day on
which state or federally chartered banking institutions in New York, New York
and the state in which the Corporate Trust Office is located are not required
to be open. If a payment date is a Legal Holiday, payment shall be made on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue
for the intervening period. If a regular record date is a Legal Holiday, the
record date shall not be affected.

SECTION 12.8. GOVERNING LAW.

THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAW OF THE STATE OF NEW YORK
WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE
EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE
REQUIRED THEREBY.

SECTION 12.9. NO ADVERSE INTERPRETATION
OF OTHER AGREEMENTS.

This Indenture may not be used to interpret another
indenture, loan or debt agreement of the Company or a Subsidiary of the Company.
Any such indenture, loan or debt agreement may not be used to interpret this
Indenture.

 67
 

 

 

SECTION 12.10. NO PERSONAL LIABILITY OF
DIRECTORS, OFFICERS, EMPLOYEES OR STOCKHOLDERS.

No past, present or future director, officer,
employee, incorporator or stockholder of the Company, as such, shall have any
liability for any obligations of the Company under the Securities, this
Indenture or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder by accepting a Security waives and
releases all such liability. The waiver and release are part of the consideration
for issuance of the Securities.

SECTION 12.11. 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 12.12. MULTIPLE COUNTERPARTS.

The parties may sign multiple counterparts of this
Indenture. Each signed counterpart shall be deemed an original, but all of them
together represent the same agreement.

SECTION 12.13. SEPARABILITY.

In case any provisions 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.

SECTION 12.14. TAX TREATMENT.

The Company agrees, and by acceptance of beneficial
ownership in the Securities each beneficial holder of the Securities will be
deemed to have agreed, for United States federal income tax purposes to treat
the Securities as indebtedness that is not subject to the contingent payment
debt instrument regulations under Treas. Reg. Sec. 1.1275-4.

SECTION 12.15. TABLE OF CONTENTS,
HEADINGS, ETC.

The table of contents, cross-reference sheet and
headings of the Articles and Sections of this Indenture have been inserted for
convenience of reference only, are not to be considered a part hereof, and
shall in no way modify or restrict any of the terms or provisions hereof.

SECTION 12.16. FORCE MAJEURE

In no event shall the Trustee be responsible or liable
for any failure or delay in the performance of its obligations hereunder
arising out of or caused by, directly or indirectly, forces beyond its control,
including, without limitation, strikes, work stoppages, accidents, acts of war
or terrorism, civil or military disturbances, nuclear or natural catastrophes
or acts of God, and interruptions, loss or malfunctions of utilities,
communications or computer (software and hardware) services; provided
that the Trustee shall use reasonable efforts consistent with 

 68
 

 

accepted practices in the banking industry to resume
performance as soon as practicable under the circumstances.

SECTION 12.17. WAIVER OF JURY TRIAL

EACH OF THE COMPANY AND THE TRUSTEE HEREBY IRREVOCABLY
WAIVES, 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.

[SIGNATURE PAGE FOLLOWS]

 69
 

 

 

IN WITNESS WHEREOF, the parties hereto have hereunto
set their hands as of the date and year first above written.

	
  

  	
   

  	
  CUBIST PHARMACEUTICALS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  

  	
   

  	
  By:

  	
  /s/ Michael W. Bonney

  
	
   

  	
   

  	
  Name: Michael W. Bonney

  
	
   

  	
   

  	
  Title: President and Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  THE BANK OF NEW YORK TRUST

  COMPANY, N.A.,

  
	
   

  	
   

  	
  as Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Peter M. Murphy

  
	
   

  	
   

  	
  Name: Peter M. Murphy

  
	
   

  	
   

  	
  Title: Vice President

  

 

 70

 

 

Schedule
I

Additional Shares Table

The following table sets
forth the hypothetical increase in the Applicable Conversion Rate, expressed as
a number of Additional Shares per $1,000 principal amount of Securities, as a
result of a Fundamental Change that occurs in the corresponding period:

	
  Effective Date

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  of Fundamental

  	
   

  	
  Stock Price

  	
   

  
	
  Change

  	
   

  	
  $23.67

  	
   

  	
  $25.00

  	
   

  	
  $27.50

  	
   

  	
  $30.00

  	
   

  	
  $32.50

  	
   

  	
  $35.00

  	
   

  	
  $40.00

  	
   

