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                                                                    EXHIBIT 10.4

                                FAIRMARKET, INC.

                      2000 STOCK OPTION AND INCENTIVE PLAN

SECTION 1. GENERAL PURPOSE OF THIS PLAN; DEFINITIONS

         The name of this plan is the FairMarket, Inc. 2000 Stock Option and
Incentive Plan (the "Plan"). The purpose of this Plan is to encourage and enable
the officers, employees, Independent Directors and other key persons (including
consultants) of FairMarket, Inc. (the "Company") and its Subsidiaries upon whose
judgment, initiative and efforts the Company largely depends for the successful
conduct of its business to acquire a proprietary interest in the Company. It is
anticipated that providing such persons with a direct stake in the Company's
welfare will assure a closer identification of their interests with those of the
Company, thereby stimulating their efforts on the Company's behalf and
strengthening their desire to remain with the Company.

         The following terms shall be defined as set forth below:

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

         "Administrator" is defined in Section 2(a).

         "Award" or "Awards," except where referring to a particular category of
grant under this Plan, shall include Incentive Stock Options, Non-Qualified
Stock Options, Deferred Stock Awards, Restricted Stock Awards, Unrestricted
Stock Awards, Performance Share Awards and Dividend Equivalent Rights.

         "Board" means the Board of Directors of the Company.

         "Code" means the Internal Revenue Code of 1986, as amended, and any
successor Code, and related rules, regulations and interpretations.

         "Committee" means the Committee of the Board referred to in
Section 2(a).

         "Covered Employee" means an employee who is a "Covered Employee" within
the meaning of Section 162(m) of the Code.

         "Deferred Stock Award" means Awards granted pursuant to Section 7.

         "Dividend Equivalent Right" means Awards granted pursuant to
Section 11.

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         "Effective Date" means the date on which this Plan is approved by
stockholders as set forth in Section 17.

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

         "Fair Market Value" of the Stock on any given date means the fair
market value of the Stock determined in good faith by the Administrator;
provided, however, that if the Stock is admitted to quotation on the National
Association of Securities Dealers Automated Quotation System ("NASDAQ"), the
Nasdaq National Market or a national securities exchange, the determination
shall be made by reference to market quotations. If there are no market
quotations for such date, the determination shall be made by reference to the
last date preceding such date for which there are market quotations. If the date
for which Fair Market Value is determined is the first day when trading prices
for the Stock are reported on NASDAQ, the Nasdaq National Market or on a
national securities exchange, the Fair Market Value shall be the "Price to the
Public" (or equivalent) set forth on the cover page for the final prospectus
relating to the Company's Initial Public Offering.

         "Incentive Stock Option" means any Stock Option designated and
qualified as an "incentive stock option" as defined in Section 422 of the Code.

         "Independent Director" means a member of the Board who is a
"non-employee director" as defined in Rule 16b-3(i) of the Exchange Act and an
"outside director" as defined in Section 162(m) of the Code and who is not an
employee of the Company or any Subsidiary.

         "Initial Public Offering" means the consummation of the first fully
underwritten, firm commitment public offering pursuant to an effective
registration statement under the Act, other than on Forms S-4 or S-8 or their
then equivalents, covering the offer and sale by the Company of its equity
securities, or such other event as a result of or following which the Stock
shall be publicly held.

         "Non-Qualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.

         "Option" or "Stock Option" means any option to purchase shares of Stock
granted pursuant to Section 5.

         "Performance Share Award" means Awards granted pursuant to Section 9.

         "Performance Cycle" means one or more periods of time, which may be of
varying and overlapping durations, as the Administrator may select, over which
the attainment of one or more performance criteria will be measured for the
purpose of determining a grantee's right to and the payment of a Performance
Share Award, Restricted Stock Award or Deferred Stock Award.

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         "Restricted Stock Award" means Awards granted pursuant to Section 6.

         "Stock" means the Common Stock, par value $.001 per share, of the
Company, subject to adjustments pursuant to Section 3.

         "Subsidiary" means any corporation or other entity (other than the
Company) in any unbroken chain of corporations or other entities beginning with
the Company if each of the corporations or entities (other than the last
corporation or entity in the unbroken chain) owns stock or other interests
possessing 50 percent or more of the economic interest or the total combined
voting power of all classes of stock or other interests in one of the other
corporations or entities in the chain.

         "Unrestricted Stock Award" means any Award granted pursuant to
Section 8.

SECTION 2. ADMINISTRATION OF PLAN; ADMINISTRATOR AUTHORITY TO SELECT GRANTEES
           AND DETERMINE AWARDS

         (a) COMMITTEE. This Plan shall be administered by either the Board or a
committee of not less than two Independent Directors (in either case, the
"Administrator").

         (b) POWERS OF ADMINISTRATOR. The Administrator shall have the power and
authority to grant Awards consistent with the terms of this Plan, including the
power and authority:

             (i) to select the individuals to whom Awards may from time to time
         be granted;

             (ii) to determine the time or times of grant, and the extent, if
         any, of Incentive Stock Options, Non-Qualified Stock Options,
         Restricted Stock Awards, Deferred Stock Awards, Unrestricted Stock
         Awards, Performance Share Awards and Dividend Equivalent Rights, or any
         combination of the foregoing, granted to any one or more grantees;

             (iii) to determine the number of shares of Stock to be covered by
         any Award;

             (iv) to determine and modify from time to time the terms and
         conditions, including restrictions, not inconsistent with the terms of
         this Plan, of any Award, which terms and conditions may differ among
         individual Awards and grantees, and to approve the form of written
         instruments evidencing the Awards;

             (v) to accelerate at any time the exercisability or vesting of all
         or any portion of any Award;

             (vi) subject to the provisions of Section 5(a)(ii), to extend at
         any time the period in which Stock Options may be exercised;

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             (vii) to determine at any time whether, to what extent, and under
         what circumstances distribution or the receipt of Stock and other
         amounts payable with respect to an Award shall be deferred either
         automatically or at the election of the grantee and whether and to what
         extent the Company shall pay or credit amounts constituting interest
         (at rates determined by the Administrator) or dividends or deemed
         dividends on such deferrals; and

             (viii) at any time to adopt, alter and repeal such rules,
         guidelines and practices for administration of this Plan and for its
         own acts and proceedings as it shall deem advisable; to interpret the
         terms and provisions of this Plan and any Award (including related
         written instruments); to make all determinations it deems advisable for
         the administration of this Plan; to decide all disputes arising in
         connection with this Plan; and to otherwise supervise the
         administration of this Plan.

         All decisions and interpretations of the Administrator shall be binding
on all persons, including the Company and Plan grantees.

         (c) DELEGATION OF AUTHORITY TO GRANT AWARDS. The Administrator, in its
discretion, may delegate to the Chief Executive Officer of the Company all or
part of the Administrator's authority and duties with respect to the granting of
Awards at Fair Market Value, to individuals who are not subject to the reporting
and other provisions of Section 16 of the Exchange Act or "covered employees"
within the meaning of Section 162(m) of the Code. The Chief Executive Officer
shall be deemed a one-person committee of the Board. Any such delegation by the
Administrator shall include a limitation as to the amount of Awards that may be
granted during the period of the delegation and shall contain guidelines as to
the determination of the exercise price of any Stock Option, the conversion
ratio or price of other Awards and the vesting criteria. The Administrator may
revoke or amend the terms of a delegation at any time but such action shall not
invalidate any prior actions of the Administrator's delegate or delegates that
were consistent with the terms of this Plan.

         (d) INDEMNIFICATION. Neither the Board nor the Committee, nor any
member of either or any delegatee thereof, shall be liable for any act,
omission, interpretation, construction or determination made in good faith in
connection with this Plan, and the members of the Board and the Committee (and
any delegatee thereof) shall be entitled in all cases to indemnification and
reimbursement by the Company in respect of any claim, loss, damage or expense
(including, without limitation, reasonable attorneys' fees) arising or resulting
therefrom to the fullest extent permitted by law and/or under any directors' and
officers' liability insurance coverage which may be in effect from time to time.

SECTION 3. STOCK ISSUABLE UNDER THIS PLAN; MERGERS; SUBSTITUTION

         (a) STOCK ISSUABLE. The maximum number of shares of Stock reserved and
available for issuance under this Plan shall be 4,017,250 shares, subject to
adjustment as provided in Section 3(b). For purposes of this limitation, the
shares of Stock underlying any Awards under

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this Plan, the Company's Amended and Restated 1997 Stock Option Plan and
the Company's 1999 Stock Option Plan which are forfeited, canceled,
reacquired by the Company, satisfied without the issuance of Stock or otherwise
terminated (other than by exercise) shall be added back to the shares of Stock
available for issuance under this Plan. Subject to such overall limitation,
shares of Stock may be issued up to such maximum number pursuant to any type or
types of Award; provided, however, that Stock Options with respect to no more
than 1,005,000 shares of Stock may be granted to any one individual grantee
during any one calendar year period. The shares available for issuance under
this Plan may be authorized but unissued shares of Stock or shares of Stock
reacquired by the Company and held in its treasury.

         (b) CHANGES IN STOCK. Subject to Section 3(c) hereof, if, as a result
of any reorganization, recapitalization, reclassification, stock dividend, stock
split, reverse stock split or other similar change in the Company's capital
stock, the outstanding shares of Stock are increased or decreased or are
exchanged for a different number or kind of shares or other securities of the
Company, or additional shares or new or different shares or other securities of
the Company or other non-cash assets are distributed with respect to such shares
of Stock or other securities, or, if, as a result of any merger or
consolidation, sale of all or substantially all of the assets of the Company,
the outstanding shares of Stock are converted into or exchanged for a different
number or kind of securities of the Company or any successor entity (or a parent
or subsidiary thereof), the Administrator shall make an appropriate or
proportionate adjustment in (i) the maximum number of shares reserved for
issuance under this Plan, (ii) the number of Stock Options that can be granted
to any one individual grantee and the maximum number of shares that may be
granted under a Performance-based Award, (iii) the number and kind of shares or
other securities subject to any then outstanding Awards under this Plan, (iv)
the repurchase price per share subject to each outstanding Restricted Stock
Award, and (v) the price for each share subject to any then outstanding Stock
Options under this Plan, without changing the aggregate exercise price (i.e.,
the exercise price multiplied by the number of Stock Options) as to which such
Stock Options remain exercisable. The adjustment by the Administrator shall be
final, binding and conclusive. No fractional shares of Stock shall be issued
under this Plan resulting from any such adjustment, but the Administrator in its
discretion may make a cash payment in lieu of fractional shares.

         The Administrator may also adjust the number of shares subject to
outstanding Awards and the exercise price and the terms of outstanding Awards to
take into consideration material changes in accounting practices or principles,
extraordinary dividends, acquisitions or dispositions of stock or property or
any other event if it is determined by the Administrator that such adjustment is
appropriate to avoid distortion in the operation of this Plan, provided that no
such adjustment shall be made in the case of an Incentive Stock Option, without
the consent of the grantee, if it would constitute a modification, extension or
renewal of the Option within the meaning of Section 424(h) of the Code.

         (c) MERGERS AND OTHER TRANSACTIONS. (i) In the case of and subject to
the consummation of any of the following (each a "Sale Event"):

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             (A) the dissolution or liquidation of the Company;

             (B) the sale of all or substantially all of the assets of the
         Company on a consolidated basis to an unrelated person or entity;

             (C) a merger, reorganization or consolidation in which the
         outstanding shares of Stock are converted into or exchanged for a
         different kind of securities of the successor entity and the holders of
         the Company's outstanding voting power immediately prior to such
         transaction do not own a majority of the outstanding voting power of
         the successor entity immediately upon completion of such transaction;
         or

             (D) the sale of all of the Stock of the Company to an unrelated
         person or entity;

             then upon the effective time of the Sale Event, this Plan and all
             outstanding Awards granted hereunder shall terminate, as more
             particularly described, and with the effect provided in, Section
             3(c)(iii), unless provision is made in connection with such Sale
             Event in the sole discretion of the parties to such Sale Event for
             the assumption or continuation of Awards theretofore granted, or
             the substitution for such Awards with new Awards of the successor
             entity to the Company in such Sale Event or any parent or
             subsidiary thereof (or its successor) (each, a "Successor Entity"),
             with such adjustment as to the number and kind of shares and the
             per share exercise prices as the parties to such Sale Event shall
             agree.

                 (ii) If the parties to such Sale Event shall agree to assume or
             continue the Awards pursuant to Section 3(c)(i), then the vesting
             of Awards shall accelerate (A) by one year if the grantee continues
             to be employed by a Successor Entity (or its successor) on the
             anniversary date of the closing of the Sale Event, effective as of
             the date of such anniversary, or (B) by two years less the amount
             of time the grantee has been employed by a Successor Entity if the
             grantee's employment with the Company and its subsidiaries or the
             Successor Entity is terminated by the Company or its Subsidiaries
             or the Successor Entity without Cause (as defined below) or by the
             grantee for Good Reason (as defined below), effective as of the
             date of such termination of employment, subject, however, to the
             provisions of Section 3(c)(iv).

         As used above:

             (x)  "Cause" means a vote of the Board of Directors of the Company
                  or the Successor Entity, as the case may be, resolving that
                  the grantee should be dismissed as a result of: (I) any
                  material breach by the grantee of any employment agreement
                  between the grantee and the Company or the Successor Entity,
                  as the case may be; (II) the conviction of or plea of nolo
                  contendere by the grantee to a felony or any crime involving
                  moral turpitude; or (III) any material misconduct or willful
                  and deliberate non-performance (other than by reason of
                  disability) by the grantee of the grantee's duties to the
                  Company or its Subsidiaries or Successor Entity, as the case
                  may be.

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             (y)  "Good Reason" means the occurrence of any of the following
                  events: (I) a substantial adverse change or diminution in the
                  nature or scope of the grantee's responsibilities,
                  authorities, title, powers, functions or duties; (II) a
                  reduction in the grantee's annual base salary except for an
                  across-the-board salary reduction similarly affecting all or
                  substantially all employees, or any material failure of the
                  Company or any Successor Entity to provide the grantee with
                  such other employee benefits to which the grantee was entitled
                  immediately prior to the Sale Event, except for an
                  across-the-board change in benefits affecting all or
                  substantially all employees; or (III) the relocation of the
                  offices at which the grantee is principally employed to a
                  location more than 50 miles from such offices.

              (iii) If no provision is made for the assumption or continuation
         of outstanding Awards in connection with a Sale Event, then all
         outstanding Awards shall become fully vested and exercisable
         immediately prior to the closing of the Sale Event and shall terminate
         upon the closing of the Sale Event. In the event of such termination,
         each grantee shall be permitted, within a specified period of time
         prior to the consummation of the Sale Event as determined by the
         Administrator, to exercise all outstanding Awards held by such grantee,
         including those that will become exercisable upon the consummation of
         the Sale Event; provided, however, that the exercise of Awards not
         exercisable prior to the Sale Event shall be subject to the
         consummation of the Sale Event.

              (iv) Notwithstanding the foregoing, if the Company receives
         written advice from its independent public accountants in connection
         with any Sale Event to the effect that vesting of any Award under the
         circumstances contemplated by Section 3(c)(ii) would preclude or
         otherwise adversely affect the ability of the Company or any other
         party to such Sale Event to account for the same as a "pooling of
         interests" within the meaning of APB No. 16 (or any successor
         provision), which Sale Event would otherwise qualify for such
         accounting treatment, then vesting of such Awards shall not accelerate
         as contemplated by Section 3(c)(ii).

         (d) SUBSTITUTE AWARDS. The Administrator may grant Awards under this
Plan in substitution for stock and stock based awards held by employees,
directors or other key persons of another corporation in connection with the
merger or consolidation of the employing corporation with the Company or a
Subsidiary or the acquisition by the Company or a Subsidiary of property or
stock of the employing corporation. The Administrator may direct that the
substitute awards be granted on such terms and conditions as the Administrator

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considers appropriate in the circumstances. Any substitute Awards granted under
this Plan shall not count against the first share limitation set forth in
Section 3(a).

SECTION 4. ELIGIBILITY

         Grantees under this Plan will be such full or part-time officers and
other employees, Independent Directors and key persons (including consultants
and prospective employees) of the Company and its Subsidiaries as are selected
from time to time by the Administrator in its sole discretion.

SECTION 5. STOCK OPTIONS

         Any Stock Option granted under this Plan shall be in such form as the
Administrator may from time to time approve.

         Stock Options granted under this Plan may be either Incentive Stock
Options or Non-Qualified Stock Options. Incentive Stock Options may be granted
only to employees of the Company or any Subsidiary that is a "subsidiary
corporation" within the meaning of Section 424(f) of the Code. To the extent
that any Option does not qualify as an Incentive Stock Option, it shall be
deemed a Non-Qualified Stock Option.

         No Incentive Stock Option shall be granted under this Plan after
February 8, 2010.

         (a) STOCK OPTIONS GRANTED TO EMPLOYEES AND KEY PERSONS. The
Administrator in its discretion may grant Stock Options to eligible employees
and key persons of the Company or any Subsidiary. Stock Options granted pursuant
to this Section 5(a) shall be subject to the following terms and conditions and
shall contain such additional terms and conditions, not inconsistent with the
terms of this Plan, as the Administrator shall deem desirable. If the
Administrator so determines, Stock Options may be granted in lieu of cash
compensation at the optionee's election, subject to such terms and conditions as
the Administrator may establish.

             (i) EXERCISE PRICE. The exercise price per share for the Stock
         covered by a Stock Option granted pursuant to this Section 5(a) shall
         be determined by the Administrator at the time of grant but shall not
         be less than 100 percent of the Fair Market Value on the date of grant
         in the case of Incentive Stock Options, or 85 percent of the Fair
         Market Value on the date of grant, in the case of Non-Qualified Stock
         Options (other than options granted in lieu of cash compensation). If
         an employee owns or is deemed to own (by reason of the attribution
         rules of Section 424(d) of the Code) more than 10 percent of the
         combined voting power of all classes of stock of the Company or any
         parent or subsidiary corporation and an Incentive Stock Option is
         granted to such employee, the option price of such Incentive Stock
         Option shall be not less than 110 percent of the Fair Market Value on
         the grant date.

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             (ii) OPTION TERM. The term of each Stock Option shall be fixed by
         the Administrator, but no Stock Option shall be exercisable more than
         10 years after the date the Stock Option is granted. If an employee
         owns or is deemed to own (by reason of the attribution rules of Section
         424(d) of the Code) more than 10 percent of the combined voting power
         of all classes of stock of the Company or any parent or subsidiary
         corporation and an Incentive Stock Option is granted to such employee,
         the term of such Stock Option shall be no more than five years from the
         date of grant.

             (iii) EXERCISABILITY; RIGHTS OF A STOCKHOLDER. Subject to the
         provisions of Section 3(c), Stock Options shall become exercisable at
         such time or times, whether or not in installments, as shall be
         determined by the Administrator at or after the grant date. The
         Administrator may at any time accelerate the exercisability of all or
         any portion of any Stock Option. An optionee shall have the rights of a
         stockholder only as to shares acquired upon the exercise of a Stock
         Option and not as to unexercised Stock Options.

             (iv) METHOD OF EXERCISE. Stock Options may be exercised in whole or
         in part, by giving written notice of exercise to the Company,
         specifying the number of shares to be purchased. Payment of the
         purchase price may be made by one or more of the following methods to
         the extent provided in the Option Award agreement:

                  (A) In cash, by certified or bank check or other instrument
             acceptable to the Administrator;

                  (B) Through the delivery (or attestation to the ownership) of
             shares of Stock that have been purchased by the optionee on the
             open market or that have been beneficially owned by the optionee
             for at least six months and are not then subject to restrictions
             under any Company plan. Such surrendered shares shall be valued at
             Fair Market Value on the exercise date;

                  (C) By the optionee delivering to the Company a properly
             executed exercise notice together with irrevocable instructions to
             a broker to promptly deliver to the Company cash or a check payable
             and acceptable to the Company for the purchase price; provided that
             in the event the optionee chooses to pay the purchase price as so
             provided, the optionee and the broker shall comply with such
             procedures and enter into such agreements of indemnity and other
             agreements as the Administrator shall prescribe as a condition of
             such payment procedure; or

                  (D) By the optionee delivering to the Company a promissory
             note if the Board has expressly authorized the loan of funds to the
             optionee for the purpose of enabling or assisting the optionee to
             effect the exercise of the optionee's Stock Option; provided that
             at least so much of the exercise price as

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             represents the par value of the Stock shall be paid other than with
             a promissory note if otherwise required by state law.

         Payment instruments will be received subject to collection. The
         delivery of certificates representing the shares of Stock to be
         purchased pursuant to the exercise of a Stock Option will be contingent
         upon receipt from the optionee (or a purchaser acting in his or her
         stead in accordance with the provisions of the Stock Option) by the
         Company of the full purchase price for such shares and the fulfillment
         of any other requirements contained in the Option Award agreement or
         applicable provisions of laws. In the event an optionee chooses to pay
         the purchase price by previously-owned shares of Stock through the
         attestation method, the number of shares of Stock transferred to the
         optionee upon the exercise of the Stock Option shall be net of the
         number of shares attested to.

             (v) ANNUAL LIMIT ON INCENTIVE STOCK OPTIONS. To the extent required
         for "incentive stock option" treatment under Section 422 of the Code,
         the aggregate Fair Market Value (determined as of the time of grant) of
         the shares of Stock with respect to which Incentive Stock Options
         granted under this Plan and any other plan of the Company or its parent
         and subsidiary corporations become exercisable for the first time by an
         optionee during any calendar year shall not exceed $100,000. To the
         extent that any Stock Option exceeds this limit, it shall constitute a
         Non-Qualified Stock Option.

         (b) RELOAD OPTIONS. At the discretion of the Administrator, Options
granted under this Plan may include a "reload" feature pursuant to which an
optionee exercising an option by the delivery of a number of shares of Stock in
accordance with Section 5(a)(iv)(B) hereof would automatically be granted an
additional Option (with an exercise price equal to the Fair Market Value of the
Stock on the date the additional Option is granted and with such other terms as
the Administrator may provide) to purchase that number of shares of Stock equal
to the sum of (i) the number delivered to exercise the original Option and (ii)
the number withheld to satisfy tax liabilities, with an Option term equal to the
remainder of the original Option term unless the Administrator otherwise
determines in the Award agreement for the original Option grant.

         (c) STOCK OPTIONS GRANTED TO INDEPENDENT DIRECTORS.

             (i) GRANT OF OPTIONS TO INDEPENDENT DIRECTORS. The Administrator,
         in its discretion, may grant Non-Qualified Stock Options to Independent
         Directors. Any such grant may vary among individual Independent
         Directors. The exercise price per share for the Stock covered by a
         Stock Option granted under this Section 5(c) shall be equal to the Fair
         Market Value of the Stock on the date the Stock Option is granted.

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             (ii) EXERCISE; TERMINATION.

                  (A) An Option granted under this Section 5(c) shall be
             exercisable as determined by the Administrator. An Option issued
             under this Section 5(c) shall not be exercisable after the
             expiration of 10 years from the date of grant.

                  (B) Options granted under this Section 5(c) may be exercised
             only by written notice to the Company specifying the number of
             shares to be purchased. Payment of the full purchase price of the
             shares to be purchased may be made by one or more of the methods
             specified in Section 5(a)(iv). An optionee shall have the rights of
             a stockholder only as to shares acquired upon the exercise of a
             Stock Option and not as to unexercised Stock Options.

         (d) NON-TRANSFERABILITY OF OPTIONS. No Stock Option shall be
transferable by the optionee otherwise than by will or by the laws of descent
and distribution and all Stock Options shall be exercisable, during the
optionee's lifetime, only by the optionee, or by the optionee's legal
representative or guardian in the event of the optionee's incapacity.
Notwithstanding the foregoing, the Administrator, in its sole discretion, may
provide in the Award agreement regarding a given Option that the optionee may
transfer his Non-Qualified Stock Options to members of his immediate family, to
trusts for the benefit of such family members, or to partnerships in which such
family members are the only partners, provided that the transferee agrees in
writing with the Company to be bound by all of the terms and conditions of this
Plan and the applicable Option.

SECTION 6. RESTRICTED STOCK AWARDS

         (a) NATURE OF RESTRICTED STOCK AWARDS. A Restricted Stock Award is an
Award entitling the recipient to acquire, at such purchase price as determined
by the Administrator, shares of Stock subject to such restrictions and
conditions as the Administrator may determine at the time of grant ("Restricted
Stock"). Conditions may be based on continuing employment (or other service
relationship) and/or achievement of pre-established performance goals and
objectives. The grant of a Restricted Stock Award is contingent on the grantee
executing a Restricted Stock Award agreement, subject to the provisions of
Section 16(g). The terms and conditions of each such agreement shall be
determined by the Administrator, and such terms and conditions may differ among
individual Awards and grantees.

         (b) RIGHTS AS A STOCKHOLDER. Upon execution of a written instrument
setting forth the Restricted Stock Award and payment of any applicable purchase
price, a grantee shall have the rights of a stockholder with respect to the
voting of the Restricted Stock, subject to such conditions contained in the
written instrument evidencing the Restricted Stock Award. Unless the
Administrator shall otherwise determine, certificates evidencing the Restricted
Stock shall remain in the possession of the Company until such Restricted Stock
is vested as provided in Section 6(d) below, and the grantee shall be required,
as a condition of the grant, to deliver to the Company a stock power endorsed in
blank.

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         (c) RESTRICTIONS. Restricted Stock may not be sold, assigned,
transferred, pledged or otherwise encumbered or disposed of except as
specifically provided herein or in the Restricted Stock Award agreement. Unless
otherwise provided in the Restricted Stock Award agreement, if a grantee's
employment (or other service relationship) with the Company and its Subsidiaries
terminates for any reason or no reason, the Company shall have the right to
repurchase Restricted Stock that has not vested at the time of termination at
its original purchase price, from the grantee or the grantee's legal
representative.

         (d) VESTING OF RESTRICTED STOCK. The Administrator at the time of grant
shall specify the date or dates and/or the attainment of pre-established
performance goals, objectives and other conditions on which the
non-transferability or forfeiture provisions of the Restricted Stock Award and
the Company's right of repurchase shall lapse. From and after such date or dates
and/or the attainment of such pre-established performance goals, objectives and
other conditions, the shares on which all restrictions have lapsed shall no
longer be Restricted Stock and shall be deemed "vested." Subject to the
provisions of Section 3(c), except as may otherwise be provided by the
Administrator either in the Award agreement or, subject to Section 14 below, in
writing after the Award agreement is issued, a grantee's rights in any shares of
Restricted Stock that have not vested shall automatically terminate upon the
grantee's termination of employment (or other service relationship) with the
Company and its Subsidiaries and such shares shall be subject to the Company's
right of repurchase as provided in Section 6(c) above.

         (e) WAIVER, DEFERRAL AND REINVESTMENT OF DIVIDENDS. The Restricted
Stock Award agreement may require or permit the immediate payment, waiver,
deferral or investment of dividends paid on the Restricted Stock.

SECTION 7. DEFERRED STOCK AWARDS

         (a) NATURE OF DEFERRED STOCK AWARDS. A Deferred Stock Award is an Award
of phantom stock units to a grantee, subject to restrictions and conditions as
the Administrator may determine at the time of grant. Conditions may be based on
continuing employment (or other service relationship) and/or achievement of
pre-established performance goals and objectives. The grant of a Deferred Stock
Award is contingent on the grantee executing a Deferred Stock Award agreement,
subject to the provisions of Section 16(g). The terms and conditions of each
such agreement shall be determined by the Administrator, and such terms and
conditions may differ among individual Awards and grantees. At the end of the
deferral period, the Deferred Stock Award, to the extent vested, shall be paid
to the grantee in the form of shares of Stock.

         (b) ELECTION TO RECEIVE DEFERRED STOCK AWARDS IN LIEU OF COMPENSATION.
The Administrator may, in its sole discretion, permit a grantee to elect to
receive a portion of the cash compensation or Restricted Stock Award otherwise
due to such grantee in the form of a Deferred Stock Award. Any such election
shall be made in writing and shall be delivered to the Company no later than the
date specified by the Administrator and in accordance with rules

                                       12
<PAGE>   13

and procedures established by the Administrator. The Administrator shall have
the sole right to determine whether and under what circumstances to permit
such elections and to impose such limitations and other terms and
conditions thereon as the Administrator deems appropriate.

         (c) RIGHTS AS A STOCKHOLDER. During the deferral period, a grantee
shall have no rights as a stockholder; provided, however, that the grantee may
be credited with Dividend Equivalent Rights with respect to the phantom stock
units underlying the grantee's Deferred Stock Award, subject to such terms and
conditions as the Administrator may determine.

         (d) RESTRICTIONS. A Deferred Stock Award may not be sold, assigned,
transferred, pledged or otherwise encumbered or disposed of during the deferral
period.

         (e) TERMINATION. Subject to the provisions of Section 3(c), except as
may otherwise be provided by the Administrator either in the Award agreement or,
subject to Section 14 below, in writing after the Award agreement is issued, a
grantee's right in all Deferred Stock Awards that have not vested shall
automatically terminate upon the grantee's termination of employment (or
cessation of service relationship) with the Company and its Subsidiaries for any
reason.

SECTION 8. UNRESTRICTED STOCK AWARDS

         GRANT OR SALE OF UNRESTRICTED STOCK. The Administrator may, in its sole
discretion, grant (or sell at par value or such higher purchase price determined
by the Administrator) an Unrestricted Stock Award to any grantee pursuant to
which such grantee may receive shares of Stock free of any restrictions
("Unrestricted Stock") under this Plan. Unrestricted Stock Awards may be granted
in respect of past services or other valid consideration, or in lieu of cash
compensation due to such grantee.

SECTION 9. PERFORMANCE SHARE AWARDS

         (a) NATURE OF PERFORMANCE SHARE AWARDS. A Performance Share Award is an
Award entitling the recipient to acquire shares of Stock upon the attainment of
specified performance goals. The Administrator may make Performance Share Awards
independent of or in connection with the granting of any other Award under this
Plan. The Administrator may make the grant of a Performance Share Award
contingent on the grantee executing a Performance Share Award agreement. The
terms and conditions of any such agreement shall be determined by the
Administrator, and such terms and conditions may differ among individual Awards
and grantees. The Administrator in its sole discretion shall determine whether
and to whom Performance Share Awards shall be made, the performance goals, the
periods during which performance is to be measured, and all other limitations
and conditions.

         (b) RIGHTS AS A STOCKHOLDER. A grantee receiving a Performance Share
Award shall have the rights of a stockholder only as to shares actually received
by the grantee under this

                                       13
<PAGE>   14

Plan and not with respect to shares subject to the Award but not actually
received by the grantee. A grantee shall be entitled to receive a stock
certificate evidencing the acquisition of shares of Stock under a Performance
Share Award only upon satisfaction of all conditions specified in the
Performance Share Award agreement (or in a performance plan adopted by the
Administrator).

