Document:

EXHIBIT 10.1
                                                                    ------------

                                                                  EXECUTION COPY

                                  CHATTEM, INC.

                    1.625% CONVERTIBLE SENIOR NOTES DUE 2014

                                    INDENTURE

                           DATED AS OF APRIL 11, 2007

                         U.S. BANK, NATIONAL ASSOCIATION

                                   AS TRUSTEE

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                                TABLE OF CONTENTS

                                                                            Page

ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE..........................1

   Section 1.01.     Definitions..............................................1

   Section 1.02.     Other Definitions........................................8

   Section 1.03.     Trust Indenture Act Provisions...........................9

   Section 1.04.     Rules of Construction...................................10

ARTICLE 2 THE SECURITIES.....................................................10

   Section 2.01.     Form and Dating.........................................10

   Section 2.02.     Execution and Authentication............................12

   Section 2.03.     Registrar, Paying Agent and Conversion Agent............13

   Section 2.04.     Paying Agent to Hold Money in Trust.....................13

   Section 2.05.     Lists of Holders of Securities..........................14

   Section 2.06.     Transfer and Exchange...................................14

   Section 2.07.     Replacement Securities..................................15

   Section 2.08.     Outstanding Securities..................................16

   Section 2.09.     Treasury Securities.....................................16

   Section 2.10.     Temporary Securities....................................16

   Section 2.11.     Cancellation............................................17

   Section 2.12.     Legend; Additional Transfer and Exchange Requirements...17

   Section 2.13.     CUSIP Numbers...........................................21

ARTICLE 3 PURCHASE UPON FUNDAMENTAL CHANGE...................................21

   Section 3.01.     Purchase at Holders' Option upon a Fundamental Change...21

   Section 3.02.     Effect of Fundamental Change Purchase Notice............23

   Section 3.03.     Deposit of Fundamental Change Purchase Price............24

   Section 3.04.     Repayment to The Company................................25

   Section 3.05.     Securities Purchased in Part............................25

   Section 3.06.     Compliance with Securities Laws upon Purchase of
                     Securities..............................................25

   Section 3.07.     Purchase of Securities in Open Market...................25

ARTICLE 4 CONVERSION.........................................................26

   Section 4.01.     Conversion Privilege and Conversion Rate................26

   Section 4.02.     Conversion Procedure....................................30

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   Section 4.03.     Fractional Shares.......................................31

   Section 4.04.     Taxes on Conversion.....................................31

   Section 4.05.     Company to Provide Stock................................31

   Section 4.06.     Adjustment of Conversion Rate...........................32

   Section 4.07.     No Adjustment...........................................39

   Section 4.08.     Notice of Adjustment....................................40

   Section 4.09.     Notice of Certain Transactions..........................40

   Section 4.10.     Effect of Recapitalization, Reclassification,
                     Consolidation, Merger or Sale...........................40

   Section 4.11.     Trustee's Disclaimer....................................41

   Section 4.12.     [Intentionally Omitted].................................41

   Section 4.13.     Settlement of Conversion Obligation.....................41

ARTICLE 5 COVENANTS..........................................................42

   Section 5.01.     Payment of Securities...................................42

   Section 5.02.     SEC and Other Reports...................................43

   Section 5.03.     Compliance Certificates.................................44

   Section 5.04.     Further Instruments and Acts............................44

   Section 5.05.     Maintenance of Corporate Existence......................44

   Section 5.06.     Rule 144A Information Requirement.......................44

   Section 5.07.     Stay, Extension and Usury Laws..........................44

   Section 5.08.     Payment of Additional Interest..........................45

   Section 5.09.     Maintenance of Office or Agency.........................45

ARTICLE 6 CONSOLIDATION AND MERGER...........................................45

   Section 6.01.     Company May Consolidate, Etc., Only on Certain Terms....45

   Section 6.02.     Successor Substituted...................................46

ARTICLE 7 DEFAULT AND REMEDIES...............................................46

   Section 7.01.     Events of Default.......................................46

   Section 7.02.     Acceleration............................................49

   Section 7.03.     Other Remedies..........................................49

   Section 7.04.     Waiver of Defaults and Events of Default................49

   Section 7.05.     Control by Majority.....................................50

   Section 7.06.     Limitations on Suits....................................50

   Section 7.07.     Rights of Holders to Receive Payment and to Convert.....50

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   Section 7.08.     Collection Suit by Trustee..............................51

   Section 7.09.     Trustee May File Proofs of Claim........................51

   Section 7.10.     Priorities..............................................51

   Section 7.11.     Undertaking for Costs...................................52

ARTICLE 8 TRUSTEE............................................................52

   Section 8.01.     Obligations of Trustee..................................52

   Section 8.02.     Rights of Trustee.......................................53

   Section 8.03.     Individual Rights of Trustee............................55

   Section 8.04.     Trustee's Disclaimer....................................55

   Section 8.05.     Notice of Default or Events of Default..................55

   Section 8.06.     Reports by Trustee to Holders...........................55

   Section 8.07.     Compensation and Indemnity..............................56

   Section 8.08.     Replacement of Trustee..................................57

   Section 8.09.     Successor Trustee by Merger, Etc........................57

   Section 8.10.     Eligibility; Disqualification...........................58

   Section 8.11.     Preferential Collection of Claims Against Company.......58

ARTICLE 9 SATISFACTION AND DISCHARGE OF INDENTURE............................58

   Section 9.01.     Satisfaction and Discharge of Indenture.................58

   Section 9.02.     Application of Trust Money..............................59

   Section 9.03.     Repayment to Company....................................59

   Section 9.04.     Reinstatement...........................................59

ARTICLE 10 AMENDMENTS; SUPPLEMENTS AND WAIVERS...............................60

   Section 10.01.    Without Consent of Holders..............................60

   Section 10.02.    With Consent of Holders.................................60

   Section 10.03.    Compliance with Trust Indenture Act.....................61

   Section 10.04.    Revocation and Effect of Consents.......................61

   Section 10.05.    Notation on or Exchange of Securities...................62

   Section 10.06.    Trustee to Sign Amendments, Etc.........................62

   Section 10.07.    Effect of Supplemental Indentures.......................62

ARTICLE 11 MISCELLANEOUS.....................................................62

   Section 11.01.    Trust Indenture Act Controls............................62

   Section 11.02.    Notices.................................................62

   Section 11.03.    Communications By Holders with Other Holder.............64

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   Section 11.04.    Certificate and Opinion as to Conditions Precedent......64

   Section 11.05.    Record Date for Vote or Consent of Holders of
                     Securities..............................................64

   Section 11.06.    Rules by Trustee, Paying Agent, Registrar and
                     Conversion Agent........................................65

   Section 11.07.    Legal Holidays..........................................65

   Section 11.08.    Governing Law...........................................65

   Section 11.09.    No Adverse Interpretation of Other Agreements...........65

   Section 11.10.    No Recourse Against Others..............................65

   Section 11.11.    No Security Interest Created............................65

   Section 11.12.    Successors..............................................65

   Section 11.13.    Multiple Counterparts...................................65

   Section 11.14.    Separability............................................65

   Section 11.15.    Table of Contents, Headings, Etc........................65

   Section 11.16.    Calculations In Respect of Securities...................66

Exhibit.....................................................................A-1

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                             CROSS REFERENCE TABLE*

TIA                                                          INDENTURE
SECTION                                                       SECTION
-------                                                       -------
Section       310                                              11.01
              310(a)(1)                                        8.10
              (a)(2)                                           8.10
              (a) (3)                                          N.A.**
              (a) (4)                                          N.A.
              (a) (5)                                          8.10
              (b)                                              8.10
              (c)                                              N.A.
Section       311                                              11.01
              311 (a)                                          8.11
              (b)                                              8.11
              (c)                                              N.A.
Section       312                                              11.01
              312(a)                                           2.05
              (b)                                              11.03
              (c)                                              11.03
Section       313                                              11.01
              313(a)                                           8.06(a)
              (b)(1)                                           N.A.
              (b)(2)                                           8.06(a)
              (c)                                              8.06(a)
              (d)                                              8.06(b)
Section       314                                              11.01
              314(a)                                           5.02(a); 5.03
              (b)                                              N.A.
              (c)(1)                                           2.02; 9.01; 11.04
              (c)(2)                                           9.01; 11.04
              (c)(3)                                           N.A.
              (d)                                              N.A.
              (e)                                              11.04
              (f)                                              N.A.
Section       315                                              11.01
              315(a)                                           8.01(b)
              (b)                                              8.05
              (d)                                              8.01(c)
              (d)(2)                                           8.01(c)
              (d)(3)                                           8.01(c)
              (e)                                              7.11
Section       316                                              11.01
              316 (a)                                          7.05; 10.02 (b)
              (b)                                              7.07
              (c)                                              11.05
Section       317                                              7.08; 7.09; 11.01
Section       318                                              11.01

*    This Cross-Reference Table shall not, for any purpose, be deemed a part of
     this Indenture.
**   N.A. means Not Applicable.

<PAGE>

         THIS INDENTURE dated as of April 11, 2007 is between Chattem, Inc., a
corporation duly organized under the laws of the Tennessee (the "Company"), and
U.S. Bank, National Association, a national banking association, as Trustee (the
"Trustee").

         In consideration of the purchase of the Securities (as defined herein)
by the Holders thereof, both parties agree as follows for the benefit of the
other and for the equal and ratable benefit of the Holders of the Securities.

                                    ARTICLE 1
                   DEFINITIONS AND INCORPORATION BY REFERENCE

         Section 1.01. Definitions.

         "Additional Interest" has the meaning specified in the Registration
Rights Agreement. All references herein to interest accrued or payable as of any
date shall include any Additional Interest accrued or payable as of such date as
provided in the Registration Rights Agreement.

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

         "Agent" means any Registrar, Paying Agent or Conversion Agent.

         "Aggregate Share Cap" means initially 16.9405 shares of Common Stock
per $1,000 principal amount of Securities, subject to proportional adjustment in
the same manner as the Conversion Rate upon the occurrence of any of the events
described under clauses (1) through (4) of Section 4.06(a).

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

         "Beneficial Ownership" means the definition such term is given in
accordance with Rule 13d-3 promulgated by the SEC under the Exchange Act.

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

         "Business Day" means any weekday that is not a day on which banking
institutions in The City of New York are authorized or obligated to close.

         "Capital Stock" of any Person means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such Person, but excluding any debt
securities convertible into such equity.

<PAGE>

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

         "Certificated Security" means a Security that is in substantially the
form attached as Exhibit A but that does not include the information or the
schedule called for by footnote 1 thereof.

         "Change of Control" means the occurrence of any of the following after
the date hereof: (i) the sale, lease, transfer, conveyance or other disposition
(other than by way of merger or consolidation), in one or a series of related
transactions, of all or substantially all of the properties and assets of the
Company and its subsidiaries taken as a whole to any "person" (as such term is
used in Section 13(d)(3) of the Exchange Act) other than to one or more of the
Company's wholly-owned subsidiaries; (ii) the adoption of a plan relating to the
liquidation or dissolution of the Company; (iii) the consummation of any
transaction (including, without limitation, any merger or consolidation) the
result of which is that any "person" or "group" (as such terms are used in
Sections 13(d) and 14(d) of the Exchange Act) becomes the "beneficial owner" (as
such term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except
that a person shall be deemed to have "beneficial ownership" of all securities
that such person has the right to acquire, whether such right is currently
exercisable or is exercisable only upon the occurrence of a subsequent
condition), directly or indirectly, of more than 50% of the Voting Stock of the
Company (measured by voting power rather than number of shares), other than any
acquisition by the Company, any of the Company's subsidiaries or any of the
Company's employee benefit plans; (iv) the first day on which a majority of the
members of the Board of Directors of the Company are not Continuing Directors;
or (v) the Company consolidates with, or merges with or into, any Person, or any
Person consolidates with, or merges with or into, the Company, in any such event
pursuant to a transaction in which any of the outstanding Voting Stock of the
Company is converted into or exchanged for cash, securities or other property,
other than any such transaction where the Voting Stock of the Company
outstanding immediately prior to such transaction is converted into or exchanged
for Voting Stock of the surviving or transferee Person constituting a majority
of the outstanding shares of such Voting Stock of such surviving or transferee
Person (immediately after giving effect to such issuance). Notwithstanding
anything to the contrary set forth herein, it will not constitute a Change of
Control if 100% of the consideration for the Common Stock (excluding cash
payments for fractional shares and cash payments made in respect of dissenters'
appraisal rights) in the transaction or transactions otherwise constituting a
Change of Control consists of common stock or American Depositary Shares
representing shares of common stock, in each case which are traded on a U.S.
national securities exchange or quoted on an established automated
over-the-counter trading market in the United States, or which will be so traded
or quoted when issued or exchanged in connection with the Change of Control, and
as a result of such transaction or transactions the Securities become
convertible solely into cash in an amount equal to the lesser of $1,000 and the
Conversion Value and, if the Conversion Value is greater than $1,000, payment of
the excess value in the form of such common stock or American Depositary Shares,
subject to the right to deliver cash in lieu of all or a portion of such
remaining shares, in substantially the same manner as described under Section
4.13; provided that, with respect to an entity organized under the laws of a
jurisdiction outside the United States, such entity has a worldwide total market
capitalization of its equity securities of at least three times the market
capitalization of the Company before giving effect to the consolidation or
merger.

                                        2
<PAGE>

         "Closing Price" means on any Trading Day, the reported last sale price
per share (or if no last sale price is reported, the average of the bid and ask
prices per share or, if more than one in either case, the average of the average
bid and the average ask prices per share) on such date reported by the Nasdaq
Global Select Market or, if the Common Stock (or the applicable security) is not
traded on the Nasdaq Global Select Market, as reported by the principal national
or regional securities exchange on which the Common Stock (or such other
security) is listed. If the Common Stock (or such other security) is not listed
for trading on a United States national or regional securities exchange, the
"Closing Price" shall be the last quoted bid price for the Common Stock (or such
other security) in the over-the-counter market on the relevant date as reported
by Pink Sheets LLC or similar organization. If the Common Stock (or such other
security) is not so quoted, the "Closing Price" shall be the average of the
midpoint of the last bid and ask prices for the Common Stock (or such other
security) on the relevant date from each of at least three independent
nationally recognized investment banking firms selected by the Company for this
purpose.

         "Common Stock" means the common stock of the Company, without par
value, as it exists on the date of this Indenture and any shares of any class or
classes of Capital Stock of the Company resulting from any reclassification or
reclassifications thereof, or, in the event of a merger, consolidation or other
similar transaction involving the Company that is otherwise permitted hereunder
in which the Company is not the surviving corporation the common stock, common
equity interests, ordinary shares or depositary shares or other certificates
representing common equity interests of such surviving corporation or its direct
or indirect parent corporation, and which have no preference in respect of
dividends or of amounts payable in the event of any voluntary or involuntary
liquidation, dissolution or winding-up of the Company and which are not subject
to redemption by the Company; provided, however, that if at any time there shall
be more than one such resulting class, the shares of each such class then so
issuable on conversion of Securities shall be substantially in the proportion
which the total number of shares of such class resulting from all such
reclassifications bears to the total number of shares of all such classes
resulting from all such reclassifications.

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

         "Continuing Directors" means, as of any date of determination, any
member of the Board of Directors of the Company who (i) was a member of such
Board of Directors on the Issue Date or (ii) was nominated for election or
elected to such Board of Directors with the approval of a majority of the
Continuing Directors who were members of such Board at the time of such
nomination or election.

         "Conversion Price" per share of Common Stock as of any day means the
result obtained by dividing (i) $1,000 by (ii) the then applicable Conversion
Rate, rounded to the nearest cent.

         "Conversion Rate" means initially 13.6617 shares of Common Stock for
each $1,000 principal amount of Securities, as adjusted from time to time
pursuant to the provisions of this Indenture.

                                        3
<PAGE>

         "Conversion Reference Period" means:

                  (i) for Securities that are converted during the one month
         period prior to the Final Maturity Date of the Securities, the 20
         consecutive Trading Days preceding and ending on the Final Maturity
         Date, subject to any extension due to a Market Disruption Event; and

                  (ii) in all other instances, the 20 consecutive Trading Days
         beginning on the third Trading Day following the Conversion Date.