  	
  $45.00

  	
   

  	
  $50.00

  	
   

  	
  $75.00

  	
   

  	
  $100.00

  	
   

  
	
  June 6,
  2006

  	
   

  	
  9.7

  	
   

  	
  8.9

  	
   

  	
  7.5

  	
   

  	
  6.4

  	
   

  	
  5.5

  	
   

  	
  4.8

  	
   

  	
  3.7

  	
   

  	
  3.0

  	
   

  	
  2.4

  	
   

  	
  1.1

  	
   

  	
  0.6

  	
   

  
	
  June 15,
  2007

  	
   

  	
  9.7

  	
   

  	
  8.8

  	
   

  	
  7.3

  	
   

  	
  6.2

  	
   

  	
  5.3

  	
   

  	
  4.6

  	
   

  	
  3.5

  	
   

  	
  2.7

  	
   

  	
  2.2

  	
   

  	
  1.0

  	
   

  	
  0.5

  	
   

  
	
  June 15,
  2008

  	
   

  	
  9.7

  	
   

  	
  8.7

  	
   

  	
  7.2

  	
   

  	
  5.9

  	
   

  	
  5.0

  	
   

  	
  4.3

  	
   

  	
  3.2

  	
   

  	
  2.4

  	
   

  	
  1.9

  	
   

  	
  0.8

  	
   

  	
  0.4

  	
   

  
	
  June 15,
  2009

  	
   

  	
  9.7

  	
   

  	
  8.6

  	
   

  	
  6.9

  	
   

  	
  5.6

  	
   

  	
  4.7

  	
   

  	
  3.9

  	
   

  	
  2.7

  	
   

  	
  2.0

  	
   

  	
  1.5

  	
   

  	
  0.5

  	
   

  	
  0.3

  	
   

  
	
  June 15,
  2010

  	
   

  	
  9.7

  	
   

  	
  8.5

  	
   

  	
  6.6

  	
   

  	
  5.2

  	
   

  	
  4.2

  	
   

  	
  3.3

  	
   

  	
  2.2

  	
   

  	
  1.5

  	
   

  	
  1.0

  	
   

  	
  0.3

  	
   

  	
  0.1

  	
   

  
	
  June 15,
  2011

  	
   

  	
  9.7

  	
   

  	
  8.3

  	
   

  	
  6.3

  	
   

  	
  4.8

  	
   

  	
  3.7

  	
   

  	
  2.8

  	
   

  	
  1.5

  	
   

  	
  0.6

  	
   

  	
  0.2

  	
   

  	
  0.0

  	
   

  	
  0.0

  	
   

  
	
  June 15,
  2012

  	
   

  	
  9.4

  	
   

  	
  7.9

  	
   

  	
  5.7

  	
   

  	
  4.1

  	
   

  	
  2.9

  	
   

  	
  2.1

  	
   

  	
  1.0

  	
   

  	
  0.4

  	
   

  	
  0.1

  	
   

  	
  0.0

  	
   

  	
  0.0

  	
   

  
	
  June 15, 2013

  	
   

  	
  0.0

  	
   

  	
  0.0

  	
   

  	
  0.0

  	
   

  	
  0.0

  	
   

  	
  0.0

  	
   

  	
  0.0

  	
   

  	
  0.0

  	
   

  	
  0.0

  	
   

  	
  0.0

  	
   

  	
  0.0

  	
   

  	
  0.0

  	
   

  

 

 

EXHIBIT A

[FORM OF FACE OF 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. THIS NOTE IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE THEREOF. THIS NOTE IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE
NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE AND, UNLESS AND UNTIL IT IS EXCHANGED
IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE FORM, THIS NOTE MAY NOT
BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE
DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER
NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A
SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.]1

 

 

 

 

1 These paragraphs should be included only if
the Security is a Global Security

 A-1
 

 

CUBIST
PHARMACEUTICALS, INC.

CUSIP No.: 229678 AC 1

2.25%
CONVERTIBLE SUBORDINATED NOTES DUE JUNE 15, 2013

Cubist Pharmaceuticals, Inc., a Delaware
corporation (the “Company”, which term shall include any successor corporation
under the Indenture referred to on the reverse hereof), promises to pay to Cede &
Co., or registered assigns, the principal sum of               
Dollars ($             )
on June 15, 2013, or such greater or lesser amount as is indicated on the
Schedule of Exchanges of Notes on the other side of this Note.