         (c) TERMINATION. Subject to the provisions of Section 3(c), except as
may otherwise be provided by the Administrator either in the Award agreement or,
subject to Section 14 below, in writing after the Award agreement is issued, a
grantee's rights in all Performance Share Awards shall automatically terminate
upon the grantee's termination of employment (or cessation of service
relationship) with the Company and its Subsidiaries for any reason.

         (d) ACCELERATION, WAIVER, ETC. At any time prior to the grantee's
termination of employment (or other service relationship) by the Company and its
Subsidiaries, the Administrator may in its sole discretion accelerate, waive or,
subject to Section 14, amend any or all of the goals, restrictions or conditions
applicable to a Performance Share Award.

SECTION 10. PERFORMANCE-BASED AWARDS TO COVERED EMPLOYEES

         Notwithstanding anything to the contrary contained herein, if any
Restricted Stock Award, Deferred Stock Award or Performance Share Award granted
to a Covered Employee is intended to qualify as "Performance-based Compensation"
under Section 162(m) of the Code and the regulations promulgated thereunder (a
"Performance-based Award"), such Award shall comply with the provisions set
forth below:

         (a) PERFORMANCE CRITERIA. The performance criteria used in performance
goals governing Performance-based Awards granted to Covered Employees may
include any or all of the following: (i) the Company's return on equity, assets,
capital or investment; (ii) pre-tax or after-tax profit levels of the Company or
any Subsidiary, a division, an operating unit or a business segment of the
Company, or any combination of the foregoing; (iii) cash flow, funds from
operations or similar measure; (iv) total shareholder return; (v) changes in the
market price of the Stock; (vi) sales or market share; or (vii) earnings per
share.

         (b) GRANT OF PERFORMANCE-BASED AWARDS. With respect to each
Performance-based Award granted to a Covered Employee, the Committee shall
select, within the first 90 days of a Performance Cycle (or, if shorter, within
the maximum period allowed under Section 162(m) of the Code) the performance
criteria for such grant, and the achievement targets with respect to each
performance criterion (including a threshold level of performance below which no
amount will become payable with respect to such Award). Each Performance-based
Award will specify the amount payable, or the formula for determining the amount
payable, upon achievement of the various applicable performance targets. The
performance criteria established by the Committee may be (but need not be)
different for each Performance Cycle and different goals may be applicable to
Performance-based Awards to different Covered Employees.

                                       14
<PAGE>   15

         (c) PAYMENT OF PERFORMANCE-BASED AWARDS. Following the completion of a
Performance Cycle, the Committee shall meet to review and certify in writing
whether, and to what extent, the performance criteria for the Performance Cycle
have been achieved and, if so, to also calculate and certify in writing the
amount of the Performance-based Awards earned for the Performance Cycle. The
Committee shall then determine the actual size of each Covered Employee's
Performance-based Award, and, in doing so, may reduce or eliminate the amount of
the Performance-based Award for a Covered Employee if, in its sole judgment,
such reduction or elimination is appropriate.

         (d) MAXIMUM AWARD PAYABLE. The maximum Performance-based Award payable
to any one Covered Employee under this Plan for a Performance Cycle is 402,000
Shares (subject to adjustment as provided in Section 3(b) hereof).

SECTION 11.  DIVIDEND EQUIVALENT RIGHTS

         (a) DIVIDEND EQUIVALENT RIGHTS. A Dividend Equivalent Right is an Award
entitling the grantee to receive credits based on cash dividends that would have
been paid on the shares of Stock specified in the Dividend Equivalent Right (or
other award to which it relates) if such shares had been issued to and held by
the grantee. A Dividend Equivalent Right may be granted hereunder to any grantee
as a component of another Award or as a freestanding award. The terms and
conditions of Dividend Equivalent Rights shall be specified in the Award
agreement. Dividend equivalents credited to the holder of a Dividend Equivalent
Right may be paid currently or may be deemed to be reinvested in additional
shares of Stock, which may thereafter accrue additional equivalents. Any such
reinvestment shall be at Fair Market Value on the date of reinvestment or such
other price as may then apply under a dividend reinvestment plan sponsored by
the Company, if any. Dividend Equivalent Rights may be settled in cash or shares
of Stock or a combination thereof, in a single installment or installments. A
Dividend Equivalent Right granted as a component of another Award may provide
that such Dividend Equivalent Right shall be settled upon exercise, settlement,
or payment of, or lapse of restrictions on, such other award, and that such
Dividend Equivalent Right shall expire or be forfeited or annulled under the
same conditions as such other award. A Dividend Equivalent Right granted as a
component of another Award may also contain terms and conditions different from
such other award.

         (b) INTEREST EQUIVALENTS. Any Award under this Plan that is settled in
whole or in part in cash on a deferred basis may provide in the grant for
interest equivalents to be credited with respect to such cash payment. Interest
equivalents may be compounded and shall be paid upon such terms and conditions
as may be specified by the grant.

         (c) TERMINATION. Except as may otherwise be provided by the
Administrator either in the Award agreement or, subject to Section 14 below, in
writing after the Award agreement is issued, a grantee's rights in all Dividend
Equivalent Rights or interest equivalents shall automatically terminate upon the
grantee's termination of employment (or cessation of service relationship) with
the Company and its Subsidiaries for any reason.

                                       15
<PAGE>   16

SECTION 12.  TAX WITHHOLDING

         (a) PAYMENT BY GRANTEE. Each grantee shall, no later than the date as
of which the value of an Award or of any Stock or other amounts received
thereunder first becomes includable in the gross income of the grantee for
Federal income tax purposes, pay to the Company, or make arrangements
satisfactory to the Administrator regarding payment of, any Federal, state, or
local taxes of any kind required by law to be withheld with respect to such
income. The Company and its Subsidiaries shall, to the extent permitted by law,
have the right to deduct any such taxes from any payment of any kind otherwise
due to the grantee. The Company's obligation to deliver stock certificates to
any grantee is subject to and conditioned on tax obligations being satisfied by
the grantee.

         (b) PAYMENT IN STOCK. Subject to approval by the Administrator, a
grantee may elect to have the minimum required tax withholding obligation
satisfied, in whole or in part, by (i) authorizing the Company to withhold from
shares of Stock to be issued pursuant to any Award a number of shares with an
aggregate Fair Market Value (as of the date the withholding is effected) that
would satisfy the withholding amount due, or (ii) transferring to the Company
shares of Stock owned by the grantee with an aggregate Fair Market Value (as of
the date the withholding is effected) that would satisfy the withholding amount
due.

SECTION 13.  TRANSFER, LEAVE OF ABSENCE, ETC.

         For purposes of this Plan, the following events shall not be deemed a
termination of employment:

         (a) a transfer to the employment of the Company from a Subsidiary or
from the Company to a Subsidiary, or from one Subsidiary to another;

         (b) an approved leave of absence for military service or sickness, or
for any other purpose approved by the Company, if the employee's right to
re-employment is guaranteed either by a statute or by contract or under the
policy pursuant to which the leave of absence was granted or if the
Administrator otherwise so provides in writing; or

         (c) any other bona fide leave of absence approved for purposes of this
Plan by the Administrator.

SECTION 14. AMENDMENTS AND TERMINATION

         The Board may, at any time, amend or discontinue this Plan and the
Administrator may, at any time, amend or cancel any outstanding Award for the
purpose of satisfying changes in law or for any other lawful purpose, but no
such action shall adversely affect rights under any outstanding Award without
the holder's consent. If and to the extent determined by the Administrator to be
required by the Code to ensure that Incentive Stock Options granted under this
Plan are qualified under Section 422 of the Code, if and to the extent intended
to so

                                       16
<PAGE>   17

qualify, Plan amendments shall be subject to approval by the Company
stockholders entitled to vote at a meeting of stockholders. Nothing in this
Section 15 shall limit the Administrator's authority to take any action
permitted pursuant to Section 3(c).

SECTION 15.  STATUS OF PLAN

         With respect to the portion of any Award that has not been exercised
and any payments in cash, Stock or other consideration not received by a
grantee, a grantee shall have no rights greater than those of a general creditor
of the Company unless the Administrator shall otherwise expressly determine in
connection with any Award or Awards. In its sole discretion, the Administrator
may authorize the creation of trusts or other arrangements to meet the Company's
obligations to deliver Stock or make payments with respect to Awards hereunder,
provided that the existence of such trusts or other arrangements is consistent
with the foregoing sentence.

SECTION 16.  GENERAL PROVISIONS

         (a) NO DISTRIBUTION; COMPLIANCE WITH LEGAL REQUIREMENTS. The
Administrator may require each person acquiring Stock pursuant to an Award to
represent to and agree with the Company in writing that such person is acquiring
the shares without a view to distribution thereof.

         No shares of Stock shall be issued pursuant to an Award until all
applicable securities law and other legal and stock exchange or similar
requirements have been satisfied. The Administrator may require the placing of
such stop-orders and restrictive legends on certificates for Stock and Awards as
it deems appropriate.

         (b) DELIVERY OF STOCK CERTIFICATES. Stock certificates to grantees
under this Plan shall be deemed delivered for all purposes when the Company or a
stock transfer agent of the Company shall have mailed such certificates in the
United States mail, addressed to the grantee, at the grantee's last known
address on file with the Company.

         (c) OTHER COMPENSATION ARRANGEMENTS; NO EMPLOYMENT RIGHTS. Nothing
contained in this Plan shall prevent the Board from adopting other or additional
compensation arrangements, including trusts, and such arrangements may be either
generally applicable or applicable only in specific cases. The adoption of this
Plan and the grant of Awards do not confer upon any employee any right to
continued employment with the Company or any Subsidiary.

         (d) TRADING POLICY RESTRICTIONS. Option exercises and other Awards
under this Plan shall be subject to such Company's insider trading policy, as in
effect from time to time.

                                       17
<PAGE>   18

         (e) LOANS TO GRANTEES. The Company shall have the authority to make
loans to grantees of Awards hereunder (including to facilitate the purchase of
shares) and shall further have the authority to issue shares for promissory
notes hereunder.

         (f) DESIGNATION OF BENEFICIARY. Each grantee to whom an Award has been
made under this Plan may designate a beneficiary or beneficiaries to exercise
any Award or receive any payment under any Award payable on or after the
grantee's death. Any such designation shall be on a form provided for that
purpose by the Administrator and shall not be effective until received by the
Administrator. If no beneficiary has been designated by a deceased grantee, or
if the designated beneficiaries have predeceased the grantee, the beneficiary
shall be the grantee's estate.

         (g) DOCUMENTATION OF AWARDS. Awards will be evidenced by such written
instruments, if any, as may be prescribed by the Administrator from time to
time. Such instruments may be in the form of agreements to be executed by both
the grantee and the Company, or certificates, letters or similar instruments,
which need not be executed by the grantee but acceptance of which shall evidence
agreement by the grantee to the terms thereof. Any reference in this Plan to an
Award agreement shall mean the agreement or other such instrument prescribed by
the Administrator from time to time in respect of such Award.

SECTION 17.  EFFECTIVE DATE OF PLAN

         This Plan shall become effective upon approval by the holders of a
majority of the votes cast at a meeting of stockholders at which a quorum is
present or by written consent of stockholders. Subject to such approval by the
stockholders and to the requirement that no Stock may be issued hereunder prior
to such approval, Stock Options and other Awards may be granted hereunder on and
after adoption of this Plan by the Board.

SECTION 18.  GOVERNING LAW

         This Plan and all Awards and actions taken thereunder shall be governed
by, and construed in accordance with, the laws of the State of Delaware, applied
without regard to conflict of law principles.

EFFECTIVE DATE APPROVED BY BOARD OF DIRECTORS:       February 8, 2000

EFFECTIVE DATE APPROVED BY STOCKHOLDERS:             February  , 2000

                                       18<PAGE>   1
                                                                     EXHIBIT 4.6

                                 ALKERMES, INC.

                                    as Issuer

                                       AND

                       STATE STREET BANK AND TRUST COMPANY

                                   as Trustee

                                    INDENTURE

                          Dated as of February 18, 2000

                 3-3/4% Convertible Subordinated Notes due 2007
<PAGE>   2
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                            PAGE
<S>                                                                         <C>
ARTICLE I. DEFINITIONS .................................................      2

Section 1.1. Definitions ...............................................      2

ARTICLE II. ISSUE, DESCRIPTION, EXECUTION, REGISTRATION
            AND EXCHANGE OF NOTES ......................................      9

Section 2.1. Designation, Amount and Issue of Notes ....................      9
Section 2.2. Form of Notes .............................................      9
Section 2.3. Date and Denomination of Notes; Payments of Interest ......     10
Section 2.4. Execution of Notes ........................................     11
Section 2.5. Exchange and Registration of Transfer of Notes;
             Restrictions on Transfer; Depositary ......................     12
Section 2.6. Mutilated, Destroyed, Lost or Stolen Notes ................     19
Section 2.7. Temporary Notes ...........................................     20
Section 2.8. Cancellation of Notes Paid, Etc ...........................     20
Section 2.9. CUSIP Numbers .............................................     21

ARTICLE III. REDEMPTION OF NOTES .......................................     21

Section 3.1. Redemption Prices .........................................     21
Section 3.2. Notice of Redemption; Selection of Notes ..................     22
Section 3.3. Payment of Notes Called for Redemption ....................     23
Section 3.4. Conversion Arrangement on Call for Redemption .............     24

ARTICLE IV. SUBORDINATION OF NOTES .....................................     25

Section 4.1. Agreement of Subordination ................................     25
Section 4.2. Payments to Noteholders ...................................     25
Section 4.3. Bankruptcy and Dissolution, Etc ...........................     26
Section 4.4. Subrogation of Notes ......................................     28
Section 4.5. Authorization by Noteholders ..............................     29
Section 4.6. Notice to Trustee .........................................     29
Section 4.7. Trustee's Relation to Senior Indebtedness .................     30
Section 4.8. No Impairment of Subordination ............................     30
Section 4.9. Certain Conversions Deemed Payment ........................     30
Section 4.10. Article Applicable to Paying Agents ......................     31

ARTICLE V. PARTICULAR COVENANTS OF THE COMPANY .........................     31

Section 5.1. Payment of Principal, Premium and Interest ................     31
Section 5.2. Maintenance of Office or Agency ...........................     31
Section 5.3. Appointments to Fill Vacancies in Trustee's Office ........     32
Section 5.4. Provisions as to Paying Agent .............................     32
Section 5.5. Existence .................................................     33
Section 5.6. Rule 144A Information Requirement .........................     33
Section 5.7. Stay, Extension and Usury Laws ............................     34
Section 5.8. Compliance Certificate ....................................     34
</TABLE>

                                       i
<PAGE>   3
<TABLE>
<S>                                                                          <C>
Section 5.9. Liquidated Damages ........................................     34
Section 5.10. Further Instruments and Acts .............................     34

ARTICLE VI. NOTEHOLDERS' LISTS AND REPORTS BY THE COMPANY AND
            THE TRUSTEE ................................................     34

Section 6.1. Noteholders' Lists ........................................     34
Section 6.2. Preservation and Disclosure of Lists ......................     35
Section 6.3. Reports by Trustee ........................................     35
Section 6.4. Reports by Company ........................................     35

ARTICLE VII. DEFAULTS AND REMEDIES .....................................     36

Section 7.1. Events of Default .........................................     36
Section 7.2. Payments of Notes on Default; Suit Therefor ...............     38
Section 7.3. Application of Monies Collected by Trustee ................     40
Section 7.4. Proceedings by Noteholder .................................     41
Section 7.5. Proceedings by Trustee ....................................     41
Section 7.6. Remedies Cumulative and Continuing ........................     42
Section 7.7. Direction of Proceedings and Waiver of Defaults by
             Majority of Noteholders ...................................     42
Section 7.8. Notice of Defaults ........................................     42
Section 7.9. Undertaking to Pay Costs ..................................     43
Section 7.10. Delay or Omission Not Waiver .............................     43

ARTICLE VIII. CONCERNING THE TRUSTEE ...................................     43

Section 8.1. Duties and Responsibilities of Trustee ....................     43
Section 8.2. Reliance on Documents, Opinions, Etc ......................     44
Section 8.3. No Responsibility for Recitals, Etc .......................     45
Section 8.4. Trustee, Paying Agents, Conversion Agents or Registrar
             May Own Notes .............................................     46
Section 8.5. Monies to Be Held in Trust ................................     46
Section 8.6. Compensation and Expenses of Trustee ......................     46
Section 8.7. Officers' Certificate as Evidence .........................     46
Section 8.8. Conflicting Interests of Trustee ..........................     47
Section 8.9. Eligibility of Trustee ....................................     47
Section 8.10. Resignation or Removal of Trustee ........................     47
Section 8.11. Acceptance by Successor Trustee ..........................     48
Section 8.12. Succession by Merger, Etc ................................     49
Section 8.13. Limitation on Rights of Trustee as Creditor ..............     49

ARTICLE IX. CONCERNING THE NOTEHOLDERS .................................     50

Section 9.1. Action by Noteholders .....................................     50
Section 9.2. Proof of Execution by Noteholders .........................     50
Section 9.3. Who Are Deemed Absolute Owners ............................     50
Section 9.4. Company-Owned Notes Disregarded ...........................     50
Section 9.5. Revocation of Consents; Future Holders Bound ..............     51

ARTICLE X. NOTEHOLDERS' MEETINGS .......................................     51

Section 10.1. Purpose of Meetings ......................................     51
Section 10.2. Call of Meetings by Trustee ..............................     52
</TABLE>

                                       ii
<PAGE>   4
<TABLE>
<S>                                                                          <C>
Section 10.3. Call of Meetings by Company or Noteholders ...............     52
Section 10.4. Qualifications for Voting ................................     52
Section 10.5. Regulations ..............................................     52
Section 10.6. Voting ...................................................     53
Section 10.7. No Delay of Rights by Meeting ............................     53

ARTICLE XI. SUPPLEMENTAL INDENTURES ....................................     54

Section 11.1. Supplemental Indentures Without Consent of Noteholders ...     54
Section 11.2. Supplemental Indentures With Consent of Noteholders ......     55
Section 11.3. Effect of Supplemental Indentures ........................     56
Section 11.4. Notation on Notes ........................................     56
Section 11.5. Evidence of Compliance of Supplemental Indenture to Be
              Furnished Trustee ........................................     56

ARTICLE XII. CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE .........     56

Section 12.1. Company May Consolidate, Etc. on Certain Terms ...........     56
Section 12.2. Successor Corporation to Be Substituted ..................     57
Section 12.3. Opinion of Counsel to Be Given Trustee ...................     58

ARTICLE XIII. SATISFACTION AND DISCHARGE OF INDENTURE ..................     58

Section 13.1. Discharge of Indenture ...................................     58
Section 13.2. Deposited Monies to Be Held in Trust by Trustee ..........     59
Section 13.3. Paying Agent to Repay Monies Held ........................     59
Section 13.4. Return of Unclaimed Monies ...............................     59
Section 13.5. Reinstatement ............................................     59

ARTICLE XIV. IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND
             DIRECTORS .................................................     59

Section 14.1. Indenture and Notes Solely Corporate Obligations .........     59

ARTICLE XV. CONVERSION OF NOTES ........................................     60

Section 15.1. Right to Convert .........................................     60
Section 15.2. Exercise of Conversion Privilege; Issuance of Common Stock
              on Conversion; No Adjustment for Interest or Dividends ...     60
Section 15.3. Cash Payments in Lieu of Fractional Shares ...............     62
Section 15.4. Conversion Price .........................................     62
Section 15.5. Adjustment of Conversion Price ...........................     62
Section 15.6. Effect of Reclassification, Consolidation, Merger or Sale      72
Section 15.7. Taxes on Shares Issued ...................................     73
Section 15.8. Reservation of Shares; Shares to Be Fully Paid; Listing
              of Common Stock ..........................................     73
Section 15.9. Responsibility of Trustee ................................     74
Section 15.10. Notice to Holders Prior to Certain Actions ..............     74

ARTICLE XVI. REPURCHASE UPON A REPURCHASE EVENT ........................     76

Section 16.1. Repurchase Right .........................................     76
Section 16.2. Notices; Method of Exercising Repurchase Right, Etc ......     76
Section 16.3. Conditions to the Company's Election to Pay the Repurchase
              Price in Common Stock ....................................     79
</TABLE>

                                      iii
<PAGE>   5
<TABLE>
<S>                                                                          <C>
Section 16.4. Certain Definitions ......................................     80

ARTICLE XVII. MISCELLANEOUS PROVISIONS .................................     81

Section 17.1. Provisions Binding on Company's Successors ...............     81
Section 17.2. Official Acts by Successor Corporation ...................     81
Section 17.3. Addresses for Notices, Etc ...............................     81
Section 17.4. Governing Law ............................................     82
Section 17.5. Evidence of Compliance with Conditions Precedent;
              Certificates to Trustee ..................................     82
Section 17.6. Legal Holidays ...........................................     82
Section 17.7. No Security Interest Created .............................     82
Section 17.8. Trust Indenture Act ......................................     82
Section 17.9. Benefits of Indenture ....................................     83
Section 17.10. Table of Contents, Headings, Etc ........................     83
Section 17.11. Authenticating Agent ....................................     83
Section 17.12. Execution in Counterparts ...............................     84
</TABLE>

                                       iv
<PAGE>   6
         INDENTURE dated as of February 18, 2000 between Alkermes, Inc., a
Pennsylvania corporation as issuer (hereinafter sometimes called the "Company",
as more fully set forth in Section 1.1), and State Street Bank and Trust
Company, a trust company organized under the laws of the Commonwealth of
Massachusetts as trustee (hereinafter sometimes called the "Trustee", as more
fully set forth in Section 1.1).

                              W I T N E S S E T H:

         WHEREAS, for its lawful corporate purposes, the Company has duly
authorized the issue of its 3-3/4% Convertible Subordinated Notes due 2007
(hereinafter sometimes called the "Notes"), in an aggregate principal amount not
to exceed $200,000,000 ($250,000,000 if the option to purchase additional Notes
granted to the Initial Purchasers (as defined herein) pursuant to the Purchase
Agreement (as defined herein) is exercised in full) and in order to provide the
terms and conditions upon which the Notes are to be authenticated, issued and
delivered, the Company has duly authorized the execution and delivery of this
Indenture; and

         WHEREAS, the Notes, the certificate of authentication to be borne by
the Notes, a form of assignment, a form of option to elect repayment upon a
Repurchase Event (as defined herein), a form of conversion notice and a
certificate of transfer to be borne by the Notes are to be substantially in the
forms hereinafter provided for; and

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

         NOW, THEREFORE, THIS INDENTURE WITNESSETH:

         That in order to declare the terms and conditions upon which the Notes
are, and are to be, authenticated, issued and delivered, and in consideration of
the premises and of the purchase and acceptance of the Notes by the holders
thereof, the Company covenants and agrees with the Trustee for the equal and
proportionate benefit of the respective holders from time to time of the Notes
(except as otherwise provided below), as follows:
<PAGE>   7
                                   ARTICLE I

                                  DEFINITIONS

         Section 1.1. Definitions. The terms defined in this Section 1.1 (except
as herein otherwise expressly provided or unless the context otherwise requires)
for all purposes of this Indenture and of any indenture supplemental hereto
shall have the respective meanings specified in this Section 1.1. All other
terms used in this Indenture, which are defined in the Trust Indenture Act or
which are by reference therein defined in the Securities Act (except as herein
otherwise expressly provided or unless the context otherwise requires) shall
have the meanings assigned to such terms in said Trust Indenture Act and in said
Securities Act as in force at the date of the execution of this Indenture. The
words "herein," "hereof," "hereunder," and words of similar import refer to this
Indenture as a whole and not to any particular Article, Section or other
Subdivision. The terms defined in this Article include the plural as well as the
singular.

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

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

         Board Resolution: The term "Board Resolution" means a copy of a
resolution certified by the Secretary or an Assistant Secretary of the Company
to have been duly adopted by the Board of Directors, or duly authorized
committee thereof (to the extent permitted by applicable law), and to be in full
force and effect on the date of such certification, and delivered to the
Trustee.

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

         Change in Control: The term "Change in Control" shall have the meaning
specified in Section 16.4.

         close of business: The term "close of business" means 5 p.m. (New York
City time).

         Commission: The term "Commission" shall mean the Securities and
Exchange Commission.

                                       2
<PAGE>   8
         Common Stock: The term "Common Stock" shall mean any stock of any class
of the Company which has 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 is not subject to redemption by the Company.
Subject to the provisions of Section 15.6, however, shares issuable on
conversion of Notes shall include only shares of the class designated as common
stock of the Company at the date of this Indenture or shares of any class or
classes resulting from any reclassification or reclassifications thereof and
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
that if at any time there shall be more than one such resulting class, the
shares of each such class then so issuable shall be substantially in the
proportion which the total number of shares of such class resulting from all
such reclassifications bears to the total number of shares of all such classes
resulting from all such reclassifications.

         Company: The term "Company" shall mean Alkermes, Inc., a Pennsylvania
corporation, and subject to the provisions of Article XII, shall include its
successors and assigns.

         Company Notice: The term "Company Notice" shall have the meaning
specified in Section 16.2.

         Conversion Price: The term "Conversion Price" shall have the meaning
specified in Section 15.4.

         Corporate Trust Office: The term "Corporate Trust Office," or other
similar term, shall mean the office of the Trustee at which at any particular
time its corporate trust business shall be principally administered, which
office is, at the date as of which this Indenture is dated, located at 2 Avenue
de Lafayette, Boston, MA 02111, Attention: Corporate Trust Department (Alkermes,
Inc. 3-3/4% Convertible Subordinated Notes due 2007).

         Custodian: The term "Custodian" means State Street Bank and Trust
Company with respect to the Notes in global form, or any successor entity
thereto.

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

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

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

         Designated Senior Indebtedness: The term "Designated Senior
Indebtedness" means (i) the Company's obligations in respect of money now or
hereafter borrowed from Fleet National

                                       3
<PAGE>   9
Bank or any commercial bank and (ii) the Company's obligations under any
particular Senior Indebtedness in which the instrument creating or evidencing
the same or the assumption or guarantee thereof (or related agreements or
documents to which the Company is a party) expressly provides that such Senior
Indebtedness shall be "Designated Senior Indebtedness" for purposes of this
Indenture (provided that such instrument, agreement or other document may place
limitations and conditions on the right of such Senior Indebtedness to exercise
the rights of Designated Senior Indebtedness).

         Event of Default: The term "Event of Default" shall mean any event
specified in Section 7.1, continued for the period of time, if any, and after
the giving of notice, if any, therein designated.

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

         Expiration Time: The term "Expiration Time" shall have the meaning
specified in Section 15.5(f) or 15.5(g).

         Global Note: The term "Global Note" shall have the meaning specified in
Section 2.5(b).

         Indebtedness: The term "Indebtedness" shall mean any obligations of, or
guaranteed or assumed by, the Company or any Significant Subsidiary for borrowed
money.

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

         Initial Purchasers: The term "Initial Purchasers" means FleetBoston
Robertson Stephens, Inc., Adams, Harkness & Hill, Inc., ING Barings LLC, J.P.
Morgan Securities Inc., PaineWebber Incorporated, SG Cowen Securities
Corporation and U.S. Bancorp Piper Jaffray Inc.

         Liquidated Damages: The term "Liquidated Damages" means all liquidated
damages then owing pursuant to Section 3 of the Registration Rights Agreement.

         Make-Whole Payment: The term "Make-Whole Payment" shall have the
meaning specified in Section 3.1.

         Note or Notes: The terms "Note" or "Notes" shall mean any Note or
Notes, as the case may be, authenticated and delivered under this Indenture.

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

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

                                       4
<PAGE>   10
         Note register: The term "Note register" shall have the meaning
specified in Section 2.5.

         Officers' Certificate: The term "Officers' Certificate", when used with
respect to the Company, shall mean a certificate signed by (a) one of the
President, the Chief Executive Officer, any Executive or Senior Vice President
or any Vice President (whether or not designated by a number or numbers or word
added before or after the title "Vice President") and (b) by one of the
Treasurer or any Assistant Treasurer, Secretary or any Assistant Secretary or
Controller of the Company, which is delivered to the Trustee. Each such
certificate shall include the statements provided for in Section 17.5 if and to
the extent required by the provisions of such Section.

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

         outstanding: The term "outstanding," when used with reference to Notes,
shall, subject to the provisions of Section 9.4, mean, as of any particular
time, all Notes authenticated and delivered by the Trustee under this Indenture,
except:

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

                  (b) Notes, or portions thereof, for the payment, or redemption
         of which monies in the necessary amount shall have been deposited in
         trust with the Trustee or with any paying agent (other than the
         Company) or shall have been set aside and segregated in trust by the
         Company (if the Company shall act as its own paying agent); provided
         that if such Notes are to be redeemed, as the case may be, prior to the
         maturity thereof, notice of such redemption shall have been given as
         provided in Section 3.2, or provision satisfactory to the Trustee shall
         have been made for giving such notice;

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

                  (d) Notes converted into Common Stock pursuant to Article XV
         and Notes deemed not outstanding pursuant to Section 3.2.

         Payment Blockage Notice: The term "Payment Blockage Notice" shall have
the meaning specified in Section 4.2(b).

         person: The term "person" shall mean an individual, a corporation, a
limited liability company, an association, a partnership, an individual, a joint
venture, a joint stock company, a

                                       5
<PAGE>   11
trust, an unincorporated organization or a government or an agency or a
political subdivision thereof.

         Portal Market: The term "Portal Market" shall mean The Portal Market
operated by the National Association of Securities Dealers, Inc. or any
successor thereto.

         Predecessor Note: The term "Predecessor Note" of any particular Note
shall mean every previous Note evidencing all or a portion of the same debt as
that evidenced by such particular Note; and, for the purposes of this
definition, any Note authenticated and delivered under Section 2.6 in lieu of a
lost, destroyed or stolen Note shall be deemed to evidence the same debt as the
lost, destroyed or stolen Note that it replaces.

         Purchase Agreement: The term "Purchase Agreement" means that certain
Purchase Agreement, dated as of February 15, 2000, by and among the Company and
the Initial Purchasers (as amended from time to time by the parties thereto).

         Purchased Shares: The term "Purchased Shares" shall have the meaning
specified in Sections 15.5(f) and 15.5(g).

         QIB: The term "QIB" shall mean a "qualified institutional buyer" as
defined in Rule 144A.

         record date: The term "record date" shall have the meaning specified in
Section 2.3.