         "Conversion Value" means, for each $1,000 principal amount of
Securities, the average of the Daily Conversion Values for each of the twenty
consecutive Trading Days of the Conversion Reference Period.

         "Corporate Trust Office" means the office of the Trustee at which at
any particular time the trust created by this Indenture shall be administered,
which initially will be the office of U.S. Bank, National Association located at
150 Fourth Avenue North, 2nd Floor, Nashville, Tennessee 37219, attention:
Corporate Trust Services (Chattem, Inc. 1.625% Convertible Senior Notes due
2014).

         "Daily Conversion Value" means, with respect to any Trading Day, the
product of (1) the applicable Conversion Rate and (2) the Volume Weighted
Average Price per share of the Company's Common Stock on such Trading Day.

         "Daily Share Amount" means, for each Trading Day of the Conversion
Reference Period and for each $1,000 principal amount of Securities surrendered
for conversion, a number of shares of Common Stock (but in no event less than
zero) determined by the following formula:

         (Volume Weighted Average Price per share      Conversion Rate in effect
           of Common Stock for such Trading Day    x    on the Conversion Date)

                                                                        - $1,000

         -----------------------------------------------------------------------
            Volume Weighted Average Price per share of Common Stock for such
                                    Trading Day x 20

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

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

         "Final Maturity Date" means May 1, 2014.

         "Fundamental Change" means the occurrence of a Change of Control or a
Termination of Trading following the original issuance of the Securities.

         "Fundamental Change Effective Date" means the date on which any
Fundamental Change becomes effective.

                                        4
<PAGE>

         "Fundamental Change Purchase Price" of any Security, means 100% of the
principal amount of the Security to be purchased plus accrued and unpaid
interest, if any, and Additional Interest, if any, to, but excluding, the
Fundamental Change Purchase Date.

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

         "Global Security" means a Security in global form that is in
substantially the form attached as Exhibit A and that includes the information
and schedule called for in footnote 1 thereof and which is deposited with the
Depositary or its custodian and registered in the name of the Depositary or its
nominee.

         "Holder" or "Holder of a Security" means the person in whose name a
Security is registered on the Registrar's books.

         "Indebtedness" means, with respect to any Person, any indebtedness of
such Person, whether or not contingent, in respect of borrowed money or
evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereof) or banker's acceptances
or representing capital lease obligations or the balance deferred and unpaid of
the purchase price of any property or representing any hedging obligations,
except any such balance that constitutes an accrued expense or trade payable, if
and to the extent any of the foregoing (other than letters of credit and hedging
obligations) would appear as a liability upon a balance sheet of such Person
prepared in accordance with GAAP, as well as all Indebtedness is assumed by such
Person) and, to the extent not otherwise included, the guarantee by such Person
of any indebtedness of any other Person. The amount of any Indebtedness
outstanding as of any date shall be (1) the accreted value thereof, in the case
of any Indebtedness issued with original issue discount, and (2) the principal
amount thereof, together with any interest thereon that is more than 30 days
past due, in the case of any other Indebtedness.

         "Indenture" means this Indenture as amended or supplemented from time
to time pursuant to the terms of this Indenture, including the provisions of the
TIA that are automatically deemed to be a part of this Indenture by operation of
the TIA.

         "Initial Purchaser" means Merrill Lynch, Pierce, Fenner & Smith
Incorporated.

         "Interest Payment Date" means May 1 and November 1 of each year,
commencing November 1, 2007.

                                        5
<PAGE>

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

         "Market Disruption Event" means the occurrence or existence for more
than one-half hour period in the aggregate on any scheduled Trading Day for the
Common Stock of any suspension or limitation imposed on trading (by reason of
movements in price exceeding limits permitted by the Nasdaq Global Select Market
or otherwise) in the Common Stock or in any options, contracts or future
contracts relating to the Common Stock, and such suspension or limitation occurs
or exists at any time before 1:00 p.m., New York City time, on such day.

         "Officer" means the Chairman of the Board, the Chief Executive Officer,
the President, any Vice President, the Chief Financial Officer, the Controller,
the Secretary, any Assistant Controller or any Assistant Secretary of the
Company.

         "Officers' Certificate" means a certificate signed on behalf of the
Company by two Officers; provided, however, that for purposes of Sections 4.11
and 5.03, "Officers' Certificate" means a certificate signed by (a) the
principal executive officer, principal financial officer or principal accounting
officer of the Company and (b) one other Officer.

         "Opinion of Counsel" means a written opinion from legal counsel
reasonably acceptable to the Trustee. The counsel may be an employee of or
counsel to the Company or the Trustee.

         "Person" or "person" means any individual, corporation, partnership,
limited liability company, joint venture, association, joint-stock company,
trust, unincorporated organization, government or any agency or political
subdivision thereof or any syndicate or group that would be deemed to be a
"person" under Section 13(d)(3) of the Exchange Act or any other entity.

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

         "Registration Rights Agreement" means the Registration Rights
Agreement, dated as of April 11, 2007, between the Company and the Initial
Purchaser, as amended from time to time in accordance with its terms.

         "Regular Record Date" means, with respect to each Interest Payment
Date, April 15 or October 15, as the case may be, next preceding such Interest
Payment Date.

         "Responsible Officer" means, when used with respect to the Trustee, any
officer within the corporate trust services department of the Trustee with
direct responsibility for the administration of this Indenture and also means,
with respect to a particular corporate trust matter, any other officer to whom
such matter is referred because of such person's knowledge of and familiarity
with the particular subject.

         "Restricted Global Security" means a Global Security that is a
Restricted Security.

         "Restricted Security" means a Security required to bear the restricted
legend set forth in the form of Security annexed as Exhibit A.

                                        6
<PAGE>

         "Rule 144" means Rule 144 under the Securities Act or any successor to
such Rule.

         "Rule 144A" means Rule 144A under the Securities Act or any successor
to such Rule.

         "SEC" means the Securities and Exchange Commission.

         "Securities" means the up to $100,000,000 aggregate principal amount of
1.625% Convertible Senior Notes due 2014, or any of them (each a "Security"), as
amended or supplemented from time to time, that are issued under this Indenture.

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

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

         "Significant Subsidiary" means, in respect of any Person, as of any
date of determination, a Subsidiary of such Person that would constitute a
"significant subsidiary" as such term is defined under Rule 1-02(w) of
Regulation S-X under the Securities Act.

         "Subsidiary" means, in respect of any Person, any corporation,
association, partnership or other business entity of which more than 50% of the
total voting power of shares of Capital Stock entitled (without regard to the
occurrence of any contingency within the control of such Person to satisfy) to
vote in the election of directors, managers, general partners or trustees
thereof is at the time owned or controlled, directly or indirectly, by (i) such
Person, (ii) such Person and one or more Subsidiaries of such Person or (iii)
one or more Subsidiaries of such Person.

         "Termination of Trading" means the termination (but not the temporary
suspension) of trading of the Common Stock, which will be deemed to have
occurred if the Common Stock or other common stock or American Depositary Shares
or similar instruments into which the Securities are convertible is neither
listed for trading on a United States national securities exchange nor approved
for quotation on an established automated over-the-counter securities market in
the United States or ceases to be traded or quoted in contemplation of a
delisting or withdrawal of approval.

         "TIA" means the Trust Indenture Act of 1939, as amended, and the rules
and regulations thereunder as in effect on the date of this Indenture, except to
the extent that the Trust Indenture Act or any amendment thereto expressly
provides for application of the Trust Indenture Act as in effect on another
date.

         "Trading Day" means any day on which (i) there is no Marketing
Disruption Event and (ii) the Nasdaq Global Select Market or, if the Common
Stock is not listed on the Nasdaq Global Select Market, the principal national
or regional securities exchange on which the Common Stock is listed, is open for
trading or, if the Common Stock is not so listed, admitted for trading or
quoted, any Business Day. A Trading Day only includes those days that have a
scheduled closing time of 4:00 p.m. (New York City time) or the then standard
closing time for regular trading on the relevant exchange or trading system.

                                        7
<PAGE>

         "Trading Price" of the Securities on any date of determination means
the average of the secondary market bid quotations obtained by the Company for
$1.5 million principal amount of Securities at approximately 3:30 p.m., New York
City time, on such determination date from three nationally recognized
securities dealers the Company selects; provided that if three such bids cannot
reasonably be obtained by the Company, but two such bids are obtained, then the
average of the two bids shall be used, and if only one such bid can reasonably
be obtained by the Company, that one bid shall be used. If the Company cannot
reasonably obtain at least one bid for $1.5 million principal amount of
Securities from a nationally recognized securities dealer, then the Trading
Price per $1,000 principal amount of Securities will be deemed to be less than
97% of the product of the Closing Price of the Common Stock and the Conversion
Rate per $1,000 principal amount of Securities.

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

         "Trust Officer" means, with respect to the Trustee, any officer
assigned to the Corporate Trust Office, and also, with respect to a particular
matter, any other officer to whom such matter is referred because of such
officer's knowledge of and familiarity with the particular subject.

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

         "Volume Weighted Average Price" per share of Common Stock on any
Trading Day means such price as displayed on Bloomberg (or any successor
service) page CHTT [equity] VAP in respect of the period from 9:30 a.m. to 4:00
p.m., New York City time, on such Trading Day; or, if such price is not
available, the Volume Weighted Average Price means the market value per share of
Common Stock on such day as determined by a nationally recognized independent
investment banking firm retained for this purpose by the Company.

         "Voting Stock" of a Person means all classes of Capital Stock or other
interests (including partnership interests) of such Person then outstanding and
normally entitled (without regard to the occurrence of any contingency within
the control of such person to satisfy) to vote in the election of directors,
managers or trustees thereof.

         Section 1.02. Other Definitions.

Term                                                         Defined in Section
----                                                         ------------------

"Agent Members"                                              2.01
"Bankruptcy Law"                                             7.01
"Business Combination"                                       4.10
"Cash Percentage"                                            4.13(b)
"Company Order"                                              2.02
"Conversion Trigger Price"                                   4.01
"Conversion Agent"                                           2.03
"Conversion Date"                                            4.02

                                        8
<PAGE>

Term                                                         Defined in Section
----                                                         ------------------

"Current Market Price"                                       4.06
"DTC"                                                        2.01
"Depositary"                                                 2.01
"Determination Date"                                         4.06
"Distributed Securities"                                     4.06
"Distribution Notice"                                        4.01
"Event of Default"                                           7.01
"Expiration Date"                                            4.06
"Expiration Time"                                            4.06
"Fundamental Change Company Notice"                          3.01
"Fundamental Change Purchase Date"                           3.01
"Fundamental Change Purchase Notice"                         3.01
"Legal Holiday"                                              11.07
"Legend"                                                     2.12
"Make Whole Premium"                                         4.01
"Notice of Default"                                          7.01
"Paying Agent"                                               2.03
"Primary Registrar"                                          2.03
"Purchase Agreement"                                         2.01
"Purchased Shares"                                           4.06
"record date"                                                4.06
"QIB"                                                        2.01
"Receiver"                                                   7.01
"Registrar"                                                  2.03
"Remaining Shares"                                           4.13
"Rights"                                                     4.06
"Rights Plan"                                                4.06
"Spinoff Securities"                                         4.06
"Spinoff Valuation Period"                                   4.06
"Stock Price"                                                4.01(j)
"tender offer"                                               4.06
"Triggering Distribution"                                    4.06

         Section 1.03. Trust Indenture Act Provisions. Whenever this Indenture
refers to a provision of the TIA, that provision is incorporated by reference in
and made a part of this Indenture. This Indenture shall also include those
provisions of the TIA required to be included herein by the provisions of the
Trust Indenture Reform Act of 1990. The following TIA terms used in this
Indenture have the following meanings:

         "indenture securities" means the Securities;

         "indenture security holder" means a Holder of a Security;

         "indenture to be qualified" means this Indenture;

         "indenture trustee" or "institutional trustee" means the Trustee; and

                                        9
<PAGE>

         "obligor" on the indenture securities means the Company or any other
obligor on the Securities.

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

Section 1.04. Rules of Construction.

         (a) Unless the context otherwise requires:

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

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

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

                  (4) provisions apply to successive events and transactions;

                  (5) the term "merger" includes a statutory share exchange and
         the term "merged" has a correlative meaning;

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

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

                  (8) all "Article", "Exhibit" and "Section" references are to
         Articles, Exhibits and Sections, respectively, of or to this Indenture
         unless otherwise specified herein, and the terms "herein," "hereof" and
         other words of similar import refer to this Indenture as a whole and
         not to any particular Article, Section or other subdivision.

                                    ARTICLE 2
                                 THE SECURITIES

         Section 2.01. Form and Dating. The Securities and the Trustee's
certificate of authentication shall be substantially in the respective forms set
forth in Exhibit A, which Exhibit is incorporated in and made part of this
Indenture. The Securities may have notations, legends or endorsements required
by law, stock exchange or automated quotation system rule or regulation or
usage. The Company shall provide any such notations, legends or endorsements to
the Trustee in writing. Each Security shall be dated the date of its
authentication. The Securities are being offered and sold by the Company
pursuant to a Purchase Agreement dated April 4, 2007 (the "Purchase Agreement")
between the Company and the Initial Purchaser.

                                       10
<PAGE>

         (a) Restricted Global Securities. All of the Securities are initially
being offered and sold to qualified institutional buyers as defined in Rule 144A
(collectively, "QIBs" or individually, each a "QIB") in reliance upon a private
placement exemption from registration under the Securities Act and shall be
issued initially in the form of one or more Restricted Global Securities, which
shall be deposited on behalf of the purchasers of the securities represented
thereby with the Trustee, at its Corporate Trust Office, as custodian for the
depositary, The Depository Trust Company ("DTC", and such depositary, or any
successor thereto, being hereinafter referred to as the "Depositary"), and
registered in the name of its nominee, Cede & Co. (or any successor thereto),
for the accounts of participants in the Depositary, duly executed by the Company
and authenticated by the Trustee as hereinafter provided. The aggregate
principal amount of the Restricted Global Securities may from time to time be
increased or decreased by adjustments made on the records of the Securities
Custodian as hereinafter provided, subject in each case to compliance with the
Applicable Procedures.

         (b) Global Securities In General. Each Global Security shall represent
such of the outstanding Securities as shall be specified therein and each shall
provide that it shall represent the aggregate amount of outstanding Securities
from time to time endorsed thereon and that the aggregate amount of outstanding
Securities represented thereby may from time to time be reduced or increased, as
appropriate, to reflect replacements, exchanges, purchases, redemptions, or
conversions of such Securities. Any adjustment of the aggregate principal amount
of a Global Security to reflect the amount of any increase or decrease in the
amount of outstanding Securities represented thereby shall be made by the
Trustee in accordance with instructions given by the Holder thereof as required
by Section 2.12 and shall be made on the records of the Trustee and the
Depositary.

         Members of, or participants in, the Depositary ("Agent Members") shall
have no rights under this Indenture with respect to any Global Security held on
their behalf by the Depositary or under the Global Security, and the Depositary
(including, for this purpose, its nominee) may be treated by the Company, the
Trustee and any agent of the Company or the Trustee as the absolute owner and
Holder of such Global Security for all purposes whatsoever. Notwithstanding the
foregoing, nothing herein shall (1) prevent the Company, the Trustee or any
agent of the Company or the Trustee from giving effect to any written
certification, proxy or other authorization furnished by the Depositary or (2)
impair, as between the Depositary and its Agent Members, the operation of
customary practices governing the exercise of the rights of a Holder of any
Security.