	
  Interest Payment Dates:

  	
   

  	
  June 15 and December 15, commencing
  December 15, 2006

  
	
   

  	
   

  	
   

  
	
  Record Dates:

  	
   

  	
  June 1 and December 1

  

 

This Note is convertible as specified on the other
side of this Note. Additional provisions of this Note are set forth on the
other side of this Note.

[SIGNATURE PAGE FOLLOWS]

 A-2
 

 

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

	
  

  	
   

  	
  CUBIST PHARMACEUTICALS, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

	
  Attest:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Name:

  	
   

  
	
  Title:

  	
   

  
	
   

  	
   

  
	
  Dated:

  	
   

  

 

TRUSTEE’S CERTIFICATE OF
AUTHENTICATION

This is one of the Securities referred to 

in the within-mentioned Indenture.

THE BANK OF NEW YORK TRUST

COMPANY, N.A., as Trustee

	
   

  	
   

  
	
  Authorized Signatory

  	
   

  

 

 A-3
 

 

[FORM OF
REVERSE SIDE OF SECURITY]

CUBIST
PHARMACEUTICALS, INC. 

2.25% CONVERTIBLE SENIOR NOTES DUE JUNE 15, 2013

1.             INTEREST

Cubist Pharmaceuticals, Inc., a Delaware
corporation (the “Company”, which term shall include any successor corporation
under the Indenture hereinafter referred to), promises to pay interest on the
principal amount of this Note at the rate of 2.25% per annum. The Company shall
pay interest semiannually on June 15 and December 15 of each year,
commencing on December 15, 2006. Interest on the Notes shall accrue from
the most recent date to which interest has been paid or, if no interest has
been paid, from June 6, 2006; provided, however, that if
there is not an existing default in the payment of interest and if this Note is
authenticated between a record date referred to on the face hereof and the next
succeeding interest payment date, interest shall accrue from such interest
payment date. Interest will be computed on the basis of a 360-day year of
twelve 30-day months.

2.             METHOD OF PAYMENT

The Company shall pay interest on this Note (except
defaulted interest) to the person who is the Holder of this Note at the close
of business on June 1 or December 1, as the case may be, next
preceding the related interest payment date. The Holder must surrender this
Note to a Paying Agent to collect payment of principal. The Company will pay
principal and interest in money of the United States that at the time of
payment is legal tender for payment of public and private debts. The Company
may, however, pay principal and interest in respect of any Certificated
Security by check or wire payable in such money; provided, however,
that a Holder with an aggregate principal amount in excess of $2,000,000 will
be paid by wire transfer in immediately available funds at the election of such
Holder if such Holder has provided wire transfer instructions to the Company
and the Trustee at least 10 Business Days prior to the payment date.

3.             PAYING AGENT, REGISTRAR AND CONVERSION AGENT

Initially, The Bank of New York Trust Company, N.A., a
national banking association (the “Trustee”, which term shall include any
successor trustee under the Indenture hereinafter referred to), will act as
Paying Agent, Registrar and Conversion Agent. The Company may change any Paying
Agent, Registrar or Conversion Agent without notice to the Holder. The Company
or any of its Subsidiaries may, subject to certain limitations set forth in the
Indenture, act as Paying Agent or Registrar.

4.             INDENTURE, LIMITATIONS

This Note is one of a duly authorized issue of Notes
of the Company designated as its 2.25% Convertible Subordinated Notes due June 15,
2013 (the “Notes”), issued under an Indenture, dated as of June 6, 2006
(together with any supplemental indentures thereto, the “Indenture”), between
the Company and the Trustee. The terms of this Note include those stated 

 A-4
 

 

in the Indenture and those required by or made part of
the Indenture by reference to the Trust Indenture Act of 1939, as amended, as
in effect on the date of the Indenture. This Note is subject to all such terms,
and the Holder of this Note is referred to the Indenture and said Act for a
statement of them. The Notes are unsecured obligations of the Company limited
to $325,000,000 aggregate principal amount (or such greater amount necessary to
reflect the exercise by the Underwriters of their option to purchase additional
Notes in compliance with the Underwriting Agreement), except that the Company
at any time or from time to time may, without the consent of any Holder, issue
additional Notes having the same terms as the Notes initially issued under the
Indenture, and entitled to all of the benefits of the Indenture. The Indenture
does not limit other debt of the Company, secured or unsecured.