         Registration Rights Agreement: The term "Registration Rights Agreement"
means that certain Registration Rights Agreement, dated as of February 18, 2000,
between the Company and the Initial Purchasers.

         Repurchase Event: The term "Repurchase Event" shall have the meaning
specified in Section 16.4.

         Repurchase Price: The term "Repurchase Price" has the meaning specified
in Section 16.1.

         Responsible Officer: The term "Responsible Officer", when used with
respect to the Trustee, shall mean an officer of the Trustee in the Corporate
Trust Office assigned and duly authorized by the Trustee to administer its
obligations under this Indenture.

         Restricted Securities: The term "Restricted Securities" has the meaning
specified in Section 2.5(d).

         Rule 144A: The term "Rule 144A" shall mean Rule 144A as promulgated
under the Securities Act.

         Securities Act: The term "Securities Act" means the Securities Act of
1933, as amended, and the rules and regulations promulgated thereunder.

                                       6
<PAGE>   12
         Senior Indebtedness: The term "Senior Indebtedness" means the principal
of, premium, if any, interest on (including any interest accruing after the
filing of a petition by or against the Company under any bankruptcy law, whether
or not allowed as a claim after such filing in any proceeding under such
bankruptcy law) and any other payment due pursuant to, any of the following,
whether outstanding on the date of this Indenture or thereafter incurred or
created:

                  (a) all indebtedness of the Company for money borrowed that is
         evidenced by notes, debentures, bonds or other securities (including,
         but not limited to, those which are convertible or exchangeable for
         securities of the Company);

                  (b) all indebtedness of the Company due and owing with respect
         to letters of credit, bank guarantees or bankers' acceptances
         (including, but not limited to, reimbursement obligations with respect
         thereto);

                  (c) all indebtedness or other obligations of the Company due
         and owing with respect to interest rate and currency swap agreements,
         cap, floor and collar agreements, currency spot and forward contracts
         and other similar agreements and arrangements;

                  (d) all indebtedness consisting of commitment or standby fees
         due and payable to lending institutions with respect to credit
         facilities or letters of credit available to the Company;

                  (e) all obligations of the Company under leases required or
         permitted to be capitalized under generally accepted accounting
         principles;

                  (f) all indebtedness or obligations of others of the kinds
         described in any of the preceding clauses (a), (b), (c), (d) or (e)
         assumed by or guaranteed in any manner by the Company or in effect
         guaranteed (directly or indirectly) by the Company through an agreement
         to purchase, contingent or otherwise, and all obligations of the
         Company under any such guarantee or other arrangements; and

                  (g) all renewals, extensions, refundings, deferrals,
         amendments or modifications of indebtedness or obligations of the kinds
         described in any of the preceding clauses (a), (b), (c), (d), (e) or
         (f);

unless in the case of any particular indebtedness, obligation, renewal,
extension, refunding, amendment, modification or supplement, the instrument or
other document creating or evidencing the same or the assumption or guarantee of
the same expressly provides that such indebtedness, obligation, renewal,
extension, refunding, amendment, modification or supplement is subordinate to,
or is not superior to, or is pari passu with, the Notes; provided that Senior
Indebtedness shall not include (i) any indebtedness of any kind of the Company
to any Subsidiary of the Company, a majority of the voting stock of which is
owned, directly or indirectly, by the Company, (ii) indebtedness for trade
payables or constituting the deferred purchase price of assets or services
incurred in the ordinary course of business, or (iii) the Notes.

                                       7
<PAGE>   13
         Significant Subsidiary: The term "Significant Subsidiary" means, with
respect to 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 of the Securities and Exchange Commission.

         Subsidiary: The term "Subsidiary" means a corporation more than 50% of
the outstanding voting stock of which is owned, directly or indirectly, by the
Company or by one or more other Subsidiaries, or by the Company and one or more
other Subsidiaries. For the purposes of this definition, "voting stock" means
stock which ordinarily has voting power for the election of directors, whether
at all times or only so long as no senior class of stock has such voting power
by reason of any contingency.

         Trading Day: The term "Trading Day" has the meaning specified in
Section 15.5(h)(5).

         transfer: The term "transfer" shall have the meaning specified in
Section 2.5(d).

         Trigger Event: The term "Trigger Event" shall have the meaning
specified in Section 15.5(d).

         Trust Indenture Act: The term "Trust Indenture Act" shall mean the
Trust Indenture Act of 1939, as amended, as it was in force at the date of
execution of this Indenture, except as provided in Sections 11.3 and 15.6;
provided, however, that in the event the Trust Indenture Act of 1939 is amended
after the date hereof, the term "Trust Indenture Act" shall mean, to the extent
required by such amendment, the Trust Indenture Act of 1939 as so amended.

         Trustee: The term "Trustee" shall mean State Street Bank and Trust
Company, and its successors and any corporation resulting from or surviving any
consolidation or merger to which it or its successors may be a party and any
successor trustee at the time serving as successor trustee hereunder.

         The definitions of certain other terms are as specified in Article XV
and Article XVI.

                                       8
<PAGE>   14
                                   ARTICLE II

                  ISSUE, DESCRIPTION, EXECUTION, REGISTRATION
                             AND EXCHANGE OF NOTES

         Section 2.1. Designation, Amount and Issue of Notes. The Notes shall be
designated as "3-3/4% Convertible Subordinated Notes due 2007." Notes not to
exceed the aggregate principal amount of $200,000,000 (or $250,000,000 if the
option set forth in Section 2(b) of the Purchase Agreement is exercised in full)
upon the execution of this Indenture, or (except pursuant to Sections 2.5, 2.6,
3.3, 15.2 and 16.2) from time to time thereafter, may be executed by the Company
and delivered to the Trustee for authentication, and the Trustee shall thereupon
authenticate and deliver said Notes upon the written order of the Company,
signed by the Company's (a) President, Executive or Senior Vice President or any
Vice President (whether or not designated by a number or numbers or word or
words added before or after the title "Vice President") and (b) Treasurer or
Assistant Treasurer or its Secretary or any Assistant Secretary, without any
further action by the Company hereunder, provided, however, that said Notes may
not be executed, delivered or authenticated unless and until the Trustee shall
have received an Officers' Certificate and opinion of counsel.

         Section 2.2. Form of Notes. The Notes and the Trustee's certificate of
authentication to be borne by such Notes shall be substantially in the form set
forth in Exhibit A, which is incorporated in and made a part of this Indenture.

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

         The Global Note shall represent such of the outstanding Notes as shall
be specified therein and shall provide that it shall represent the aggregate
amount of outstanding Notes from time to time endorsed thereon and that the
aggregate amount of outstanding Notes represented thereby may from time to time
be increased or reduced to reflect transfers or exchanges permitted hereby. Any
endorsement of the Global Note to reflect the amount of any increase or decrease
in the amount of outstanding Notes represented thereby shall be made by the
Trustee or the Custodian, at the direction of the Trustee, in such manner and
upon instructions given by the holder of such Notes in accordance with this
Indenture. Payment of principal of and interest and premium, if any (including
any redemption price), on the Global Note shall be made to the holder of such
Note.

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

                                       9
<PAGE>   15
         Section 2.3. Date and Denomination of Notes; Payments of Interest. The
Notes shall be issuable in registered form without coupons in denominations of
$1,000 principal amount and integral multiples thereof. Every Note shall be
dated the date of its authentication, and shall bear interest from the
applicable date and accrued interest shall be payable semiannually on February
15 and August 15, of each year, commencing August 15, 2000 as specified on the
face of the form of Note, attached as Exhibit A hereto.

         The person in whose name any Note (or its Predecessor Note) is
registered at the close of business on any record date with respect to any
interest payment date (including any Note that is converted after the record
date and on or before the interest payment date) shall be entitled to receive
the interest payable on such interest payment date notwithstanding the
cancellation of such Note upon any transfer, exchange or conversion subsequent
to the record date and on or prior to such interest payment date; provided that,
in the case of any Note, or portion thereof, called for redemption pursuant to
Article III on a redemption date, or repurchased by the Company pursuant to
Article XVI on a repurchase date, during the period from the close of business
on the record date to the close of business on the Business Day next preceding
the following interest payment date, interest shall not be paid to the person in
whose name the Note, or portion thereof, is registered on the close of business
on such record date, and the Company shall have no obligation to pay interest on
such Note or portion thereof except to the extent required to be paid upon such
redemption or repurchase in accordance with Article III or Article XVI. Interest
may, at the option of the Company, be paid by check mailed to the address of
such person on the Note registry; provided that, with respect to any holder of
Notes with an aggregate principal amount equal to or in excess of $2,000,000, at
the request of such holder in writing to the Company, interest on such holder's
Notes shall be paid by wire transfer in immediately available funds in
accordance with the wire transfer instruction supplied by such holder from time
to time to the Trustee and paying agent (if different from Trustee) at least two
days prior to the applicable record date. The term "record date" with respect to
any interest payment date shall mean the February 1 or August 1 preceding said
February 15 or August 15, respectively.

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

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

                  (1) The Company may elect to make payment of any Defaulted
         Interest to the persons in whose names the Notes (or their respective
         Predecessor Notes) are registered at the close of business on a special
         record date for the payment of such Defaulted Interest, which shall be
         fixed in the following manner. The Company shall notify the Trustee in
         writing of the amount of Defaulted Interest to be paid on each Note and
         the date of the payment (which shall be not less than twenty-five (25)
         days after the receipt

                                       10
<PAGE>   16
         by the Trustee of such notice, unless the Trustee shall consent to an
         earlier date), and at the same time the Company shall deposit with the
         Trustee an amount of money equal to the aggregate amount to be paid in
         respect of such Defaulted Interest or shall make arrangements
         satisfactory to the Trustee for such deposit prior to the date of the
         proposed payment, such money when deposited to be held in trust for the
         benefit of the persons entitled to such Defaulted Interest as in this
         clause provided. Thereupon the Trustee shall fix a special record date
         for the payment of such Defaulted Interest which shall be not more than
         fifteen (15) days and not less than ten (10) days prior to the date of
         the proposed payment and not less than ten (10) days after the receipt
         by the Trustee of the notice of the proposed payment. The Trustee shall
         promptly notify the Company of such special record date and, in the
         name and at the expense of the Company, shall cause notice of the
         proposed payment of such Defaulted Interest and the special record date
         therefor to be mailed, first-class postage prepaid, to each Noteholder
         as of such special record date at his address as it appears in the Note
         register, not less than ten (10) days prior to such special record
         date. Notice of the proposed payment of such Defaulted Interest and the
         special record date therefor having been so mailed, such Defaulted
         Interest shall be paid to the persons in whose names the Notes (or
         their respective Predecessor Notes) were registered at the close of
         business on such special record date and shall no longer be payable
         pursuant to the following clause (2).

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

         Section 2.4. Execution of Notes. The Notes shall be signed in the name
and on behalf of the Company by the facsimile signature of its President, its
Chief Executive Officer, any of its Executive or Senior Vice Presidents, or any
of its Vice Presidents (whether or not designated by a number or numbers or word
or words added before or after the title "Vice President") and attested by the
facsimile signature of its Secretary or any of its Assistant Secretaries (which
may be printed, engraved or otherwise reproduced thereon, by facsimile or
otherwise). Only such Notes as shall bear thereon a certificate of
authentication substantially in the form set forth on the form of Note attached
as Exhibit A hereto, manually executed by the Trustee (or an authenticating
agent appointed by the Trustee as provided by Section 17.11), shall be entitled
to the benefits of this Indenture or be valid or obligatory for any purpose.
Such certificate by the Trustee (or such an authenticating agent) upon any Note
executed by the Company shall be conclusive evidence that the Note so
authenticated has been duly authenticated and delivered hereunder and that the
holder is entitled to the benefits of this Indenture.

         In case any officer of the Company who shall have signed any of the
Notes shall cease to be such officer before the Notes so signed shall have been
authenticated and delivered by the Trustee, or disposed of by the Company, such
Notes nevertheless may be authenticated and delivered or disposed of as though
the person who signed such Notes had not ceased to be such

                                       11
<PAGE>   17
officer of the Company; and any Note may be signed on behalf of the Company by
such persons as, at the actual date of the execution of such Note, shall be the
proper officers of the Company, although at the date of the execution of this
Indenture any such person was not such an officer.

Section 2.5 Exchange and Registration of Transfer of Notes; Restrictions on
Transfer; Depositary.

                  (a) The Company shall cause to be kept at the Corporate Trust
         Office a register (the register maintained in such office and in any
         other office or agency of the Company designated pursuant to Section
         5.2 being herein sometimes collectively referred to as the "Note
         register") in which, subject to such reasonable regulations as it may
         prescribe, the Company shall provide for the registration of Notes and
         of transfers of Notes. Such register shall be in written form or in any
         form capable of being converted into written form within a reasonable
         period of time. The Trustee is hereby appointed "Note registrar" for
         the purpose of registering Notes and transfers of Notes as herein
         provided. The Company may appoint one or more co-registrars in
         accordance with Section 5.2.

                  Upon surrender for registration of transfer of any Note to the
         Note registrar or any co-registrar, and satisfaction of the
         requirements for such transfer set forth in this Section 2.5, the
         Company shall execute, and the Trustee shall authenticate and deliver,
         in the name of the designated transferee or transferees, one or more
         new Notes of any authorized denominations and of a like aggregate
         principal amount and bearing such restrictive legends as may be
         required by this Indenture.

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

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

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

                  None of the Company, the Trustee, the Note registrar or any
         co-registrar shall be required to exchange or register a transfer of
         (a) any Notes for a period of fifteen (15) days next preceding any
         selection of Notes to be redeemed or (b) any Notes called for

                                       12
<PAGE>   18
         redemption or, if a portion of any Note is selected or called for
         redemption, such portion thereof selected or called for redemption or
         (c) any Notes surrendered for conversion or, if a portion of any Note
         is surrendered for conversion, such portion thereof surrendered for
         conversion or (d) any Notes, or a portion of any Note, surrendered for
         repurchase (and not withdrawn) in connection with a Repurchase Event.

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

                  (b) So long as the Notes are eligible for book-entry
         settlement with the Depositary, unless otherwise required by law, all
         Notes issued to QIBs pursuant to Rule 144A of the Securities Act to be
         traded on The Portal Market shall be represented by a Note in global
         form (the "Global Note") registered in the name of the Depositary or
         the nominee of the Depositary. The transfer and exchange of beneficial
         interests in the Global Note, which does not involve the issuance of a
         definitive Note, shall be effected through the Depositary (but not the
         Trustee or the Custodian) in accordance with this Indenture (including
         the restrictions on transfer set forth herein) and the procedures of
         the Depositary therefor.

                  Notes resold to persons who are not QIBs will be issued in
         definitive registered form and may not be represented by the Global
         Note. In addition, at any time at the request of a QIB that is a
         beneficial holder of an interest in the Global Note, such beneficial
         holder shall be entitled to obtain a definitive Note upon written
         request to the Trustee and the Custodian in accordance with the
         standing instructions and procedures existing between the Depositary
         and the Custodian for the issuance thereof. Upon receipt of any such
         request, the Trustee or the Custodian, at the direction of the Trustee,
         will cause, in accordance with the standing instructions and procedures
         existing between the Depositary and the Custodian, the aggregate
         principal amount of the Global Note to be reduced by the principal
         amount of the definitive Note issued upon such request to such
         beneficial holder and, following such reduction, the Company will
         execute and the Trustee will authenticate and deliver to such
         beneficial holder (or its nominee) a definitive Note or Notes in the
         appropriate aggregate principal amount in the name of such beneficial
         holder (or its nominee) and bearing such restrictive legends as may be
         required by this Indenture.

                  Any transfer of a beneficial interest in the Global Note which
         cannot be effected through book-entry settlement must be effected by
         the delivery to the transferee (or its nominee) of a definitive Note or
         Notes registered in the name of the transferee (or its nominee) on the
         books maintained by the Trustee in accordance with the transfer
         restrictions set forth herein. With respect to any such transfer, the
         Trustee or the Custodian, at the direction of the Trustee, will cause,
         in accordance with the standing instructions and procedures existing
         between the Depositary and the Custodian, the aggregate principal
         amount of the Global Note to be reduced by the principal amount of the
         beneficial interest in the Global Note being transferred and, following
         such reduction,

                                       13
<PAGE>   19
         the Company will execute and the Trustee will authenticate and deliver
         to the transferee (or such transferee's nominee, as the case may be), a
         Note or Notes in the appropriate aggregate principal amount in the name
         of such transferee (or its nominee) and bearing such restrictive
         legends as may be required by this Indenture.

                  (c) So long as the Notes are eligible for book-entry
         settlement, unless otherwise required by law, upon any transfer of a
         definitive Note to a QIB in accordance with Rule 144A, unless otherwise
         requested by the transferor, and upon receipt of the definitive Note or
         Notes being so transferred, together with a certification from the
         transferor that the transferee is a QIB (or other evidence satisfactory
         to the Trustee), the Trustee shall make or direct the Custodian to
         make, an endorsement on the Global Note to reflect an increase in the
         aggregate principal amount of the Notes represented by the Global Note
         by the principal amount of the Note being transferred to the QIB, the
         Trustee shall cancel such definitive Note or Notes and cause, or direct
         the Custodian to cause, in accordance with the standing instructions
         and procedures existing between the Depositary and the Custodian, the
         aggregate principal amount of Notes represented by the Global Note to
         be increased accordingly; provided that no definitive Note, or portion
         thereof, in respect of which the Company or an Affiliate of the Company
         held any beneficial interest shall be included in the Global Note until
         such definitive Note is freely tradable in accordance with Rule 144(k);
         provided further that the Trustee shall authenticate and deliver Notes
         in definitive form upon any transfer of a beneficial interest in the
         Global Note to the Company or any Affiliate of the Company.

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

                  (d) Every Note that bears or is required under this Section
         2.5(d) to bear either of the legends set forth in this Section 2.5(d)
         (together with any Common Stock issued upon conversion of the Notes and
         required to bear either of the legends set forth in Section 2.5(e),
         collectively, the "Restricted Securities") shall be subject to the
         restrictions on transfer set forth in this Section 2.5(d) (including
         one of the legends set forth below), unless such restrictions on
         transfer shall be waived by written consent of the Company, and the
         holder of each such Restricted Security, by such holder's acceptance
         thereof, agrees to be bound by all such restrictions on transfer. As
         used in Sections 2.5(d) and 2.5(e), the term "transfer" encompasses any
         sale, pledge, transfer or other disposition whatsoever of any
         Restricted Security.

                                       14
<PAGE>   20
                  Until two (2) years after the original issuance date of any
         Note, any certificate evidencing such Note (and all securities issued
         in exchange therefor or substitution thereof, other than Common Stock,
         if any, issued upon conversion thereof which shall bear the legend set
         forth in Section 2.5(e), if applicable) shall bear a legend in
         substantially the following form (unless such Notes have been
         transferred pursuant to a registration statement that has been declared
         effective under the Securities Acts and which continues to be effective
         at the time of such transfer, pursuant to the exemption from
         registration provided by Rule 144 under the Securities Act, or unless
         otherwise agreed by the Company in writing, with notice thereof to the
         Trustee):

                  THE NOTE EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE
                  U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT")
                  OR ANY STATE SECURITIES LAWS, AND MAY NOT BE OFFERED OR SOLD
                  EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS
                  ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT IT IS A
                  "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER
                  THE SECURITIES ACT); (2) AGREES THAT IT WILL NOT WITHIN TWO
                  YEARS AFTER THE ORIGINAL ISSUANCE OF THE NOTE EVIDENCED HEREBY
                  RESELL OR OTHERWISE TRANSFER THE NOTE EVIDENCED HEREBY OR THE
                  COMMON STOCK ISSUABLE UPON CONVERSION OF SUCH NOTE EXCEPT (A)
                  TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) TO A QUALIFIED
                  INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE
                  SECURITIES ACT, (C) PURSUANT TO THE EXEMPTION FROM
                  REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF
                  AVAILABLE) OR (D) PURSUANT TO A REGISTRATION STATEMENT WHICH
                  HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT (AND
                  WHICH CONTINUES TO BE EFFECTIVE AT THE TIME OF SUCH TRANSFER);
                  AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE
                  NOTE EVIDENCED HEREBY IS TRANSFERRED (OTHER THAN A TRANSFER
                  PURSUANT TO CLAUSE 2(D) ABOVE) A NOTICE SUBSTANTIALLY TO THE
                  EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THE
                  NOTE EVIDENCED HEREBY WITHIN TWO YEARS AFTER THE ORIGINAL
                  ISSUANCE OF SUCH NOTE (OTHER THAN A TRANSFER PURSUANT TO
                  CLAUSE 2(D) ABOVE), THE HOLDER MUST CHECK THE APPROPRIATE BOX
                  SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH
                  TRANSFER AND SUBMIT THIS CERTIFICATE TO STATE STREET BANK AND
                  TRUST COMPANY, AS TRUSTEE. IF THE PROPOSED TRANSFER IS
                  PURSUANT TO CLAUSE 2(C) ABOVE, THE HOLDER MUST, PRIOR TO SUCH
                  TRANSFER, FURNISH TO STATE STREET BANK AND TRUST COMPANY, AS
                  TRUSTEE, SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER

                                       15
<PAGE>   21
                  INFORMATION AS THE COMPANY MAY REASONABLY REQUIRE TO CONFIRM
                  THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION
                  FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
                  REQUIREMENTS OF THE SECURITIES ACT. THIS LEGEND WILL BE
                  REMOVED UPON THE EARLIER OF THE TRANSFER OF THE NOTE EVIDENCED
                  HEREBY PURSUANT TO CLAUSE 2(C) OR 2(D) ABOVE OR THE EXPIRATION
                  OF TWO YEARS FROM THE ORIGINAL ISSUANCE OF THE NOTE EVIDENCED
                  HEREBY.

                  Any Note (or security issued in exchange or substitution
         therefor) as to which such restrictions on transfer shall have expired
         in accordance with their terms may, upon surrender of such Note for
         exchange to the Note registrar in accordance with the provisions of
         this Section 2.5, be exchanged for a new Note or Notes, of like tenor
         and aggregate principal amount, which shall not bear the restrictive
         legend required by this Section 2.5(d).

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

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

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

                  If a Note in certificated form is issued in exchange for any
         portion of a Global Note after the close of business on any record date
         at the office or agency where such exchange occurs and before the
         opening of business at such office or agency on the next succeeding
         interest payment date, interest will not be payable on such interest
         payment date in respect of such certificated Note, but will be payable
         on such interest payment

                                       16
<PAGE>   22
         date only with respect to the exchanged portion of the Global Note in
         accordance with the provisions of this Indenture.

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

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

                  (e) Until two (2) years after the original issuance date of
         any Note, any stock certificate representing Common Stock issued upon
         conversion of such Note shall bear a legend in substantially the
         following form (unless the Note or such Common Stock has been sold
         pursuant to the exemption from registration provided by Rule 144 under
         the Securities Act or pursuant to a registration statement that has
         been declared effective under the Securities Act, and which continues
         to be effective at the time of such transfer, or such Common Stock has
         been issued upon conversion of Notes that have been transferred
         pursuant to a registration statement that has been declared effective
         under the Securities Act or pursuant to the exemption from registration
         provided by Rule 144 under the Securities Act, or unless otherwise
         agreed by the Company with written notice thereof to the Trustee and
         any transfer agent for the Common Stock):

                  THE COMMON STOCK EVIDENCED HEREBY HAS NOT BEEN REGISTERED
                  UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE
                  "SECURITIES ACT") OR ANY STATE SECURITIES LAWS, AND MAY NOT BE
                  OFFERED OR SOLD EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE.
                  THE HOLDER HEREOF AGREES THAT UNTIL THE EXPIRATION OF TWO
                  YEARS AFTER THE ORIGINAL ISSUANCE OF THE NOTE UPON THE
                  CONVERSION OF WHICH THE COMMON STOCK EVIDENCED HEREBY WAS
                  ISSUED, (1) IT WILL NOT RESELL OR OTHERWISE TRANSFER THE
                  COMMON STOCK EVIDENCED HEREBY EXCEPT (A) TO THE COMPANY OR ANY
                  SUBSIDIARY

                                       17
<PAGE>   23
                  THEREOF, (B) TO A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED
                  IN RULE 144A UNDER THE SECURITIES ACT) IN COMPLIANCE WITH RULE
                  144A, (C) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED
                  BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), OR (D)
                  PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED
                  EFFECTIVE UNDER THE SECURITIES ACT (AND WHICH CONTINUES TO BE
                  EFFECTIVE AT THE TIME OF SUCH TRANSFER); (2) PRIOR TO ANY SUCH
                  TRANSFER (OTHER THAN A TRANSFER PURSUANT TO CLAUSE 1(D)
                  ABOVE), IT WILL FURNISH TO EQUISERVE, AS TRANSFER AGENT, SUCH
                  CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS THE
                  COMPANY MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER
                  IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A
                  TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF
                  THE SECURITIES ACT; AND (3) IT WILL DELIVER TO EACH PERSON TO
                  WHOM THE COMMON STOCK EVIDENCED HEREBY IS TRANSFERRED (OTHER
                  THAN A TRANSFER PURSUANT TO CLAUSE 1(D) ABOVE) A NOTICE
                  SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. THIS LEGEND WILL
                  BE REMOVED UPON THE EARLIER OF THE TRANSFER OF THE COMMON
                  STOCK EVIDENCED HEREBY PURSUANT TO CLAUSE 1(C) OR 1(D) ABOVE
                  OR THE EXPIRATION OF TWO YEARS FROM THE ORIGINAL ISSUANCE OF
                  THE NOTE UPON THE CONVERSION OF WHICH THE COMMON STOCK
                  EVIDENCED HEREBY WAS ISSUED.

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

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

                  (g) Notwithstanding any provision of Section 2.5 to the
         contrary, in the event Rule 144(k) as promulgated under the Securities
         Act (or any successor rule) is amended

                                       18
<PAGE>   24
         to change the two-year period under Rule 144(k) (or the corresponding
         period under any successor rule), from and after receipt by the Trustee
         of the Officers' Certificate and Opinion of Counsel provided for in
         this Section 2.5(g), (i) each reference in Section 2.5(d) to "two (2)
         years" and in the restrictive legend set forth in such paragraph to
         "TWO YEARS" shall be deemed for all purposes hereof to be references to
         such changed period, (ii) each reference in Section 2.5(e) to "two (2)
         years" and in the restrictive legend set forth in such paragraph to
         "TWO YEARS" shall be deemed for all purposes hereof to be references to
         such changed period and (iii) all corresponding references in the Notes
         and the restrictive legends thereon shall be deemed for all purposes
         hereof to be references to such changed period, provided that such
         changes shall not become effective if they are otherwise prohibited by,
         or would otherwise cause a violation of, the then-applicable federal
         securities laws. As soon as practicable after the Company has knowledge
         of the effectiveness of any such amendment to change the two-year
         period under Rule 144(k) (or the corresponding period under any
         successor rule), unless such changes would otherwise be prohibited by,
         or would otherwise cause a violation of, the then-applicable securities
         law, the Company shall provide to the Trustee an Officers' Certificate
         and Opinion of Counsel informing the Trustee of the effectiveness of
         such amendment and the effectiveness of the foregoing changes to
         Sections 2.5(d) and 2.5(e) and the Notes. The provisions of this
         Section 2.5(g) will not be effective until such time as the Opinion of
         Counsel and Officers' Certificate have been received by the Trustee
         hereunder. This Section 2.5(g) shall apply to successive amendments to
         Rule 144(k) (or any successor rule) changing the holding period
         thereunder.

         Section 2.6. Mutilated, Destroyed, Lost or Stolen Notes. In case any
Note shall become mutilated or be destroyed, lost or stolen, the Company in its
discretion may execute, and upon its request the Trustee or an authenticating
agent appointed by the Trustee shall authenticate and deliver, a new Note,
bearing a number not contemporaneously outstanding, in exchange and substitution
for the mutilated Note, or in lieu of and in substitution for the Note so
destroyed, lost or stolen. In every case the applicant for a substituted Note
shall furnish to the Company, to the Trustee and, if applicable, to such
authenticating agent such security or indemnity as may be required by them to
save each of them harmless from any loss, liability, cost or expense caused by
or connected with such substitution, and, in every case of destruction, loss or
theft, the applicant shall also furnish to the Company, to the Trustee and, if
applicable, to such authenticating agent evidence to their satisfaction of the
destruction, loss or theft of such Note and of the ownership thereof.

         The Trustee or such authenticating agent may authenticate any such
substituted Note and deliver the same upon the receipt of such security or
indemnity as the Trustee, the Company and, if applicable, such authenticating
agent may require. Upon the issuance of any substituted Note, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses connected
therewith. In case any Note which has matured or is about to mature or has been
called for redemption or is about to be converted into Common Stock shall become
mutilated or be destroyed, lost or stolen, the Company may, instead of issuing a
substitute Note, pay or authorize the payment of or convert or authorize the
conversion of the same (without surrender thereof except in the case of a
mutilated Note), as the case may be, if the applicant for such payment or

                                       19
<PAGE>   25
conversion shall furnish to the Company, to the Trustee and, if applicable, to
such authenticating agent such security or indemnity as may be required by them
to save each of them harmless for any loss, liability, cost or expense caused by
or connected with such substitution, and, in case of destruction, loss or theft,
evidence satisfactory to the Company, the Trustee and, if applicable, any paying
agent or conversion agent of the destruction, loss or theft of such Note and of
the ownership thereof.

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

         Section 2.7. Temporary Notes. Pending the preparation of definitive
Notes, the Company may execute and the Trustee or an authenticating agent
appointed by the Trustee shall, upon written request of the Company,
authenticate and deliver temporary Notes (printed or lithographed). Temporary
Notes shall be issuable in any authorized denomination, and substantially in the
form of the definitive Notes but with such omissions, insertions and variations
as may be appropriate for temporary Notes, all as may be determined by the
Company. Every such temporary Note shall be executed by the Company and
authenticated by the Trustee or such authenticating agent upon the same
conditions and in substantially the same manner, and with the same effect, as
the definitive Notes. Without unreasonable delay the Company will execute and
deliver to the Trustee or such authenticating agent definitive Notes (other than
in the case of Notes in global form) and thereupon any or all temporary Notes
(other than any the Global Note) may be surrendered in exchange therefor, at
each office or agency maintained by the Company pursuant to Section 5.2 and the
Trustee or such authenticating agent shall authenticate and deliver in exchange
for such temporary Notes an equal aggregate principal amount of definitive
Notes. Such exchange shall be made by the Company at its own expense and without
any charge therefor. Until so exchanged, the temporary Notes shall in all
respects be entitled to the same benefits and subject to the same limitations
under this Indenture as definitive Notes authenticated and delivered hereunder.