         (c) Book Entry Provisions. The Company shall execute and the Trustee
shall, in accordance with this Section 2.01(c), authenticate and deliver
initially one or more Global Securities that (1) shall be registered in the name
of the Depositary or its nominee, (2) shall be delivered by the Trustee to the
Depositary or pursuant to the Depositary's instructions and (3) shall bear
legends substantially to the following effect:

                  "UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
                  REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE COMPANY
                  OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
                  PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME
                  OF CEDE & CO. OR IN SUCH OTHER NAME

                                       11
<PAGE>

                  AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
                  DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE TO
                  CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
                  AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY),
                  ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
                  OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED
                  OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. THIS
                  SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
                  INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE
                  NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY IS
                  EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON
                  OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED
                  CIRCUMSTANCES DESCRIBED IN THE INDENTURE AND, UNLESS AND UNTIL
                  IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN
                  DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT
                  AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR
                  BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER
                  NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH
                  NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH
                  SUCCESSOR DEPOSITARY."

         Section 2.02. Execution and Authentication.

         (a) The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is limited to $100,000,000
aggregate principal amount except as provided in Sections 2.06 and 2.07.

         (b) An Officer shall sign the Securities for the Company by manual or
facsimile signature. Typographic and other minor errors or defects in any such
facsimile signature shall not affect the validity or enforceability of any
Security that has been authenticated and delivered by the Trustee.

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

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

         (e) The Trustee shall authenticate and make available for delivery
Securities for original issue in the aggregate principal amount of up to
$100,000,000 upon receipt of a written order or orders of the Company signed by
an Officer of the Company (a "Company Order"). The Company order shall specify
the amount of Securities to be authenticated, shall provide that all such
securities will be represented by a Restricted Global Security and the date on
which each original issue of Securities is to be authenticated.

                                       12
<PAGE>

         (f) The Trustee shall act as the initial authenticating agent.
Thereafter, the Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Securities. An authenticating agent may authenticate
Securities whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent shall have the same rights as an Agent to deal with the
Company or an Affiliate of the Company.

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

         Section 2.03. Registrar, Paying Agent and Conversion Agent.

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

         (b) The Company shall enter into an appropriate agency agreement with
any Agent not a party to this Indenture, provided that the Agent may be an
Affiliate of the Trustee. The agreement shall implement the provisions of this
Indenture that relate to such Agent. The Company shall notify the Trustee of the
name and address of any Agent not a party to this Indenture. If the Company
fails to maintain a Registrar, Paying Agent, Conversion Agent, or agent for
service of notices and demands in any place required by this Indenture, or fails
to give the foregoing notice, the Trustee shall act as such. The Company or any
Affiliate of the Company may act as Paying Agent (except for the purposes of
Section 5.01 and Article 9).

         (c) The Company hereby initially designates the Trustee as Paying
Agent, Registrar, Securities Custodian and Conversion Agent, and initially
designates the Corporate Trust Office of the Trustee as an office or agency
where notices and demands to or upon the Company in respect of the Securities
and this Indenture shall be served.

         Section 2.04. Paying Agent to Hold Money in Trust.

         Prior to 12:00 p.m. (noon), New York City time, on each due date of the
payment of principal of, or interest on, any Securities, the Company shall
deposit with the Paying Agent a sum sufficient to pay such principal or interest
so becoming due. Subject to Section 9.02, a Paying Agent shall hold in trust for
the benefit of Holders of Securities or the Trustee all money held by the Paying
Agent for the payment of principal of, or interest on, the Securities, and shall
notify the Trustee of any failure by the Company (or any other obligor on the
Securities) to make any such payment. If the Company or an Affiliate of the
Company acts as Paying Agent, it shall, before 12:00 p.m. (noon), New York City
time, on each due date of the principal of, or interest

                                       13
<PAGE>

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

         Section 2.05. Lists of Holders of Securities.

         The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Holders of Securities. If the Trustee is not the Primary Registrar, the Company
shall furnish to the Trustee on or before each Interest Payment Date and at such
other times as the Trustee may request in writing, a list in such form and as of
such date as the Trustee may reasonably require of the names and addresses of
Holders of Securities.

         Section 2.06. Transfer and Exchange.

         (a) Subject to compliance with any applicable additional requirements
contained in Section 2.12, when a Security is presented to a Registrar with a
request to register a transfer thereof or to exchange such Security for an equal
principal amount of Securities of other authorized denominations, the Registrar
shall register the transfer or make the exchange as requested; provided,
however, that every Security presented or surrendered for registration of
transfer or exchange shall be duly endorsed or accompanied by an assignment form
and, if applicable, a transfer certificate each in the form included in the form
of Security attached as Exhibit A hereto, and completed in a manner satisfactory
to the Registrar and duly executed by the Holder thereof or its attorney duly
authorized in writing. To permit registration of transfers and exchanges, upon
surrender of any Security for registration of transfer or exchange at an office
or agency maintained pursuant to Section 2.03, the Company shall execute and the
Trustee shall authenticate Securities of a like aggregate principal amount at
the Registrar's request. Any exchange or transfer shall be without charge,
except that the Company or the Registrar may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in relation
thereto; provided that this sentence shall not apply to any exchange pursuant to
Section 2.10, 2.12(a), 3.06, 4.02(e) or 10.05.

         (b) Neither the Company, any Registrar nor the Trustee shall be
required to exchange or register a transfer of (1) any Securities for a period
of 15 days next preceding mailing of a notice of Securities to be redeemed, or
(2) any Securities or portions thereof in respect of which a Fundamental Change
Purchase Notice has been delivered and not withdrawn by the Holder thereof
(except, in the case of the purchase of a Security in part, the portion thereof
not to be purchased).

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

                                       14
<PAGE>

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

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

         Section 2.07. Replacement Securities.

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

         (b) If any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, or is about to be purchased by the
Company pursuant to Article 3, or converted pursuant to Article 4, the Company
in its discretion may, instead of issuing a new Security, pay, purchase or
convert such Security, as the case may be.

         (c) Upon the issuance of any new Securities under this Section 2.07,
the Company may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto as a result of
any Securities, at the request of any Holder, being issued to a Person other
than such Holder and any other reasonable expenses (including the reasonable
fees and expenses of the Trustee or the Registrar) in connection therewith.

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

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

                                       15
<PAGE>

         Section 2.08. Outstanding Securities.

         (a) Securities outstanding at any time are all Securities authenticated
by the Trustee, except for those canceled by it, those purchased pursuant to
Article 3, those converted pursuant to Article 4, those delivered to the Trustee
for cancellation or surrendered for transfer or exchange and those described in
this Section 2.08 as not outstanding.

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

         (c) If a Paying Agent (other than the Company or an Affiliate of the
Company) holds in respect of the outstanding Securities on a Fundamental Change
Purchase Date or the Final Maturity Date money sufficient to pay the principal
of (including premium, if any), accrued interest and Additional Interest, if
any, on Securities (or portions thereof) payable on that date, then on and after
such Fundamental Change Purchase Date or Final Maturity Date, as the case may
be, such Securities (or portions thereof, as the case may be) shall cease to be
outstanding and cash interest and Additional Interest, if any, on them shall
cease to accrue.

         (d) Subject to the restrictions contained in Section 2.09, a Security
does not cease to be outstanding because the Company or an Affiliate of the
Company holds the Security.

         Section 2.09. Treasury Securities.

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

         Section 2.10. Temporary Securities.

         Until definitive Securities are ready for delivery, the Company may
prepare and execute, and, upon receipt of a Company Order, the Trustee shall
authenticate and deliver, temporary Securities. Temporary Securities shall be
substantially in the form of definitive securities but may have variations that
the Company with the consent of the Trustee considers appropriate for temporary
Securities. Without unreasonable delay, the Company shall prepare and the
Trustee shall authenticate and deliver definitive Securities in exchange for
temporary Securities.

                                       16
<PAGE>

         Section 2.11. Cancellation.

         The Company at any time may deliver Securities to the Trustee for
cancellation. The Registrar, the Paying Agent and the Conversion Agent shall
forward to the Trustee or its agent any Securities surrendered to them for
transfer, exchange, purchase, payment or conversion. The Trustee and no one else
shall cancel, in accordance with its standard procedures, all Securities
surrendered for transfer, exchange, purchase, payment, conversion or
cancellation and shall dispose of the cancelled Securities in accordance with
its customary procedures or deliver the canceled Securities to the Company.

         Section 2.12. Legend; Additional Transfer and Exchange Requirements.

         (a) If Securities are issued upon the transfer, exchange or replacement
of Securities subject to restrictions on transfer and bearing the legends set
forth on the forms of Securities attached as Exhibit A (collectively, the
"Legend"), or if a request is made to remove the Legend on a Security, the
Securities so issued shall bear the Legend, or the Legend shall not be removed,
as the case may be, unless there is delivered to the Company and the Registrar
such satisfactory evidence, which shall include an Opinion of Counsel if
requested by the Company or such Registrar, as may be reasonably required by the
Company and the Registrar, that neither the Legend nor the restrictions on
transfer set forth therein are required to ensure that transfers thereof comply
with the provisions of Rule 144A or Rule 144 under the Securities Act or that
such Securities are not "restricted" within the meaning of Rule 144 under the
Securities Act; provided that no such evidence need be supplied in connection
with the sale of such Security pursuant to a registration statement that is
effective at the time of such sale. Upon (1) provision of such satisfactory
evidence if requested or (2) notification by the Company to the Trustee and
Registrar of the sale of such Security pursuant to a registration statement that
is effective at the time of such sale, the Trustee, at the written direction of
the Company, shall authenticate and deliver a Security that does not bear the
Legend. If the Legend is removed from the face of a Security and the Security is
subsequently held by an Affiliate of the Company, the Legend shall be
reinstated.

         (b) A Global Security may not be transferred, in whole or in part, to
any Person other than the Depositary or a nominee or any successor thereof, and
no such transfer to any such other Person may be registered; provided that the
foregoing shall not prohibit any transfer of a Security that is issued in
exchange for a Global Security but is not itself a Global Security. No transfer
of a Security to any Person shall be effective under this Indenture or the
Securities unless and until such Security has been registered in the name of
such Person. Notwithstanding any other provisions of this Indenture or the
Securities, transfers of a Global Security, in whole or in part, shall be made
only in accordance with this Section 2.12.

         (c) Subject to Section 2.12(b) and in compliance with Section 2.12(d),
every Security shall be subject to the restrictions on transfer provided in the
Legend. Whenever any Restricted Security other than a Restricted Global Security
is presented or surrendered for registration of transfer or in exchange for a
Security registered in a name other than that of the Holder, such Security must
be accompanied by a certificate in substantially the form set forth in Exhibit
A, dated the date of such surrender and signed by the Holder of such Security,
as to compliance with such restrictions on transfer. The Registrar shall not be
required to accept for such

                                       17
<PAGE>

registration of transfer or exchange any Security not so accompanied by a
properly completed certificate.

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

         As used in Sections 2.12(c) and (d), the term "transfer" encompasses
any sale, pledge, transfer, hypothecation or other disposition of any Security.

         (e) The provisions below shall apply only to Global Securities:

                  (1) Each Global Security authenticated under this Indenture
         shall be registered in the name of the Depositary or a nominee thereof
         and delivered to such Depositary or a nominee thereof or custodian
         therefor, and each such Global Security shall constitute a single
         Security for purposes of this Indenture.

                  (2) Notwithstanding any other provisions of this Indenture or
         the Securities, a Global Security shall not be exchanged in whole or in
         part for a Security registered, and no transfer of a Global Security in
         whole or in part shall be registered in the name of any Person other
         than the Depositary or one or more nominees thereof; provided that a
         Global Security may be exchanged for securities registered in the names
         of any person designated by the Depositary in the event that (A) the
         Depositary has notified the Company that it is unwilling or unable to
         continue as Depositary for such Global Security or such Depositary has
         ceased to be a "clearing agency" registered under the Exchange Act, and
         a successor Depositary is not appointed by the Company within 90 days
         after receiving such notice or becoming aware that the Depositary has
         ceased to be a "clearing agency," or (B) an Event of Default has
         occurred and is continuing with respect to the Securities. Any Global
         Security exchanged pursuant to subclause (A) above shall be so
         exchanged in whole and not in part, and any Global Security exchanged
         pursuant to subclause (B) above may be exchanged in whole or from time
         to time in part as directed by the Depositary. Any Security issued in
         exchange for a Global Security or any portion

                                       18
<PAGE>

         thereof shall be a Global Security; provided further that any such
         Security so issued that is registered in the name of a Person other
         than the Depositary or a nominee thereof shall not be a Global
         Security.

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

                  (4) Subject to clause (6) of this Section 2.12(e), the
         registered Holder may grant proxies and otherwise authorize any Person,
         including Agent Members and Persons that may hold interests through
         Agent Members, to take any action which a Holder is entitled to take
         under this Indenture or the Securities.

                  (5) In the event of the occurrence of any of the events
         specified in clause (2) of this Section 2.12(e), the Company will
         promptly make available to the Trustee a reasonable supply of
         Certificated Securities in definitive, fully registered form, without
         interest coupons.

                  (6) Neither Agent Members nor any other Persons on whose
         behalf Agent Members may act shall have any rights under this Indenture
         with respect to any Global Security registered in the name of the
         Depositary or any nominee thereof, or under any such Global Security,
         and the Depositary or such nominee, as the case may be, may be treated
         by the Company, the Trustee and any agent of the Company or the Trustee
         as the absolute owner and holder of such Global Security for all
         purposes whatsoever. Notwithstanding the foregoing, nothing herein
         shall prevent the Company, the Trustee or any agent of the Company or
         the Trustee from giving effect to any written certification, proxy or
         other authorization furnished by the Depositary or such nominee, as the
         case may be, or impair, as between the Depositary, its Agent Members
         and any other Person on whose behalf an Agent Member may act, the
         operation of customary practices of such Persons governing the exercise
         of the rights of a holder of any Security.

                  (7) At such time as all interests in a Global Security have
         been converted, canceled or exchanged for Securities in certificated
         form, such Global Security shall, upon receipt thereof, be cancelled by
         the Trustee in accordance with standing procedures and instructions
         existing between the Depositary and the Securities Custodian, subject
         to Section 2.11 of this Indenture. At any time prior to such
         cancellation, if any interest in a

                                       19
<PAGE>

         Global Security is converted, canceled or exchanged for Securities in
         certificated form, the principal amount of such Global Security shall,
         in accordance with the standing procedures and instructions existing
         between the Depositary and the Securities Custodian, be appropriately
         reduced, and an endorsement shall be made on such Global Security, by
         the Trustee or the Securities Custodian, at the direction of the
         Trustee, to reflect such reduction.

         (f) Until the expiration of the holding period applicable to sales
thereof under Rule 144(k) under the Securities Act (or any successor provision
thereto), any stock certificate representing Common Stock issued upon conversion
of any Security shall bear a legend in substantially the following form, unless
such Common Stock has been sold 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 transferred in compliance with Rule
144 under the Securities Act (or any successor provision thereto), or such
Common Stock has been issued upon conversion of Securities that have been
transferred pursuant to a registration statement that has been declared
effective under the Securities Act or pursuant to Rule 144 under the Securities
Act (or any successor provision thereto), or unless otherwise agreed by the
Company in writing with written notice thereof to the transfer agent:

THE COMMON STOCK EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS,
AND, ACCORDINGLY, MAY NOT BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION UNDER
THE SECURITIES ACT.

BY ITS ACQUISITION HEREOF, THE HOLDER AGREES TO OFFER, SELL OR OTHERWISE
TRANSFER THE COMMON STOCK EVIDENCED HEREBY PRIOR TO THE DATE THAT IS TWO YEARS
AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH
CHATTEM INC. (THE "COMPANY") OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF
THE COMMON STOCK EVIDENCED HEREBY (OR ANY PREDECESSOR OF THE COMMON STOCK
EVIDENCED HEREBY) (THE "RESALE RESTRICTION TERMINATION DATE") ONLY (A) TO THE
COMPANY OR ANY SUBSIDIARY THEREOF, (B) PURSUANT TO A REGISTRATION STATEMENT
WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, OR (C) PURSUANT TO
ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT, SUBJECT TO THE COMPANY'S AND THE TRANSFER AGENT'S RIGHT PRIOR TO
ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (C) PRIOR TO THE RESALE
RESTRICTION TERMINATION DATE TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATIONS AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND IN
EACH OF THE FOREGOING CASES, TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE
FORM APPEARING ON THE OTHER SIDE OF THIS CERTIFICATE IS COMPLETED AND DELIVERED
BY THE TRANSFEROR TO THE TRANSFER AGENT. THIS LEGEND WILL BE REMOVED UPON THE
REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.