5.             OPTIONAL REDEMPTION

The Notes are subject to redemption, at the option of
the Company, on or after June 20, 2011, in whole or in part, but only if
the Closing Sale Price of the Common Stock for at least 20 Trading Days in the
30 consecutive Trading Day period ending on the date one day prior to the day
the Company gives a notice of redemption is greater than 150% of the Applicable
Conversion Price on the date of such notice, at a Redemption Price in cash
equal to 100% of the principal amount of the Notes to be redeemed together with
accrued and unpaid interest, if any, on the principal amount of the Notes
redeemed to the date of redemption.

No sinking fund is provided for the Notes.

6.             NOTICE OF REDEMPTION

Notice of redemption will be delivered at least 10
days but not more than 60 days before the Redemption Date to each Holder of
Notes to be redeemed at its registered address. Notes in denominations larger
than $1,000 may be redeemed in part, but only in whole multiples of $1,000. On
and after the Redemption Date, subject to the deposit with the Paying Agent of
funds sufficient to pay the Redemption Price plus accrued interest, if any,
accrued to, but excluding, the Redemption Date, interest shall cease to accrue
on Notes or portions of them called for redemption.

7.                                       REPURCHASE
OF NOTES AT OPTION OF HOLDER UPON A FUNDAMENTAL CHANGE

Subject to the terms and conditions of the Indenture,
if a Fundamental Change occurs at any time prior to the Final Maturity Date,
each Holder will, upon receipt of the notice of the occurrence of a Fundamental
Change, have the right to require the Company to repurchase any or all of such
Holder’s Notes for cash in an amount equal to 100% of the principal amount of
the Notes to be repurchased plus accrued and unpaid interest, if any, to (but
not including) the Fundamental Change Repurchase Date, unless such Fundamental
Change Repurchase Date falls after an interest payment record date and on or
prior to the corresponding interest payment date, in which case the Fundamental
Change Repurchase Price will include the full amount of accrued and unpaid
interest payable on such interest payment date to the Holder of record at the
close of business on the corresponding interest payment record date. Subject to
Sections 3.8(b) of the Indenture, on or before the 15th Business Day after the effective date of a
Fundamental Change, 

 A-5
 

 

the Company will provide to all Holders of the Notes
and the Trustee and Paying Agent a notice of the occurrence of the Fundamental
Change and of the resulting repurchase right. To exercise the repurchase right,
a Holder must deliver a Repurchase Exercise Notice duly completed to the Paying
Agent as described in the Indenture.

Notwithstanding the foregoing, the Holders will not
have the right to require the Company to repurchase any Notes if a Fundamental
Change described in clause (b), (c) or (d) in the definition of
Fundamental Change occurs (and the Company will not be required to deliver the
notice described in Section 3.8(c) of the Indenture), if either:

(1)          
the Closing Sale Price for any five Trading Days within the period of 10
consecutive Trading Days ending immediately after the later of the effective
date of the Fundamental Change or the date of the public announcement of the
Fundamental Change, in the case of a Fundamental Change relating to an
acquisition of Capital Stock under clause (b) of the definition of
Fundamental Change, or the period of 10 consecutive Trading Days ending
immediately before the effective date of the Fundamental Change, in the case of
a Fundamental Change relating to a merger, consolidation, asset sale or
otherwise under clause (c) of the definition of Fundamental Change or a
change in the Board of Directors under clause (d) of the definition of
Fundamental Change, equals or exceeds 105% of the Applicable Conversion Price
in effect on each of those five Trading Days; or

(2)           at
least 90% of the consideration paid for the Common Stock (excluding cash
payments for fractional shares and cash payments made pursuant to dissenters’
or appraisal rights) in a merger or consolidation or a conveyance, sale,
transfer or lease otherwise constituting a Fundamental Change under clause (b) and/or
(c) of the definition of Fundamental Change consists of shares of common
stock traded on the New York Stock Exchange or another U.S. national securities
exchange or quoted on the Nasdaq Stock Market or another established automated
over-the-counter trading market in the United States (or will be so traded or
quoted immediately following the merger or consolidation) and, as a result of
the merger or consolidation, the Securities become convertible into shares of
such common stock.