         Section 2.8. Cancellation of Notes Paid, Etc. All Notes surrendered for
the purpose of payment, redemption, repurchase, conversion, exchange or
registration of transfer, shall, if surrendered to the Company or any paying
agent or any Note registrar or any conversion agent, be surrendered to the
Trustee and promptly canceled by it, or, if surrendered to the Trustee, shall be
promptly canceled by it, and no Notes shall be issued in lieu thereof except as
expressly permitted by any of the provisions of this Indenture. Upon written
instructions of the Company, the Trustee shall destroy canceled Notes and, after
such destruction, shall deliver a certificate of such destruction to the
Company. If the Company shall acquire any of the Notes, such

                                       20
<PAGE>   26
acquisition shall not operate as a redemption or satisfaction of the
indebtedness represented by such Notes unless and until the same are delivered
to the Trustee for cancellation.

         Section 2.9. CUSIP Numbers. The Company in issuing the Notes may use
"CUSIP" numbers (if then generally in use), and, if so, the trustee shall use
"CUSIP" numbers in notices of redemption and Company Notices as a convenience to
holders of the Notes; provided, that any such notice may state that no
representation is made as to the correctness of such numbers either as printed
on the Notes or as contained in any notice of a redemption or Company Notice and
that reliance may be placed only on the other identification numbers printed on
the Notes, and any redemption or offer to purchase pursuant to Article XVI shall
not be affected by any defect in or omission of such numbers. The Company will
promptly notify the Trustee of any change in the "CUSIP" numbers.

                                  ARTICLE III.

                              REDEMPTION OF NOTES

         Section 3.1. Redemption Prices. The Company may, at its option, redeem
all or from time to time any part of the Notes on any date prior to maturity,
upon notice as set forth in Section 3.2, and at the optional redemption prices
set forth in the form of Note attached as Exhibit A hereto, together with
accrued interest, if any, to, but excluding, the date fixed for redemption,
provided, however, that no such redemption shall be effected before February 19,
2003.

         The Company may, at its option, redeem all or from time to time any
part of the Notes at any time prior to February 19, 2003, upon notice as set
forth in Section 3.2, and at the provisional redemption price equal to $1,000
per $1,000 principal amount of the Notes redeemed, together with accrued
interest, if any, to, but excluding, the date fixed for provisional redemption
if (i) the Closing Price has exceeded 200% of the Conversion Price (as such may
be adjusted from time to time) then in effect for at least 20 Trading Days in
any consecutive 30-Trading Day period ending on the Trading Day immediately
prior to the date of mailing of the provisional notice of redemption pursuant to
Section 3.2 and (ii) a shelf registration statement covering resales of the
Notes and the Common Stock issuable upon conversion thereof is effective and
available for use and is expected to remain effective for the 30 days following
the provisional redemption date.

         Upon any such provisional redemption which occurs prior to February 15,
2001, the Company shall also make an additional payment in cash (the "Make-Whole
Payment") with respect to the Notes called for redemption to Holders on the date
the provisional redemption notice is sent pursuant to Section 3.2 in an amount
equal to $37.50 per $1,000 principal amount of the Notes, less the amount of any
interest actually paid on such Notes prior to the provisional redemption notice
date. The Company shall make the Make-Whole Payment on all Notes called for
provisional redemption, including those Notes converted into Common Stock
between the provisional notice date and the provisional redemption date.

                                       21
<PAGE>   27
         Section 3.2. Notice of Redemption; Selection of Notes. In case the
Company shall desire to exercise the right to redeem all or, as the case may be,
any part of the Notes pursuant to Section 3.1, it shall fix a date for
redemption, and it, or at its request (which must be received by the Trustee at
least ten (10) Business Days prior to the date the Trustee is requested to give
notice as described below unless a shorter period is agreed to by the Trustee),
the Trustee in the name of and at the expense of the Company, shall mail or
cause to be mailed a notice of such redemption (a) at least ten (10) Trading
Days and not more than twenty (20) Trading Days prior to the date fixed for
provisional redemption and (b) at least thirty (30) and not more than sixty (60)
days prior to the date fixed for optional redemption, to the holders of Notes so
to be redeemed as a whole or in part at their last addresses as the same appear
on the Note register (provided that if the Company shall give such notice, it
shall also give such notice, and notice of the Notes to be redeemed, to the
Trustee). Such mailing shall be by first class mail. The notice if mailed in the
manner herein provided shall be conclusively presumed to have been duly given,
whether or not the holder receives such notice. In any case, failure to give
such notice by mail or any defect in the notice to the holder of any Note
designated for redemption as a whole or in part shall not affect the validity of
the proceedings for the redemption of any other Note.

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

         On or prior to the redemption date specified in the notice of
redemption given as provided in this Section, the Company will deposit with the
Trustee or with one or more paying agents (or, if the Company is acting as its
own paying agent, set aside, segregate and hold in trust as provided in Section
5.4) an amount of money sufficient to redeem on the redemption date all the
Notes (or portions thereof) so called for redemption (other than those
theretofore surrendered for conversion into Common Stock) at the appropriate
redemption price, together with accrued interest to, but excluding, the date
fixed for redemption; provided that if such payment is made on the redemption
date it must be received by the Trustee or paying agent, as the case may be, by
10:00 a.m. New York City time, on such date. If any Note called for redemption
is converted pursuant hereto, any money deposited with the Trustee or any paying
agent or so segregated and held in trust for the redemption of such Note shall
be paid to the Company upon its request, or, if then held by the Company shall
be discharged from such trust.

         If fewer than all the Notes are to be redeemed, the Company will give
the Trustee written notice in the form of an Officers' Certificate not fewer
than thirty-five (35) days (or such shorter

                                       22
<PAGE>   28
period of time as may be acceptable to the Trustee) prior to the redemption date
as to the aggregate principal amount of Notes to be redeemed. If fewer than all
the Notes are to be redeemed, the Trustee shall select the Notes or portions
thereof to be redeemed (in principal amounts of $1,000 or integral multiples
thereof), by lot, or by a method the Trustee considers fair and appropriate (as
long as such method is not prohibited by the rules of any United States national
securities exchange or of an established automated over-the-counter trading
market in the United States on which the Notes are then listed). If any Note
selected for partial redemption is converted in part after such selection, the
converted portion of such Note shall be deemed (so far as is possible) to be the
portion to be selected for redemption. The Notes (or portions thereof) so
selected shall be deemed duly selected for redemption for all purposes hereof,
notwithstanding that any such Note is converted as a whole or in part before the
mailing of the notice of redemption.

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

         Section 3.3. Payment of Notes Called for Redemption. If notice of
redemption has been given as above provided, the Notes or portion of Notes with
respect to which such notice has been given shall, unless converted into Common
Stock pursuant to the terms hereof, become due and payable on the date and at
the place or places stated in such notice at the applicable redemption price,
together with interest accrued to, but excluding, the date fixed for redemption,
and on and after said date (unless the Company shall default in the payment of
such Notes at the redemption price, together with interest accrued to, but
excluding, said date) interest on the Notes or portion of Notes so called for
redemption shall cease to accrue and such Notes shall cease after the close of
business on the Business Day next preceding the date fixed for redemption to be
convertible into Common Stock and, except as provided in Sections 8.5 and 13.4,
to be entitled to any benefit or security under this Indenture, and the holders
thereof shall have no right in respect of such Notes except the right to receive
the redemption price thereof and unpaid interest to, but excluding, the date
fixed for redemption. On presentation and surrender of such Notes at a place of
payment in said notice specified, the said Notes or the specified portions
thereof to be redeemed shall be paid and redeemed by the Company at the
applicable redemption price, together with interest accrued thereon to, but
excluding, the date fixed for redemption; provided that, if the applicable
redemption date is an interest payment date, the semi-annual payment of interest
becoming due on such date shall be payable to the holders of such Notes
registered as such on the relevant record date subject to the terms and
provisions of Section 2.3 hereof, and with respect to a provisional redemption,
the holder of any Notes converted into Common Stock pursuant to the terms hereof
after the provisional redemption notice date and prior to the provisional
redemption date shall have the right to the Make-Whole Payment regardless of the
conversion.

         Upon presentation of any Note redeemed in part only, the Company shall
execute and the Trustee shall authenticate and deliver to the holder thereof, at
the expense of the Company, a

                                       23
<PAGE>   29
new Note or Notes, of authorized denominations, in principal amount equal to the
unredeemed portion of the Notes so presented.

         Notwithstanding the foregoing, the Trustee shall not redeem any Notes
or mail any notice of optional redemption during the continuance of a default in
payment of interest or premium on the Notes or of any Event of Default of which,
in the case of any Event of Default other than under Section 7.1(a), (b) or (d),
a Responsible Officer of the Trustee has knowledge. If any Note called for
redemption shall not be so paid upon surrender thereof for redemption, the
principal and premium, if any, shall, until paid or duly provided for, bear
interest from the date fixed for redemption at the rate borne by the Note and
such Note shall remain convertible into Common Stock until the principal and
premium, if any, shall have been paid or duly provided for.

         Section 3.4. Conversion Arrangement on Call for Redemption. In
connection with any redemption of Notes, the Company may arrange for the
purchase and conversion of any Notes not converted prior to the expiration of
such conversion right by an agreement with one or more investment bankers or
other purchasers to purchase such Notes by paying to the Trustee in trust for
the Noteholders, on or before the date fixed for redemption, an amount not less
than the applicable redemption price, together with interest accrued to the date
fixed for redemption, of such Notes. Notwithstanding anything to the contrary
contained in this Article III, the obligation of the Company to pay the
redemption price of such Notes, together with interest accrued to, but
excluding, the date fixed for redemption, shall be deemed to be satisfied and
discharged to the extent such amount is so paid by such purchasers. If such an
agreement is entered into, a copy of which, certified as true and correct by the
Secretary or Assistant Secretary of the Company will be filed with the Trustee
prior to the date fixed for redemption, any Notes not duly surrendered for
conversion by the holders thereof may, at the option of the Company, be deemed,
to the fullest extent permitted by law, acquired by such purchasers from such
holders and (notwithstanding anything to the contrary contained in Article XV)
surrendered by such purchasers for conversion, all as of immediately prior to
the close of business on the date fixed for redemption (and the right to convert
any such Notes shall be deemed to have been extended through such time), subject
to payment of the above amount as aforesaid. At the direction of the Company,
the Trustee shall hold and dispose of any such amount paid to it in the same
manner as it would monies deposited with it by the Company for the redemption of
Notes. Without the Trustee's prior written consent, no arrangement between the
Company and such purchasers for the purchase and conversion of any Notes shall
increase or otherwise affect any of the powers, duties, responsibilities or
obligations of the Trustee as set forth in this Indenture, and the Company
agrees to indemnify the Trustee from, and hold it harmless against, any loss,
liability or expense arising out of or in connection with any such arrangement
for the purchase and conversion of any Notes between the Company and such
purchasers, including the costs and expenses incurred by the Trustee in the
defense of any claim or liability arising out of or in connection with the
exercise or performance of any of its powers, duties, responsibilities or
obligations under this Indenture.

                                       24
<PAGE>   30

                                   ARTICLE IV

                             SUBORDINATION OF NOTES

         Section 4.1. Agreement of Subordination. The Company covenants and
agrees, and each holder of Notes issued hereunder by his acceptance thereof
likewise covenants and agrees, that all Notes shall be issued subject to the
provisions of this Article IV; and each person holding any Note, whether upon
original issue or upon transfer, assignment or exchange thereof, accepts and
agrees to be bound by such provisions.

         The payment of the principal of, premium, if any, and interest on all
Notes (including, but not limited to, the redemption price or repurchase price
with respect to the Notes to be redeemed or repurchased, as provided in this
Indenture) issued hereunder shall, to the extent and in the manner hereinafter
set forth, be subordinated to the prior payment in full, in cash or in such
other form of payment as may be acceptable to the holders of Senior
Indebtedness, of all Senior Indebtedness, whether outstanding at the date of
this Indenture or thereafter incurred or created.

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

         Section 4.2. Payments to Noteholders. No payment (including pursuant to
any redemption or repurchase of Notes) shall be made with respect to the
principal of, or premium, if any, or interest (including Liquidated Damages, if
any) on the Notes, except payments and distributions made by the Trustee as
permitted by Section 4.6, if:

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

                  (b) any other default occurs and is continuing with respect to
         Designated Senior Indebtedness that then permits holders of the
         Designated Senior Indebtedness as to which such default related to
         accelerate its maturity and the Trustee and the Company receive a
         notice of such default (a "Payment Blockage Notice") from a
         representative of Designated Senior Indebtedness or a holder of
         Designated Senior Indebtedness or the Company.

         The Company may and shall resume payments on the Notes (1) in the case
of a payment default, on the date upon which such default is cured or waived or
ceases to exist, and (2) in the case of a nonpayment default with respect to
Designated Senior Indebtedness, on the earlier of the date on which the
nonpayment default is cured or waived or ceases to exist or 179 days pass after
the date on which the applicable Payment Blockage Notice is received.

         No new period of payment blockage may be commenced pursuant to a
Payment Blockage Notice unless (A) at least 365 days shall have elapsed since
the first day of effectiveness of the immediately prior Payment Blockage Notice
and (B) all scheduled payments

                                       25
<PAGE>   31
of principal, premium, if any, and interest on the Notes that have come due have
been paid in full in cash, or in such other form of payment as may be acceptable
to the holders of the Notes or the Trustee or the Noteholders shall not have
begun proceedings to enforce the right of the Noteholders to receive payment. No
default (whether or not such event of default is on the same issue of Designated
Senior Indebtedness) 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.

         In addition, in the event of any acceleration of the Notes because of
an Event of Default, no payment or distribution (including with respect to any
redemption or repurchase of the Notes) shall be made to the Trustee or any
holder of Notes with respect to the principal of, premium, if any, or interest
(including Liquidated Damages, if any) on the Notes, except payments and
distributions made by the Trustee as permitted by Section 4.6, until all Senior
Indebtedness has been paid in full in cash or other payment satisfactory to the
holders of Senior Indebtedness or such acceleration is rescinded in accordance
with the terms of this Indenture. If payment of the Notes is accelerated because
of an Event of Default, the Company shall promptly notify holders of Senior
Indebtedness of the acceleration.

         Notwithstanding the foregoing, in the event that the Trustee or any
holder of Notes receives any payment or distribution of assets of the Company of
any kind in contravention of any term of this Indenture, whether in cash,
property or securities, including, without limitation, by way of setoff or
otherwise, before all Senior Indebtedness is paid in full, in cash or such other
form of payment as may be acceptable to the holders of Senior Indebtedness, then
such payment or distribution shall be held by the recipient or recipients in
trust for the benefit of, and shall immediately be paid over or delivered to,
the holders of Senior Indebtedness or their respective representative or
representatives, or to the trustee or trustees under any indenture pursuant to
which any instruments evidencing any Senior Indebtedness may have been issued,
as their respective interests may appear, as calculated by the Company, for
application to the payment of all Senior Indebtedness remaining unpaid to the
extent necessary to make payment in full, in cash or such other form of payment
as may be acceptable to the holders of Senior Indebtedness, of all Senior
Indebtedness remaining unpaid, after giving effect to any concurrent payment or
distribution, or provision therefor, to or for the holders of such Senior
Indebtedness.

         Nothing in this Section 4.2 shall apply to claims of, or payments to,
the Trustee pursuant to Section 8.6. This Section 4.2 shall be subject to the
further provisions of Section 4.6.

         Section 4.3. Bankruptcy and Dissolution, Etc. Upon any payment by the
Company, or distribution of assets of the Company of any kind or character,
whether in cash, property or securities, to creditors upon any dissolution,
winding-up, liquidation or reorganization of the Company, whether voluntary or
involuntary or in bankruptcy, insolvency, receivership or other proceedings, all
amounts due or to become due upon all Senior Indebtedness shall first be paid in
full, in cash or in such other form of payment as may be acceptable to the
holders of Senior Indebtedness, before any payment is made on account of the
principal or premium, if any, and interest on the Notes (except payments made
pursuant to Article XIII from monies deposited with the Trustee pursuant thereto
prior to the happening of such dissolution, winding-up, liquidation or
reorganization or bankruptcy, insolvency, receivership or other such
proceedings);

                                       26
<PAGE>   32
and upon any such dissolution, winding-up, liquidation or reorganization or
bankruptcy, insolvency, receivership or other such proceedings, any payment by
the Company, or distribution of assets of the Company of any kind or character,
whether in cash, property or securities, to which the holders of the Notes or
the Trustee under this Indenture would be entitled, except for the provisions of
this Article IV, shall (except as aforesaid) be paid by the Company or by any
receiver, trustee in bankruptcy, liquidating trustee, agent or other person
making such payment or distribution, or by the holders of the Notes or by the
Trustee under this Indenture if received by them or it, directly to the holders
of Senior Indebtedness (pro rata to such holders on the basis of the respective
amounts of Senior Indebtedness held by such holders, or as otherwise required by
law or a court order) or their respective representative or representatives, or
to the trustee or trustees under any indenture pursuant to which any instruments
evidencing any Senior Indebtedness may have been issued, as their respective
interests may appear, to the extent necessary to pay all Senior Indebtedness in
full in cash or in such other form of payment as may be acceptable to the
holders of Senior Indebtedness after giving effect to any concurrent payment or
distribution to or for the holders of Senior Indebtedness, before any payment or
distribution is made to the holders of the Notes or to the Trustee under this
Indenture.

         Notwithstanding the foregoing, in the event that the Trustee or any
holder of Notes receives any payment or distribution of assets of the Company of
any kind in contravention of any term of this Indenture, whether in cash,
property or securities, including, without limitation, by way of setoff or
otherwise, before all Senior Indebtedness is paid in full, in cash or such other
form of payment as may be acceptable to the holders of Senior Indebtedness, then
such payment or distribution shall be held by the recipient or recipients in
trust for the benefit of, and shall immediately be paid over or delivered to,
the holders of Senior Indebtedness or their respective representative or
representatives, or to the trustee or trustees under any indenture pursuant to
which any instruments evidencing any Senior Indebtedness may have been issued,
as their respective interests may appear, as calculated by the Company, for
application to the payment of all Senior Indebtedness remaining unpaid to the
extent necessary to make payment in full, in cash or such other form of payment
as may be acceptable to the holders of Senior Indebtedness, of all Senior
Indebtedness remaining unpaid, after giving effect to any concurrent payment or
distribution, or provision therefor, to or for the holders of such Senior
Indebtedness.

         For purposes of Section 4.2 hereof and this Section 4.3, the words
"cash, property or securities" shall not be deemed to include shares of stock of
the Company as reorganized or readjusted, or securities of the Company or any
other corporation provided for by a plan of reorganization or readjustment, the
payment of which is subordinated (at least to the extent provided in this
Article IV with respect to the Notes) to the payment of all Senior Indebtedness
which may at the time be outstanding; provided that (i) the Senior Indebtedness
is assumed by the new corporation, if any, resulting from such reorganization or
adjustment, and (ii) the rights of the holders of Senior Indebtedness (other
than leases which are not assumed by the Company or by the new corporation, as
the case may be) are not, without the consent of such holders, altered by such
reorganization or readjustment. The consolidation of the Company with, or the
merger of the Company into, another corporation or the liquidation or
dissolution of the Company following the conveyance or transfer of its property
as an entirety, or substantially as an entirety, to another corporation upon the
terms and conditions provided for in Article XII shall not be deemed a
dissolution, winding-up, liquidation or reorganization for the purposes of this

                                       27
<PAGE>   33
Section 4.3 if such other corporation shall, as a part of such consolidation,
merger, conveyance or transfer, comply with the conditions stated in Article
XII.

         Nothing in this Section 4.3 shall apply to claims of, or payments to,
the Trustee under or pursuant to Section 8.6. This Section 4.3 shall be subject
to the further provisions of Section 4.6.

         Section 4.4. Subrogation of Notes. Subject to the payment in full in
cash or in such other form of payment as may be acceptable to the holders of
Senior Indebtedness of all Senior Indebtedness, the rights of the holders of the
Notes shall be subrogated to the extent of the payments or distributions made to
the holders of such Senior Indebtedness pursuant to the provisions of this
Article IV (equally and ratably with the holders of all indebtedness of the
Company which by its express terms is subordinated to other indebtedness of the
Company to substantially the same extent as the Notes are subordinated and is
entitled to like rights of subrogation) to the rights of the holders of Senior
Indebtedness to receive payments or distributions of cash, property or
securities of the Company applicable to the Senior Indebtedness until the
principal of, and premium, if any, and interest on the Notes shall be paid in
full; and, for the purposes of such subrogation, no payments or distributions to
the holders of the Senior Indebtedness of any cash, property or securities to
which the holders of the Notes or the Trustee would be entitled except for the
provisions of this Article IV, and no payment over pursuant to the provisions of
this Article IV, to or for the benefit of the holders of Senior Indebtedness by
holders of the Notes or the Trustee, shall, as between the Company, its
creditors other than holders of Senior Indebtedness, and the holders of the
Notes, be deemed to be a payment by the Company to or on account of the Senior
Indebtedness; and no payments or distributions of cash, property or securities
to or for the benefit of the holders of the Notes pursuant to the subrogation
provisions of this Article IV, which would otherwise have been paid to the
holders of Senior Indebtedness shall be deemed to be a payment by the Company to
or for the account of the Notes. It is understood that the provisions of this
Article IV are and are intended solely for the purposes of defining the relative
rights of the holders of the Notes, on the one hand, and the holders of the
Senior Indebtedness, on the other hand.

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

         Upon any payment or distribution of assets of the Company referred to
in this Article IV, the Trustee, subject to the provisions of Section 8.1, and
the holders of the Notes shall be entitled to rely upon any order or decree made
by any court of competent jurisdiction in which such bankruptcy, dissolution,
winding-up, liquidation or reorganization proceedings are pending, or a

                                       28
<PAGE>   34
certificate of the receiver, trustee in bankruptcy, liquidating trustee, agent
or other person making such payment or distribution, delivered to the Trustee or
to the holders of the Notes, for the purpose of ascertaining the persons
entitled to participate in such distribution, the holders of the Senior
Indebtedness and other indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article IV.

         Section 4.5. Authorization by Noteholders. Each holder of a Note by his
acceptance thereof authorizes and directs the Trustee on his behalf to take such
action as may be necessary or appropriate to effectuate the subordination
provided in this Article IV and appoints the Trustee his attorney-in-fact for
any and all such purposes.

         Section 4.6. Notice to Trustee. The Company shall give written notice
to the Trustee of the issuance of any Designated Senior Indebtedness. In
addition, the Company shall give prompt written notice in the form of an
Officers' Certificate to a Responsible Officer of the Trustee and to any paying
agent of any fact known to the Company which would prohibit the making of any
payment of monies to or by the Trustee or any paying agent in respect of the
Notes pursuant to the provisions of this Article IV. Notwithstanding the
provisions of this Article IV or any other provision of this Indenture, the
Trustee shall not be charged with knowledge of the existence of any Senior
Indebtedness or of any default or event of default with respect to any Senior
Indebtedness or of any other facts which would prohibit the making of any
payment of monies to or by the Trustee in respect of the Notes pursuant to the
provisions of this Article IV, unless and until a Responsible Officer of the
Trustee shall have received written notice thereof at the Corporate Trust Office
from the Company (in the form of an Officers' Certificate) or a holder or
holders of Senior Indebtedness or from any trustee thereof who shall have been
certified by the Company or otherwise established to the reasonable satisfaction
of the Trustee to be such holder or trustee; and before the receipt of any such
written notice, the Trustee, subject to the provisions of Section 8.1, shall be
entitled in all respects to assume that no such facts exist; provided that if on
a date at least two (2) Business Days prior to the date upon which by the terms
hereof any such monies may become payable for any purpose (including, without
limitation, the payment of the principal of, or premium, if any, or interest on
any Note), the Trustee shall not have received with respect to such monies the
notice provided for in this Section 4.6, then, anything herein contained to the
contrary notwithstanding, the Trustee shall have full power and authority to
receive such monies and to apply the same to the purpose for which they were
received, and shall not be affected by any notice to the contrary which may be
received by it on or after such prior date.

         Notwithstanding anything to the contrary hereinbefore set forth,
nothing shall prevent (a) any payment by the Company or the Trustee to the
Noteholders of amounts in connection with a redemption of Notes if (i) notice of
such redemption has been given to the Noteholders pursuant to Article III prior
to the receipt by the Trustee of written notice as aforesaid, and (ii) such
notice of redemption is given not earlier than sixty (60) days before the
redemption date, (b) any payment by the Company or the Trustee to the
Noteholders of amounts in connection with a repurchase of Notes if (i) notice of
such repurchase has been given pursuant to Article XVI prior to the receipt by
the Trustee of written notice as aforesaid, and (ii) such notice of repurchase
is

                                       29
<PAGE>   35
given not earlier than forty (40) days before the repurchase date, or (c) any
payment by the Trustee to the Noteholders of monies deposited with it pursuant
to Section 13.1.

         The Trustee, subject to the provisions of Section 8.1, shall be
entitled to rely on the delivery to it of a written notice by a person
representing himself to be a holder of Senior Indebtedness (or a trustee on
behalf of such holder) to establish that such notice has been given by a holder
of Senior Indebtedness or a trustee on behalf of any such holder or holders. In
the event that the Trustee determines in good faith that further evidence is
required with respect to the right of any person as a holder of Senior
Indebtedness to participate in any payment or distribution pursuant to this
Article IV, the Trustee may request such person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness
held by such person, the extent to which such person is entitled to participate
in such payment or distribution and any other facts pertinent to the rights of
such person under this Article IV, and if such evidence is not furnished the
Trustee may defer any payment to such person pending judicial determination as
to the right of such person to receive such payment.

         Section 4.7. Trustee's Relation to Senior Indebtedness. The Trustee and
any agent of the Company or the Trustee in its individual capacity shall be
entitled to all the rights set forth in this Article IV in respect of any Senior
Indebtedness at any time held by it, to the same extent as any other holder of
Senior Indebtedness, and nothing in Section 8.13 or elsewhere in this Indenture
shall deprive the Trustee or any such agent of any of its rights as such holder.
Nothing in this Article IV shall apply to claims of, or payments to, the Trustee
under or pursuant to Section 8.6.

         With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform or to observe only such of its covenants and obligations
as are specifically set forth in this Article IV, and no implied covenants or
obligations with respect to the holders of Senior Indebtedness shall be read
into this Indenture against the Trustee. The Trustee shall not be deemed to owe
any fiduciary duty to the holders of Senior Indebtedness and, subject to the
provisions of Section 4.2 and Section 8.1, the Trustee shall not be liable to
any holder of Senior Indebtedness if it shall pay over or deliver to holders of
Notes, the Company or any other person money or assets to which any holder of
Senior Indebtedness shall be entitled by virtue of this Article IV or otherwise.

         Section 4.8. No Impairment of Subordination. No right of any present or
future holder of any Senior Indebtedness to enforce subordination as herein
provided shall at any time in any way be prejudiced or impaired by any act or
failure to act on the part of the Company or by any act or failure to act, in
good faith, by any such holder, or by any noncompliance by the Company with the
terms, provisions and covenants of this Indenture, regardless of any knowledge
thereof which any such holder may have or otherwise be charged with.

         Section 4.9. Certain Conversions Deemed Payment. For the purposes of
this Article IV only, (1) the issuance and delivery of junior securities upon
conversion of Notes in accordance with Article XV shall not be deemed to
constitute a payment or distribution on account of the principal of (or premium,
if any) or interest on Notes or on account of the purchase or other acquisition
of Notes, and (2) the payment, issuance or delivery of cash,

                                       30
<PAGE>   36
property or securities (other than junior securities) upon conversion of a Note
shall be deemed to constitute payment on account of the principal of such Note.
For the purposes of this Section, the term "junior securities" means (a) shares
of any stock of any class of the Company and (b) securities of the Company which
are subordinated in right of payment to all Senior Indebtedness which may be
outstanding at the time of issuance or delivery of such securities to
substantially the same extent as, or to a greater extent than, the Notes are so
subordinated as provided in this Article. Nothing contained in this Article or
elsewhere in this Indenture or in the Notes is intended to or shall impair, as
among the Company, its creditors other than holders of Senior Indebtedness and
the holders of the Notes, the right, which is absolute and unconditional, of the
holder of any Note to convert such Note in accordance with Article XV.

         Section 4.10. Article Applicable to Paying Agents. If at any time any
paying agent other than the Trustee shall have been appointed by the Company and
be then acting hereunder, the term Trustee as used in this Article IV shall
(unless the context shall otherwise require) be construed as extending to and
including such paying agent within its meaning as fully for all intents and
purposes as if such paying agent were named in this Article in addition to or in
place of the Trustee; provided, however, that the first sentence of Section 4.5
shall not apply to the Company or any Affiliate of the Company if it or such
Affiliate acts as paying agent.

                                    ARTICLE V

                       PARTICULAR COVENANTS OF THE COMPANY

         Section 5.1. Payment of Principal, Premium and Interest. The Company
covenants and agrees that it will duly and punctually pay or cause to be paid
the principal of and premium, if any, and interest on each of the Notes at the
places, at the respective times and in the manner provided herein and in the
Notes. Each installment of interest on the Notes due on any semi-annual interest
payment date may be paid by mailing checks for the interest payable to or upon
the written order of the holders of Notes entitled thereto as they shall appear
on the registry books of the Company, provided that, with respect to any holder
of Notes with an aggregate principal amount equal to or in excess of $2,000,000,
at the request of such holder in writing to the Company, interest on such
holder's Notes shall be paid by wire transfer in immediately available funds in
accordance with the wire transfer instructions supplied by such holder from time
to time to the Trustee and paying agent (if different from Trustee) at least two
days prior to the applicable record date.

         Section 5.2. Maintenance of Office or Agency. The Company will maintain
in the Borough of Manhattan, The City of New York, an office or agency where the
Notes may be surrendered for registration of transfer or exchange or for
presentation for payment or for conversion, redemption or repurchase and where
notices and demands to or upon the Company in respect of the Notes and this
Indenture may be served. The Company will give prompt written notice to the
Trustee of the location, and any change in the location, of such office or
agency not designated or appointed by the Trustee. If at any time the Company
shall fail to maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust

                                       31
<PAGE>   37
Office or the office or agency of the Trustee in the Borough of Manhattan, The
City of New York.

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

         The Company hereby initially designates the Trustee as paying agent,
Note registrar, Custodian and conversion agent and the Corporate Trust Office
and the office or agency of the Trustee in the Borough of Manhattan, The City of
New York (which initially shall be State Street Bank and Trust Company, N.A., an
Affiliate of the Trustee located at 61 Broadway, 15th Floor, New York, New York
10006) as one such office or agency of the Company for each of the aforesaid
purposes.