                                       20
<PAGE>

         Any such Common Stock as to which such restrictions on transfer shall
have expired in accordance with their terms or as to which the conditions for
removal of the foregoing legend set forth therein have been satisfied 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 number of
shares of Common Stock, which shall not bear the restrictive legend required by
this section.

         Section 2.13. CUSIP Numbers.

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

                                    ARTICLE 3
                        PURCHASE UPON FUNDAMENTAL CHANGE

         Section 3.01. Purchase at Holders' Option upon a Fundamental Change.

         (a) If a Fundamental Change occurs prior to the Final Maturity Date,
each Holder of a Security shall have the right, at the option of the Holder, to
require the Company to repurchase for cash all or any portion of the Securities
of such Holder equal to $1,000 principal amount (or an integral multiple
thereof) at the Fundamental Change Purchase Price, on the date (the "Fundamental
Change Purchase Date") specified by the Company pursuant to subsection 3.01(b)
that is not less than 30 days nor more than 45 days after the Fundamental Change
Effective Date.

         (b) As promptly as practicable following the date when the Company
publicly announces a Fundamental Change but in no event less than 10 Trading
Days prior to the anticipated Fundamental Change Effective Date, the Company
shall mail a written notice of the Fundamental Change and of the resulting
repurchase right to the Trustee, Paying Agent and to each Holder (and to
beneficial owners as required by applicable law) (the "Fundamental Change
Company Notice"). The Fundamental Change Company Notice shall include the form
of a Fundamental Change Purchase Notice to be completed by the Holder and shall
state:

                  (1) the events causing such Fundamental Change;

                  (2) the date (or expected date) of such Fundamental Change;

                  (3) the last date by which the Fundamental Change Purchase
         Notice must be delivered to elect the repurchase option pursuant to
         this Section 3.01;

                  (4) the Fundamental Change Purchase Date;

                                       21
<PAGE>

                  (5) the Fundamental Change Purchase Price;

                  (6) the Holder's right to require the Company to purchase the
         Securities;

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

                  (8) the then effective Conversion Rate and any adjustments to
         the Conversion Rate resulting from such Fundamental Change;

                  (9) the procedures that the Holder must follow to exercise
         rights under Article 4 and that Securities as to which a Fundamental
         Change Purchase Notice has been given may be converted into Common
         Stock pursuant to Article 4 of this Indenture only to the extent that
         the Fundamental Change Purchase Notice has been withdrawn in accordance
         with the terms of this Indenture;

                  (10) the procedures that the Holder must follow to exercise
         rights under this Section 3.01;

                  (11) the procedures for withdrawing a Fundamental Change
         Purchase Notice;

                  (12) that, unless the Company fails to pay such Fundamental
         Change Purchase Price, Securities covered by any Fundamental Change
         Purchase Notice will cease to be outstanding and interest and
         Additional Interest, if any, will cease to accrue on and after the
         Fundamental Change Purchase Date; and

                  (13) the CUSIP number of the Securities.

At the Company's request, the Trustee shall give such Fundamental Change Company
Notice in the Company's name and at the Company's expense; provided that, in all
cases, the text of such Fundamental Change Company Notice shall be prepared by
the Company. If any of the Securities is in the form of a Global Security, then
the Company shall modify such notice to the extent necessary to accord with the
Applicable Procedures relating to the purchase of Global Securities.

         (c) A Holder may exercise its rights specified in Section 3.01(a) upon
delivery of a written notice (which shall be in substantially the form set forth
in the form of Security attached as Exhibit A under the heading "Fundamental
Change Purchase Notice" and which may be delivered by letter, overnight courier,
hand delivery, facsimile transmission or in any other written form and, in the
case of Global Securities, may be delivered electronically or by other means in
accordance with the Depositary's Applicable Procedures) of the exercise of such
rights (a "Fundamental Change Purchase Notice") to the Company or any Paying
Agent at any time prior to the close of business on the Business Day next
preceding the Fundamental Change Purchase Date, subject to extension to comply
with applicable law.

                                       22
<PAGE>

                  (1) The Fundamental Change Purchase Notice shall state: (A)
         the certificate number (if such Security is held other than in global
         form) of the Security which the Holder will deliver to be purchased
         (or, if the Security is held in global form, any other items required
         to comply with the Applicable Procedures), (B) the portion of the
         principal amount of the Security which the Holder will deliver to be
         purchased, which portion must be $1,000 or an integral multiple of
         $1,000 and (C) that such Security shall be purchased as of the
         Fundamental Change Purchase Date pursuant to the terms and conditions
         specified in the Securities and in this Indenture.

                  (2) The delivery of a Security for which a Fundamental Change
         Purchase Notice has been timely delivered to any Paying Agent and not
         validly withdrawn prior to, on or after the Fundamental Change Purchase
         Notice (together with all necessary endorsements) at the office of such
         Paying Agent shall be a condition to the receipt by the Holder of the
         Fundamental Change Purchase Price therefor.

                  (3) The Company shall only be obliged to purchase, pursuant to
         this Section 3.01, a portion of a Security if the principal amount of
         such portion is $1,000 or an integral multiple of $1,000 (provisions of
         this Indenture that apply to the purchase of all of a Security also
         apply to the purchase of such portion of such Security).

                  (4) Notwithstanding anything herein to the contrary, any
         Holder delivering to a Paying Agent the Fundamental Change Purchase
         Notice contemplated by this Section 3.01(c) shall have the right to
         withdraw such Fundamental Change Purchase Notice in whole or in a
         portion thereof that is a principal amount of $1,000 or in an integral
         multiple thereof at any time prior to the close of business on the
         Business Day prior to the Fundamental Change Purchase Date by delivery
         of a written notice of withdrawal to the Paying Agent in accordance
         with Section 3.02.

                  (5) A Paying Agent shall promptly notify the Company of the
         receipt by it of any Fundamental Change Purchase Notice or written
         withdrawal thereof.

                  (6) Anything herein to the contrary notwithstanding, in the
         case of Global Securities, any Fundamental Change Purchase Notice may
         be delivered or withdrawn and such Securities may be surrendered or
         delivered for purchase in accordance with the Applicable Procedures as
         in effect from time to time.

         Section 3.02. Effect of Fundamental Change Purchase Notice.

         (a) Upon receipt by any Paying Agent of a properly completed
Fundamental Change Purchase Notice from a Holder, the Holder of the Security in
respect of which such Fundamental Change Purchase Notice was given shall (unless
such Fundamental Change Purchase Notice is withdrawn as specified in Section
3.02(b)) thereafter be entitled to receive the Fundamental Change Purchase Price
with respect to such Security, subject to the occurrence of an absence of an
Event of Default, or a continuation thereof (other than a Default in the payment
of the Fundamental Change Purchase Price). Such Fundamental Change Purchase
Price shall be paid to such Holder promptly following the later of (1) the
Fundamental Change Purchase Date (provided that the conditions in Section 3.01
have been satisfied) and (2) the time of delivery of

                                       23
<PAGE>

such Security to a Paying Agent by the Holder thereof in the manner required by
Section 3.01(c). Securities in respect of which a Fundamental Change Purchase
Notice has been given by the Holder thereof may not be converted into shares of
Common Stock pursuant to Article 4 on or after the date of the delivery of such
Fundamental Change Purchase Notice unless such Fundamental Change Purchase
Notice has first been validly withdrawn in accordance with Section 3.02(b) with
respect to the Securities to be converted.

         (b) A Fundamental Change Purchase Notice may be withdrawn by means of a
written notice (which may be delivered by mail, overnight courier, hand
delivery, facsimile transmission or in any other written form and, in the case
of Global Securities, may be delivered electronically or by other means in
accordance with the Applicable Procedures) of withdrawal delivered by the Holder
to a Paying Agent at any time prior to the close of business on the Business Day
immediately prior to the Fundamental Change Purchase Date, specifying (1) if
certificated Securities have been issued, the certificate number of the Security
being withdrawn in whole or in withdrawable part (or if the Securities are not
certificated, such written notice must comply with the Applicable Procedures),
(2) the principal amount of the Security or portion thereof (which must be a
principal amount of $1,000 or an integral multiple of $1,000 in excess thereof)
with respect to which such notice of withdrawal is being submitted, and (3) the
portion of the principal amount of the Security that will remain subject to the
Fundamental Change Purchase Notice, which portion must be a principal amount of
$1,000 or an integral multiple thereof.

         Section 3.03. Deposit of Fundamental Change Purchase Price.

         (a) On or before 10:00 a.m., New York City time, on the applicable
Fundamental Change Purchase Date, the Company shall deposit with the Trustee or
with a Paying Agent (or if the Company or an Affiliate of the Company is acting
as the Paying Agent, shall segregate and hold in trust as provided in Section
2.04) an amount of money (in immediately available funds), sufficient to pay the
aggregate Fundamental Change Purchase Price of all the Securities or portions
thereof that are to be purchased as of such Fundamental Change Purchase Date.

         (b) If a Paying Agent or the Trustee holds, in accordance with the
terms hereof, money sufficient to pay the Fundamental Change Purchase Price of
any Security for which a Fundamental Change Purchase Notice has been tendered
and not withdrawn in accordance with this Indenture then, on immediately after
the applicable Fundamental Change Purchase Date, such Security will cease to be
outstanding, whether or not the Security is delivered to the Paying Agent or the
Trustee, and interest and Additional Interest, if any, shall cease to accrue,
and the rights of the Holder in respect of the Security shall terminate (other
than the right to receive the Fundamental Change Purchase Price as aforesaid).
The Company shall publicly announce the principal amount of Securities
repurchased on or as soon as practicable after the Fundamental Change Purchase
Date.

         (c) The Paying Agent will promptly return to the respective Holders
thereof any Securities with respect to which a Fundamental Change Purchase
Notice has been withdrawn in compliance with this Indenture.

                                       24
<PAGE>

         (d) If a Fundamental Change Purchase Date falls after a Regular Record
Date and on or before the related Interest Payment Date, then interest on the
Securities payable on such Interest Payment Date will be payable to the Holders
in whose names the Securities are registered at the close of business on such
Regular Record Date.

         Section 3.04. Repayment to The Company.

         To the extent that the aggregate amount of cash deposited by the
Company pursuant to Section 3.03 exceeds the aggregate Fundamental Change
Purchase Price of the Securities or portions thereof that the Company is
obligated to purchase, then promptly after the Fundamental Change Purchase Date
the Trustee or a Paying Agent, as the case may be, shall return any such excess
cash to the Company.

         Section 3.05. Securities Purchased in Part.

         Any Security that is to be purchased only in part shall be surrendered
at the office of a Paying Agent, and promptly after the Fundamental Change
Purchase Date, the Company shall execute and the Trustee shall authenticate and
deliver to the Holder of such Security, without service charge, a new Security
or Securities, of such authorized denomination or denominations as may be
requested by such Holder (which must be equal to $1,000 principal amount or any
integral thereof), in aggregate principal amount equal to, and in exchange for,
the portion of the principal amount of the Security so surrendered that is not
purchased.

         Section 3.06. Compliance with Securities Laws upon Purchase of
Securities.

         In connection with any offer to purchase of Securities under Section
3.01, the Company shall (a) comply with Rule 13e-4 and Rule 14e-1 (or any
successor to either such Rule), and any other tender offer rules, if applicable,
under the Exchange Act, (b) file the related Schedule TO (or any successor or
similar schedule, form or report) if required under the Exchange Act, and (c)
otherwise comply with all federal and state securities laws in connection with
such offer to purchase or purchase of Securities, all so as to permit the rights
of the Holders and obligations of the Company under Sections 3.01 through 3.04
to be exercised in the time and in the manner specified therein. To the extent
that compliance with any such laws, rules and regulations would result in a
conflict with any of the terms hereof, this Indenture is hereby modified to the
extent required for the Company to comply with such laws, rules and regulations.

         Section 3.07. Purchase of Securities in Open Market.

         The Company (a) on or prior to the date that is two years from the
latest issuance of any Securities and in accordance with Section 2.11, shall
surrender any Security purchased by the Company pursuant to this Article 3 to
the Trustee for cancellation, and (b) after such date and in accordance with
Section 2.11, may surrender such Security to the Trustee for cancellation. Any
securities surrendered to the Trustee for cancellation may not be reissued or
resold by the Company and will be canceled promptly in accordance with Section
2.11. The Company may repurchase Securities in the open market, by tender at any
price or by negotiated transactions and such Securities may be reissued or
resold, to the extent permitted by applicable law, or may be surrendered to the
Trustee for cancellation.

                                       25
<PAGE>

                                    ARTICLE 4
                                   CONVERSION

         Section 4.01. Conversion Privilege and Conversion Rate.

         (a) Subject to the obligation and the right of the Company to pay some
or all of the conversion consideration in cash in accordance with Section 4.13,
and upon compliance with the provisions of this Article 4, at the option of the
Holder thereof, any Security or portion thereof that is an integral multiple of
$1,000 principal amount may be converted into fully paid and nonassessable
shares (calculated as to each conversion to the nearest 1/100th of a share) of
Common Stock prior to the close of business on the Business Day immediately
preceding the Final Maturity Date or such earlier date set forth in this Article
4, unless previously purchased by the Company at the Holder's option upon the
occurrence of a Fundamental Change, at the Conversion Rate in effect at such
time, determined as hereinafter provided and subject to the adjustments
described below, only under the following circumstances:

                  (1) during any fiscal quarter beginning after August 31, 2007,
         and only during such fiscal quarter, if, as of the last day of the
         immediately preceding fiscal quarter, the Closing Price per share of
         the Common Stock for at least 20 Trading Days in the period of the 30
         consecutive Trading Days ending on the last Trading Day of such
         preceding calendar quarter was more than 130% of the Conversion Price
         (the "Conversion Trigger Price");

                  (2) if the Company distributes to all holders of Common Stock
         rights (including rights under a shareholder rights agreement) or
         warrants entitling them to purchase, for a period expiring within 45
         days of the date of issuance, Common Stock at less than the Current
         Market Price of the Common Stock on the day of issuance;

                  (3) if the Company distributes to all holders of Common Stock,
         assets, debt securities or rights to purchase the Company's securities,
         which distribution has a per share value exceeding 15% of the average
         of the Closing Prices of the Common Stock for the five consecutive
         Trading Days ending on the date immediately preceding the first public
         announcement of such distribution;

                  (4) if a Fundamental Change occurs;

                  (5) at any time during the one month period beginning on April
         1, 2014 and ending at the close of business on the Business Day
         immediately preceding the Final Maturity Date; or

                  (6) prior to April 1, 2014, during any five Business Day
         period after any five consecutive Trading Day period in which the
         Trading Price per $1,000 principal amount of Securities, as determined
         following a request by a Holder in accordance with the procedures
         described below in Section 4.01(e)(ii), for each day of that period was
         less than 97% of the product of the Closing Price of the Common Stock
         and the then applicable Conversion Rate.

                                       26
<PAGE>

         (b) In the case of a distribution contemplated by clauses (2) and (3)
of Section 4.01(a), the Company shall notify Holders and Trustee at least 20
days prior to the ex-dividend date for such distribution (the "Distribution
Notice"); provided that if the Company distributes rights pursuant to a
shareholder rights agreement, it will notify the Holders of the Securities on
the Business Day after the Company is required to give notice generally to its
shareholders pursuant to such shareholder rights agreement if such date is less
than 20 days prior to the date of such distribution. Once the Company has given
the Distribution Notice, Holders may surrender their Securities for conversion
at any time until the earlier of the close of business on the last Business Day
preceding the ex-dividend date or the Company's announcement that such
distribution will not take place. Notwithstanding the provisions of clauses (2)
and (3) of Section 4.01(a), Holders may not convert the Securities if the
Holders will be entitled to participate in such distribution on an as converted
basis. The Company will provide written notice to the Conversion Agent as soon
as reasonably practicable of any anticipated or actual event or transaction that
will cause or causes the Securities to become convertible pursuant to clauses
(2) or (3) of Section 4.01(a).