Holders have the right to withdraw any Fundamental
Change repurchase notice, in whole or in part, 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 Fundamental Change
Repurchase Price of all Notes or portions thereof to be purchased as of the
Fundamental Change Repurchase Date, has been deposited with the Paying Agent on
or prior to the Business Day following the Fundamental Change Repurchase Date,
all interest shall cease to accrue on such Notes (or portions thereof)
immediately after such Fundamental Change Repurchase Date and the Holder
thereof shall have no other rights as such other than the right to receive the
Fundamental Change Repurchase Price, upon surrender of such Notes.

8.             CONVERSION

A Holder of a Note may convert the principal amount of
such Note (or any portion thereof equal to $ 1,000 or any integral multiple of
$1,000 in excess thereof) into Common Stock 

 A-6
 

 

at any time prior to the close of business on the last
Business Day prior to the Final Maturity Date, at the Applicable Conversion
Rate in effect on the Conversion Date; provided, however, that, if such
Note is called for redemption or submitted or presented for purchase pursuant
to Article 3 of the Indenture, such conversion right shall terminate at
the close of business on the Business Day immediately preceding the Redemption
Date or Fundamental Change Repurchase Date, as the case may be, for such Note
or such earlier date as the Holder presents such Note for redemption or for
purchase (unless the Company shall default in making the redemption payment or
Fundamental Change Repurchase Price payment when due, as the case may be, in
which case the conversion right shall terminate at the close of business on the
date such default is cured and such Note is redeemed or purchased, as the case
may be).

The Initial Conversion Rate means 32.4981 shares of
Common Stock per $1,000 principal amount of Notes, subject to adjustment under
certain circumstances as provided in the Indenture.

Upon surrender of Notes for conversion, the Company
will have the right to deliver, in lieu of shares of Common Stock, cash or a
combination of cash and shares of Common Stock in the amounts provided in Section 4.2
of the Indenture.

No fractional shares will be issued upon conversion;
in lieu thereof, an amount will be paid in cash based upon the Closing Sale
Price of the Common Stock on the Trading Day immediately prior to the
Conversion Date.

To convert a Note, a Holder must (a) complete and
manually sign the conversion notice set forth below and deliver such notice to
a Conversion Agent, (b) surrender the Note to a Conversion Agent, (c) furnish
appropriate endorsements and transfer documents if required by a Registrar or a
Conversion Agent, and (d) pay any transfer or similar tax, if required. Notes
so surrendered for conversion (in whole or in part) during the period from the
close of business on any regular record date to the opening of business on the
next succeeding interest payment date (excluding Notes or portions thereof
called for redemption or subject to purchase upon a Fundamental Change on a
Redemption Date or Fundamental Change Repurchase Date, as the case may be,
during the period beginning at the close of business on a regular record date
and ending at the opening of business on the first Business Day after the next
succeeding interest payment date, or if such interest payment date is not a
Business Day, the second such Business Day) shall also be accompanied by
payment in funds acceptable to the Company of an amount equal to the interest
payable on such interest payment date on the principal amount of such Note then
being converted, and such interest shall be payable to such registered Holder
notwithstanding the conversion of such Note, subject to the provisions of the
Indenture relating to the payment of defaulted interest by the Company. If the
Company defaults in the payment of interest payable on such interest payment
date, the Company shall promptly repay such funds to such Holder.

A Note in respect of which a Holder had delivered a
Fundamental Change repurchase notice exercising the option of such Holder to
require the Company to purchase such Note may be converted only if the
Fundamental Change repurchase notice is withdrawn in accordance with the terms
of the Indenture.

 A-7
 

 

9.             DENOMINATIONS, TRANSFER, EXCHANGE

The Notes are in registered form, without coupons, in
denominations of $1,000 and integral multiples of $1,000. A Holder may register
the transfer of or exchange Notes 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 or other governmental
charges that may be imposed in relation thereto by law or permitted by the
Indenture.

10.           PERSONS DEEMED OWNERS

The Holder of a Note may be treated as the owner of it
for all purposes.

11.           UNCLAIMED MONEY

The Trustee and each Paying Agent shall pay to the
Company upon request any money held by them for the payment of principal or
interest that remains unclaimed for two years after a right to such money has
matured. After payment to the Company, Holders entitled to money must look to
the Company for payment as general creditors unless an applicable abandoned
property law designates another person.