         So long as the Trustee is the Note registrar, the Trustee agrees to
mail, or cause to be mailed, the notices set forth in Section 8.10(a) and the
third paragraph of Section 8.11.

         Section 5.3. Appointments to Fill Vacancies in Trustee's Office. The
Company, whenever necessary to avoid or fill a vacancy in the office of Trustee,
will appoint, in the manner provided in Section 8.10, a Trustee, so that there
shall at all times be a Trustee hereunder.

         Section 5.4. Provisions as to Paying Agent.

                  (a) If the Company shall appoint a paying agent other than the
         Trustee or if the Trustee shall appoint such a paying agent, it will
         cause such paying agent to execute and deliver to the Trustee an
         instrument in which such agent shall agree with the Trustee, subject to
         the provisions of this Section 5.4:

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

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

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

                                       32
<PAGE>   38
                  The Company shall, on or before each due date of the principal
         of, premium, if any, or interest on the Notes, deposit with the paying
         agent a sum sufficient to pay such principal, premium, if any, or
         interest, and (unless such paying agent is the Trustee) the Company
         will promptly notify the Trustee of any failure to take such action,
         provided that if such deposit is made on the due date, such deposit
         must be received by the paying agent by 10:00 a.m., New York City time,
         on such date.

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

                  (c) Anything in this Section 5.4 to the contrary
         notwithstanding, the Company may, at any time, for the purpose of
         obtaining a satisfaction and discharge of this Indenture, or for any
         other reason, pay or cause to be paid to the Trustee all sums held in
         trust by the Company or any paying agent hereunder as required by this
         Section 5.4, such sums to be held by the Trustee upon the trusts herein
         contained and upon such payment by the Company or any paying agent to
         the Trustee, the Company or such paying agent shall be released from
         all further liability with respect to such sums.

                  (d) Anything in this Section 5.4 to the contrary
         notwithstanding, the agreement to hold sums in trust as provided in
         this Section 5.4 is subject to Sections 13.3 and 13.4.

         Section 5.5. Existence. Subject to Article XII, 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 5.6. Rule 144A Information Requirement. Within the period prior
to the expiration of the holding period applicable to sales thereof under Rule
144(k) under the Securities Act (or any successor provision), the Company
covenants and agrees that it shall, during any period in which it is not subject
to Section 13 or 15(d) under the Exchange Act, make available to any holder or
beneficial holder of Notes or any Common Stock issued upon conversion thereof,
in each case which continue to be Restricted Securities, in connection with any
sale thereof and any prospective purchaser of Notes or such Common Stock from
such holder or beneficial holder, the information required pursuant to Rule
144A(d)(4) under the Securities Act upon the request of any holder or beneficial
holder of the Notes or such Common Stock and it will take such further action as
any holder or beneficial holder of such Notes or such Common Stock may
reasonably request, all to the extent required from time to time to enable such
holder or beneficial holder to sell its Notes or Common Stock without
registration under the Securities Act within the limitation of the exemption
provided by Rule 144A, as such rule may be amended from time to time. Upon the
request of any holder or any beneficial holder of the Notes or such Common
Stock, the Company will deliver to such holder a written statement as to whether
it has complied with such requirements.

                                       33
<PAGE>   39
         Section 5.7. 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 or
interest on the Notes as contemplated herein, wherever enacted, now or at any
time hereafter in force, or which may affect the covenants or the performance of
this Indenture; and the Company (to the extent it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
will not, by resort to any such law, hinder, delay or impede the execution of
any power herein granted to the Trustee, but will suffer and permit the
execution of every such power as though no such law has been enacted.

         Section 5.8. Compliance Certificate. The Company shall deliver to the
Trustee within 120 days after the end of each fiscal year of the Company
(beginning with the fiscal year ending on March 31, 2000) an Officers'
Certificate stating whether or not to the best of their knowledge the signers
know of any default or Event of Default that occurred during such period. If
they do, such Officers' Certificate shall describe the default or Event of
Default and its status.

         Section 5.9. Liquidated Damages. If Liquidated Damages are payable by
the Company pursuant to the Registration Rights Agreement, the Company shall
deliver to the Trustee a certificate to that effect stating (i) the amount of
such Liquidated Damages that are payable and (ii) the date on which such damages
are payable. Unless and until a Responsible Officer of the Trustee receives at
the Corporate Trust Office such a certificate, the Trustee may assume without
inquiry that no such Liquidated Damages are payable. If the Company has paid
Liquidated Damages directly to the persons entitled to them, the Company shall
deliver to the Trustee a certificate setting forth the particulars of such
payment

         Section 5.10. 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.

                                   ARTICLE VI

          NOTEHOLDERS' LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE

         Section 6.1. Noteholders' Lists. The Company covenants and agrees that
it will furnish or cause to be furnished to the Trustee, semi-annually, not more
than fifteen (15) days after each February 1 and August 1 in each year beginning
with August 1, 2000, and at such other times as the Trustee may request in
writing, within thirty (30) days after receipt by the Company of any such
request (or such lesser time as the Trustee may reasonably request in order to
enable it to timely provide any notice to be provided by it hereunder), a list
in such form as the Trustee may reasonably require of the names and addresses of
the holders of Notes as of a date not more than fifteen (15) days (or such other
date as the Trustee may reasonably request in order to so provide any such
notices) prior to the time such information is furnished, except that no such
list need be furnished so long as the Trustee is acting as Note registrar.

                                       34
<PAGE>   40
         Section 6.2. Preservation and Disclosure of Lists.

                  (a) The Trustee shall preserve, in as current a form as is
reasonably practicable, all information as to the names and addresses of the
holders of Notes contained in the most recent list furnished to it as provided
in Section 6.1 or maintained by the Trustee in its capacity as Note registrar,
if so acting. The Trustee may destroy any list furnished to it as provided in
Section 6.1 upon receipt of a new list so furnished.

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

                  (c) Every Noteholder, by receiving and holding the same,
agrees with the Company and the Trustee that neither the Company nor the Trustee
nor any agent of either of them shall be held accountable by reason of any
disclosure of information as to names and addresses of holders of Notes made
pursuant to the Trust Indenture Act.

         Section 6.3. Reports by Trustee.

                  (a) After this Indenture has been qualified under the Trust
Indenture Act, the Trustee shall transmit to holders of Notes such reports
concerning the Trustee and its actions under this Indenture as may be required
pursuant to the Trust Indenture Act at the times and in the manner provided
pursuant thereto.

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

         Section 6.4. Reports by Company.

                  (a) After this Indenture has been qualified under the Trust
Indenture Act, the Company shall file with the Trustee and the Commission, and
transmit to holders of Notes, such information, documents and other reports and
such summaries thereof, as may be required pursuant to the Trust Indenture Act
at the times and in the manner provided pursuant to such Act; provided that any
such information, documents or reports required to be filed with the Commission
pursuant to Section 13 or 15(d) of the Exchange Act shall be filed with the
Trustee within 15 days after the same is so required to be filed with the
Commission.

                  (b) The Company will deliver to the Trustee (a) as soon as
available and in any event within ninety (90) days after the end of each fiscal
year of the Company (i) a consolidated balance sheet of the Company and its
Subsidiaries as of the end of such fiscal year and the related consolidated
statements of operations, stockholders' equity and cash flows for such fiscal
year, all reported on by an independent public accountant of nationally
recognized

                                       35
<PAGE>   41
standing and (ii) a report containing a management's discussion and analysis of
the financial condition and results of operations and a description of the
business and properties of the Company and (b) as soon as available and in any
event within forty-five (45) days after the end of each of the first three
quarters of each fiscal year of the Company (i) an unaudited consolidated
management's discussion and analysis of the financial condition and results of
operations of the Company for such quarter; provided that the foregoing
statements and reports shall not be required for any fiscal year or quarter, as
the case may be, with respect to which the Company files or expects to file with
the Trustee an annual report or quarterly report, as the case may be, pursuant
to the preceding paragraph of this Section 6.4. The Trustee shall have no
liability as regards the substance of the information provided by the Company or
its agents pursuant to this Section 6.4.

                                   ARTICLE VII

                              DEFAULTS AND REMEDIES

         Section 7.1. Events of Default. In case one or more of the following
Events of Default (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body) shall have occurred and be
continuing:

                  (a) default in the payment of the principal of and premium, if
         any, on any of the Notes as and when the same shall become due and
         payable either at maturity or in connection with any redemption, by
         declaration or otherwise, whether or not such payment is prohibited by
         the provisions of Article IV; or

                  (b) default for thirty (30) days in the payment of any
         installment of interest or Liquidated Damages, if any, upon any of the
         Notes as and when the same shall become due and payable, whether or not
         such payment is prohibited by the provisions of Article IV; or

                  (c) failure on the part of the Company duly to observe or
         perform any other of the covenants on the part of the Company in the
         Notes or in this Indenture (other than a covenant default in whose
         performance or whose breach is elsewhere in this Section specifically
         dealt with) and the continuance of such failure for a period of
         forty-five (45) days after the date on which written notice of such
         failure, requiring the Company to remedy the same, shall have been
         given to the Company by the Trustee, or to the Company and a
         Responsible Officer of the Trustee by the holders of at least 25% in
         aggregate principal amount of the outstanding Notes at the time
         outstanding determined in accordance with Section 9.4; or

                  (d) a default in the payment of the Repurchase Price in
         respect of any Note on the repurchase date therefor in accordance with
         the provisions of Article XVI, whether or

                                       36
<PAGE>   42
         not such payment in cash of the Repurchase Price is prohibited by the
         provisions of Article IV; or

                  (e) failure on the part of the Company to provide a written
         notice of a Repurchase Event in accordance with Section 16.2; or

                  (f) failure on the part of the Company or any Significant
         Subsidiary to make any payment at maturity, including any applicable
         grace period, in respect of Indebtedness of, or guaranteed or assumed
         by, the Company or any Significant Subsidiary, in a principal amount
         then outstanding in excess of U.S. $7,500,000, and the continuance of
         such failure for a period of thirty (30) days after there shall have
         been given, by registered or certified mail, to the Company by the
         Trustee or to the Company and the Trustee by the holders of not less
         than 25% in aggregate principal amount of the Notes then outstanding, a
         written notice specifying such default and requiring the Company to
         cause such default to be cured or waived and stating that such notice
         is a "Notice of Default" hereunder; or

                  (g) default on the part of the Company or any Significant
         Subsidiary with respect to any Indebtedness of, or guaranteed or
         assumed by, the Company or any Significant Subsidiary, which default
         results in the acceleration of Indebtedness in a principal amount then
         outstanding in excess of U.S. $7,500,000, and such Indebtedness shall
         not have been discharged or such acceleration shall not have been
         rescinded or annulled for a period of thirty (30) days after there
         shall have been given, by registered or certified mail, to the Company
         by the Trustee or to the Company and the Trustee by the holders of not
         less than 25% in aggregate principal amount of the Notes then
         outstanding, 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; or

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

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

                                       37
<PAGE>   43
then, and in each and every such case (other than an Event of Default specified
in Section 7.1(h) or 7.1(i) with respect to the Company), unless the principal
of all of the Notes shall have already become due and payable, either the
Trustee or the holders of not less than 25% in aggregate principal amount of the
Notes then outstanding hereunder determined in accordance with Section 9.4, by
notice in writing to the Company (and to the Trustee if given by Noteholders),
may declare the principal of and premium, if any, on all the Notes and the
interest accrued thereon to be due and payable immediately, and upon any such
declaration the same shall become and shall be immediately due and payable,
anything in this Indenture or in the Notes contained to the contrary
notwithstanding. If an Event of Default specified in Section 7.1(h) or 7.1(i)
occurs and is continuing with respect to the Company, the principal of all the
Notes and the interest accrued thereon shall be immediately due and payable.
This provision, however, is subject to the conditions that if, at any time after
the principal of the Notes shall have been so declared due and payable, and
before any judgment or decree for the payment of the monies due shall have been
obtained or entered as hereinafter provided, the Company shall pay or shall
deposit with the Trustee a sum sufficient to pay all matured installments of
interest upon all Notes and the principal of and premium, if any, on any and all
Notes which shall have become due otherwise than by acceleration (with interest
on overdue installments of interest (to the extent that payment of such interest
is enforceable under applicable law) and on such principal and premium, if any,
at the rate borne by the Notes, to the date of such payment or deposit) and
amounts due to the Trustee pursuant to Section 8.6, and if any and all defaults
under this Indenture, other than the nonpayment of principal of and premium, if
any, and accrued interest on Notes which shall have become due by acceleration,
shall have been cured or waived pursuant to Section 7.7, then and in every such
case the holders of a majority in aggregate principal amount of the Notes then
outstanding, by written notice to the Company and to the Trustee, may waive all
defaults or Events of Default and rescind and annul such declaration and its
consequences; but no such waiver or rescission and annulment shall extend to or
shall affect any subsequent default or Event of Default, or shall impair any
right consequent thereon. The Company shall notify the Responsible Officer of
the Trustee, promptly upon becoming aware thereof, of any default or Event of
Default and shall deliver to the Trustee a statement specifying such default or
Event of Default and the action the Company has taken, is taking or proposes to
take with respect thereto.

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

         Section 7.2. Payments of Notes on Default; Suit Therefor. The Company
covenants that (a) in case default shall be made in the payment by the Company
of any installment of interest upon any of the Notes as and when the same shall
become due and payable, and such default shall have continued for a period of
thirty (30) days, or (b) in case default shall be made in the payment of the
principal of or premium, if any, on any of the Notes as and when the same

                                       38
<PAGE>   44
shall have become due and payable, whether at maturity of the Notes or in
connection with any redemption or repurchase, by declaration under this
Indenture or otherwise, then, upon demand of the Trustee, the Company will pay
to the Trustee, for the benefit of the holders of the Notes, the whole amount
that then shall have become due and payable on all such Notes for principal and
premium, if any, or interest, or both, as the case may be, with interest upon
the overdue principal and premium, if any, and (to the extent that payment of
such interest is enforceable under applicable law) upon the overdue installments
of interest at the rate borne by the Notes; and, in addition thereto, such
further amount as shall be sufficient to cover the costs and expenses of
collection, including reasonable compensation to the Trustee, its agents,
attorneys and counsel, and any expenses or liabilities incurred by the Trustee
hereunder other than through its negligence or bad faith. Until such demand by
the Trustee, the Company may pay the principal of and premium, if any, and
interest on the Notes to the registered holders, whether or not the Notes are
overdue.

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

         In the case there shall be pending proceedings for the bankruptcy or
for the reorganization of the Company or any other obligor on the Notes under
Title 11 of the United States Code, or any other applicable law, or in case a
receiver, assignee or trustee in bankruptcy or reorganization, liquidator,
sequestrator or similar official shall have been appointed for or taken
possession of the Company or such other obligor, the property of the Company or
such other obligor, or in the case of any other judicial proceedings relative to
the Company or such other obligor upon the Notes, or to the creditors or
property of the Company or such other obligor, the Trustee, irrespective of
whether the principal of the Notes shall then be due and payable as therein
expressed or by declaration or otherwise and irrespective of whether the Trustee
shall have made any demand pursuant to the provisions of this Section 7.2, shall
be entitled and empowered, by intervention in such proceedings or otherwise, to
file and prove a claim or claims for the whole amount of principal, premium, if
any, and interest owing and unpaid in respect of the Notes, and, in case of any
judicial proceedings, to file such proofs of claim and other papers or documents
and to take such other actions as it may deem necessary or advisable in order to
have the claims of the Trustee and of the Noteholders allowed in such judicial
proceedings relative to the Company or any other obligor on the Notes, its or
their creditors, or its or their property, and to collect and receive any monies
or other property payable or deliverable on any such claims, and to distribute
the same after the deduction of any amounts due the Trustee under Section 8.6;
and any receiver, assignee or trustee in bankruptcy or reorganization,
liquidator, custodian or similar official is hereby authorized by each of the
Noteholders to make such payments to the Trustee, and, in the event that the
Trustee shall consent to the making of such payments directly to the
Noteholders, to pay to the Trustee any amount due it for reasonable
compensation, expenses, advances and disbursements, including agents and counsel
fees incurred by it up to the date of such distribution. To the extent that such

                                       39
<PAGE>   45
payment of reasonable compensation, expenses, advances and disbursements out of
the estate in any such proceedings shall be denied for any reason, payment of
the same shall be secured by a lien on, and shall be paid out of, any and all
distributions, dividends, monies, securities and other property which the
holders of the Notes may be entitled to receive in such proceedings, whether in
liquidation or under any plan of reorganization or arrangement or otherwise.

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

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

         Section 7.3. Application of Monies Collected by Trustee. Any monies
collected by the Trustee pursuant to this Article VII shall be applied in the
order following, at the date or dates fixed by the Trustee for the distribution
of such monies, upon presentation of the several Notes, and stamping thereon the
payment, if only partially paid, and upon surrender thereof, if fully paid:

                  First: To the payment of all amounts due the Trustee under
         Section 8.6;

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

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

                                       40
<PAGE>   46
                  Fourth: Subject to the provisions of Article IV, to the
         payment of the remainder, if any, to the Company or any other person
         lawfully entitled thereto.

         Section 7.4. Proceedings by Noteholder. No holder of any Note shall
have any right by virtue of or by availing of any provision of this Indenture to
institute any suit, action or proceeding in equity or at law upon or under or
with respect to this Indenture, or for the appointment of a receiver, trustee,
liquidator, custodian or other similar official, or for any other remedy
hereunder, unless such holder previously shall have given to the Trustee written
notice of an Event of Default and of the continuance thereof, as hereinbefore
provided, and unless also the holders of not less than 25% in aggregate
principal amount of the Notes then outstanding shall have made written request
upon the Trustee to institute such action, suit or proceeding in its own name as
Trustee hereunder and shall have offered to the Trustee such indemnity as may be
reasonably satisfactory to the Trustee against the costs, expenses and
liabilities to be incurred therein or thereby, and the Trustee for sixty (60)
days after its receipt of such notice, request and offer of indemnity, shall
have neglected or refused to institute any such action, suit or proceeding and
no direction inconsistent with such written request shall have been given to the
Trustee pursuant to Section 7.7; it being understood and intended, and being
expressly covenanted by the taker and holder of every Note with every other
taker and holder and the Trustee, that no one or more holders of Notes shall
have any right in any manner whatever by virtue of or by availing of any
provision of this Indenture to affect, disturb or prejudice the rights of any
other holder of Notes, or to obtain or seek to obtain priority over or
preference to any other such holder, or to enforce any right under this
Indenture, except in the manner herein provided and for the equal, ratable and
common benefit of all holders of Notes (except as otherwise provided herein).
For the protection and enforcement of this Section 7.4, each and every
Noteholder and the Trustee shall be entitled to such relief as can be given
either at law or in equity.

         Notwithstanding any other provision of this Indenture and any provision
of any Note, the right of any holder of any Note to receive payment of the
principal of and premium, if any, and interest on such Note, on or after the
respective due dates expressed in such Note, or to institute suit for the
enforcement of any such payment on or after such respective dates against the
Company shall not be impaired or affected without the consent of such holder.

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

         Section 7.5. Proceedings by Trustee. In case of an Event of Default the
Trustee may in its discretion proceed to protect and enforce the rights vested
in it by this Indenture by such appropriate judicial proceedings as the Trustee
shall deem most effectual to protect and enforce any of such rights, either by
suit in equity or by action at law or by proceeding in bankruptcy or otherwise,
whether for the specific enforcement of any covenant or agreement contained in
this Indenture or in aid of the exercise of any power granted in this Indenture,
or to enforce any other legal or equitable right vested in the Trustee by this
Indenture or by law.

                                       41
<PAGE>   47
         Section 7.6. Remedies Cumulative and Continuing. Except as provided in
the last paragraph of Section 2.6, all powers and remedies given by this Article
VII to the Trustee or to the Noteholders shall, to the extent permitted by law,
be deemed cumulative and not exclusive of any thereof or of any other powers and
remedies available to the Trustee or the holders of the Notes, by judicial
proceedings or otherwise, to enforce the performance or observance of the
covenants and agreements contained in this Indenture, and no delay or omission
of the Trustee or of any holder of any of the Notes to exercise any right or
power accruing upon any default or Event of Default occurring and continuing as
aforesaid shall impair any such right or power, or shall be construed to be a
waiver of any such default or any acquiescence therein; and, subject to the
provisions of Section 7.4, every power and remedy given by this Article VII or
by law to the Trustee or to the Noteholders may be exercised from time to time,
and as often as shall be deemed expedient, by the Trustee or by the Noteholders.

         Section 7.7. Direction of Proceedings and Waiver of Defaults by
Majority of Noteholders. The holders of a majority in aggregate principal amount
of the Notes at the time outstanding determined in accordance with Section 9.4
shall have the right to direct the time, method, and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on the Trustee; provided, however, that (a) such direction shall
not be in conflict with any rule of law or with this Indenture, and (b) the
Trustee may take any other action deemed proper by the Trustee which is not
inconsistent with such direction. The holders of a majority in aggregate
principal amount of the Notes at the time outstanding determined in accordance
with Section 9.4 may on behalf of the holders of all of the Notes waive any past
default or Event of Default hereunder and its consequences except (i) a default
in the payment of interest or premium, if any, on, or the principal of, the
Notes when due, (ii) a failure by the Company to convert any Notes into Common
Stock or (iii) a default in respect of a covenant or provisions hereof which
under Article XI cannot be modified or amended without the consent of the
holders of all Notes then outstanding. Upon any such waiver the Company, the
Trustee and the holders of the Notes shall be restored to their former positions
and rights hereunder; but no such waiver shall extend to any subsequent or other
default or Event of Default or impair any right consequent thereon. Whenever any
default or Event of Default hereunder shall have been waived as permitted by
this Section 7.7, said default or Event of Default shall for all purposes of the
Notes and this Indenture be deemed to have been cured and to be not continuing;
but no such waiver shall extend to any subsequent or other default or Event of
Default or impair any right consequent thereon.

         Section 7.8. Notice of Defaults. The Trustee shall, within ninety (90)
days after the occurrence of a default, mail to all Noteholders, as the names
and addresses of such holders appear upon the Note register, notice of all
defaults known to a Responsible Officer, unless such defaults shall have been
cured or waived before the giving of such notice; and provided that, except in
the case of default in the payment of the principal of, or premium, if any, or
interest on any of the Notes, including without limiting the generality of the
foregoing any default in the payment of any Repurchase Price or in the payment
of any amount due in connection with any redemption of Notes, then in any such
event the Trustee shall be protected in withholding such notice if and so long
as a trust committee of directors and/or Responsible Officers of the Trustee in
good faith determine that the withholding of such notice is in the best
interests of the Noteholders.

                                       42
<PAGE>   48
         Section 7.9. Undertaking to Pay Costs. All parties to this Indenture
agree, and each holder of any Note by his acceptance thereof shall be deemed to
have agreed, that any court may, in its discretion, require, in any suit for the
enforcement of any right or remedy under this Indenture, or in any suit against
the Trustee for any action taken or omitted by it as Trustee, the filing by any
party litigant in such suit of an undertaking to pay the costs of such suit and
that such court may in its discretion assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in such suit, having due
regard to the merits and good faith of the claims or defenses made by such party
litigant; provided that the provisions of this Section 7.9 shall not apply to
any suit instituted by the Trustee, to any suit instituted by any Noteholder, or
group of Noteholders, holding in the aggregate more than 10% in principal amount
of the Notes at the time outstanding determined in accordance with Section 9.4,
or to any suit instituted by any Noteholder for the enforcement of the payment
of the principal of or premium, if any, or interest on any Note (including, but
not limited to, the redemption price or repurchase price with respect to the
Notes being redeemed or repurchased as provided in this Indenture) on or after
the due date expressed in such Note or to any suit for the enforcement of the
right to convert any Note in accordance with the provisions of Article XV.

         Section 7.10. Delay or Omission Not Waiver. No delay or omission of the
Trustee or of any holder of any Note to exercise any right or remedy accruing
upon any Event of Default shall impair any such right or remedy or constitute a
waiver of any such Event of Default or any acquiescence therein. Every right and
remedy given by this Article or by law to the Trustee or to the holders of Notes
may be exercised from time to time, and as often as may be deemed expedient, by
the Trustee or by the holders of Notes, as the case may be.

                                  ARTICLE VIII

                             CONCERNING THE TRUSTEE

         Section 8.1. Duties and Responsibilities of Trustee. The Trustee, prior
to the occurrence of an Event of Default and after the curing or waiver of all
Events of Default which may have occurred, undertakes to perform such duties and
only such duties as are specifically set forth in this Indenture. In case an
Event of Default has occurred (which has not been cured or waived) the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in their exercise, as a prudent person
would exercise or use under the circumstances in the conduct of such person's
own affairs.

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

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

                           (1) the duties and obligations of the Trustee shall
                  be determined solely by the express provisions of this
                  Indenture and, after it has been

                                       43
<PAGE>   49
                  qualified thereunder, the Trust Indenture Act, and the Trustee
                  shall not be liable except for the performance of such duties
                  and obligations as are specifically set forth in this
                  Indenture and no implied covenants or obligations shall be
                  read into this Indenture and the Trust Indenture Act against
                  the Trustee; and

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

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

                  (c) the Trustee shall not be liable to any Noteholder with
         respect to any action taken or omitted to be taken by it in good faith
         in accordance with the direction of the holders of not less than a
         majority in principal amount of the Notes at the time outstanding
         determined as provided in Section 9.4 relating to the time, method and
         place of conducting any proceeding for any remedy available to the
         Trustee, or exercising any trust or power conferred upon the Trustee,
         under this Indenture; and

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

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

         Section 8.2. Reliance on Documents, Opinions, Etc. Except as otherwise
provided in Section 8.1:

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

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

                                       44
<PAGE>   50
         Directors may be evidenced to the Trustee by a copy thereof certified
         by the Secretary or an Assistant Secretary of the Company;

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

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

                  (e) the Trustee shall not be bound to make any investigation
         into the facts or matters stated in any resolution, certificate,
         statement, instrument, opinion, report, notice, request, direction,
         consent, order, bond, debenture or other paper or document, but the
         Trustee, in its discretion, may make such further inquiry or
         investigation into such facts or matters as it may see fit, and, if the
         Trustee shall determine to make such further inquiry or investigation,
         it shall be entitled to examine the books, records and premises of the
         Company, personally or by agent or attorney; provided, however, that if
         the payment within a reasonable time to the Trustee of the costs,
         expenses or liabilities likely to be incurred by it in the making of
         such investigation is, in the opinion of the Trustee, not reasonably
         assured to the Trustee by the security afforded to it by the terms of
         this Indenture, the Trustee may require indemnity reasonably
         satisfactory to the Trustee from the Noteholders against such expenses
         or liability as a condition to so proceeding; the reasonable expenses
         of every such examination shall be paid by the Company or, if paid by
         the Trustee or any predecessor Trustee, shall be repaid by the Company
         upon demand; and

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

In no event shall the Trustee be liable for any consequential loss or damage of
any kind whatsoever (including but not limited to lost profits), even if the
Trustee has been advised of the likelihood of such loss or damage and regardless
of the form of action other than through the Trustee's willful misconduct or
gross negligence.

         Section 8.3. No Responsibility for Recitals, Etc. The recitals
contained herein and in the Notes (except in the Trustee's certificate of
authentication) shall be taken as the statements of the Company, and the Trustee
assumes no responsibility for the correctness of the same. The Trustee makes no
representations as to the validity or sufficiency of this Indenture or of the
Notes. The Trustee shall not be accountable for the use or application by the
Company of any

                                       45
<PAGE>   51
Notes or the proceeds of any Notes authenticated and delivered by the Trustee in
conformity with the provisions of this Indenture.

         Section 8.4. Trustee, Paying Agents, Conversion Agents or Registrar May
Own Notes. The Trustee, any paying agent, any conversion agent or Note
registrar, in its individual or any other capacity, may become the owner or
pledgee of Notes with the same rights it would have if it were not Trustee,
paying agent, conversion agent or Note registrar.

         Section 8.5. Monies to Be Held in Trust. Subject to the provisions of
Section 13.4, all monies received by the Trustee shall, until used or applied as
herein provided, be held in trust for the purposes for which they were received.
Money held by the Trustee in trust hereunder need not be segregated from other
funds except to the extent required by law. The Trustee shall be under no
liability for interest on any money received by it hereunder except as may be
agreed from time to time by the Company and the Trustee.

         Section 8.6. Compensation and Expenses of Trustee. The Company
covenants and agrees to pay to the Trustee from time to time, and the Trustee
shall be entitled to, reasonable compensation for all services rendered by it
hereunder in any capacity (which shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust), and the Company
will pay or reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances reasonably incurred or made by the Trustee in
accordance with any of the provisions of this Indenture (including the
reasonable compensation and the expenses and disbursements of its agents and
counsel and of all persons not regularly in its employ) except any such expense,
disbursement or advance as may arise from its negligence, willful misconduct or
bad faith. The Company also covenants to indemnify the Trustee in any capacity
under this Indenture and its agents and any authenticating agent for, and to
hold them harmless against, any loss, liability or expense incurred without
negligence, willful misconduct or bad faith on the part of the Trustee or such
agent or authenticating agent, as the case may be, and arising out of or in
connection with the acceptance or administration of this trust or in any other
capacity hereunder, including the costs and expenses of defending themselves
against any claim of liability in the premises. The obligations of the Company
under this Section 8.6 to compensate or indemnify the Trustee and to pay or
reimburse the Trustee for expenses, disbursements and advances shall be secured
by a lien prior to that of the Notes upon all property and funds held or
collected by the Trustee as such, except, subject to the effect of Sections 4.3
and 7.6, funds held in trust herewith for the benefit of the holders of
particular Notes prior to the date of the accrual of such unpaid compensation or
indemnifiable claim. The obligation of the Company under this Section shall
survive the satisfaction and discharge of this Indenture. The indemnification
provided in this Section 8.6 shall extend to the officers, directors, agents and
employees of the Trustee.

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

         Section 8.7. Officers' Certificate as Evidence. Except as otherwise
provided in Section 8.1, whenever in the administration of the provisions of
this Indenture the Trustee shall

                                       46
<PAGE>   52
deem it necessary or desirable that a matter be proved or established prior to
taking or omitting any action hereunder, such matter (unless other evidence in
respect thereof be herein specifically prescribed) may, in the absence of
negligence, willful misconduct, recklessness and bad faith on the part of the
Trustee, be deemed to be conclusively proved and established by an Officers'
Certificate delivered to the Trustee, and such Officers' Certificate, in the
absence of negligence, willful misconduct, recklessness and bad faith on the
part of the Trustee, shall be full warrant to the Trustee for any action taken
or omitted by it under the provisions of this Indenture upon the faith thereof.