         (c) [Intentionally Omitted]

         (d) In the case of a transaction contemplated by clause (4) of section
4.01(a), the Company will notify the Holders and Trustee at least 10 Trading
Days prior to the anticipated Fundamental Change Effective Date of any
Fundamental Change. Holders may surrender Securities for conversion at any time
beginning 10 Trading Days before the anticipated Fundamental Change Effective
Date of a Fundamental Change and until the last Trading Day preceding the
Fundamental Change Purchase Date.

         (e) (i) For each fiscal quarter of the Company, beginning with the
fiscal quarter ending August 31, 2007, the Company will determine, on the first
Business Day following the last Trading Day of such fiscal quarter, whether the
Securities are convertible pursuant to clause (1) of Section 4.01(a), and, if
so, will notify the Trustee in writing. Upon request of the Conversion Agent,
the Company shall provide, or cause to be provided to, the Conversion Agent the
Closing Price per share of Common Stock for the 30 consecutive Trading Days
ending on the last Trading Day of the preceding fiscal quarter.

                  (ii) The Company shall have no obligation to determine the
         Trading Price of the Securities and whether the Securities are
         convertible pursuant to clause (6) of Section 4.01(a) unless a Holder
         of Securities provides the Company with reasonable evidence that the
         Trading Price per $1,000 principal amount of Securities would be less
         than 97% of the product of the Closing Price of the Common Stock and
         the Conversion Rate per $1,000 principal amount of Securities. At such
         time, the Company shall determine the Trading Price of the Securities
         beginning on the next Trading Day and on each successive Trading Day
         until the Trading Price per $1,000 principal amount of the Securities
         is greater than 97% of the product of the Closing Price of the Common
         Stock and the Conversion Rate per $1,000 principal amount of the
         Securities.

         (f) The conversion rights pursuant to this Article 4 shall commence on
the initial issuance date of the Securities and expire at the close of business
on the Business Day immediately preceding the Final Maturity Date, but shall be
exercisable only during the time

                                       27
<PAGE>

periods specified with respect to each circumstance pursuant to which the
Securities become convertible, subject, in the case of conversion of any Global
Security, to any Applicable Procedures. If a Security is convertible as a result
of a Fundamental Change, such conversion right shall commence and terminate as
set forth in Section 4.01(d). Securities in respect of which a Fundamental
Change Purchase Notice has been delivered may not be surrendered for conversion
pursuant to this Article 4 prior to a valid withdrawal of such Fundamental
Change Notice in accordance with the provisions of Article 3.

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

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

         (i) The Conversion Rate shall be adjusted in certain instances as
provided in Section 4.01(j) and Section 4.06.

         (j) If a Fundamental Change occurs as a result of a Termination of
Trading or as a result of the occurrence of one of the events specified in
clause (i), (ii), (iii) or (v) of the definition of the term Change in Control,
the Company shall pay, to the extent set forth in this Section 4.01(j), a
make-whole premium to a Holder who converts its Securities in connection with
any such transaction by increasing the Conversion Rate applicable to such
Securities. A conversion of Securities will be deemed for the purposes of this
Section 4.01(j) to be "in connection with" a Fundamental Change if the
Conversion Notice set forth in the form of Security attached as Exhibit A is
received by the Conversion Agent on or subsequent to the date 10 Trading Days
prior to the date announced by the Company as the anticipated Fundamental Change
Effective Date but before the close of business on the Business Day immediately
preceding the related Fundamental Change Purchase Date. Any increase in the
applicable Conversion Rate shall be determined by reference to the table below
and shall be based on the date on which the Fundamental Change Effective Date
occurs and the price paid, or deemed to be paid, per share of Common Stock in
the transaction constituting the Fundamental Change (the "Stock Price"). If
holders of Common Stock receive only cash in the Fundamental Change, the Stock
Price shall be the cash amount paid per share of Common Stock. In all other
cases, the Stock Price shall be the average of the Closing Prices of the Common
Stock for each of the 10 Trading Days immediately prior to but not including the
Fundamental Change Effective Date.

         The following table sets forth the amount, if any, by which the
applicable Conversion Rate shall increase for each Stock Price and Fundamental
Change Effective Date set forth below.

         Make Whole Premium Upon a Fundamental Change (Increase in Applicable
Conversion Rate)

<TABLE><CAPTION>
 Stock Price on    April 11,    May 1,        May 1,         May 1,        May 1,        May 1,         May 1,        May 1,
 Effective Date      2007        2008          2009           2010          2011          2012           2013          2014
 --------------      ----        ----          ----           ----          ----          ----           ----          ----
<S>                 <C>         <C>           <C>            <C>           <C>           <C>            <C>           <C>
 $59.03             3.2788      3.2788        3.2788         3.2788        3.2788        3.2788         3.2788        3.2788
 $65.00             2.7183      2.6709        2.6105         2.5331        2.4227        2.2644         2.0136        1.7229
 $70.00             2.3557      2.2873        2.2028         2.0960        1.9503        1.7444         1.4166        0.6240
 $75.00             2.0644      1.9824        1.8821         1.7574        1.5893        1.3587         0.9980        0.0000
</TABLE>
                                       28
<PAGE>
<TABLE><CAPTION>
 Stock Price on    April 11,    May 1,        May 1,         May 1,        May 1,        May 1,         May 1,        May 1,
 Effective Date      2007        2008          2009           2010          2011          2012           2013          2014
 --------------      ----        ----          ----           ----          ----          ----           ----          ----
<S>                 <C>         <C>           <C>            <C>           <C>           <C>            <C>           <C>
 $80.00             1.8280      1.7367        1.6271         1.4911        1.3130        1.0728         0.7098        0.0000
 $85.00             1.6339      1.5376        1.4218         1.2812        1.1003        0.8604         0.5143        0.0000
 $90.00             1.4729      1.3739        1.2562         1.1146        0.9346        0.7024         0.3833        0.0000
 $95.00             1.3377      1.2381        1.1204         0.9798        0.8042        0.5840         0.2959        0.0000
 $100.00            1.2239      1.1249        1.0082         0.8709        0.7020        0.4947         0.2374        0.0000
 $150.00            0.6538      0.5798        0.4964         0.4070        0.3091        0.2049         0.1033        0.0000
 $200.00            0.4597      0.4049        0.3459         0.2820        0.2174        0.1469         0.0770        0.0000

   *Original issue date of the notes.
----------------------------------------------------------------------------------------------------------------------------
</TABLE>

         The actual Stock Price and Fundamental Change Effective Date may not be
set forth in the table, in which case:

                  (i) if the actual Stock Price on the Fundamental Change
         Effective Date is between two Stock Prices in the table or the actual
         Fundamental Change Effective Date is between two Fundamental Change
         Effective Dates in the table, the amount of the Conversion Rate
         adjustment shall be determined by a straight-line interpolation between
         the adjustment amounts set forth for the two Stock Prices and the two
         Fundamental Change Effective Dates set forth in the table based on a
         365-day year, as applicable;

                  (ii) if the Stock Price on the Fundamental Change Effective
         Date exceeds $200.00 per share, subject to adjustment as described in
         Section 4.06, no adjustment to the applicable Conversion Rate will be
         made; and

                  (iii) if the stock price on the Fundamental Change Effective
         Date is less than $59.03 per share, subject to adjustment as described
         in Section 4.06, no adjustment to the applicable conversion rate will
         be made.

         The Stock Prices set forth in the first column of the table above will
be adjusted as of any date on which the Conversion Rate of the Securities is
adjusted in accordance with Section 4.06. The adjusted Stock Prices shall equal
the Stock Prices applicable immediately prior to such adjustment multiplied by a
fraction, the numerator of which shall be the Conversion Rate immediately prior
to the adjustment giving rise to the Stock Price adjustment and the denominator
of which shall be the Conversion Rate as so adjusted. The Conversion Rate
adjustment amounts set forth in the table above shall be adjusted in the same
manner as the Conversion Rate as set forth in Section 4.06.

         Notwithstanding the foregoing paragraph, in no event will the
Conversion Rate exceed 16.9405 per $1,000 principal amount of Securities,
subject to adjustment in the manner set forth in clauses (1) through (4) of
Section 4.06(a) hereof.

         (k) Except as set forth in Section 4.02(c), by delivering the amount of
cash and/or the number of shares of Common Stock issuable on conversion to the
Trustee, the Company will be deemed to have satisfied its obligation to pay the
principal amount of the Securities so converted and its obligation to pay
accrued and unpaid interest, and Additional Interest if any, attributable

                                       29
<PAGE>

to the period from the most recent Interest Payment Date through the Conversion
Date (which amount will be deemed paid in full rather than cancelled,
extinguished or forfeited).

         (l) Notwithstanding anything else contained herein, the Securities
shall not become subject to conversion by reason of a merger, consolidation, or
other transaction effected with the Company's direct or indirect Subsidiaries
for the sole purpose of changing the Company's state of incorporation to any
other state within the United States or the District of Columbia.

         Section 4.02. Conversion Procedure.

         (a) To convert a Security, the Holder must (1) complete and manually
sign the Conversion Notice on the reverse of the Security and deliver such
notice to the Conversion Agent, (2) surrender the Security to the Conversion
Agent, (3) furnish appropriate endorsements and transfer documents if required
by the Conversion Agent, and (4) pay all transfer or similar taxes, if required
pursuant to Section 4.04. The date on which the Holder satisfies all of those
requirements is the "Conversion Date." Upon the conversion of a Security, the
Company shall settle its conversion obligation in the manner set forth in
Section 4.13.

         (b) The person in whose name the shares of Common Stock, if any, that
are issued upon conversion shall be deemed to be a holder of record of such
shares of Common Stock on the date on which such shares, if any, are delivered
to the Holder in accordance with the provisions of Section 4.13. Except as set
forth in this Indenture, no payment or adjustment will be made for dividends or
distributions declared or made on shares of Common Stock issued upon conversion
of a Security prior to the issuance of such shares.

         (c) Holders of Securities surrendered for conversion (in whole or in
part) during the period from the close of business on any Regular Record Date to
the opening of business on the next succeeding Interest Payment Date will
receive the semi-annual interest payable on such Securities on the corresponding
Interest Payment Date notwithstanding the conversion. Except as otherwise
provided in this Section 4.02(c), no payment or adjustment will be made for
accrued interest on a converted Security.

         (d) Subject to Section 4.02(c), nothing in this Section shall affect
the right of a Holder in whose name any Security is registered at the close of
business on a Regular Record Date to receive the interest payable on such
Security on the related Interest Payment Date in accordance with the terms of
this Indenture, the Securities and the Registration Rights Agreement. If a
Holder converts more than one Security at the same time, the amount of cash to
be paid and the number of shares of Common Stock issuable upon the conversion,
if any (and the amount of any cash in lieu of fractional shares pursuant to
Section 4.03), shall be based on the aggregate principal amount of all
Securities so converted.

         (e) In the case of any Security which is converted in part only, upon
such conversion the Company shall execute and the Trustee shall authenticate and
deliver to the Holder thereof, without service charge, a new Security or
Securities of authorized denominations in an aggregate principal amount equal
to, and in exchange for, the unconverted portion of the principal amount of such
Security. A Security may be converted in part, but only if the principal amount
of such part is an integral multiple of $1,000 and the principal amount of such
Security to remain

                                       30
<PAGE>

outstanding after such conversion is equal to $1,000 or any integral multiple of
$1,000 in excess thereof.

         (f) Upon the Company's determination that a Holder is or will be
entitled to convert its Securities pursuant to this Article 4, the Company will
promptly after making such determination issue a press release and use
reasonable efforts to post such information on the Company's website or
otherwise publicly disclose such information.

         Section 4.03. Fractional Shares.

         The Company will not issue fractional shares of Common Stock upon
conversion of Securities. If more than one Security shall be surrendered for
conversion at one time by the same Holder, the number of full shares that shall
be issuable upon conversion shall be computed on the basis of the aggregate
principal amount of the Securities (or specified portions thereof to the extent
permitted hereby) so surrendered. In lieu of any fractional shares, the Company
will pay an amount in cash for the current market value of the fractional
shares. The current market value of a fractional share shall be determined
(calculated to the nearest 1/100th of a share) by multiplying the arithmetic
average of the Volume Weighted Average Price of the Common Stock for each of the
twenty consecutive Trading Days of the Conversion Reference Period by such
fractional share and rounding the product to the nearest whole cent.

         Section 4.04. Taxes on Conversion. If a Holder converts a Security, the
Company shall pay any transfer, stamp or similar taxes or duties related to the
issue or delivery of shares of Common Stock, if any, upon such conversion. The
Company shall also pay any such tax with respect to cash received in lieu of
fractional shares. The Holder shall pay any such tax which is due because the
Holder requests the shares to be issued in a name other than the Holder's name.
The Conversion Agent may refuse to deliver the certificate representing the
Common Stock being issued in a name other than the Holder's name until the
Conversion Agent receives a sum sufficient to pay any tax which will be due
because the shares are to be issued in a name other than the Holder's name.
Nothing herein shall preclude any tax withholding required by law or regulation.

         Section 4.05. Company to Provide Stock.

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

         (b) All shares of Common Stock delivered upon conversion of the
Securities shall be duly authorized, validly issued, fully paid and
nonassessable and shall be free from preemptive or similar rights of any
securityholder of the Company and free of any lien or adverse claim as the
result of any action by the Company.

         (c) The Company will endeavor promptly to comply with all federal and
state securities laws regulating the offer and delivery of shares of Common
Stock upon conversion of Securities.

                                       31
<PAGE>

         Section 4.06. Adjustment of Conversion Rate.

         (a) The Conversion Rate shall be adjusted from time to time by the
Company as follows:

                  (1) If the Company shall pay a dividend or make a distribution
         to all holders of outstanding Common Stock in shares of Common Stock,
         the Conversion Rate in effect immediately prior to the record date for
         the determination of shareholders entitled to receive such dividend or
         other distribution shall be increased so that the same shall equal the
         rate determined by multiplying the Conversion Rate in effect
         immediately prior to such record date by a fraction of which the
         numerator shall be the sum of the number of shares of Common Stock
         outstanding at the close of business on such record date plus the total
         number of shares of Common Stock constituting such dividend or other
         distribution and of which the denominator shall be the number of shares
         of Common Stock outstanding at the close of business on such record
         date. Such adjustment shall be made successively whenever any such
         dividend or distribution is made and shall become effective immediately
         after such record date. For the purpose of this clause (1), the number
         of shares of Common Stock at any time outstanding shall not include
         shares held in the treasury of the Company (to the extent any shares
         may be held in the treasury of the Company). The Company will not pay
         any dividend or make any distribution on Common Stock held in the
         treasury of the Company (to the extent any shares may be held in the
         treasury of the Company). If any dividend or distribution of the type
         described in this clause is declared but not so paid or made, the
         Conversion Rate shall again be adjusted to the Conversion Rate that
         would then be in effect if such dividend or distribution had not been
         declared.

                  (2) If the Company shall subdivide its outstanding Common
         Stock into a greater number of shares, or combine its outstanding
         Common Stock into a smaller number of shares, the Conversion Rate in
         effect immediately prior to the day upon which such subdivision or
         combination becomes effective shall be, in the case of a subdivision of
         Common Stock, proportionately increased and, in the case of a
         combination of Common Stock, proportionately reduced. Such adjustment
         shall be made successively whenever any such subdivision or combination
         of the Common Stock occurs and shall become effective immediately after
         the date upon which such subdivision or combination becomes effective.