12.           AMENDMENT, SUPPLEMENT AND WAIVER

Subject to certain exceptions, the Indenture or the
Notes may be amended or supplemented with the consent of the Holders of at
least a majority in aggregate principal amount of the Notes then outstanding,
and an existing default or Event of Default and its consequence or compliance
with any provision of the Indenture or the Notes may be waived in a particular
instance with the consent of the Holders of a majority in aggregate principal
amount of the Notes then outstanding. Without the consent of or notice to any
Holder, the Company and the Trustee may amend or supplement the Indenture or
the Notes to, among other things, cure any ambiguity, defect or inconsistency
or make any other change that does not adversely affect the rights of any
Holder.

13.           SUCCESSOR ENTITY

When a successor corporation assumes all the
obligations of its predecessor under the Notes and the Indenture in accordance
with the terms and conditions of the Indenture, the predecessor corporation
(except in certain circumstances specified in the Indenture) shall be released
from those obligations.

14.           DEFAULTS AND REMEDIES

Under the Indenture, an Event of Default includes: (i) default
for 30 days in payment of any interest on any Notes; (ii) default in
payment of any principal (including, without limitation, premium, if any) on
the Notes when due; (iii) failure by the Company for 60 days after notice
to it to comply with any of its other agreements contained in the Indenture or
the Notes; (iv) default in payment of the purchase price of any Note when
due; (v) the Company fails to provide a 

 A-8
 

 

notice of a Fundamental Change within 30 days after
notice of failure to do so; (vi) default in the payment of certain
indebtedness of the Company or a Significant Subsidiary; and (vii) certain
events of bankruptcy, insolvency or reorganization of the Company or any
Significant Subsidiary. If an Event of Default (other than as a result of
certain events of bankruptcy, insolvency or reorganization of the Company)
occurs and is continuing, the Trustee or the Holders of at least 25% in
aggregate principal amount of the Notes then outstanding may declare all unpaid
principal to the date of acceleration on the Notes then outstanding to be due
and payable immediately, all as and to the extent provided in the Indenture. If
an Event of Default occurs as a result of certain events of bankruptcy,
insolvency or reorganization of the Company, unpaid principal of the Notes then
outstanding shall become immediately due and payable without any declaration or
other act on the part of the Trustee or any Holder, all as and to the extent
provided in the Indenture. Holders may not enforce the Indenture or the Notes
except as provided in the Indenture. The Trustee may require indemnity
satisfactory to it before it enforces the Indenture or the Notes. Subject to
certain limitations, Holders of a majority in aggregate principal amount of the
Notes then outstanding may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Holders notice of any continuing default
(except a default in payment of principal or interest) if it determines that
withholding notice is in their interests. The Company is required to file
periodic reports with the Trustee as to the absence of default.

15.           TRUSTEE DEALINGS WITH THE COMPANY

The Bank of New York Trust Company, N.A., a national
banking association, the Trustee under the Indenture, in its individual or any
other capacity, may make loans to, accept deposits from and perform services
for the Company or an Affiliate of the Company, and may otherwise deal with the
Company or an Affiliate of the Company, as if it were not the Trustee.

16.           NO RECOURSE AGAINST OTHERS

No past, present or future director, officer,
employee, incorporator or stockholder of the Company, as such, shall have any
liability for any obligations of the Company under the Notes, the Indenture or
for any claim based on, in respect of, or by reason of, such obligations or
their creation. The Holder of this Note by accepting this Note waives and
releases all such liability. The waiver and release are part of the
consideration for the issuance of this Note.

17.           AUTHENTICATION

This Note shall not be valid until the Trustee or an
authenticating agent manually signs the certificate of authentication on the
other side of this Note.

18.           ABBREVIATIONS AND DEFINITIONS

Customary abbreviations may be used in the name of the
Holder 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 tenants in common), CUST (=
Custodian) and UGMA (= Uniform Gifts to Minors Act).

 A-9
 

 

All terms used in this Note but not specifically
defined herein are defined in the Indenture and are used herein as so defined.

19.           INDENTURE TO CONTROL; GOVERNING LAW

In the case of any conflict between the provisions of
this Note and the Indenture, the provisions of the Indenture shall control.

THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAW OF THE STATE OF NEW YORK WITHOUT GIVING
EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE
APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

The Company will furnish to any Holder, upon written
request and without charge, a copy of the Indenture. Requests may be made to:
Cubist Pharmaceuticals, Inc., 65 Hayden Avenue, Lexington, MA 02421,
Attention: Investor Relations.

 A-10

 

 

ASSIGNMENT
FORM

To assign this Note, fill in the form below:

I or we assign and transfer this Note to:

	
  (Insert assignee’s
  social  security or tax I.D. number)

  
	
   

  
	
   

  
	
   

  
	
   

  
	
   

  
	
   

  
	
   

  
	
   

  
	
   

  
	
   

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

  
	
   

  
	
  and irrevocably appoint

  
	
   

  
	
   

  
	
   

  
	
  agent to transfer this Note on the books of the
  Company. The agent may substitute another to act for him or her.

  
	
   

  

 

	
  Date

  	
   

  	
  Your Signature:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  

 

 

* Signature guaranteed
by:

	
  By:

  	
   

  	
   

  	
   

  

 

*                 The signature
must be guaranteed by an institution which is a member of one of the following
recognized signature guaranty programs: (i) the Securities Transfer Agent
Medallion Program (STAMP); (ii) the New York Stock Exchange Medallion
Program (MSP); (iii) the Stock Exchange Medallion Program (SEMP); or (iv) such
other guaranty program acceptable to the Trustee.

 A-11
 

 

 

CONVERSION
NOTICE

To convert this Note into Common Stock of the Company,
check the box:  ̈

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

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

	
  (Insert assignee’s social
  security or tax I.D. number)

  
	
   

  
	
   

  
	
   

  
	
   

  
	
   

  
	
   

  
	
   

  
	
   

  
	
   

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

  

 

	
  Date:

  	
   

  	
  Your Signature:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  

 

* Signature guaranteed by:

	
  By:

  	
   

  	
   

  	
   

  

 

*                 The signature
must be guaranteed by an institution which is a member of one of the following
recognized signature guaranty programs: (i) the Securities Transfer Agent
Medallion Program (STAMP); (ii) the New York Stock Exchange Medallion
Program (MSP); (iii) the Stock Exchange Medallion Program (SEMP); or (iv) such
other guaranty program acceptable to the Trustee.

 A-12
 

 

 

REPURCHASE
EXERCISE NOTICE

UPON A FUNDAMENTAL CHANGE

To:          Cubist
Pharmaceuticals, Inc.

The undersigned
registered owner of this Note hereby irrevocably acknowledges receipt of a
notice from Cubist Pharmaceuticals, Inc. (the “Company”) as to the
occurrence of a Fundamental Change with respect to the Company and requests and
instructs the Company to redeem the entire principal amount of this Note, or
the portion thereof (which is $1,000 or an integral multiple thereof) below
designated, in accordance with the terms of the Indenture referred to in this
Note at the Fundamental Change Repurchase Price, together with accrued interest
to, but excluding, the Repurchase Date, to the registered Holder hereof.

	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature(s)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature(s) must be guaranteed by a qualified
  guarantor institution with membership in an approved signature guarantee
  program pursuant to Rule 17Ad-15 under the Securities Exchange Act
  of 1934.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature Guaranty

  

 

Principal amount to be redeemed

(in an integral multiple of $1,000, if less than all):

	
  

  	
   

  	
   

  
	
   

  	
   

  	
   

  

NOTICE: The signature to the foregoing Election must
correspond to the name as written upon the face of the Note in every
particular, without alteration or any change whatsoever.

 A-13
 

 

 

SCHEDULE
OF EXCHANGES OF NOTES(2)

The following exchanges, redemptions, repurchases or
conversions of a part of this Global Note have been made:

	
  Date of

  Exchange,

  Redemption,

  Repurchase or

  Conversion

  	
   

  	
  Amount of

  Decrease in

  Principal

  Amount of this

  Global Note

  	
   

  	
  Amount of

  Increase in

  Principal

  Amount of this

  Global Note

  	
   

  	
  Principal Amount

  of this Global

  Note Following

  Such Decrease

  or Increase

  	
   

  	
  Signature of

  Authorized Signatory

  of Securities

  Custodian

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

(2)           This
schedule should be included only if the Security is a Global Security.

 A-14

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00105-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00105-of-00352.parquet"}]]