         Section 8.8. Conflicting Interests of Trustee. After qualification
under the Trust Indenture Act, if the Trustee has or shall acquire a conflicting
interest within the meaning of the Trust Indenture Act, the Trustee shall either
eliminate such interest or resign, to the extent and in the manner provided by,
and subject to the provisions of, the Trust Indenture Act and this Indenture.

         Section 8.9. Eligibility of Trustee. There shall at all times be a
Trustee hereunder which shall be a person that is eligible pursuant to the Trust
Indenture Act to act as such and has a combined capital and surplus (together
with its corporate parent) of at least $50,000,000. If such person publishes
reports of condition at least annually, pursuant to law or to the requirements
of any supervising or examining authority, then for the purposes of this
Section, the combined capital and surplus of such person shall be deemed to be
its combined capital and surplus as set forth in its most recent report of
condition so published. If at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section, it shall resign immediately in
the manner and with the effect hereinafter specified in this Article.

         Section 8.10. Resignation or Removal of Trustee.

                  (a) The Trustee may at any time resign by giving written
         notice of such resignation to the Company and by mailing notice thereof
         to the holders of Notes at their addresses as they shall appear on the
         Note register. Upon receiving such notice of resignation, the Company
         shall promptly appoint a successor trustee by written instrument, in
         duplicate, executed by order of the Board of Directors, one copy of
         which instrument shall be delivered to the resigning Trustee and one
         copy to the successor trustee. If no successor trustee shall have been
         so appointed and have accepted appointment sixty (60) days after the
         mailing of such notice of resignation to the Noteholders, the resigning
         Trustee may petition any court of competent jurisdiction for the
         appointment of a successor trustee, or any Noteholder who has been a
         bona fide holder of a Note or Notes for at least six months may,
         subject to the provisions of Section 7.9, on behalf of himself and all
         others similarly situated, petition any such court for the appointment
         of a successor trustee. Such court may thereupon, after such notice, if
         any, as it may deem proper and prescribe, appoint a successor trustee.

                                       47
<PAGE>   53
                  (b) In case at any time any of the following shall occur:

                           (1) the Trustee shall fail to comply with Section 8.8
                  within a reasonable time after written request therefor by the
                  Company or by any Noteholder who has been a bona fide holder
                  of a Note or Notes for at least six months, or

                           (2) the Trustee shall cease to be eligible in
                  accordance with the provisions of Section 8.9 and shall fail
                  to resign after written request therefor by the Company or by
                  any such Noteholder, or

                           (3) the Trustee shall become incapable of acting, or
                  shall be adjudged a bankrupt or insolvent, or a receiver of
                  the Trustee or of its property shall be appointed, or any
                  public officer shall take charge or control of the Trustee or
                  of its property or affairs for the purpose of rehabilitation,
                  conservation or liquidation,

         then, in any such case, the Company may by a Board resolution remove
         the Trustee and appoint a successor trustee by written instrument, in
         duplicate, executed by order of the Board of Directors, one copy of
         which instrument shall be delivered to the Trustee so removed and one
         copy to the successor trustee, or, subject to the provisions of Section
         7.9, any Noteholder who has been a bona fide holder of a Note or Notes
         for at least six months may, on behalf of himself and all others
         similarly situated, petition any court of competent jurisdiction for
         the removal of the Trustee and the appointment of a successor trustee.
         Such court may thereupon, after such notice, if any, as it may deem
         proper and prescribe, remove the Trustee and appoint a successor
         trustee.

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

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

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

                                       48
<PAGE>   54
successor trustee, the trustee ceasing to act shall, upon payment of any amounts
then due it pursuant to the provisions of Section 8.6, execute and deliver an
instrument transferring to such successor trustee all the rights and powers of
the trustee so ceasing to act. Upon request of any such successor trustee, the
Company shall execute any and all instruments in writing for more fully and
certainly vesting in and confirming to such successor trustee all such rights
and powers. Any trustee ceasing to act shall, nevertheless, retain a lien upon
all property and funds held or collected by such trustee as such, except for
funds held in trust for the benefit of holders of particular Notes, to secure
any amounts then due it pursuant to the provisions of Section 8.6.

         No successor trustee shall accept appointment as provided in this
Section 8.11 unless at the time of such acceptance such successor trustee shall
be qualified under the provisions of Section 8.8 and be eligible under the
provisions of Section 8.9.

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

         Section 8.12. Succession by Merger, Etc. Any corporation or other
entity into which the Trustee may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any corporation or other
entity succeeding to all or substantially all of the corporate trust business of
the Trustee (including the administration of this Indenture), shall be the
successor to the Trustee hereunder without the execution or filing of any paper
or any further act on the part of any of the parties hereto, provided that in
the case of any corporation succeeding to all or substantially all of the
corporate trust business of the Trustee such corporation shall be qualified
under the provisions of Section 8.8 and eligible under the provisions of Section
8.9.

         In case at the time such successor to the Trustee shall succeed to the
trusts created by this Indenture, any of the Notes shall have been authenticated
but not delivered, any such successor to the Trustee may adopt the certificate
of authentication of any predecessor trustee or authenticating agent appointed
by such predecessor trustee, and deliver such Notes so authenticated; and in
case at that time any of the Notes shall not have been authenticated, any
successor to the Trustee or an authenticating agent appointed by such successor
trustee may authenticate such Notes either in the name of any predecessor
trustee hereunder or in the name of the successor trustee; and in all such cases
such certificates shall have the full force which it is anywhere in the Notes or
in this Indenture provided that the certificate of the Trustee shall have;
provided, however, that the right to adopt the certificate of authentication of
any predecessor Trustee or to authenticate Notes in the name of any predecessor
Trustee shall apply only to its successor or successors by merger, conversion or
consolidation.

         Section 8.13. Limitation on Rights of Trustee as Creditor. If and when
the Trustee shall be or become a creditor of the Company (or any other obligor
upon the Notes), after qualification under the Trust Indenture Act, the Trustee
shall be subject to the provisions of the Trust

                                       49
<PAGE>   55
Indenture Act regarding the collection of the claims against the Company (or any
such other obligor).

                                   ARTICLE IX

                           CONCERNING THE NOTEHOLDERS

         Section 9.1. Action by Noteholders. Whenever in this Indenture it is
provided that the holders of a specified percentage in aggregate principal
amount of the Notes may take any action (including the making of any demand or
request, the giving of any notice, consent or waiver or the taking of any other
action), the fact that at the time of taking any such action, the holders of
such specified percentage have joined therein may be evidenced (a) by any
instrument or any number of instruments of similar tenor executed by Noteholders
in person or by agent or proxy appointed in writing, or (b) by the record of the
holders of Notes voting in favor thereof at any meeting of Noteholders duly
called and held in accordance with the provisions of Article X, or (c) by a
combination of such instrument or instruments and any such record of such a
meeting of Noteholders. Whenever the Company or the Trustee solicits the taking
of any action by the holders of the Notes, the Company or the Trustee may fix in
advance of such solicitation, a date as the record date for determining holders
entitled to take such action. The record date shall be not more than fifteen
(15) days prior to the date of commencement of solicitation of such action.

         Section 9.2. Proof of Execution by Noteholders. Subject to the
provisions of Sections 8.1, 8.2 and 10.5, proof of the execution of any
instrument by a Noteholder or his agent or proxy shall be sufficient if made in
accordance with such reasonable rules and regulations as may be prescribed by
the Trustee or in such manner as shall be satisfactory to the Trustee. The
holding of Notes shall be proved by the Note register or by a certificate of the
Note registrar. The record of any Noteholders' meeting shall be proved in the
manner provided in Section 10.6.

         Section 9.3. Who Are Deemed Absolute Owners. The Company, the Trustee,
any authenticating agent, any paying agent, any conversion agent and any Note
registrar may deem the person in whose name such Note shall be registered upon
the Note register to be, and may treat him as, the absolute owner of such Note
(whether or not such Note shall be overdue and notwithstanding any notation of
ownership or other writing thereon) for the purpose of receiving payment of or
on account of the principal of, premium, if any, and interest on such Note, for
conversion of such Note and for all other purposes; and neither the Company nor
the Trustee nor any paying agent nor any conversion agent nor any Note registrar
shall be affected by any notice to the contrary. All such payments so made to
any holder for the time being, or upon his order, shall be valid, and, to the
extent of the sum or sums so paid, effectual to satisfy and discharge the
liability for monies payable upon any such Note.

         Section 9.4. Company-Owned Notes Disregarded. In determining whether
the holders of the requisite aggregate principal amount of Notes have concurred
in any direction, consent, waiver or other action under this Indenture, Notes
which are owned by the Company or any other obligor on the Notes or by any
person directly or indirectly controlling or controlled by or under direct or
indirect common control with the Company or any other obligor on the Notes shall
be disregarded and deemed not to be outstanding for the purpose of any such
determination;

                                       50
<PAGE>   56
provided that for the purposes of determining whether the Trustee shall be
protected in relying on any such direction, consent, waiver or other action only
Notes which a Responsible Officer knows are so owned shall be so disregarded.
Notes so owned which have been pledged in good faith may be regarded as
outstanding for the purposes of this Section 9.4 if the pledgee shall establish
to the satisfaction of the Trustee the pledgee's right to vote such Notes and
that the pledgee is not the Company, any other obligor on the Notes or a person
directly or indirectly controlling or controlled by or under direct or indirect
common control with the Company or any such other obligor. In the case of a
dispute as to such right, any decision by the Trustee taken upon the advice of
counsel shall be full protection to the Trustee. Upon request of the Trustee,
the Company shall furnish to the Trustee promptly an Officers' Certificate
listing and identifying all Notes, if any, known by the Company to be owned or
held by or for the account of any of the above described persons; and, subject
to Section 8.1, the Trustee shall be entitled to accept such Officers'
Certificate as conclusive evidence of the facts therein set forth and of the
fact that all Notes not listed therein are outstanding for the purpose of any
such determination.

         Section 9.5. Revocation of Consents; Future Holders Bound. At any time
prior to (but not after) the evidencing to the Trustee, as provided in Section
9.1, of the taking of any action by the holders of the percentage in aggregate
principal amount of the Notes specified in this Indenture in connection with
such action, any holder of a Note which is shown by the evidence to be included
in the Notes the holders of which have consented to such action may, by filing
written notice with the Trustee at its Corporate Trust Office and upon proof of
holding as provided in Section 9.2, revoke such action so far as concerns such
Note. Except as aforesaid, any such action taken by the holder of any Note shall
be conclusive and binding upon such holder and upon all future holders and
owners of such Note and of any Notes issued in exchange or substitution
therefor, irrespective of whether any notation in regard thereto is made upon
such Note or any Note issued in exchange or substitution therefor.

                                    ARTICLE X

                              NOTEHOLDERS' MEETINGS

         Section 10.1. Purpose of Meetings. A meeting of Noteholders may be
called at any time and from time to time pursuant to the provisions of this
Article X for any of the following purposes:

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

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

                                       51
<PAGE>   57
                  (3) to consent to the execution of an indenture or indentures
         supplemental hereto pursuant to the provisions of Section 11.2;

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

                  (5) to take any other action authorized by this Indenture or
         under applicable law.

         Section 10.2. Call of Meetings by Trustee. The Trustee may at any time
call a meeting of Noteholders to take any action specified in Section 10.1, to
be held at such time and at such place in the Borough of Manhattan, The City of
New York, as the Trustee shall determine. Notice of every meeting of the
Noteholders, setting forth the time and the place of such meeting and in general
terms the action proposed to be taken at such meeting and the establishment of
any record date pursuant to Section 9.1, shall be mailed to holders of Notes at
their addresses as they shall appear on the Note register. Such notice shall
also be mailed to the Company. Such notices shall be mailed not less than twenty
(20) nor more than ninety (90) days prior to the date fixed for the meeting.

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

         Section 10.3. Call of Meetings by Company or Noteholders. In case at
any time the Company, pursuant to a resolution of its Board of Directors, or the
holders of at least 10% in aggregate principal amount of the Notes then
outstanding, shall have requested the Trustee to call a meeting of Noteholders,
by written request setting forth in reasonable detail the action proposed to be
taken at the meeting, and the Trustee shall not have mailed the notice of such
meeting within twenty (20) days after receipt of such request, then the Company
or such Noteholders may determine the time and the place for such meeting and
may call such meeting to take any action authorized in Section 10.1, by mailing
notice thereof as provided in Section 10.2.

         Section 10.4. Qualifications for Voting. To be entitled to vote at any
meeting of Noteholders a person shall (a) be a holder of one or more Notes on
the record date pertaining to such meeting or (b) be a person appointed by an
instrument in writing as proxy by a holder of one or more Notes. The only
persons who shall be entitled to be present or to speak at any meeting of
Noteholders shall be the persons entitled to vote at such meeting and their
counsel and any representatives of the Trustee and its counsel and any
representatives of the Company and its counsel.

         Section 10.5. Regulations. Notwithstanding any other provisions of this
Indenture, the Trustee may make such reasonable regulations as it may deem
advisable for any meeting of Noteholders, in regard to proof of the holding of
Notes and of the appointment of proxies, and in

                                       52
<PAGE>   58
regard to the appointment and duties of inspectors of votes, the submission and
examination of proxies, certificates and other evidence of the right to vote,
and such other matters concerning the conduct of the meeting as it shall think
fit.

         The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the
Company or by Noteholders as provided in Section 10.3, in which case the Company
or the Noteholders calling the meeting, as the case may be, shall in like manner
appoint a temporary chairman. A permanent chairman and a permanent secretary of
the meeting shall be elected by vote of the holders of a majority in principal
amount of the Notes represented at the meeting and entitled to vote at the
meeting.

         Subject to the provisions of Section 9.4, at any meeting each
Noteholder or proxyholder shall be entitled to one vote for each $1,000
principal amount of Notes held or represented by him; provided, however, that no
vote shall be cast or counted at any meeting in respect of any Note challenged
as not outstanding and ruled by the chairman of the meeting to be not
outstanding. The chairman of the meeting shall have no right to vote other than
by virtue of Notes held by him or instruments in writing as aforesaid duly
designating him as the proxy to vote on behalf of other Noteholders. Any meeting
of Noteholders duly called pursuant to the provisions of Section 10.2 or 10.3
may be adjourned from time to time by the holders of a majority of the aggregate
principal amount of Notes represented at the meeting, whether or not
constituting a quorum, and the meeting may be held as so adjourned without
further notice.

         Section 10.6. Voting. The vote upon any resolution submitted to any
meeting of Noteholders shall be by written ballot on which shall be subscribed
the signatures of the holders of Notes or of their representatives by proxy and
the principal amount of the Notes held or represented by them. The permanent
chairman of the meeting shall appoint two inspectors of votes who shall count
all votes cast at the meeting for or against any resolution and who shall make
and file with the secretary of the meeting their verified written reports in
duplicate of all votes cast at the meeting. A record in duplicate of the
proceedings of each meeting of Noteholders shall be prepared by the secretary of
the meeting and there shall be attached to said record the original reports of
the inspectors of votes on any vote by ballot taken thereat and affidavits by
one or more persons having knowledge of the facts setting forth a copy of the
notice of the meeting and showing that said notice was mailed as provided in
Section 10.2. The record shall show the principal amount of the Notes voting in
favor of or against any resolution. The record shall be signed and verified by
the affidavits of the permanent chairman and secretary of the meeting and one of
the duplicates shall be delivered to the Company and the other to the Trustee to
be preserved by the Trustee, the latter to have attached thereto the ballots
voted at the meeting.

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

         Section 10.7. No Delay of Rights by Meeting. Nothing in this Article X
contained shall be deemed or construed to authorize or permit, by reason of any
call of a meeting of Noteholders or any rights expressly or impliedly conferred
hereunder to make such call, any hindrance or

                                       53
<PAGE>   59
delay in the exercise of any right or rights conferred upon or reserved to the
Trustee or to the Noteholders under any of the provisions of this Indenture or
of the Notes.

                                   ARTICLE XI

                             SUPPLEMENTAL INDENTURES

         Section 11.1. Supplemental Indentures Without Consent of Noteholders.
The Company, when authorized by the resolutions of the Board of Directors, and
the Trustee may from time to time and at any time enter into an indenture or
indentures supplemental hereto for one or more of the following purposes:

                  (a) to make provision with respect to the conversion rights of
         the holders of Notes pursuant to the requirements of Section 15.6;

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

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

                  (d) to add to the covenants of the Company such further
         covenants, restrictions or conditions for the benefit of the holders of
         Notes, and to make the occurrence, or the occurrence and continuance,
         of a default in any such additional covenants, restrictions or
         conditions a default or an Event of Default permitting the enforcement
         of all or any of the several remedies provided in this Indenture as
         herein set forth; provided, however, that in respect of any such
         additional covenant, restriction or condition such supplemental
         indenture may provide for a particular period of grace after default
         (which period may be shorter or longer than that allowed in the case of
         other defaults) or may provide for an immediate enforcement upon such
         default or may limit the remedies available to the Trustee upon such
         default;

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

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

                                       54
<PAGE>   60
                  (g) to evidence and provide for the acceptance of appointment
         hereunder by a successor Trustee with respect to the Notes; or

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

          The Trustee is hereby authorized to join with the Company in the
execution of any such supplemental indenture, to make any further appropriate
agreements and stipulations which may be therein contained and to accept the
conveyance, transfer and assignment of any property thereunder, but the Trustee
shall not be obligated to, but may in its discretion, enter into any
supplemental indenture which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.

         Any supplemental indenture authorized by the provisions of this Section
11.1 may be executed by the Company and the Trustee without the consent of the
holders of any of the Notes at the time outstanding, notwithstanding any of the
provisions of Section 11.2.

         Section 11.2. Supplemental Indentures With Consent of Noteholders. With
the consent (evidenced as provided in Article IX) of the holders of not less
than a majority in aggregate principal amount of the Notes at the time
outstanding (determined in accordance with Section 9.4), the Company, when
authorized by the resolutions of the Board of Directors, and the Trustee may
from time to time and at any time enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture or any
supplemental indenture or of modifying in any manner the rights of the holders
of the Notes; provided, however, that no such supplemental indenture shall (i)
extend the fixed maturity of any Note, or reduce the rate or extend the time of
payment of interest thereon, or reduce the principal amount thereof or premium,
if any, thereon, or reduce any amount payable on redemption or repurchase
thereof, impair, or change in any respect adverse to the holder of Notes, the
obligation of the Company to repurchase any Note at the option of the holder
upon the happening of a Repurchase Event, or impair or adversely affect the
right of any Noteholder to institute suit for the payment thereof, or change the
currency in which the Notes are payable, or impair or change in any respect
adverse to the Noteholders the right to convert the Notes into Common Stock
subject to the terms set forth herein, including Section 15.6, or modify the
provisions of this Indenture with respect to the subordination of the Notes in a
manner adverse to the Noteholders, without the consent of the holder of each
Note so affected, or (ii) reduce the aforesaid percentage of Notes, the holders
of which are required to consent to any such supplemental indenture, without the
consent of the holders of all Notes then outstanding.

         Upon the request of the Company, accompanied by a copy of the Board
Resolutions authorizing the execution of any such supplemental indenture, and
upon the filing with the Trustee of evidence of the consent of Noteholders as
aforesaid, the Trustee shall join with the Company in the execution of such
supplemental indenture unless such supplemental indenture affects the Trustee's
own rights, duties or immunities under this Indenture or otherwise, in which

                                       55
<PAGE>   61
case the Trustee may in is discretion, but shall not be obligated to, enter into
such supplemental indenture.

         It shall not be necessary for the consent of the Noteholders under this
Section 11.2 to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such consent shall approve the
substance thereof.

         Section 11.3. Effect of Supplemental Indentures. Any supplemental
indenture executed pursuant to the provisions of this Article XI shall comply
with the Trust Indenture Act, as then in effect. Upon the execution of any
supplemental indenture pursuant to the provisions of this Article XI, this
Indenture shall be and be deemed to be modified and amended in accordance
therewith and the respective rights, limitation of rights, obligations, duties
and immunities under this Indenture of the Trustee, the Company and the holders
of Notes shall thereafter be determined, exercised and enforced hereunder
subject in all respects to such modifications and amendments and all the terms
and conditions of any such supplemental indenture shall be and be deemed to be
part of the terms and conditions of this Indenture for any and all purposes.

         Section 11.4. Notation on Notes. Notes authenticated and delivered
after the execution of any supplemental indenture pursuant to the provisions of
this Article XI may bear a notation in form approved by the Trustee as to any
matter provided for in such supplemental indenture. If the Company or the
Trustee shall so determine, new Notes so modified as to conform, in the opinion
of the Trustee and the Board of Directors, to any modification of this Indenture
contained in any such supplemental indenture may, at the Company's expense, be
prepared and executed by the Company, authenticated by the Trustee (or an
authenticating agent duly appointed by the Trustee pursuant to Section 17.11)
and delivered in exchange for the Notes then outstanding, upon surrender of such
Notes then outstanding.

         Section 11.5. Evidence of Compliance of Supplemental Indenture to Be
Furnished Trustee. The Trustee, subject to the provisions of Sections 8.1 and
8.2, may receive an Officers' Certificate and an Opinion of Counsel as
conclusive evidence that any supplemental indenture executed pursuant hereto
complies with the requirements of this Article XI.

                                   ARTICLE XII

                CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE

         Section 12.1. Company May Consolidate, Etc. on Certain Terms. The
Company shall not, directly or indirectly, consolidate with or merge with or
into any other Person or sell, lease, convey or transfer all its properties and
assets substantially as an entirety, whether in a single transaction or a series
of related transactions, to any Person or group of affiliated Persons unless:

                  (a) either (i) in the case of a merger or consolidation that
does not involve a transfer of all or substantially all of the Company's
properties and assets, the Company is the surviving entity or (ii) in case the
Company shall consolidate with or merge into another Person or sell, lease,
convey or transfer all its properties and assets substantially as an entirety,
whether

                                       56
<PAGE>   62
in a single transaction or a series of related transactions, to any Person, the
Person formed by such consolidation or into which the Company is merged, or the
Person which acquires by sale, conveyance or transfer, or which leases the
properties and assets of the Company substantially as an entirety, shall be a
corporation, limited liability company, partnership or trust, shall be 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 (including Liquidated Damages, if any) on all of the Notes as
applicable, and the performance or observance of every covenant of this
Indenture on the part of the Company to be performed or observed and shall have
provided for the applicable conversion rights set forth in Section 15.6 and the
repurchase rights set forth in Article XVI;

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

                  (c) 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, together with any documents
required under Article IX.

         Section 12.2. Successor Corporation to Be Substituted. In case of any
such consolidation, merger, sale, conveyance or lease in accordance with Section
12.1, and, where required in accordance with Section 12.1(a) upon the assumption
by the successor corporation, by supplemental indenture, executed and delivered
to the Trustee and satisfactory in form to the Trustee, of the due and punctual
payment of the principal of and premium, if any, and interest on all of the
Notes and the due and punctual performance of all of the covenants and
conditions of this Indenture to be performed by the Company, such successor
corporation shall succeed to and be substituted for the Company, with the same
effect as if it had been named herein as the party of the first part. Such
successor corporation thereupon may cause to be signed, and may issue either in
its own name or in the name of Alkermes, Inc. any or all of the Notes issuable
hereunder which theretofore shall not have been signed by the Company and
delivered to the Trustee; and, upon the order of such successor corporation
instead of the Company and subject to all the terms, conditions and limitations
in this Indenture prescribed, the Trustee shall authenticate and shall deliver,
or cause to be authenticated and delivered, any Notes which previously shall
have been signed and delivered by the officers of the Company to the Trustee for
authentication, and any Notes which such successor corporation thereafter shall
cause to be signed and delivered to the Trustee for that purpose. All the Notes
so issued shall in all respects have the same legal rank and benefit under this
Indenture as the Notes theretofore or thereafter issued in accordance with the
terms of this Indenture as though all of such Notes had been issued at the date
of the execution hereof. In the event of any such consolidation, merger, sale,
conveyance or lease, the person named as the "Company" in the first paragraph of
this Indenture or any successor which shall thereafter have become such in the
manner prescribed in this

                                       57
<PAGE>   63
Article XII may be dissolved, wound up and liquidated at any time thereafter and
such person shall be released from its liabilities as obligor and maker of the
Notes and from its obligations under this Indenture.

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

         Section 12.3. Opinion of Counsel to Be Given Trustee. The Trustee,
subject to Sections 8.1 and 8.2, shall receive an Officers' Certificate and an
Opinion of Counsel as conclusive evidence that any such consolidation, merger,
sale, conveyance or lease and any such assumption complies with the provisions
of this Article XII.

                                  ARTICLE XIII

                     SATISFACTION AND DISCHARGE OF INDENTURE

         Section 13.1. Discharge of Indenture. When (a) the Company shall
deliver to the Trustee for cancellation all Notes theretofore authenticated
(other than any Notes which have been destroyed, lost or stolen and in lieu of
or in substitution for which other Notes shall have been authenticated and
delivered) and not theretofore canceled, or (b) all the Notes not theretofore
canceled or delivered to the Trustee for cancellation shall have become due and
payable, or are by their terms to become due and payable within one year or are
to be called for redemption within one year under arrangements satisfactory to
the Trustee for the giving of notice of redemption, and the Company shall
deposit with the Trustee, in trust, funds sufficient to pay at maturity or upon
redemption of all of the Notes (other than any Notes which shall have been
mutilated, destroyed, lost or stolen and in lieu of or in substitution for which
other Notes shall have been authenticated and delivered) not theretofore
canceled or delivered to the Trustee for cancellation, including principal and
premium, if any, and interest due or to become due to such date of maturity or
redemption date, as the case may be, and if in either case the Company shall
also pay or cause to be paid all other sums payable hereunder by the Company,
then this Indenture shall cease to be of further effect (except as to (i)
remaining rights of registration of transfer, substitution and exchange and
conversion of Notes, (ii) rights hereunder of Noteholders to receive payments of
principal of and premium, if any, and interest on, the Notes and the other
rights, duties and obligations of Noteholders, as beneficiaries hereof with
respect to the amounts, if any, so deposited with the Trustee and (iii) the
rights, obligations and immunities of the Trustee hereunder), and the Trustee,
on demand of the Company accompanied by an Officers' Certificate and an Opinion
of Counsel as required by Section 17.5 and at the cost and expense of the
Company, shall execute proper instruments acknowledging satisfaction of and
discharging this Indenture; the Company, however, hereby agreeing to reimburse
the Trustee for any costs or expenses thereafter reasonably and properly
incurred by the Trustee and to compensate the Trustee for any services
thereafter reasonably and properly rendered by the Trustee in connection with
this Indenture or the Notes.

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<PAGE>   64
         Section 13.2. Deposited Monies to Be Held in Trust by Trustee. Subject
to Section 13.4, all monies deposited with the Trustee pursuant to Section 13.1
shall be held in trust and applied by it to the payment, notwithstanding the
provisions of Article IV, either directly or through any paying agent (including
the Company if acting as its own paying agent), to the holders of the particular
Notes for the payment or redemption of which such monies have been deposited
with the Trustee, of all sums due and to become due thereon for principal and
interest and premium, if any.

         Section 13.3. Paying Agent to Repay Monies Held. Upon the satisfaction
and discharge of this Indenture, all monies then held by any paying agent of the
Notes (other than the Trustee) shall, upon demand of the Company, be repaid to
it or paid to the Trustee, and thereupon such paying agent shall be released
from all further liability with respect to such monies.

         Section 13.4. Return of Unclaimed Monies. Subject to the requirements
of applicable law, any monies deposited with or paid to the Trustee for payment
of the principal of, premium, if any, or interest on Notes and not applied but
remaining unclaimed by the holders of Notes for two years after the date upon
which the principal of, premium, if any, or interest on such Notes, as the case
may be, shall have become due and payable, shall be repaid to the Company by the
Trustee on demand and all liability of the Trustee shall thereupon cease with
respect to such monies; and the holder of any of the Notes shall thereafter look
only to the Company for any payment which such holder may be entitled to collect
unless an applicable abandoned property law designates another person.

         Section 13.5. Reinstatement. If (i) the Trustee or the paying agent is
unable to apply any money in accordance with Section 13.2 by reason of any order
or judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application and (ii) the holders of at least a
majority in principal amount of the then outstanding Notes so request by written
notice to the Trustee, the Company's obligations under this Indenture and the
Notes shall be revived and reinstated as though no deposit had occurred pursuant
to Section 13.1 until such time as the Trustee or the paying agent is permitted
to apply all such money in accordance with Section 13.2; provided, however, that
if the Company makes any payment of interest on or principal of any Note
following the reinstatement of its obligations, the Company shall be subrogated
to the rights of the holders of such Notes to receive such payment from the
money held by the Trustee or paying agent.

                                   ARTICLE XIV

                    IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
                             OFFICERS AND DIRECTORS

         Section 14.1. Indenture and Notes Solely Corporate Obligations. No
recourse for the payment of the principal of or premium, if any, or interest on
any Note, or for any claim based thereon or otherwise in respect thereof, and no
recourse under or upon any obligation, covenant or agreement of the Company in
this Indenture or in any supplemental indenture or in any Note, or because of
the creation of any indebtedness represented thereby, shall be had against any
incorporator, stockholder, employee, agent, officer or director or Subsidiary,
as such, past,

                                       59
<PAGE>   65
present or future, of the Company or of any successor corporation, either
directly or through the Company or any successor corporation, whether by virtue
of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise; it being expressly understood that all such
liability is hereby expressly waived and released as a condition of, and as a
consideration for, the execution of this Indenture and the issue of the Notes.

                                   ARTICLE XV

                               CONVERSION OF NOTES

         Section 15.1. Right to Convert. Subject to and upon compliance with the
provisions of this Indenture, the holder of any Note shall have the right, at
his option, at any time following the date of original issuance of the Notes and
prior to the close of business on February 15, 2007 (except that, with respect
to any Note or portion of a Note which shall be called for redemption, such
right shall terminate, except as provided in the fifth paragraph of Section 15.2
and Section 3.4, at the close of business on the Business Day preceding the date
fixed for redemption of such Note or portion of a Note unless the Company shall
default in payment due upon redemption thereof) to convert the principal amount
of any such Note, or any portion of such principal amount which is $1,000 or an
integral multiple thereof, into that number of fully paid and non-assessable
shares of Common Stock (as such shares shall then be constituted) obtained by
dividing the principal amount of the Note or portion thereof surrendered for
conversion by the Conversion Price in effect at such time, by surrender of the
Note so to be converted in whole or in part in the manner provided in Section
15.2. A holder of Notes is not entitled to any rights of a holder of Common
Stock until such holder has converted his Notes to Common Stock, and only to the
extent such Notes are deemed to have been converted to Common Stock under this
Article XV. A Note with respect to which a holder has delivered a notice in
accordance with Section 16.2 regarding such holder's election to require the
Company to repurchase such holder's Notes following the occurrence of a
Repurchase Event may be converted in accordance with this Article XV only if
such holder withdraws such notice by delivering a written notice of withdrawal
to the Company prior to the close of business on last Business Day prior to the
day fixed for repurchase.