                  (3) If the Company shall issue rights or warrants to all
         holders of its outstanding Common Stock entitling them for a period
         expiring within 45 days after such issuance to subscribe for or
         purchase shares of Common Stock (or securities convertible into Common
         Stock) at a price per share (or having a conversion price per share)
         less than the Current Market Price per share of Common Stock (as
         determined in accordance with clause (9) of this Section 4.06(a)) on
         the record date for the determination of shareholders entitled to
         receive such rights or warrants, the Conversion Rate in effect
         immediately prior thereto shall be adjusted so that the same shall
         equal the rate determined by multiplying the Conversion Rate in effect
         immediately prior to 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 such record date plus the number of

                                       32
<PAGE>

         additional shares of Common Stock that such rights or warrants entitle
         holders thereof to subscribe for or purchase (or into which such
         convertible securities are convertible) and of which the denominator
         shall be the number of shares of Common Stock outstanding at the close
         of business on such record date plus the number of shares which the
         aggregate offering price of the total number of shares of Common Stock
         so offered for subscription or purchase (or the aggregate conversion
         price of the convertible securities so offered for subscription or
         purchase, which shall be determined by multiplying the number of shares
         of Common Stock issuable upon conversion of such convertible securities
         by the conversion price per share of Common Stock pursuant to the terms
         of such convertible securities) would purchase at the Current Market
         Price per share of Common Stock on such record date. Such adjustment
         shall be made successively whenever any such rights or warrants are
         issued, and shall become effective immediately after such record date.
         To the extent that shares of Common Stock (or securities convertible
         into Common Stock) are not delivered after the expiration of such
         rights or warrants, the Conversion Rate shall be readjusted to the
         Conversion Rate that would then be in effect had the adjustments made
         upon the issuance of such rights or warrants been made on the basis of
         delivery of only the number of shares of Common Stock (or securities
         convertible into Common Stock) actually delivered. If such rights or
         warrants are not so issued, the Conversion Rate shall again be adjusted
         to be the Conversion Rate that would then be in effect if the record
         date for the determination of shareholders entitled to receive such
         rights or warrants had not been fixed. In determining whether any
         rights or warrants entitle the shareholders to subscribe for or
         purchase shares of Common Stock at a price less than the Current Market
         Price per share of Common Stock and in determining the aggregate
         offering price of the total number of shares of Common Stock so
         offered, there shall be taken into account any consideration received
         by the Company for such rights or warrants and any amount payable on
         exercise or conversion thereof, the value of such consideration, if
         other than cash, to be determined by the Board of Directors.

                  (4) If the Company shall make a dividend or other distribution
         to all holders of its Common Stock of Capital Stock, other than Common
         Stock, or evidences of indebtedness or other assets of the Company
         (excluding (x) any issuance of rights or warrants to which the
         provisions of Section 4.06(a)(3) shall apply, (y) dividends or
         distributions in connection with a reclassification, change,
         consolidation, merger, combination, liquidation, dissolution, winding
         up, sale or conveyance resulting in a change in the conversion
         consideration, or pursuant to any shareholder rights plan or (z) any
         dividend or distribution paid exclusively in cash to which the
         provisions of Section 4.06(a)(6) shall apply) (the "Distributed
         Securities"), then in each such case (unless the Company distributes
         such Distributed Securities for distribution to the Holders of
         Securities on such dividend or distribution date as if each Holder had
         converted such Security into a number of shares of Common Stock equal
         to the then applicable Conversion Rate immediately prior to the record
         date with respect to such distribution) the Conversion Rate in effect
         immediately prior to the record date fixed for the determination of
         shareholders entitled to receive such dividend or distribution shall be
         adjusted so that the same shall equal the rate determined by
         multiplying the Conversion Rate in effect immediately prior to such
         record date by a fraction of which the numerator shall be the Current
         Market Price per share of the Common Stock on such record date and of
         which the denominator shall be Current Market Price per share on such
         record date

                                       33
<PAGE>

         less the fair market value (as determined in good faith by the Board of
         Directors, whose determination shall be conclusive evidence of such
         fair market value and which shall be evidenced by an Officers'
         Certificate delivered to the Trustee) on such record date of the
         portion of the Distributed Securities so distributed applicable to one
         share of Common Stock (determined on the basis of the number of shares
         of Common Stock outstanding at the close of business on such record
         date). Such adjustment shall be made successively whenever any such
         distribution is made and shall become effective immediately after the
         record date for the determination of shareholders entitled to receive
         such distribution. In the event that such dividend or distribution is
         not so paid or made, the Conversion Rate shall again be adjusted to be
         the Conversion Rate that would then be in effect if such dividend or
         distribution had not been declared.

         If the fair market value (as so determined) of the portion of the
         Distributed Securities so distributed applicable to one share of Common
         Stock is equal to or greater than the Current Market Price per share of
         the Common Stock on such record date, in lieu of the foregoing
         adjustment, adequate provision shall be made so that each holder of a
         Security shall have the right to receive upon conversion the amount of
         Distributed Securities so distributed that such Holder would have
         received had such Holder converted each Security on such record date
         into a number of shares of Common Stock equal to the Conversion Rate.
         If the Board of Directors determines the fair market value of any
         distribution for purposes of this Section 4.06(a)(4) by reference to
         the actual or when issued trading market for any securities, it must in
         doing so consider the prices in such market over the same period used
         in computing the Current Market Price of the Common Stock.

         Notwithstanding the foregoing, if the securities distributed by the
         Company to all holders of its Common Stock consist of Capital Stock of,
         or similar equity interests in, a Subsidiary or other business unit of
         the Company (the "Spinoff Securities"), the Conversion Rate shall be
         adjusted so that the same shall be equal to the rate determined by
         multiplying the Conversion Rate in effect on the record date fixed for
         the determination of shareholders entitled to receive such distribution
         by a fraction, the numerator of which shall be the sum of (A) the
         average Closing Price of one share of Common Stock over the ten
         consecutive Trading Day period (the "Spinoff Valuation Period")
         commencing on and including the fifth Trading Day after the date on
         which ex-dividend trading commences for such distribution on the Nasdaq
         Global Market or such other U.S. national or regional exchange or
         market on which the Common Stock is then listed or quoted and (B) the
         average of the Closing Prices over the Spinoff Valuation Period of the
         Spinoff Securities multiplied by the number of Spinoff Securities
         distributed in respect of one share of Common Stock and the denominator
         of which shall be the average Closing Price of one share of Common
         Stock over the Spinoff Valuation Period, such adjustment to become
         effective immediately prior to the opening of business on the fifteenth
         Trading Day after the date on which ex-dividend trading commences;
         provided, however, that the Company may in lieu of the foregoing
         adjustment elect to make an equivalent distribution to the Holders of
         the Securities or make adequate provision so that each Holder of
         Securities shall have the right to receive upon conversion thereof the
         amount of such Spinoff Securities that such Holder of Securities would
         have

                                       34
<PAGE>

         received if such Securities had been converted on the record date with
         respect to such distribution.

                  (5) With respect to any rights or warrants (the "Rights") that
         may be issued or distributed pursuant to any existing rights plan of
         the Company or any rights plans implemented by the Company after the
         date of this Indenture (a "Rights Plan"), the Holders of Securities
         will receive, with respect to any shares of Common Stock issued upon
         conversion, the Rights described therein (whether or not the Rights
         have separated from the Common Stock at the time of conversion),
         subject to the limitations set forth in and in accordance with any such
         Rights Plan; provided that if at the time of conversion the Rights have
         separated from the shares of Common Stock in accordance with the
         provisions of the Rights Plan so that Holders would not be entitled to
         receive any rights in respect of the shares of Common Stock, if any,
         issuable upon conversion of the Securities as a result of the timing of
         the Conversion Date, the Conversion Rate will be adjusted as if the
         Company distributed to all holders of Common Stock Distributed
         Securities constituting such rights as provided in the first paragraph
         of clause (4) of this Section 4.06(a), subject to appropriate
         readjustment in the event of the expiration, termination, repurchase or
         redemption of the Rights. Other than as specified in this clause (5) of
         this Section 4.06(a), there will not be any adjustment to the
         Conversion Rate as the result of the issuance of any Rights, the
         distribution of separate certificates representing such Rights, the
         exercise or redemption of such Rights in accordance with any Rights
         Plan or the termination or invalidation of any Rights.

                  (6) If the Company shall, by dividend or otherwise, at any
         time distribute (a "Triggering Distribution") to all holders of its
         Common Stock a payment consisting exclusively of cash (excluding any
         dividend or distribution in connection with the liquidation,
         dissolution or winding up of the Company, whether voluntary or
         involuntary) the Conversion Rate shall be increased so that the same
         shall equal the rate determined by multiplying such Conversion Rate in
         effect immediately prior to the close of business on the record date
         for such Triggering Distribution (a "Determination Date") by a fraction
         of which the numerator shall be such Current Market Price per share of
         the Common Stock on the Determination Date and the denominator of which
         shall be the Current Market Price per share of the Common Stock on the
         Determination Date less the amount of such cash dividend or
         distribution applicable to one share of Common Stock (determined on the
         basis of the number of shares of Common Stock outstanding at the close
         of business on the Determination Date), such increase to become
         effective immediately prior to the opening of business on the day
         following the record date relating to such Triggering Distribution. If
         the amount of cash dividend or distribution applicable to one share of
         Common Stock is equal to or greater than the Current Market Price per
         share of the Common Stock on the Determination Date, in lieu of the
         foregoing adjustment, adequate provision shall be made so that each
         Holder of a Security shall have the right to receive upon conversion
         the amount of cash so distributed that such Holder would have received
         had such Holder converted each Security on such Determination Date into
         a number of shares of Common Stock equal to the Conversion Rate. In the
         event that such dividend or distribution is not so paid or made, the
         Conversion Rate shall again be adjusted to be the Conversion Rate that
         would then be in effect if such divided or distribution had not been
         declared.

                                       35
<PAGE>

                  (7) If any tender offer made by the Company or any of its
         Subsidiaries for all or any portion of Common Stock shall expire, then,
         if the tender offer shall require the payment to shareholders of
         consideration per share of Common Stock having a fair market value
         (determined as provided below) that exceeds the Closing Price per share
         of Common Stock on the Trading Day next succeeding the last date (the
         "Expiration Date") tenders could have been made pursuant to such tender
         offer (as it may be amended) (the last time at which such tenders could
         have been made on the Expiration Date is hereinafter sometimes called
         the "Expiration Time"), the Conversion Rate shall be increased so that
         the same shall equal the rate determined by multiplying the Conversion
         Rate in effect immediately prior to the close of business on the
         Expiration Date by a fraction of which the numerator shall be the sum
         of (A) the fair market value of the aggregate consideration (the fair
         market value as determined in good faith by the Board of Directors,
         whose determination shall be conclusive evidence of such fair market
         value and which shall be evidenced by an Officers' Certificate
         delivered to the Trustee) payable to shareholders based on the
         acceptance (up to any maximum specified in the terms of the tender
         offer) of all shares validly tendered and not withdrawn as of the
         Expiration Time (the shares deemed so accepted, up to any such maximum,
         being referred to as the "Purchased Shares") and (B) the product of the
         number of shares of Common Stock outstanding (less any Purchased Shares
         and excluding any shares held in the treasury of the Company) at the
         Expiration Time and the Closing Price per share of Common Stock on the
         Trading Day next succeeding the Expiration Date and the denominator of
         which shall be the product of the number of shares of Common Stock
         outstanding (including Purchased Shares but excluding any shares held
         in the treasury of the Company) at the Expiration Time multiplied by
         the Closing Price per share of the Common Stock on the Trading Day next
         succeeding the Expiration Date, such increase to become effective
         immediately prior to the opening of business on the day following the
         Expiration Date. 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 or all such
         purchases or any or all such purchases are rescinded, the Conversion
         Rate shall again be adjusted to be the Conversion Rate which would have
         been in effect based upon the number of shares actually purchased, if
         any. If the application of this clause (7) of Section 4.06(a) to any
         tender offer would result in a decrease in the Conversion Rate, no
         adjustment shall be made for such tender offer under this clause (7).

                  (8) For purposes of this Section 4.06, the term "tender offer"
         shall mean and include both tender offers and exchange offers, all
         references to "purchases" of shares in tender offers (and all similar
         references) shall mean and include both the purchase of shares in
         tender offers and the acquisition of shares pursuant to exchange
         offers, and all references to "tendered shares" (and all similar
         references) shall mean and include shares tendered in both tender
         offers and exchange offers.

                  (9) For purposes of any computation under this Section 4.06,
         "Current Market Price" shall mean the average of the daily Closing
         Prices per share of Common Stock for each of the ten consecutive
         Trading Days immediately prior to the date in question; provided,
         however, that if

                                       36
<PAGE>

                           (A) 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
                  Rate pursuant to Section 4.06(a) (1), (2), (3), (4), (5), (6)
                  or (7) occurs during such ten consecutive Trading Days, the
                  Closing Price for each Trading Day prior to the "ex" date for
                  such other event shall be adjusted by dividing such Closing
                  Price by the same fraction by which the Conversion Rate is so
                  required to be adjusted as a result of such other event;

                           (B) the "ex" date for any event (other than the
                  issuance or distribution requiring such computation) that
                  requires an adjustment to the Conversion Rate pursuant to
                  Section 4.06(a) (1), (2), (3), (4), (5), (6) or (7) 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 dividing such
                  Closing Price by the reciprocal of the fraction by which the
                  Conversion Rate is so required to be adjusted as a result of
                  such other event; and

                           (C) 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
                  the immediately preceding clause (A) or (B) of this Section
                  4.06(a)(9), 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 in good
                  faith by the Board of Directors in a manner consistent with
                  any determination of such value for purposes of Section
                  4.06(a)(4) or (7), whose determination shall be conclusive and
                  set forth in a board resolution of the Board of Directors) of
                  the evidences of indebtedness, shares of capital stock or
                  assets being distributed applicable to one share of Common
                  Stock as of the close of business on the day before such "ex"
                  date.

         For purposes of any computation under Section 4.06(a)(7), if the "ex"
         date for any event (other than the tender offer that is the subject of
         the adjustment pursuant to Section 4.06(a)(7)) that requires an
         adjustment to the Conversion Rate pursuant to Section 4.06(a)(1), (2),
         (3), (4), (5) or (6) occurs on the date of the Expiration Time for the
         tender or exchange offer requiring such computation or on the Trading
         Day next following the Expiration Time, the Closing Price for each
         Trading Day on and after the "ex" date for such other event shall be
         adjusted by dividing such Closing Price by the reciprocal of the
         fraction by which the Conversion Rate is so required to be adjusted as
         a result of such other event. For purposes of this Section 4.06(a)(9)
         the term "ex" date, when used:

                           (A) 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;

                           (B) with respect to any subdivision or combination of
                  shares of Common Stock, means the first date on which the
                  Common Stock trades regular

                                       37
<PAGE>

                  way on such exchange or in such market after the time at which
                  such subdivision or combination becomes effective, and

                           (C) 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 Rate are called for pursuant to this Section 4.06, such
         adjustments shall be made to the Current Market Price as may be
         necessary or appropriate to effectuate the intent of this Section 4.06
         and to avoid unjust or inequitable results as determined in good faith
         by the Board of Directors.

                  (10) Subject to applicable stock exchange rules and listing
         standards, the Company shall be permitted to increase the Conversion
         Rate by any amount for a period of at least 20 days if the Board of
         Directors determines that such increase would be in the Company's best
         interest. Subject to applicable stock exchange rules and listing
         standards, the Company may also increase the Conversion Rate to avoid
         or diminish income tax to Holders of the Common Stock in connection
         with a dividend or distribution of Common Stock or similar event.

         (b) In any case in which this Section 4.06 shall require that an
adjustment be made following a record date, a Determination Date or Expiration
Date, as the case may be, established for the purposes specified in this Section
4.06, the Company may elect to defer (but only until five Business Days
following the filing by the Company with the Trustee of the certificate
described in Section 4.08) issuing to the Holder of any Security converted after
such record date, Determination Date or Expiration Date the shares of Common
Stock and other Capital Stock of the Company issuable upon such conversion over
and above the shares of Common Stock and other Capital Stock of the Company (or
other cash, property or securities, as applicable) issuable upon such conversion
only on the basis of the Conversion Rate prior to adjustment; and, in lieu of
any cash, property or securities the issuance of which is so deferred, the
Company shall issue or cause its transfer agents to issue due bills or other
appropriate evidence prepared by the Company of the right to receive such cash,
property or securities. If any distribution in respect of which an adjustment to
the Conversion Rate is required to be made as of the record date, Determination
Date or Expiration Date therefore is not thereafter made or paid by the Company
for any reason, the Conversion Rate shall be readjusted to the Conversion Rate
which would then be in effect if such record date had not been fixed or such
record date, Determination Date or Expiration Date had not occurred.