         Section 15.2. Exercise of Conversion Privilege; Issuance of Common
Stock on Conversion; No Adjustment for Interest or Dividends. In order to
exercise the conversion privilege with respect to any Note in definitive form,
the holder of any such Note to be converted in whole or in part shall surrender
such Note, duly endorsed, at an office or agency maintained by the Company
pursuant to Section 5.2, accompanied by the funds, if any, required by the fifth
paragraph of this Section 15.2, and shall give written notice of conversion in
the form provided on the Notes (or such other notice which is acceptable to the
Company) to the office or agency that the holder elects to convert such Note or
such portion thereof specified in said notice. Such notice shall also state the
name or names (with address) in which the certificate or certificates for shares
of Common Stock which shall be issuable on such conversion shall be issued, and
shall be accompanied by transfer taxes, if required pursuant to Section 15.7.
Each such Note surrendered for conversion shall, unless the shares issuable on
conversion are to be issued in the same name as the registration of such Note,
be duly endorsed by, or be accompanied by instruments of

                                       60
<PAGE>   66
transfer in form satisfactory to the Company duly executed by, the holder or his
duly authorized attorney.

         In order to exercise the conversion privilege with respect to any
interest in the Global Note, the beneficial holder must complete the appropriate
instruction form for conversion pursuant to the Depositary's book-entry
conversion program, deliver by book-entry delivery an interest in the Global
Note, furnish appropriate endorsements and transfer documents if required by the
Company or the Trustee or conversion agent, and pay the funds, if any, required
by the fifth paragraph of this Section 15.2 and any transfer taxes, if required
pursuant to Section 15.7.

         As promptly as practicable after satisfaction of the requirements for
conversion set forth above, but no later than three Business Days after the
conversion date, subject to compliance with any restrictions on transfer if
shares issuable on conversion are to be issued in a name other than that of the
Noteholder (as if such transfer were a transfer of the Note or Notes (or portion
thereof) so converted), the Company shall issue and shall deliver to such holder
at the office or agency maintained by the Company for such purpose pursuant to
Section 5.2, a certificate or certificates for the number of full shares of
Common Stock issuable upon the conversion of such Note or portion thereof in
accordance with the provisions of this Article and a check or cash in respect of
any fractional interest in respect of a share of Common Stock arising upon such
conversion, as provided in Section 15.3 (which payment, if any, shall be paid no
later than five Business Days after satisfaction of the requirements for
conversion set forth above). In case any Note of a denomination greater than
$1,000 shall be surrendered for partial conversion, and subject to Section 2.3,
the Company shall execute and the Trustee shall authenticate and deliver to the
holder of the Note so surrendered, without charge to him, a new Note or Notes in
authorized denominations in an aggregate principal amount equal to the
unconverted portion of the surrendered Note.

         Each conversion shall be deemed to have been effected as to any such
Note (or portion thereof) on the date on which the requirements set forth above
in this Section 15.2 have been satisfied as to such Note (or portion thereof),
and the person in whose name any certificate or certificates for shares of
Common Stock shall be issuable upon such conversion shall be deemed to have
become on said date the holder of record of the shares represented thereby;
provided, however, that any such surrender on any date when the stock transfer
books of the Company shall be closed shall constitute the person in whose name
the certificates are to be issued as the record holder thereof for all purposes
on the next succeeding day on which such stock transfer books are open, but such
conversion shall be at the Conversion Price in effect on the date upon which
such Note shall be surrendered.

         Any Note or portion thereof surrendered for conversion during the
period from the close of business on the record date for any interest payment
date through the close of business on the Business Day preceding such interest
payment date shall (unless such Note or portion thereof being converted shall
have been called for redemption pursuant to a redemption notice mailed to the
Noteholders in accordance with Section 3.2) be accompanied by payment, in New
York Clearing House funds or other funds acceptable to the Company, of an amount
equal to the interest otherwise payable on such interest payment date on the
principal amount being converted; provided, however, that no such payment need
be made if there shall exist at the time

                                       61
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of conversion a default in the payment of interest on the Notes. Except as
provided above in this Section 15.2, no adjustment shall be made for interest
accrued on any Note converted or for dividends on any shares issued upon the
conversion of such Note as provided in this Article.

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

         Section 15.3. Cash Payments in Lieu of Fractional Shares. No fractional
shares of Common Stock or scrip representing fractional shares shall be issued
upon conversion of Notes. If more than one Note shall be surrendered for
conversion at one time by the same holder, the number of full shares which shall
be issuable upon conversion shall be computed on the basis of the aggregate
principal amount of the Notes (or specified portions thereof to the extent
permitted hereby) so surrendered for conversion. If any fractional share of
stock otherwise would be issuable upon the conversion of any Note or Notes, the
Company shall make an adjustment therefor in cash at the current market value
thereof to the holder of Notes. The current market value of a share of Common
Stock shall be the Closing Price on the first Trading Day immediately preceding
the day on which the Notes (or specified portions thereof) are deemed to have
been converted and such Closing Price shall be determined as provided in Section
15.5(h).

         Section 15.4. Conversion Price. The conversion price shall be as
specified in the form of Note (herein called the "Conversion Price") attached as
Exhibit A hereto, subject to adjustment as provided in this Article XV.

         Section 15.5. Adjustment of Conversion Price. The Conversion Price
shall be adjusted from time to time by the Company as follows:

                  (a) In case the Company shall hereafter pay a dividend or make
         a distribution to all holders of the outstanding Common Stock in shares
         of Common Stock, the Conversion Price in effect at the opening of
         business on the date following the date fixed for the determination of
         stockholders entitled to receive such dividend or other distribution
         shall be reduced by multiplying such Conversion Price by a fraction of
         which the numerator shall be the number of shares of Common Stock
         outstanding at the close of business on the Record Date (as defined in
         Section 15.5(h)) fixed for such determination and the denominator shall
         be the sum of such number of shares and the total number of shares
         constituting such dividend or other distribution, such reduction to
         become effective immediately after the opening of business on the day
         following the Record Date. If any dividend or distribution of the type
         described in this Section 15.5(a) is declared but not so paid or made,
         the Conversion Price shall again be adjusted to the Conversion Price
         which would then be in effect if such dividend or distribution had not
         been declared.

                  (b) In case the Company shall issue rights or warrants to all
         holders of its outstanding shares of Common Stock entitling them (for a
         period expiring within forty-five (45) days after the date fixed for
         the determination of stockholders entitled to receive such rights or
         warrants) to subscribe for or purchase shares of Common Stock at a
         price

                                       62
<PAGE>   68
         per share less than the Current Market Price (as defined in Section
         15.5(h)) on the Record Date fixed for the determination of stockholders
         entitled to receive such rights or warrants, the Conversion Price shall
         be adjusted so that the same shall equal the price determined by
         multiplying the Conversion Price in effect at the opening of business
         on the date after such Record Date by a fraction of which the numerator
         shall be the number of shares of Common Stock outstanding at the close
         of business on the Record Date plus the number of shares which the
         aggregate offering price of the total number of shares so offered for
         subscription or purchase would purchase at such Current Market Price,
         and of which the denominator shall be the number of shares of Common
         Stock outstanding on the close of business on the Record Date plus the
         total number of additional shares of Common Stock so offered for
         subscription or purchase. Such adjustment shall become effective
         immediately after the opening of business on the day following the
         Record Date fixed for determination of stockholders entitled to receive
         such rights or warrants. To the extent that shares of Common Stock are
         not delivered pursuant to such rights or warrants, upon the expiration
         or termination of such rights or warrants the Conversion Price shall be
         readjusted to the Conversion Price which would then be in effect had
         the adjustments made upon the issuance of such rights or warrants been
         made on the basis of delivery of only the number of shares of Common
         Stock actually delivered. In the event that such rights or warrants are
         not so issued, the Conversion Price shall again be adjusted to be the
         Conversion Price which would then be in effect if such date fixed for
         the determination of stockholders entitled to receive such rights or
         warrants had not been fixed. In determining whether any rights or
         warrants entitle the holders to subscribe for or purchase shares of
         Common Stock at less than such Current Market Price, and in determining
         the aggregate offering price of such shares of Common Stock, there
         shall be taken into account any consideration received for such rights
         or warrants, the value of such consideration, if other than cash, to be
         determined by the Board of Directors.

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

                  (d) In case the Company shall, by dividend or otherwise,
         distribute to all holders of its Common Stock shares of any class of
         capital stock of the Company (other than any dividends or distributions
         to which Section 15.5(a) applies) or evidences of its indebtedness,
         cash or other assets (including securities, but excluding (1) any
         rights or warrants referred to in Section 15.5(b) and, (2) dividends
         and distributions (A) in connection with the liquidation, dissolution
         or winding up of the Company or paid (B) exclusively in cash and (3)
         any capital stock, evidences of indebtedness, cash or assets
         distributed upon a merger or consolidation to which Section 15.6
         applies) (the foregoing

                                       63
<PAGE>   69
         hereinafter in this Section 15.5(d) called the "Securities")), unless
         the Company elects to reserve such Securities for distribution to the
         Noteholders upon conversion of the Notes so that any such holder
         converting Notes will receive upon such conversion, in addition to the
         shares of Common Stock to which such holder is entitled, the amount and
         kind of such Securities which such holder would have received if such
         holder had converted its Notes into Common Stock immediately prior to
         the Record Date (as defined in Section 15.5(h) for such distribution of
         the Securities) then, in each such case, the Conversion Price shall be
         reduced so that the same shall be equal to the price determined by
         multiplying the Conversion Price in effect immediately prior to the
         close of business on the Record Date (as defined in Section 15.5(h))
         with respect to such distribution by a fraction of which the numerator
         shall be the Current Market Price (determined as provided in Section
         15.5(h)) on such date less the fair market value (as determined by the
         Board of Directors, whose determination shall be conclusive and
         described in a Board Resolution) on such date of the portion of the
         Securities so distributed applicable to one share of Common Stock and
         the denominator shall be such Current Market Price, such reduction to
         become effective immediately prior to the opening of business on the
         day following the Record Date; provided, however, that in the event the
         then fair market value (as so determined) of the portion of the
         Securities so distributed applicable to one share of Common Stock is
         equal to or greater than the Current Market Price on the Record Date,
         in lieu of the foregoing adjustment, adequate provision shall be made
         so that each Noteholder shall have the right to receive upon conversion
         of a Note (or any portion thereof) the amount of Securities such holder
         would have received had such holder converted such Note (or portion
         thereof) immediately prior to such Record Date. In the event that such
         dividend or distribution is not so paid or made, the Conversion Price
         shall again be adjusted to be the Conversion Price which would then be
         in effect if such dividend or distribution had not been declared. If
         the Board of Directors determines the fair market value of any
         distribution for purposes of this Section 15.5(d) by reference to the
         actual or when issued trading market for any securities comprising all
         or part of such distribution, it must in doing so consider the prices
         in such market over the same period (the "Reference Period") used in
         computing the Current Market Price pursuant to Section 15.5(h) to the
         extent possible, unless the Board of Directors in a board resolution
         determines in good faith that determining the fair market value during
         the Reference Period would not be in the best interest of the
         Noteholder.

                  In the event that the Company implements a stockholder rights
         plan, such rights plan shall provide that upon conversion of the Notes
         the holders will receive, in addition to the Common Stock issuable upon
         such conversion, the rights issued under such rights plan
         (notwithstanding the occurrence of an event causing such rights to
         separate from the Common Stock at or prior to the time of conversion).
         Any distribution of rights or warrants pursuant to a stockholder rights
         plan complying with the requirements set forth in the immediately
         preceding sentence of this paragraph shall not constitute a
         distribution of rights or warrants for the purposes of this Section
         15.5(d).

                  Rights or warrants distributed by the Company to all holders
         of Common Stock entitling the holders thereof to subscribe for or
         purchase shares of the Company's capital stock (either initially or
         under certain circumstances), which rights or warrants, until the

                                       64
<PAGE>   70
         occurrence of a specified event or events ("Trigger Event"): (i) are
         deemed to be transferred with such shares of Common Stock; (ii) are not
         exercisable; and (iii) are also issued in respect of future issuances
         of Common Stock, shall be deemed not to have been distributed for
         purposes of this Section 15.5(d) (and no adjustment to the Conversion
         Price under this Section 15.5(d) will be required) until the occurrence
         of the earliest Trigger Event. If such right or warrant is subject to
         subsequent events, upon the occurrence of which such right or warrant
         shall become exercisable to purchase different securities, evidences of
         indebtedness or other assets or entitle the holder to purchase a
         different number or amount of the foregoing or to purchase any of the
         foregoing at a different purchase price, then the occurrence of each
         such event shall be deemed to be the date of issuance and record date
         with respect to a new right or warrant (and a termination or expiration
         of the existing right or warrant without exercise by the holder
         thereof). In addition, in the event of any distribution (or deemed
         distribution) of rights or warrants, or any Trigger Event or other
         event (of the type described in the preceding sentence) with respect
         thereto, that resulted in an adjustment to the Conversion Price under
         this Section 15.5(d), (1) in the case of any such rights or warrants
         which shall all have been redeemed or repurchased without exercise by
         any holders thereof, the Conversion Price shall be readjusted upon such
         final redemption or repurchase to give effect to such distribution or
         Trigger Event, as the case may be, as though it were a cash
         distribution, equal to the per share redemption or repurchase price
         received by a holder of Common Stock with respect to such rights or
         warrants (assuming such holder had retained such rights or warrants),
         made to all holders of Common Stock as of the date of such redemption
         or repurchase, and (2) in the case of such rights or warrants all of
         which shall have expired or been terminated without exercise, the
         Conversion Price shall be readjusted as if such rights and warrants had
         never been issued.

                  For purposes of this Section 15.5(d) and Sections 15.5(a) and
         (b), any dividend or distribution to which this Section 15.5(d) is
         applicable that also includes shares of Common Stock, or rights or
         warrants to subscribe for or purchase shares of Common Stock to which
         Section 15.5(b) applies (or both), shall be deemed instead to be (1) a
         dividend or distribution of the evidences of indebtedness, assets,
         shares of capital stock, rights or warrants other than such shares of
         Common Stock or rights or warrants to which Section 15.5(b) applies
         (and any Conversion Price reduction required by this Section 15.5(d)
         with respect to such dividend or distribution shall then be made)
         immediately followed by (2) a dividend or distribution of such shares
         of Common Stock or such rights or warrants (and any further Conversion
         Price reduction required by Sections 15.5(a) and (b) with respect to
         such dividend or distribution shall then be made, except (A) the Record
         Date of such dividend or distribution shall be substituted as "the date
         fixed for the determination of stockholders entitled to receive such
         dividend or other distribution", "Record Date fixed for such
         determination" and "Record Date" within the meaning of Section 15.5(a)
         and as "the date fixed for the determination of stockholders entitled
         to receive such rights or warrants", "the Record Date fixed for the
         determination of the stockholders entitled to receive such rights or
         warrants" and "such Record Date" within the meaning of Section 15.5(b)
         and (B) any shares of Common Stock included in such dividend or
         distribution shall not be deemed "outstanding at the close of business
         on the date fixed for such determination" within the meaning of Section
         15.5(a).

                                       65
<PAGE>   71
                  (e) In case the Company shall, by dividend or otherwise,
         distribute to all holders of its Common Stock cash (excluding any cash
         that is distributed upon a merger or consolidation to which Section
         15.6 applies or as part of a distribution referred to in Section
         15.5(d)), in an aggregate amount that, combined together with (1) the
         aggregate amount of any other such distributions to all holders of its
         Common Stock made exclusively in cash within the twelve (12) months
         preceding the date of payment of such distribution, and in respect of
         which no adjustment pursuant to this Section 15.5(e) has been made, and
         (2) the aggregate of any cash plus the fair market value (as determined
         by the Board of Directors, whose determination shall be conclusive and
         described in a Board Resolution) of consideration payable in respect of
         any tender offer by the Company or any of its Subsidiaries for all or
         any portion of the Common Stock concluded within the twelve (12) months
         preceding the date of payment of such distribution, and in respect of
         which no adjustment pursuant to Section 15.5(f) has been made, exceeds
         10% of the product of the Current Market Price (determined as provided
         in Section 15.5(h)) on the Record Date with respect to such
         distribution times the number of shares of Common Stock outstanding on
         such date, then, and in each such case, immediately after the close of
         business on such date, the Conversion Price shall be reduced so that
         the same shall equal the price determined by multiplying the Conversion
         Price in effect immediately prior to the close of business on such
         Record Date by a fraction (i) the numerator of which shall be equal to
         the Current Market Price on the Record Date less an amount equal to the
         quotient of (x) the excess of such combined amount over such 10% and
         (y) the number of shares of Common Stock outstanding on the Record Date
         and (ii) the denominator of which shall be equal to the Current Market
         Price on such date; provided, however, that in the event the portion of
         the cash so distributed applicable to one share of Common Stock is
         equal to or greater than the Current Market Price of the Common Stock
         on the Record Date, in lieu of the foregoing adjustment, adequate
         provision shall be made so that each Noteholder shall have the right to
         receive upon conversion of a Note (or any portion thereof) the amount
         of cash such holder would have received had such holder converted such
         Note (or portion thereof) immediately prior to such Record Date. In the
         event that such dividend or distribution is not so paid or made, the
         Conversion Price shall again be adjusted to be the Conversion Price
         which would then be in effect if such dividend or distribution had not
         been declared. Any cash distribution to all holders of Common Stock as
         to which the Company makes the election permitted by Section 15.5(n)
         and as to which the Company has complied with the requirements of such
         Section shall be treated as not having been made for all purposes of
         this Section 15.5(e)).

                  (f) In case a tender offer made by the Company or any
         Subsidiary for all or any portion of the Common Stock shall expire and
         such tender offer (as amended upon the expiration thereof) shall
         require the payment to shareholders (based on the acceptance (up to any
         maximum specified in the terms of the tender offer) of Purchased Shares
         (as defined below)) of an aggregate consideration having a fair market
         value (as determined by the Board of Directors, whose determination
         shall be conclusive and described in a Board Resolution) that combined
         together with (1) the aggregate of the cash plus the fair market value
         (as determined by the Board of Directors, whose determination shall be
         conclusive and described in a Board Resolution), as of the expiration
         of such tender offer,

                                       66
<PAGE>   72
         of consideration payable in respect of any other tender offers, by the
         Company or any of its Subsidiaries for all or any portion of the Common
         Stock expiring within the twelve (12) months preceding the expiration
         of such tender offer and in respect of which no adjustment pursuant to
         this Section 15.5(f) has been made and (2) the aggregate amount of any
         distributions to all holders of the Company's Common Stock made
         exclusively in cash within twelve (12) months preceding the expiration
         of such tender offer and in respect of which no adjustment pursuant to
         Section 15.5(e) has been made, exceeds 10% of the product of the
         Current Market Price (determined as provided in Section 15.5(h)) as of
         the last time (the "Expiration Time") tenders could have been made
         pursuant to such tender offer (as it may be amended) times the number
         of shares of Common Stock outstanding (including any tendered shares)
         on the Expiration Time, then, and in each such case, immediately prior
         to the opening of business on the day after the date of the Expiration
         Time, the Conversion Price shall be adjusted so that the same shall
         equal the price determined by multiplying the Conversion Price in
         effect immediately prior to close of business on the date of the
         Expiration Time by a fraction of which the numerator shall be the
         number of shares of Common Stock outstanding (including any tendered
         shares) on the Expiration Time multiplied by the Current Market Price
         of the Common Stock on the Trading Day next succeeding the Expiration
         Time and the denominator shall be the sum of (x) the fair market value
         (determined as aforesaid) of the aggregate consideration payable to
         stockholders based on the acceptance (up to any maximum specified in
         the terms of the tender offer) of all shares validly tendered and not
         withdrawn as of the Expiration Time (the shares deemed so accepted, up
         to any such maximum, being referred to as the "Purchased Shares") and
         (y) the product of the number of shares of Common Stock outstanding
         (less any Purchased Shares) on the Expiration Time and the Current
         Market Price of the Common Stock on the Trading Day next succeeding the
         Expiration Time, such reduction (if any) to become effective
         immediately prior to the opening of business on the day following the
         Expiration Time. In the event that the Company is obligated to purchase
         shares pursuant to any such tender offer, but the Company is
         permanently prevented by applicable law from effecting any such
         purchases or all such purchases are rescinded, the Conversion Price
         shall again be adjusted to be the Conversion Price which would then be
         in effect if such tender offer had not been made. If the application of
         this Section 15.5(f) to any tender offer would result in an increase in
         the Conversion Price, no adjustment shall be made for such tender offer
         under this Section 15.5(f). Any cash distribution to all holders of
         Common Stock as to which the Company has made the election permitted by
         Section 15.5(n) and as to which the Company has complied with the
         requirements of such Section shall be treated as not having been made
         for all purposes of this Section 15.5(f).

                  (g) In case of a tender or exchange offer made by a person
         other than the Company or any Subsidiary for an amount which increases
         the offeror's ownership of Common Stock to more than 25% of the Common
         Stock outstanding and shall involve the payment by such person of
         consideration per share of Common Stock having a fair market value (as
         determined by the Board of Directors), whose determination shall be
         conclusive, and described in a resolution of the Board of Directors at
         the last time (the "Expiration Time") tenders or exchanges may be made
         pursuant to such tender or exchange offer (as it shall have been
         amended) that exceeds the Current Market Price of

                                       67
<PAGE>   73
         the Common Stock on the Trading Day next succeeding the Expiration
         Time, and in which, as of the Expiration Time the Board of Directors is
         not recommending rejection of the offer, the Conversion Price shall be
         reduced so that the same shall equal the price determined by
         multiplying the Conversion Price in effect immediately prior to the
         Expiration Time by a fraction of which the numerator shall be the
         number of shares of Common Stock outstanding (including any tendered or
         exchanged shares) on the Expiration Time multiplied by the current
         Market Price of the Common Stock on the Trading Day next succeeding the
         Expiration Time and the denominator shall be the sum of (x) the fair
         market value (determined as aforesaid) of the aggregate consideration
         payable to stockholders based on the acceptance (up to any maximum
         specified in the terms of the tender or exchange offer) of all shares
         validly tendered or exchanged and not withdrawn as of the Expiration
         Time (the shares deemed so accepted, up to any such maximum, being
         referred to as the "Purchased Shares") and (y) the product of the
         number of shares of Common Stock outstanding (less any Purchased
         Shares) on the Expiration Time and the Current Market Price of the
         Common Stock on the Trading Day next succeeding the Expiration Time,
         such reduction to become effective immediately prior to the opening of
         business on the day following the Expiration Time. In the event that
         such person is obligated to purchase shares pursuant to any such tender
         or exchange offer, but such person is permanently prevented by
         applicable law from effecting any such purchases or all such purchases
         are rescinded, the Conversion Price shall again be adjusted to be the
         Conversion Price which would then be in effect if such tender or
         exchange offer had not been made. Notwithstanding the foregoing, the
         adjustment described in this Section 15.5(g) shall not be made if, as
         of the Expiration Time, the offering documents with respect to such
         offer disclose a plan or intention to cause the Company to engage in
         any transaction described in Article XII.

                  (h) For purposes of this Section 15.5, the following terms
         shall have the meaning indicated:

                           (1) "Closing Price" with respect to any securities on
                  any day shall mean the closing sale price regular way on such
                  day or, in case no such sale takes place on such day, the
                  average of the reported closing bid and asked prices, regular
                  way, in each case on the Nasdaq National Market or New York
                  Stock Exchange, as applicable, or, if such security is not
                  listed or admitted to trading on such Nasdaq National Market
                  or New York Stock Exchange, on the principal national security
                  exchange or quotation system on which such security is quoted
                  or listed or admitted to trading, or, if not quoted or listed
                  or admitted to trading on any national securities exchange or
                  quotation system, the average of the closing bid and asked
                  prices of such security on the over-the-counter market on the
                  day in question as reported by the National Quotation Bureau
                  Incorporated, or a similar generally accepted reporting
                  service, or if not so available, in such manner as furnished
                  by any New York Stock Exchange member firm selected from time
                  to time by the Board of Directors for that purpose, or a price
                  determined in good faith by the Board of Directors, whose
                  determination shall be conclusive and described in a Board
                  Resolution.

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<PAGE>   74
                           (2) "Current Market Price" shall mean the average of
                  the daily Closing Prices per share of Common Stock for the ten
                  (10) consecutive Trading Days immediately prior to the date in
                  question; provided, however, that (1) if the "ex" date (as
                  hereinafter defined) for any event (other than the issuance or
                  distribution requiring such computation) that requires an
                  adjustment to the Conversion Price pursuant to Section
                  15.5(a), (b), (c), (d), (e), (f) or (g) occurs during such ten
                  (10) consecutive Trading Days, the Closing Price for each
                  Trading Day prior to the "ex" date for such other event shall
                  be adjusted by multiplying such Closing Price by the same
                  fraction by which the Conversion Price is so required to be
                  adjusted as a result of such other event, (2) if the "ex" date
                  for any event (other than the issuance or distribution
                  requiring such computation) that requires an adjustment to the
                  Conversion Price pursuant to Section 15.5(a), (b), (c), (d),
                  (e), (f) or (g) occurs on or after the "ex" date for the
                  issuance or distribution requiring such computation and prior
                  to the day in question, the Closing Price for each Trading Day
                  on and after the "ex" date for such other event shall be
                  adjusted by multiplying such Closing Price by the reciprocal
                  of the fraction by which the Conversion Price is so required
                  to be adjusted as a result of such other event, and (3) if the
                  "ex" date for the issuance or distribution requiring such
                  computation is prior to the day in question, after taking into
                  account any adjustment required pursuant to clause (1) or (2)
                  of this proviso, the Closing Price for each Trading Day on or
                  after such "ex" date shall be adjusted by adding thereto the
                  amount of any cash and the fair market value (as determined by
                  the Board of Directors in a manner consistent with any
                  determination of such value for purposes of Section 15.5(d),
                  (f) or (g), whose determination shall be conclusive and
                  described in a Board Resolution) of the evidences of
                  indebtedness, shares of capital stock or assets being
                  distributed applicable to one share of Common Stock as of the
                  close of business on the day before such "ex" date. For
                  purposes of any computation under Sections 15.5(f) or (g), the
                  Current Market Price of the Common Stock on any date shall be
                  deemed to be the average of the daily Closing Prices per share
                  of Common Stock for such day and the next two succeeding
                  Trading Days; provided, however, that if the "ex" date for any
                  event (other than the tender offer requiring such computation)
                  that requires an adjustment to the Conversion Price pursuant
                  to Section 15.5(a), (b), (c), (d), (e), (f) and (g) occurs on
                  or after the Expiration Time for the tender or exchange offer
                  requiring such computation and prior to the day in question,
                  the Closing Price for each Trading Day on and after the "ex"
                  date for such other event shall be adjusted by multiplying
                  such Closing Price by the reciprocal of the fraction by which
                  the Conversion Price is so required to be adjusted as a result
                  of such other event. For purposes of this paragraph, the term
                  "ex" date, (1) when used with respect to any issuance or
                  distribution, means the first date on which the Common Stock
                  trades regular way on the relevant exchange or in the relevant
                  market from which the Closing Price was obtained without the
                  right to receive such issuance or distribution, (2) when used
                  with respect to any subdivision or combination of shares of
                  Common Stock, means the first date on which the Common Stock
                  trades regular way on such exchange or in such market after
                  the time at which such subdivision or combination becomes
                  effective, and (3) when

                                       69
<PAGE>   75
                  used with respect to any tender or exchange offer means the
                  first date on which the Common Stock trades regular way on
                  such exchange or in such market after the Expiration Time of
                  such offer. Notwithstanding the foregoing, whenever successive
                  adjustments to the Conversion Price are called for pursuant to
                  this Section 15.5, such adjustments shall be made to the
                  Current Market Price as may be necessary or appropriate to
                  effectuate the intent of this Section 15.5 and to avoid unjust
                  or inequitable results as determined in good faith by the
                  Board of Directors.

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

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

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

                  (i) The Company may make such reductions in the Conversion
         Price, in addition to those required by Sections 15.5(a), (b), (c),
         (d), (e), (f) and (g), as the Board of Directors considers to be
         advisable to avoid or diminish any income tax to holders of Common
         Stock or rights to purchase Common Stock resulting from any dividend or
         distribution of stock (or rights to acquire stock) or from any event
         treated as such for income tax purposes.

                  To the extent permitted by applicable law, the Company from
         time to time may reduce the Conversion Price by any amount for any
         period of time if the period is at least twenty (20) days, the
         reduction is irrevocable during the period and the Board of Directors
         shall have made a determination that such reduction would be in the
         best interests of the Company, which determination shall be conclusive
         and described in a Board Resolution. Whenever the Conversion Price is
         reduced pursuant to the preceding sentence, the Company shall mail to
         the holder of each Note at his last address appearing on the Note
         register provided for in Section 2.5 a notice of the reduction at least
         fifteen

                                       70
<PAGE>   76
         (15) days prior to the date the reduced Conversion Price takes effect,
         and such notice shall state the reduced Conversion Price and the period
         during which it will be in effect.

                  (j) No adjustment in the Conversion Price shall be required
         unless such adjustment would require an increase or decrease of at
         least 1% in such price; provided, however, that any adjustments which
         by reason of this Section 15.5(j) are not required to be made shall be
         carried forward and taken into account in any subsequent adjustment.
         All calculations under this Article XV shall be made by the Company and
         shall be made to the nearest cent or to the nearest one hundredth of a
         share, as the case may be. No adjustment need be made for a change in
         the par value or no par value of the Common Stock.

                  (k) Whenever the Conversion Price is adjusted as herein
         provided, the Company shall promptly file with the Trustee, and any
         conversion agent other than the Trustee, an Officers' Certificate
         setting forth the Conversion Price after such adjustment and setting
         forth a brief statement of the facts requiring such adjustment. Unless
         and until a Responsible Officer of the Trustee shall have received such
         Officers' Certificate, the Trustee shall not be deemed to have
         knowledge of any adjustment of the Conversion Price and may assume
         without inquiry that the last Conversion Price of which it has
         knowledge remains in effect. Promptly after delivery of such
         certificate, the Company shall prepare a notice of such adjustment of
         the Conversion Price setting forth the adjusted Conversion Price and
         the date on which each adjustment becomes effective and shall mail such
         notice of such adjustment of the Conversion Price to the holder of each
         Note at his last address appearing on the Note register provided for in
         Section 2.5, within twenty (20) days of the effective date of such
         adjustment. Failure to deliver such notice shall not effect the
         legality or validity of any such adjustment.

                  (l) In any case in which this Section 15.5 provides that an
         adjustment shall become effective immediately after a Record Date for
         an event, the Company may defer until the occurrence of such event (i)
         issuing to the holder of any Note converted after such Record Date and
         before the occurrence of such event the additional shares of Common
         Stock issuable upon such conversion by reason of the adjustment
         required by such event over and above the Common Stock issuable upon
         such conversion before giving effect to such adjustment and (ii) paying
         to such holder any amount in cash in lieu of any fraction pursuant to
         Section 15.3.

                  (m) For purposes of this Section 15.5, the number of shares of
         Common Stock at any time outstanding shall not include shares held in
         the treasury of the Company but shall include shares issuable in
         respect of scrip certificates issued in lieu of fractions of shares of
         Common Stock. The Company will not pay any dividend or make any
         distribution on shares of Common Stock held in the treasury of the
         Company.

                  (n) In lieu of making any adjustment to the Conversion Price
         pursuant to Section 15.5(e), the Company may elect to reserve an amount
         of cash for distribution to the holders of the Notes upon the
         conversion of the Notes so that any such holder converting Notes will
         receive upon such conversion, in addition to the shares of Common

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<PAGE>   77
         Stock and other items to which such holder is entitled, the full amount
         of cash which such holder would have received if such holder had,
         immediately prior to the Record Date for such distribution of cash,
         converted its Notes into Common Stock, together with any interest
         accrued with respect to such amount, in accordance with this Section
         15.5(n). The Company may make such election by providing an Officers'
         Certificate to the Trustee to such effect on or prior to the payment
         date for any such distribution and depositing with the Trustee on or
         prior to such date an amount of cash equal to the aggregate amount the
         holders of the Notes would have received if such holders had,
         immediately prior to the Record Date for such distribution, converted
         all of the Notes into Common Stock. Any such funds so deposited by the
         Company with the Trustee shall be invested by the Trustee in marketable
         obligations issued or fully guaranteed by the United States government
         with a maturity not more than three (3) months from the date of
         issuance. Upon conversion of Notes by a holder, the holder will be
         entitled to receive, in addition to the Common Stock issuable upon
         conversion, an amount of cash equal to the amount such holder would
         have received if such holder had, immediately prior to the Record Date
         for such distribution, converted its Note into Common Stock, along with
         such holder's pro rata share of any accrued interest earned as a
         consequence of the investment of such funds. Promptly after making an
         election pursuant to this Section 15.5(n), the Company shall give or
         shall cause to be given notice to all Noteholders of such election,
         which notice shall state the amount of cash per $1,000 principal amount
         of Notes such holders shall be entitled to receive (excluding interest)
         upon conversion of the Notes as a consequence of the Company having
         made such election.

         Section 15.6. Effect of Reclassification, Consolidation, Merger or
Sale. If any of the following events occur, namely (i) any reclassification or
change of the outstanding shares of Common Stock (other than a change in par
value, or from par value to no par value, or from no par value to par value, or
as a result of a subdivision or combination), (ii) any consolidation, merger or
combination of the Company with another corporation as a result of which holders
of Common Stock shall be entitled to receive stock, securities or other property
or assets (including cash) with respect to or in exchange for such Common Stock,
or (iii) any sale or conveyance of the properties and assets of the Company as,
or substantially as, an entirety to any other corporation as a result of which
holders of Common Stock shall be entitled to receive stock, securities or other
property or assets (including cash) with respect to or in exchange for such
Common Stock, then the Company or the successor or purchasing corporation, as
the case may be, shall execute with the Trustee a supplemental indenture (which
shall comply with the Trust Indenture Act as in force at the date of execution
of such supplemental indenture if such supplemental indenture is then required
to so comply) providing that such Note shall be convertible into the kind and
amount of shares of stock and other securities or property or assets (including
cash) receivable upon such reclassification, change, consolidation, merger,
combination, sale or conveyance by a holder of a number of shares of Common
Stock issuable upon conversion of such Notes (assuming, for such purposes, a
sufficient number of authorized shares of Common Stock available to convert all
such Notes) immediately prior to such reclassification, change, consolidation,
merger, combination, sale or conveyance assuming such holder of Common Stock did
not exercise his rights of election, if any, as to the kind or amount of
securities, cash or other property receivable upon such consolidation, merger,
statutory exchange, sale or conveyance (provided that, if the kind or amount of
securities, cash or other property receivable upon such consolidation, merger,
statutory exchange, sale or conveyance is not the same for each share of Common
Stock in respect of which such rights of election shall not have been exercised
("non-electing share"), then for the purposes of this Section 15.6 the kind and
amount of securities, cash or other property receivable upon such consolidation,
merger, statutory

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<PAGE>   78
exchange, sale or conveyance for each non-electing share shall be deemed to be
the kind and amount so receivable per share by a plurality of the non-electing
shares). Such supplemental indenture shall provide for adjustments which shall
be as nearly equivalent as may be practicable to the adjustments provided for in
this Article. If, in the case of any such reclassification, change,
consolidation, merger, combination, sale or conveyance, the stock or other
securities and assets receivable thereupon by a holder of shares of Common Stock
include shares of stock or other securities and assets of a corporation other
than the successor or purchasing corporation, as the case may be, in such
reclassification, change, consolidation, merger, combination, sale or
conveyance, then such supplemental indenture shall also be executed by such
other corporation and shall contain such additional provisions to protect the
interests of the holders of the Notes as the Board of Directors shall reasonably
consider necessary by reason of the foregoing, including to the extent
practicable the provisions providing for the repurchase rights set forth in
Article XVI herein.

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

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

         If this Section 15.6 applies to any event or occurrence, Section 15.5
shall not apply.

         Section 15.7. Taxes on Shares Issued. The issue of stock certificates
on conversions of Notes shall be made without charge to the converting
Noteholder for any tax in respect of the issue thereof. The Company shall not,
however, be required to pay any tax which may be payable in respect of any
transfer involved in the issue and delivery of stock in any name other than that
of the holder of any Note converted, and the Company shall not be required to
issue or deliver any such stock certificate unless and until the person or
persons requesting the issue thereof shall have paid to the Company the amount
of such tax or shall have established to the satisfaction of the Company that
such tax has been paid.

         Section 15.8. Reservation of Shares; Shares to Be Fully Paid; Listing
of Common Stock. The Company shall provide, free from preemptive rights, out of
its authorized but unissued shares or shares held in treasury, sufficient shares
to provide for the conversion of the Notes from time to time as such Notes are
presented for conversion.

         Before taking any action which would cause an adjustment reducing the
Conversion Price below the then par value, if any, of the shares of Common Stock
issuable upon conversion of the Notes, the Company will take all corporate
action which may, in the opinion of its counsel, be

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<PAGE>   79
necessary in order that the Company may validly and legally issue shares of such
Common Stock at such adjusted Conversion Price.

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

         The Company further covenants that if at any time the Common Stock
shall be listed on any other national securities exchange or automated quotation
system the Company will, if permitted and required by the rules of such exchange
or automated quotation system, list and keep listed, so long as the Common Stock
shall be so listed on such exchange or automated quotation system, all Common
Stock issuable upon conversion of the Notes.

         Section 15.9. Responsibility of Trustee. The Trustee and any other
conversion agent shall not at any time be under any duty or responsibility to
any holder of Notes to determine whether any facts exist which may require any
adjustment of the Conversion Price, or with respect to the nature or extent or
calculation of any such adjustment when made, or with respect to the method
employed, or herein or in any supplemental indenture provided to be employed, in
making the same. The Trustee and any other conversion agent shall not be
accountable with respect to the validity or value (or the kind or amount) of any
shares of Common Stock, or of any securities or property, which may at any time
be issued or delivered upon the conversion of any Note; and the Trustee and any
other conversion agent make no representations with respect thereto. Subject to
the provisions of Section 8.1, neither the Trustee nor any conversion agent
shall be responsible for any failure of the Company to issue, transfer or
deliver any shares of Common Stock or stock certificates or other securities or
property or cash upon the surrender of any note for the purpose of conversion or
to comply with any of the duties, responsibilities or covenants of the Company
contained in this Article. Without limiting the generality of the foregoing,
neither the Trustee nor any conversion agent shall be under any responsibility
to determine the correctness of any provisions contained in any supplemental
indenture entered into pursuant to Section 15.6 relating either to the kind or
amount of shares of stock or securities or property (including cash) receivable
by Noteholders upon the conversion of their Notes after any event referred to in
such Section 15.6 or to any adjustment to be made with respect thereto, but,
subject to the provisions of Section 8.1, may accept as conclusive evidence of
the correctness of any such provisions, and shall be protected in relying upon,
the Officers' Certificate (which the Company shall be obligated to file with the
Trustee prior to the execution of any such supplemental indenture) with respect
thereto.

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

                  (a) the Company shall declare a dividend (or any other
         distribution) on its Common Stock (that would require an adjustment in
         the Conversion Price pursuant to Section 15.5); or

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

                                       74
<PAGE>   80

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

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

the Company shall cause to be filed with the Trustee and to be mailed to each
holder of Notes at his address appearing on the Note register, provided for in
Section 2.5 of this Indenture, as promptly as possible but in any event at least
fifteen days prior to the applicable date hereinafter specified, a notice
stating (x) the date on which a record is to be taken for the purpose of such
dividend, distribution or rights or warrants, or, if a record is not to be
taken, the date as of which the holders of Common Stock of record to be entitled
to such dividend, distribution or rights are to be determined, or (y) the date
on which such reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding-up is expected to become effective or occur,
and the date as of which it is expected that holders of Common Stock of record
shall be entitled to exchange their Common Stock for securities or other
property deliverable upon such reclassification, consolidation, merger, sale,
transfer, dissolution, liquidation or winding-up. Failure to give such notice,
or any defect therein, shall not affect the legality or validity of such
dividend, distribution, reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding-up.

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<PAGE>   81
                                   ARTICLE XVI

                       REPURCHASE UPON A REPURCHASE EVENT

         Section 16.1. Repurchase Right. If, at any time prior to February 15,
2007 there shall occur a Repurchase Event, then each Noteholder shall have the
right, at such holder's option, to require the Company to repurchase all of such
holder's Notes, or any portion thereof (in principal amounts of $1,000 or
integral multiples thereof), on the date (the "repurchase date") that is forty
(40) calendar days after the date of the Company Notice (as defined in Section
16.2 below) of such Repurchase Event (or, if such 40th day is not a Business
Day, the next succeeding Business Day). Such repurchase shall be made in cash at
a price equal to 105% of the principal amount of Notes such holder elects to
require the Company to repurchase, together with accrued interest, if any, to
but excluding the repurchase date (the "Repurchase Price") (or, at the option of
the Company, by delivery of Common Stock in accordance with the provisions of
Section 16.3); provided, however, that if such repurchase date is February 15 or
August 15 then the interest payable on such date shall be paid to the holder of
record of the Note on the next preceding February 1 or August 1, respectively.
No Notes may be redeemed at the option of holders upon a Repurchase Event if
there has occurred and is continuing an Event of Default, other than a default
in the payment of the Repurchase Price with respect to such Notes on the
repurchase date.

         Section 16.2. Notices; Method of Exercising Repurchase Right, Etc.

                  (a) [intentionally omitted]

                  (b) Unless the Company shall have theretofore called for
         redemption all of the outstanding Notes, on or before the fifteenth
         (15th) calendar day after the occurrence of a Repurchase Event, the
         Company or, at the written request of the Company, the Trustee, shall
         mail to all holders of record of the Notes a notice (the "Company
         Notice") in the form as prepared by the Company of the occurrence of
         the Repurchase Event and of the repurchase right set forth herein
         arising as a result thereof. The Company shall also deliver a copy of
         such Company Notice to the Trustee and cause a copy of such Company
         Notice, or a summary of the information contained therein, to be
         published once in a newspaper of general circulation in The City of New
         York. The Company Notice shall contain the following information:

                           (1) the repurchase date;

                           (2) the date by which the repurchase right must be
                  exercised;

                           (3) the last date by which the election to require
                  repurchase, if submitted, must be revoked;

                           (4) the Repurchase Price and whether the Repurchase
                  Price shall be payable in cash or Common Stock and, if payable
                  in Common Stock, the

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<PAGE>   82
                  method of calculating the amount of the Common Stock to be
                  delivered upon the repurchase as provided in Section 16.3(a);

                           (5) a description of the procedure which a holder
                  must follow to exercise a repurchase right;

                           (6) the Conversion Price then in effect, the date on
                  which the right to convert the principal amount of the Notes
                  to be repurchased will terminate and the place or places where
                  Notes may be surrendered for conversion; and

                           (7) the CUSIP numbers of the Notes.

                  No failure of the Company to give the foregoing notices or
         defect therein shall limit any holder's right to exercise a repurchase
         right or affect the validity of the proceedings for the repurchase of
         Notes.

                  If any of the foregoing provisions are inconsistent with
         applicable law, such law shall govern.

                  (c) To exercise a repurchase right, a holder shall deliver to
         the Trustee on or before the thirty-fifth (35th) day after the Company
         Notice was delivered (i) written notice to the Company (or agent
         designated by the Company for such purpose) of the holder's exercise of
         such right, which notice shall set forth the name of the holder, the
         principal amount of the Notes to be repurchased, a statement that an
         election to exercise the repurchase right is being made thereby, and,
         in the event that the Repurchase Price shall be paid in shares of
         Common Stock, the name or names (with addresses) in which the
         certificate or certificates for shares of Common Stock shall be issued,
         and (ii) the Notes with respect to which the repurchase right is being
         exercised, duly endorsed for transfer to the Company. Election of
         repurchase by a holder shall be revocable at any time prior to, but
         excluding, the repurchase date, by delivering written notice to that
         effect to the Trustee prior to the close of business on the Business
         Day prior to the repurchase date.

                  (d) If the Company fails to repurchase on the repurchase date
         any Notes (or portions thereof) as to which the repurchase right has
         been properly exercised, then the principal of such Notes shall, until
         paid, bear interest to the extent permitted by applicable law from the
         repurchase date at the rate borne by the Note and each such Note shall
         be convertible into Common Stock in accordance with this Indenture
         (without giving effect to Section 16.2(b)) until the principal of such
         Note shall have been paid or duly provided for.

                  (e) Any Note which is to be repurchased only in part shall be
         surrendered to the Trustee duly endorsed for transfer to the Company
         and accompanied by appropriate evidence of genuineness and authority
         satisfactory to the Company and the Trustee duly executed by, the
         holder thereof (or his attorney duly authorized in writing), and the
         Company shall execute, and the Trustee shall authenticate and deliver
         to the holder of

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<PAGE>   83
         such Note without service charge, a new Note or Notes, containing
         identical terms and conditions, of any authorized denomination as
         requested by such holder in aggregate principal amount equal to and in
         exchange for the unrepurchased portion of the principal of the Note so
         surrendered.

                  (f) On or prior to the repurchase date, the Company shall
         deposit with the Trustee or with a paying agent (or, if the Company is
         acting as its own paying agent, segregate and hold in trust as provided
         in Section 5.4) the Repurchase Price in cash for payment to the holder
         on the repurchase date; provided that if payment is to be made in cash,
         such cash payment is made on the repurchase date it must be received by
         the Trustee or paying agent, as the case may be, by 10:00 a.m., New
         York City time, on such date; provided further that if the Repurchase
         Price is to be paid in shares of Common Stock, such shares of Common
         Stock are to be paid as promptly after the repurchase date as
         practicable.

                  (g) Any issuance of shares of Common Stock in respect of the
         Repurchase Price shall be deemed to have been effected immediately
         prior to the close of business on the repurchase date and the person or
         persons in whose name or names any certificate or certificates for
         shares of Common Stock shall be issuable upon such repurchase shall be
         deemed to have become on the repurchase date the holder or holders of
         record of the shares represented thereby; provided, however, that any
         surrender for repurchase on a date when the stock transfer books of the
         Company shall be closed shall constitute the person or persons in whose
         name or names the certificate or certificates for such shares are to be
         issued as the record holder or holders thereof for all purposes at the
         opening of business on the next succeeding day on which such stock
         transfer books are open. No payment or adjustment shall be made for
         dividends or distributions on any Common Stock issued upon repurchase
         of any Security declared prior to the repurchase date.

                  (h) No fractions of shares shall be issued upon repurchase of
         Notes. If more than one Note shall be repurchased from the same holder
         and the Repurchase Price shall be payable in shares of Common Stock,
         the number of full shares which shall be issuable upon such repurchase
         shall be computed on the basis of the aggregate principal amount of the
         Notes so repurchased. Instead of any fractional share of Common Stock
         which would otherwise be issuable on the repurchase of any Note or
         Notes, the Company will deliver to the applicable holder its check for
         the current market value of such fractional share. The current market
         value of a fraction of a share is determined by multiplying the current
         market price of a full share by the fraction, and rounding the result
         to the nearest cent. For purposes of this Section, the current market
         price of a share of Common Stock is the Closing Price of the Common
         Stock on the Trading Day immediately preceding the repurchase date.

                  (i) Any issuance and delivery of certificates for shares of
         Common Stock on repurchase of Notes shall be made without charge to the
         holder of Notes being repurchased for such certificates or for any tax
         or duty in respect of the issuance or delivery of such certificates or
         the securities represented thereby; provided, however, that the Company
         shall not be required to pay any tax or duty which may be payable in

                                       78
<PAGE>   84
         respect of (i) income of the holder or (ii) any transfer involved in
         the issuance or delivery of certificates for shares of Common Stock in
         a name other than that of the holder of the Notes being repurchased,
         and no such issuance or delivery shall be made unless and until the
         person requesting such issuance or delivery has paid to the Company the
         amount of any such tax or duty or has established, to the satisfaction
         of the Company, that such tax or duty has been paid.

                  (j) All Notes delivered for repurchase shall be delivered to
         the Trustee to be canceled in accordance with the provisions of Section
         2.8.

         Section 16.3. Conditions to the Company's Election to Pay the
Repurchase Price in Common Stock.

         The Company may elect to pay the Repurchase Price by delivery of shares
of Common Stock pursuant to Section 16.1 if and only if the following conditions
shall have been satisfied:

         (a) the shares of Common Stock deliverable in payment of the Repurchase
Price shall have a fair market value as of the repurchase date of not less than
the Repurchase Price. For purposes of Section 16.1 and this Section 16.3, the
fair market value of shares of Common Stock shall be determined by the Company
and shall be equal to 95% of the average of the Closing Prices of the Common
Stock for the five consecutive Trading Days immediately preceding and including
the third Trading Day prior to the repurchase date;

         (b) the Repurchase Price shall be paid only in cash in the event any
shares of Common Stock to be issued upon repurchase of Notes hereunder (i)
require registration under any federal securities law before such shares may be
freely transferrable without being subject to any transfer restrictions under
the Securities Act upon repurchase and if such registration is not completed or
does not become effective prior to the repurchase date, and/or (ii) require
registration with or approval of any governmental authority under any state law
or any other federal law before such shares may be validly issued or delivered
upon repurchase and if such registration is not completed or does not become
effective or such approval is not obtained prior to the repurchase date;

         (c) payment of the Repurchase Price may not be made in Common Stock
unless such stock is, or shall have been, or approved for quotation on the
Nasdaq National Market or listed on a national securities exchange, in either
case, prior to the repurchase date; and

         (d) all shares of Common Stock which may be issued upon repurchase of
the Notes will be issued out of the Company's authorized but unissued Common
Stock and, will upon issue, be duly and validly issued and fully paid and
non-assessable and free of any preemptive rights.

         If all of the conditions set forth in this Section 16.3 are not
satisfied in accordance with the terms thereof, the Repurchase Price shall be
paid by the Company only in cash.

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<PAGE>   85
         Section 16.4. Certain Definitions. For purposes of this Article XVI:

                  (a) the term "beneficial owner" shall be determined in
         accordance with Rule 13d-3 and 13d-5, as in effect on the date of the
         original execution of this Indenture, promulgated by the Securities and
         Exchange Commission pursuant to the Exchange Act;

                  (b) the term "person" or "group" shall include any syndicate
         or group which would be deemed to be a "person" under Section 13(d) and
         14(d) of the Exchange Act as in effect on the date of the original
         execution of this Indenture; and

                  (c) the term "Continuing Director" means at any date a member
         of the Company's Board of Directors (i) who was a member of such board
         on December 31, 1999 or (ii) who was nominated or elected by at least a
         majority of the directors who were Continuing Directors at the time of
         such nomination or election or whose election to the Company's Board of
         Directors was recommended or endorsed by at least a majority of the
         directors who were Continuing Directors at the time of such nomination
         or election or such lesser number comprising a majority of a nominating
         committee if authority for such nominations or elections has been
         delegated to a nominating committee whose authority and composition
         have been approved by at least a majority of the directors who were
         continuing directors at the time such committee was formed. (Under this
         definition, if the Board of Directors of the Company as of the date of
         this Indenture were to approve a new director or directors and then
         resign, no Change in Control would occur even though the current Board
         of Directors would thereafter cease to be in office).

                  (d) the term "Repurchase Event" means a Change in Control or a
         Termination of Trading.

                  (e) a "Change in Control" shall be deemed to have occurred
         when (i) any "person" or "group" (as such terms are used in Sections
         13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial
         owner" (as defined in Rules 13-d3 and 13-d5 under the Exchange Act) of
         shares representing more than 50% of the combined voting power of the
         then outstanding securities entitled to vote generally in elections of
         directors of the Company (the "Voting Stock"); (ii) approval by
         stockholders of the Company of any plan or proposal for the
         liquidation, dissolution or winding up of the Company; (iii) the
         Company (A) consolidates with or merges into any other corporation or
         any other corporation merges into the Company, and in the case of any
         such transaction, the outstanding Common Stock of the Company is
         changed or exchanged into other assets or securities as a result,
         unless the stockholders of the Company immediately before such
         transaction own, directly or indirectly immediately following such
         transaction, at least 51% of the combined voting power of the
         outstanding voting securities of the corporation resulting from such
         transaction in substantially the same proportion as their ownership of
         the Voting Stock immediately before such transaction, or (B) conveys,
         transfers or leases all or substantially all of its assets to any
         person; or (iv) any time Continuing Directors do not constitute a
         majority of the Board of Directors of the Company (or, if applicable, a
         successor corporation to the Company); provided that a Change in
         Control shall not be

                                       80
<PAGE>   86
         deemed to have occurred if either (x) the Closing Price (as defined in
         Section 15.5(h)(1) hereof) of the Common Stock for any five (5) Trading
         Days during the ten (10) Trading Days immediately preceding the Change
         in Control is at least equal to 105% of the Conversion Price in effect
         on the date on which the Change in Control occurs or (y) in the case of
         a merger or consolidation otherwise constituting a Change in Control,
         all of the consideration (excluding cash payments for fractional
         shares) in such merger or consolidation constituting the Change in
         Control consists of common stock traded on a United States national
         securities exchange or quoted on the Nasdaq National Market (or which
         will be so traded or quoted when issued or exchanged in connection with
         such Change in Control) and as a result of such transaction or
         transactions such Notes become convertible solely into such common
         stock.

                  (f) a "Termination of Trading" shall have occurred if the
         Common Stock (or other common stock into which the Notes are then
         convertible) is neither listed for trading on a United States national
         securities exchange nor approved for trading on an established
         automated over-the-counter trading market in the United States.

                                  ARTICLE XVII

                            MISCELLANEOUS PROVISIONS

         Section 17.1. Provisions Binding on Company's Successors. All the
covenants, stipulations, promises and agreements of the Company in this
Indenture contained shall bind its successors and assigns whether so expressed
or not.

         Section 17.2. Official Acts by Successor Corporation. Any act or
proceeding by any provision of this Indenture authorized or required to be done
or performed by any board, committee or officer of the Company shall and may be
done and performed with like force and effect by the like board, committee or
officer of any corporation that shall at the time be the lawful sole successor
of the Company.

         Section 17.3. Addresses for Notices, Etc. Any notice or demand which by
any provision of this Indenture is required or permitted to be given or served
by the Trustee or by the holders of Notes on the Company shall be deemed to have
been sufficiently given or made, for all purposes if given or served by being
deposited postage prepaid by registered or certified mail in a post office
letter box addressed (until another address is filed by the Company with the
Trustee) to Alkermes, Inc., 64 Sidney Street, Cambridge, MA 02139, Attention:
Chief Financial Officer. Any notice, direction, request or demand hereunder to
or upon the Trustee shall be deemed to have been sufficiently given or made, for
all purposes, if given or served by being deposited postage prepaid by
registered or certified mail in a post office letter box addressed to the
Corporate Trust Office.

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

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<PAGE>   87
         Any notice or communication mailed to a Noteholder shall be mailed to
him by first class mail, postage prepaid, at his address as it appears on the
Note register and shall be sufficiently given to him if so mailed within the
time prescribed.

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

         Section 17.4. GOVERNING LAW. THIS INDENTURE AND EACH NOTE SHALL BE
DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF NEW YORK, AND FOR ALL PURPOSES
SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF NEW YORK (WITHOUT REGARD TO
THE CONFLICT OF LAWS PROVISIONS THEREOF).

         Section 17.5. Evidence of Compliance with Conditions Precedent;
Certificates to Trustee. Upon any application or demand by the Company to the
Trustee to take any action under any of the provisions of this Indenture, the
Company shall furnish to the Trustee an Officers' Certificate stating that all
conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with, and an Opinion of Counsel stating that,
in the opinion of such counsel, all such conditions precedent have been complied
with.

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

         Section 17.6. Legal Holidays. In any case where the date of maturity of
interest on or principal of the Notes or the date fixed for redemption of any
Note will not be a Business Day, then payment of such interest on or principal
of the Notes need not be made on such date, but may be made on the next
succeeding Business Day with the same force and effect as if made on the date of
maturity or the date fixed for redemption, and no interest shall accrue for the
period from and after such date.

         Section 17.7. No Security Interest Created. Nothing in this Indenture
or in the Notes, expressed or implied, shall be construed to constitute a
security interest under the Uniform Commercial Code or similar legislation, as
now or hereafter enacted and in effect, in any jurisdiction.

         Section 17.8. Trust Indenture Act. This Indenture is hereby made
subject to, and shall be governed by, the provisions of the Trust Indenture Act
required to be part of and to govern

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indentures qualified under the Trust Indenture Act; provided, however, that,
unless otherwise required by law, notwithstanding the foregoing, this Indenture
and the Notes issued hereunder shall not be subject to the provisions of
subsections (a)(1), (a)(2), and (a)(3) of Section 314 of the Trust Indenture Act
as now in effect as hereafter amended or modified; provided further that this
Section 17.8 shall not require that this Indenture or the Trustee be qualified
under the Trust Indenture Act prior to the time such qualification is in fact
required under the terms of the Trust Indenture Act, nor shall it constitute any
admission or acknowledgment by any party hereto that any such qualification is
required prior to the time such qualification is in fact required under the
terms of the Trust Indenture Act. If any provision hereof limits, qualifies or
conflicts with another provision hereof which is required to be included in an
indenture qualified under the Trust Indenture Act, such required provision shall
control.

         Section 17.9. Benefits of Indenture. Nothing in this Indenture or in
the Notes, expressed or implied, shall give to any person, other than the
parties hereto, any paying agent, any authenticating agent, any Note registrar
and their successors hereunder, the holders of Notes and the holders of Senior
Indebtedness, any benefit or any legal or equitable right, remedy or claim under
this Indenture.

         Section 17.10. Table of Contents, Headings, Etc. The table of contents
and the titles and headings of the articles and sections of this Indenture have
been inserted for convenience of reference only, are not to be considered a part
hereof, and shall in no way modify or restrict any of the terms or provisions
hereof.

         Section 17.11. Authenticating Agent. The Trustee may appoint an
authenticating agent which shall be authorized to act on its behalf and subject
to its direction in the authentication and delivery of Notes in connection with
the original issuance thereof and transfers and exchanges of Notes hereunder,
including under Sections 2.4, 2.5, 2.6, 2.7 and 3.3, as fully to all intents and
purposes as though the authenticating agent had been expressly authorized by
this Indenture and those Sections to authenticate and deliver Notes. For all
purposes of this Indenture, the authentication and delivery of Notes by the
authenticating agent shall be deemed to be authentication and delivery of such
Notes "by the Trustee" and a certificate of authentication executed on behalf of
the Trustee by an authenticating agent shall be deemed to satisfy any
requirement hereunder or in the Notes for the Trustee's certificate of
authentication. Such authenticating agent shall at all times be a person
eligible to serve as trustee hereunder pursuant to Section 8.9.

         Any corporation into which any authenticating agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, consolidation or conversion to which any authenticating agent
shall be a party, or any corporation succeeding to the corporate trust business
of any authenticating agent, shall be the successor of the authenticating agent
hereunder, if such successor corporation is otherwise eligible under this
Section, without the execution or filing of any paper or any further act on the
part of the parties hereto or the authenticating agent or such successor
corporation.

         Any authenticating agent may at any time resign by giving written
notice of resignation to the Trustee and to the Company. The Trustee may at any
time terminate the agency of any

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<PAGE>   89
authenticating agent by giving written notice of termination to such
authenticating agent and to the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time any
authenticating agent shall cease to be eligible under this Section, the Trustee
shall promptly appoint a successor authenticating agent (which may be the
Trustee), shall give written notice of such appointment to the Company and shall
mail notice of such appointment to all holders of Notes as the names and
addresses of such holders appear on the Note register.

         The Trustee agrees to pay to the authenticating agent from time to time
reasonable compensation for its services (to the extent pre-approved by the
Company in writing), and the Trustee shall be entitled to be reimbursed for such
pre-approved payments, subject to Section 8.6.

         The provisions of Sections 8.2, 8.3, 8.4, 9.3 and this Section 17.11
shall be applicable to any authenticating agent.

         Section 17.12. Execution in Counterparts. This Indenture may be
executed in any number of counterparts, each of which shall be an original, but
such counterparts shall together constitute but one and the same instrument.

         State Street Bank and Trust Company hereby accepts the trusts in this
Indenture declared and provided, upon the terms and conditions hereinabove set
forth.

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

                                      ALKERMES, INC.

                                      By:   /s/ James M. Frates
                                          --------------------------------------
                                          Name:  James M. Frates
                                          Title: Vice President, Chief
                                                 Financial Officer and Treasurer

Attest:

  /s/ Patricia L. Allen
-------------------------------
Name:  Patricia L. Allen
Title: Assistant Secretary
[seal]

                                      STATE STREET BANK AND TRUST COMPANY
                                      as Trustee

                                      By:   /s/ Robert J. Dunn
                                          --------------------------------------
                                          Name:  Robert J. Dunn
                                          Title: Vice President

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