         (c) For purposes of this Section 4.06, "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 or converted into any combination of cash, securities or other
property, the date fixed for determination of shareholders entitled to receive
such cash, security or other property (whether or not such date is fixed by the
Board of Directors or by statute, contract or otherwise).

                                       38
<PAGE>

         (d) If one or more event occurs requiring an adjustment be made to the
Conversion Rate for a particular period, adjustments to the Conversion Rate
shall be determined by the Company's Board of Directors to reflect the combined
impact of such Conversion Rate adjustment events, as set out in this Section
4.06, during such period.

         (e) Notwithstanding the provisions set forth in Section 4.06(a), in no
event shall the Conversion Rate exceed 16.9405 per $1,000 principal amount of
Securities, subject to adjustment in the manner set forth in clauses (1) through
(4) of Section 4.06(a).

         Section 4.07. No Adjustment. No adjustment in the Conversion Rate shall
be required if Holders may participate in the transactions set forth in Section
4.06 above (to the same extent as if the Securities had been converted into
Common Stock immediately prior to such transactions) without converting the
Securities held by such Holders.

         (a) No adjustment in the Conversion Rate shall be required unless such
adjustment would require an increase or decrease of at least 1% in the
Conversion Rate as last adjusted; provided, however, that any adjustments which
would be required to be made but for this Section 4.07(a) shall be carried
forward and taken into account in any subsequent adjustment. Notwithstanding the
foregoing, all adjustments not previously made shall have effect with respect to
any conversion on or after April 1, 2014. All calculations under this Article 4
shall be made to the nearest cent or to the nearest one-ten thousandth of a
share, as the case may be, with one half cent and 0.00005 of a share,
respectively, being rounded upward.

         (b) No adjustment in the Conversion Rate shall be required for (1)
issuances of Common Stock pursuant to any present or future plan of the Company
providing for the reinvestment of dividends or interest and the investment of
additional optional amounts of Common Stock under any plan, (2) issuances of
Common Stock or options or rights to purchase Common Stock pursuant to any
present or future employee, director or consultant benefit plan or program of,
or assumed by, the Company or any of its subsidiaries, (3) issuances of Common
Stock pursuant to any option, warrant, right or exercisable, exchangeable or
convertible security not described in clause (2) above and outstanding as of the
Issue Date or (4) for accrued and unpaid interest and Additional Interest owed,
if any.

         (c) To the extent that the Securities become convertible into the right
to receive cash in accordance with the provision of Section 4.10, no adjustment
need be made thereafter as to the cash.

                                       39
<PAGE>

         Section 4.08. Notice of Adjustment.

         Whenever the Conversion Rate or conversion privilege is required to be
adjusted pursuant to this Indenture, the Company shall promptly mail to Holders
a notice of the adjustment and file with the Trustee an Officers' Certificate
briefly stating the facts requiring the adjustment and the manner of computing
it. Failure to mail such notice or any defect therein shall not affect the
validity of any such adjustment. Unless and until the Trustee shall receive an
Officers' Certificate setting forth an adjustment of the Conversion Rate, the
Trustee may assume without inquiry that the Conversion Rate has not been
adjusted and that the last Conversion Rate of which it has knowledge remains in
effect.

         Section 4.09. Notice of Certain Transactions.

         In the event that there is a dissolution or liquidation of the Company,
the Company shall mail to Holders and file with the Trustee a notice stating the
proposed effective date. The Company shall mail such notice at least 10 days
before such proposed effective date. Failure to mail such notice or any defect
therein shall not affect the validity of any transaction referred to in this
Section 4.09.

         Section 4.10. Effect of Recapitalization, Reclassification,
Consolidation, Merger or Sale.

         If any of following events occur (each, a "Business Combination"):

                  (1) any recapitalization, reclassification or change of the
         Common Stock, other than changes resulting from a subdivision or a
         combination,

                  (2) a consolidation, merger or combination involving the
         Company,

                  (3) a sale, conveyance or lease to another corporation of all
         or substantially all of the property and assets of the Company, other
         than to one or more of the Company's subsidiaries, or

                  (4) any statutory share exchange,

in each case as a result of which holders of Common Stock are entitled to
receive stock, other securities, other property or assets (including cash or any
combination thereof) with respect to or in exchange for Common Stock, the
Company or the successor or purchasing corporation, as the case may be, shall
execute with the Trustee a supplemental indenture (which shall comply with the
TIA as in force at the date of execution of such supplemental indenture if such
supplemental indenture is then required to so comply) providing that the
settlement of the Conversion Value will be based on the kind and amount of
shares of stock, other securities or other property or assets (including cash or
any combination thereof) which Holders of Common Stock receive in such Business
Combination in respect of each share of Common Stock. In the event holders of
Common Stock have the opportunity to elect the form of consideration to be
received in such Business Combination, the Company shall make adequate provision
whereby the Securities shall be convertible from and after the effective date of
such Business Combination into the form of consideration elected by a majority
of the Company's shareholders in such Business

                                       40
<PAGE>

Combination. Appropriate provisions will be made, as determined in good faith by
the Company's Board of Directors, to preserve the settlement provisions in
Section 4.13 following such Business Combination to the extent feasible. The
Company may not become a party to any such transaction unless its terms are
consistent with this Section 4.10. 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 4. If, in the case of any such Business
Combination, the stock or other securities and assets receivable thereupon by a
holder of shares of Common Stock includes shares of stock or other securities
and assets of a corporation other than the successor or purchasing corporation,
as the case may be, in such Business Combination, then such supplemental
indenture shall also be executed by such other corporation and shall contain a
full and unconditional guarantee by such other corporation of all the Company's
obligations under the Indenture and the Securities and such additional
provisions to protect the interests of the Holders of the Securities as the
Board of Directors shall reasonably consider necessary by reason of the
foregoing, including to the extent practicable the provisions providing for the
repurchase rights set forth in Article 3 hereof. Notwithstanding anything
contained in this Section, and for the avoidance of doubt, this Section shall
not affect the right of a Holder to convert its Securities into shares of Common
Stock prior to the effective date of the Business Combination.

         Section 4.11. Trustee's Disclaimer.

         The Trustee shall have no duty to determine when an adjustment under
this Article 4 should be made, how it should be made or what such adjustment
should be, but may accept as conclusive evidence of that fact or the correctness
of any such adjustment, and shall be protected in relying upon, an Officers'
Certificate, including the Officers' Certificate with respect thereto which the
Company is obligated to file with the Trustee pursuant to Section 4.08. The
Trustee makes no representation as to the validity or value of any securities or
assets issued upon conversion of Securities.

         Section 4.12. [Intentionally Omitted]

         Section 4.13. Settlement of Conversion Obligation.

         (a) Holders surrendering Securities for conversion shall receive for
each $1,000 principal amount of Securities surrendered for conversion:

                           (A) cash in an amount equal to the lesser of (1)
                  $1,000 and (2) the Conversion Value; and

                           (B) if the Conversion Value is greater than $1,000, a
                  number of shares of Common Stock (the "Remaining Shares")
                  equal to the sum of the Daily Share Amounts for each of the 20
                  consecutive Trading Days in the Conversion Reference Period,
                  appropriately adjusted to reflect stock splits, stock
                  dividends, combinations or similar events occurring during the
                  Conversion Reference Period, subject to the Company's right to
                  deliver cash in lieu of all or a portion of such Remaining
                  Shares as set forth in Section 4.13(b);

                                       41
<PAGE>

                  provided that in no event shall the aggregate number of
                  Remaining Shares, per $1,000 principal amount of Securities,
                  exceed the Aggregate Share Cap.

         (b) On any day prior to the first Trading Day of the applicable
Conversion Reference Period, the Company may specify a percentage of the Daily
Share Amount that will be settled in cash (the "Cash Percentage"). If the
Company elects to specify a Cash Percentage, the amount of cash that the Company
will deliver in respect of each Trading Day in the applicable Conversion
Reference Period will equal the product of: (1) the Cash Percentage, (2) the
Daily Share Amount for such Trading Day and (3) the Volume Weighted Average
Price of the Common Stock for such Trading Day (provided that after the
consummation of a Fundamental Change in which the consideration is comprised
entirely of cash, the amount used in this clause (3) will be the cash price per
share received by holders of the Common Stock in such Fundamental Change). The
number of shares that the Company shall deliver in respect of each Trading Day
in the applicable Conversion Reference Period will be a percentage of the Daily
Share Amount equal to 100% minus the Cash Percentage. Upon making a
determination that a percentage of the Daily Share Amount will be settled in
cash, the Company shall promptly issue a press release and disclose such
information on its website prior to the first Trading Day of the applicable
Conversion Reference Period. If the Company does not specify a Cash Percentage
by the start of the applicable Conversion Reference Period, the Company shall be
required to settle 100% of the Daily Share Amount for each Trading Day in the
applicable Conversion Reference Period with shares of Common Stock; provided,
however, that the Company shall pay cash in lieu of fractional shares otherwise
issuable upon conversion of Securities.

         (c) The Company shall determine the Conversion Value, Daily Share
Amount and the number of shares of Common Stock, if any, to be issued upon
conversion at the end of the applicable Conversion Reference Period. Upon
conversion of a Security, the Company shall pay the cash and deliver the shares
of Common Stock, as applicable, as promptly as practicable after the last
Trading Day of the Conversion Reference Period but in any event not later than
the third Trading Day following the last Trading Day of the Conversion Reference
Period.

         For the purposes of Sections 4.13(a) and (b), in the event that any of
Conversion Value, Daily Share Amounts or Volume Weighted Average Price cannot be
determined for all portions of the Conversion Reference Period, the Company's
Board of Directors shall in good faith determine the values necessary to
calculate the Conversion Value, Daily Share Amounts and Volume Weighted Average
Price, as applicable.

                                    ARTICLE 5
                                    COVENANTS

         Section 5.01. Payment of Securities.

         (a) The Company shall promptly make all payments in respect of the
Securities on the dates and in the manner provided in the Securities and this
Indenture. A payment of principal or interest or Additional Interest, if any,
shall be considered paid on the date it is due if the Paying Agent (other than
the Company) holds by 10:00 a.m., New York City time, on that date money,
deposited by or on behalf of the Company sufficient to make the payment. Subject
to

                                       42
<PAGE>

Section 4.02, accrued and unpaid interest on any Security that is payable, and
is punctually paid or duly provided for, on any Interest Payment Date shall be
paid to the Person in whose name that Security is registered at the close of
business on the Regular Record Date for such interest at the office or agency of
the Company maintained for such purpose. Principal, interest, Fundamental Change
Purchase Price and Additional Interest, if any, in each case if payable, shall
be considered paid on the applicable date due if on such date the Trustee or the
Paying Agent holds, in accordance with this Indenture, money sufficient to pay
all such amounts then due. The Company shall, to the fullest extent permitted by
law, pay interest in immediately available funds on overdue principal amount and
interest at the annual rate borne by the Securities compounded semiannually,
which interest shall accrue from the date such overdue amount was originally due
to the date payment of such amount, including interest thereon, has been made or
duly provided for. All such interest shall be payable on demand.

         (b) Payment of the principal of and interest, if any, on the Securities
shall be made at the office or agency of the Company maintained for that purpose
in the Borough of Manhattan, The City of New York (which shall initially be at
the address set forth in Section 2.03(c)) or at the Corporate Trust Office of
the Trustee in such coin or currency of the United States of America as at the
time of payment is legal tender for payment of public and private debts;
provided, however, that at the option of the Company payment of interest may be
made by check mailed to the address of the Person entitled thereto as such
address appears in the Register; provided further that a Holder with an
aggregate principal amount in excess of $2,000,000 will be paid by wire transfer
in immediately available funds at the election of such Holder if such Holder has
provided wire transfer instructions to the Trustee at least 10 Business Days
prior to the payment date. Any wire transfer instructions received by the
Trustee will remain in effect until revoked by the Holder.

         Section 5.02. SEC and Other Reports.

         (a) The Company shall file all reports and other information and
documents which it is required to file with the SEC pursuant to Section 13 or
15(d) of the Exchange Act, and within 15 days after it files them with the SEC,
the Company shall file copies of all such reports, information and other
documents with the Trustee; provided that any such reports, information and
documents filed with the SEC pursuant to its Electronic Data Gathering, Analysis
and Retrieval (or EDGAR) system shall be deemed to be filed with the Trustee.
The Company also shall comply with the provisions of TIA Section 314(a).

         (b) Delivery of such reports, information and documents to the Trustee
is for informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).

                                       43
<PAGE>

         Section 5.03. Compliance Certificates.

         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 or
about November 30, 2006), an Officers' Certificate as to the signer's knowledge
of the Company's compliance with all terms, conditions and covenants on its part
contained in this Indenture and stating whether or not the signer knows of any
Default or Event of Default. If such signer knows of such a Default or Event of
Default, the Officers' Certificate shall describe the Default or Event of
Default and the efforts to remedy the same. For the purposes of this Section
5.03, compliance shall be determined without regard to any grace period or
requirement of notice provided pursuant to the terms of this Indenture.

         Section 5.04. Further Instruments and Acts.

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

         Section 5.05. Maintenance of Corporate Existence.

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

         Section 5.06. Rule 144A Information Requirement.

         During 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,
upon the request of any Holder or beneficial holder of the Securities, make
available to such Holder or beneficial holder of Securities or any Common Stock
issued upon conversion thereof which continue to be Restricted Securities in
connection with any sale thereof and any prospective purchaser of Securities or
such Common Stock designated by such Holder or beneficial holder, the
information required pursuant to Rule 144A(d)(4) under the Securities Act and it
will take such further action as any Holder or beneficial holder of such
Securities 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 Securities 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. Whether a person is a beneficial holder shall be
determined by the Company.

         Section 5.07. 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 accrued but unpaid interest or Additional Interest, if any,
on the Securities 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

                                       44
<PAGE>

Company (to the extent it may lawfully do so) hereby expressly waives all
benefit or advantage of any such law and covenants that it will not, by resort
to any such law, hinder, delay or impede the execution of any power herein
granted to the Trustee, but will suffer and permit the execution of every such
power as though no such law had been enacted.

         Section 5.08. Payment of Additional Interest.

         If Additional Interest is payable by the Company pursuant to the
Registration Rights Agreement, the Company shall deliver to the Trustee an
Officers' Certificate to that effect stating (i) the amount of such Additional
Interest that is payable, (ii) the reason why such Additional Interest is
payable and (iii) the date on which such Additional Interest is payable. Unless
and until a Trust Officer of the Trustee receives such a certificate, the
Trustee may assume without inquiry that no such Additional Interest is payable.
If the Company has paid Additional Interest directly to the Persons entitled to
such Additional Interest, the Company shall deliver to the Trustee a certificate
setting forth the particulars of such payment.

         Section 5.09. Maintenance of Office or Agency.

         The Company will maintain an office or agency of the Trustee, Registrar
and Paying Agent where securities may be presented or surrendered for payment,
where Securities may be surrendered for registration of transfer, purchase or
redemption and where notices and demands to or upon the Company in respect of
the Securities and this Indenture may be served. The Corporate Trust Office
shall initially be one such office or agency for all of the aforesaid purposes.
The Company shall give prompt written notice to the Trustee of the location, and
of any change in the location, of any such office or agency (other than a change
in the location of the office of the Trustee). If at any time the Company shall
fail to maintain any such required office or agency or shall fail to furnish the
Trustee with the address thereof, such presentations, surrenders, notices and
demands may be made or served at the address of the Trustee set forth in Section
11.02.

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

                                    ARTICLE 6
                            CONSOLIDATION AND MERGER

         Section 6.01. Company May Consolidate, Etc., Only on Certain Terms.

         The Company may not consolidate with or merge into any Person or
convey, transfer or lease the property and assets, substantially as an entirety,
of the Company to another Person, other than to one or more of the Company's
wholly-owned subsidiaries, unless:

                  (1) Either (A) the Company is the continuing entity or (B) the
         Person (if other than the Company) formed by such consolidation or into
         which the Company is merged, or the Person which acquires by
         conveyance, transfer or lease all or substantially all of

                                       45
<PAGE>

         the properties and assets of the Company, shall (i) be a corporation,
         limited liability company, partnership, trust or other business entity
         organized and existing under the laws of the United States of America
         or any State thereof or the District of Columbia and (ii) such Person
         (if other than the Company) expressly assumes, by an indenture
         supplemental hereto, executed and delivered to the Trustee, in form
         satisfactory to the Trustee, the obligations of the Company under the
         Securities and this Indenture and the performance or observance of
         every covenant and provision of this Indenture and the Securities
         required on the part of the Company to be performed or observed
         (including, without limitation, the obligation to convert Securities in
         accordance with Article 4), by supplemental indenture satisfactory in
         form to the Trustee, executed and delivered to the Trustee, by the
         Person (if other than the Company) formed by such consolidation or into
         which the Company shall have been merged or by the Person which shall
         have acquired the Company's assets;

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

                  (3) the Company shall have, at or prior to the effective date
         of such consolidation, merger or transfer, delivered to the Trustee an
         Officers' Certificate and an Opinion of Counsel, each stating that such
         consolidation, merger or transfer complies with this Article 6.01 and,
         if a supplemental indenture is required in connection with such
         transaction, such supplemental indenture complies with this Article,
         and that all conditions precedent herein provided for relating to such
         transaction have been complied with.

         Section 6.02. Successor Substituted.

         Upon any consolidation of the Company with, or merger of the Company
into, any other Person or any conveyance, transfer or lease substantially as an
entirety, of the properties and assets of the Company and its Subsidiaries,
taken as a whole, in accordance with Section 6.01, the successor Person formed
by such consolidation or into which the Company is merged or to which such
conveyance, transfer or lease is made shall succeed to, and be substituted for,
and may exercise every right and power of, the Company under this Indenture with
the same effect as if such successor Person had been named as the Company
herein, and thereafter, except in the case of a lease, and except for
obligations the predecessor Person may have under a supplemental indenture, the
predecessor Person shall be relieved of all obligations and covenants under this
Indenture and the Securities.

                                    ARTICLE 7
                              DEFAULT AND REMEDIES

         Section 7.01. Events of Default.

         (a) An "Event of Default" shall occur if:

                                       46
<PAGE>

                  (1) the Company shall fail to pay when due the Principal or
         Fundamental Change Purchase Price of any Security, when the same
         becomes due and payable whether at the Final Maturity Date, upon
         repurchase, acceleration or otherwise; or

                  (2) the Company shall fail to pay an installment of cash
         interest or Additional Interest, if any, on any of the Securities,
         which failure continues for 30 days after the date when due; or

                  (3) the Company shall fail to deliver when due all cash and
         shares of Common Stock, if any, deliverable upon conversion of the
         Securities, which failure continues for 15 days; or

                  (4) the Company shall fail to provide a Fundamental Change
         Company Notice when due;

                  (5) the Company shall fail to perform or observe (or obtain a
         waiver with respect to) any other term, covenant or agreement contained
         in the Securities or this Indenture for a period of 60 days after
         receipt by the Company of a Notice of Default specifying such failure;
         or

                  (6) the Company shall default in the payment of principal by
         the end of any applicable grace period or resulting in acceleration of
         other Indebtedness of the Company for borrowed money where the
         aggregate principal amount with respect to which the default or
         acceleration has occurred exceeds $7.5 million and such acceleration
         has not been rescinded or annulled or such Indebtedness repaid within a
         period of 30 days after receipt of a Notice of Default, provided that
         if any such default is cured, waived, rescinded or annulled, then the
         Event of Default by reason thereof would not be deemed to have
         occurred; or

                  (7) the Company or any of its Subsidiaries shall fail to pay
         final judgment aggregating in excess of $7.5 million (excluding
         therefrom any amount covered by insurance as to which the insurer has
         acknowledged in writing its coverage obligation), which judgments are
         not paid, discharged or stayed for a period of 60 days; or

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

                           (A) commences as a debtor a voluntary case or
                  proceeding;

                           (B) consents to the entry of an order for relief
                  against it in an involuntary case or proceeding or the
                  commencement of any case against it;

                           (C) consents to the appointment of a Receiver of it
                  or for all or substantially all of its property;

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

                                       47
<PAGE>

                           (E) files a petition in bankruptcy or answer or
                  consent seeking reorganization or relief; or

                           (F) consents to the filing of such a petition or the
                  appointment of or taking possession by a Receiver; or

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

                           (A) grants relief against the Company or any
                  Significant Subsidiary of the Company in an involuntary case
                  or proceeding or adjudicates the Company or any Significant
                  Subsidiary of the Company insolvent or bankrupt;

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

                           (C) orders the winding up or liquidation of the
                  Company or any Significant Subsidiary of the Company;

         and in each case the order or decree remains unstayed and in effect for
         60 consecutive days.

         The term "Bankruptcy Law" means Title 11 of the United States Code (or
any successor thereto) or any similar federal or state law for the relief of
debtors. The term "Receiver" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.

         (b) Notwithstanding Section 7.01(a), no Event of Default under clauses
(5) or (6) of Section 7.01(a) shall occur until the Trustee notifies the Company
in writing, or the Holders of at least 25% in aggregate principal amount of the
Securities then outstanding notify the Company and the Trustee in writing, of
the Default (a "Notice of Default"), and the Company does not cure the Default
within the time specified in clause (5) or (6) of Section 7.01(a), as
applicable, after receipt of such notice. A notice given pursuant to this
Section 7.01 shall be given by registered or certified mail, must specify the
Default, demand that it be remedied and state that the notice is a Notice of
Default. When any Default under this Section 7.01 is cured, it ceases.

         (c) The Company will deliver to the Trustee, within five Business Days
after becoming aware of the occurrence of a Default or Event of Default, written
notice thereof.

         The Trustee shall not be charged with knowledge of any Event of Default
unless written notice thereof shall have been given to a Trust Officer with
responsibility for this Indenture at the Corporate Trust Office of the Trustee
by the Company, a Paying Agent, any Holder or any agent of any Holder or unless
a Trust Officer with responsibility for this Indenture acquires actual knowledge
of such Event of Default in the course of performing other duties pursuant to
this Indenture.

                                       48
<PAGE>

         Section 7.02. Acceleration.

         If an Event of Default (other than an Event of Default specified in
clause (8) or (9) of Section 7.01(a)) occurs and is continuing with respect to
the Company, the Trustee may, by notice to the Company, or the Holders of at
least 25% in aggregate principal amount of the Securities then outstanding may,
by notice to the Company and the Trustee, declare the principal amount and
accrued and unpaid interest, if any, and accrued and unpaid Additional Interest,
if any, through the date of declaration on all the Securities to be immediately
due and payable. Upon such a declaration, such principal amount and such accrued
and unpaid interest, if any, and such accrued and unpaid Additional Interest, if
any, shall be due and payable immediately. If an Event of Default specified in
Section 7.01(a)(8) or (9) occurs in respect of the Company and is continuing,
the principal amount and accrued but unpaid interest, if any, and accrued and
unpaid Additional Interest, if any, on all the Securities shall become and be
immediately due and payable without any declaration or other act on the part of
the Trustee or any Holders of Securities. The Holders of a majority in aggregate
principal amount of the Securities then outstanding by notice to the Trustee may
rescind an acceleration and its consequences if (a) all existing Events of
Default, other than the nonpayment of the principal of the Securities which have
become due solely by such declaration of acceleration, have been cured or
waived; (b) to the extent the payment of such interest is lawful, interest
(calculated at the rate per annum borne by the Securities) on overdue
installments of interest and overdue principal, which has become due otherwise
than by such declaration of acceleration, has been paid; (c) the rescission
would not conflict with any judgment or decree of a court of competent
jurisdiction; and (d) all payments due to the Trustee and any predecessor
Trustee under Section 8.07 have been made. No such rescission shall affect any
subsequent Default or impair any right consequent thereto.

         Section 7.03. Other Remedies.

         (a) Subject to Section 8.01(a), if an Event of Default occurs and is
continuing, the Trustee may, but shall not be obligated to, pursue any available
remedy by proceeding at law or in equity to collect payment of the principal
amount and accrued and unpaid interest, if any, and accrued and unpaid
Additional Interest, if any, on the Securities or to enforce the performance of
any provision of the Securities or this Indenture.

         (b) The Trustee may maintain a proceeding even if it does not possess
any of the Securities or does not produce any of them in the proceeding. A delay
or omission by the Trustee or any Holder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative to the
extent permitted by applicable law.

         Section 7.04. Waiver of Defaults and Events of Default.

         Subject to Sections 7.07 and 10.02, the Holders of a majority in
aggregate principal amount of the Securities then outstanding by notice to the
Trustee may waive an existing Default or Event of Default and its consequences,
except an uncured Default or Event of Default in the payment of the principal
of, premium, if any, or any accrued but unpaid interest on any Security, an
uncured failure by the Company to convert any Securities into Common Stock and
cash, as

                                       49
<PAGE>

applicable, or any Default or Event of Default in respect of any provision of
this Indenture or the Securities which, under Section 10.02, cannot be modified
or amended without the consent of the Holder of each Security affected. When a
Default or Event of Default is waived, it is cured and ceases to exist.

         Section 7.05. Control by Majority.

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

         Section 7.06. Limitations on Suits.

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

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

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

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

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

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

(b)      No Holder of a Security shall have any right under any provision of
         this Indenture or the Securities to affect, disturb, or prejudice the
         rights of another Holder of a Security or to obtain a preference or
         priority over another Holder of a Security.

         Section 7.07. Rights of Holders to Receive Payment and to Convert.

         Notwithstanding any other provision of this Indenture, the right of any
Holder of a Security to receive payment of the principal amount, interest,
Fundamental Change Purchase Price, if any, or Additional Interest, if any, in
respect of the Securities held by such Holder, on or after the respective due
dates expressed in the Securities and this Indenture (whether upon

                                       50
<PAGE>

repurchase or otherwise), and to convert such Security in accordance with
Article 4, and to bring suit for the enforcement of any such payment on or after
such respective due dates or for the right to convert in accordance with Article
4, is absolute and unconditional and shall not be impaired or affected without
the consent of the Holder.

         Section 7.08. Collection Suit by Trustee.

         If an Event of Default described in clause (1) or (2) of Section
7.01(a) occurs and is continuing, the Trustee may recover judgment in its own
name and as trustee of an express trust against the Company or another obligor
on the Securities for the whole amount owing with respect to the Securities and
such further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.

         Section 7.09. Trustee May File Proofs of Claim.

         The Trustee may file such proofs of claim and other papers or documents
as may be necessary or advisable in order to have the claims of the Trustee
(including any claim for the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel) and the Holders allowed in
any judicial proceedings relative to the Company (or any other obligor on the
Securities), its creditors or its property and shall be entitled and empowered
to collect and receive any money or other property payable or deliverable on any
such claims and to distribute the same, and any Receiver in any such judicial
proceeding is hereby authorized by each Holder to make such payments to the
Trustee and, in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due to it for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 8.07, and to the extent that such payment of the reasonable
compensation, expenses, disbursements and advances in any such proceedings shall
be denied for any reason, payment of the same shall be secured by a lien on, and
shall be paid out of, any and all distributions, dividends, money, securities
and other property which the Holders may be entitled to receive in such
proceedings, whether in liquidation or under any plan of reorganization or
arrangement or otherwise. Nothing herein contained shall be deemed to authorize
the Trustee to authorize or consent to, or, on behalf of any Holder, to
authorize, accept or adopt any plan of reorganization, arrangement, adjustment
or composition affecting the Securities or the rights of any Holder thereof, or
to authorize the Trustee to vote in respect of the claim of any Holder in any
such proceeding.

         Section 7.10. Priorities.

         (a) If the Trustee collects any money pursuant to this Article 7, it
shall pay out the money in the following order:

                  (1) First, to the Trustee for amounts due under Section 8.07;

                  (2) Second, to Holders for amounts due and unpaid on the
         Securities for the principal amount, interest, and Additional Interest,
         as applicable, ratably, without preference or priority of any kind,
         according to such respective amounts due and payable on the Holders'
         Securities;

                                       51
<PAGE>

                  (3) Third, to such other Person or Persons, if any, to the
         extent entitled thereto; and

                  (4) Fourth, the balance, if any, to the Company.

         (b) The Trustee may fix a record date and payment date for any payment
to Holders pursuant to this Section 7.10.

         Section 7.11. Undertaking for Costs.

         In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees and expenses, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses made by the party
litigant. This Section 7.11 does not apply to a suit made by the Trustee, a suit
by a Holder pursuant to Section 7.07 or a suit by Holders of more than 10% in
aggregate principal amount of the Securities then outstanding. This Section 7.11
shall be in lieu of Section 315(e) of the TIA and such Section 315(e) is hereby
expressly excluded from this Indenture, as permitted by the TIA.

                                    ARTICLE 8
                                     TRUSTEE

         Section 8.01. Obligations of Trustee.

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

         (b) Except during the continuance of an Event of Default of which a
Responsible Officer of the Trustee shall have actual knowledge:

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

                  (2) in the absence of bad faith on its part, the Trustee may
         conclusively rely, as to the truth of the statements and the
         correctness of the opinions expressed therein, upon certificates or
         opinions furnished to the Trustee and conforming to the requirements of
         this Indenture. The Trustee, however, shall examine any certificates
         and opinions which by any provision hereof are specifically required to
         be delivered to the Trustee to determine whether or not they conform to
         the requirements of this Indenture, but need not confirm or investigate
         the accuracy of mathematical calculations or other facts stated
         therein.

                                       52
<PAGE>

                  This Section 8.01(b) shall be in lieu of Section 315(a) of the
         TIA and such Section 315(a) is hereby expressly excluded from this
         Indenture, as permitted by the TIA.

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

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

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

                  (3) the Trustee shall not be liable in its individual capacity
         with respect to any action it takes or omits to take in good faith in
         accordance with a direction received by it pursuant to Section 7.05.

         This Section 8.01(c) shall be in lieu of Sections 315(d)(1), 315(d)(2)
and 315(d)(3) of the TIA and such Sections are hereby expressly excluded from
this Indenture as permitted by the TIA.

         (d) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers unless the Trustee shall have received adequate security or
indemnity in its opinion against potential costs and liabilities incurred by it
relating thereto.

         (e) Every provision of this Indenture that in any way relates to the
Trustee is subject to subsections (a), (b), (c) and (d) of this Section 8.01.

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

         Section 8.02. Rights of Trustee.

         (a) Subject to Section 8.01:

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

                                       53
<PAGE>

                  (2) Before the Trustee acts or refrains from acting, it may
         require an Officers' Certificate or an Opinion of Counsel, which shall
         conform to Section 11.04(b). The Trustee shall not be liable for any
         action it takes or omits to take in good faith in reliance on such
         Officers' Certificate or Opinion of Counsel.

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

                  (4) The Trustee shall not be personally liable for any action
         it takes or omits to take in good faith which it believes to be
         authorized or within its rights or powers.

                  (5) The Trustee may consult with counsel of its selection, and
         the advice or opinion of such counsel as to matters of law shall be
         full and complete authorization and protection in respect of any such
         action taken, omitted or suffered by it hereunder in good faith and in
         accordance with the advice or opinion of such counsel.

                  (6) The Trustee shall be under no obligation to exercise any
         of the rights or powers vested in it by this Indenture or to institute,
         conduct or defend any litigation hereunder or in relation hereto at the
         request or direction of any of the Holders pursuant to this Indenture,
         unless such Holders shall have offered to the Trustee security or
         indemnity satisfactory to the Trustee against the costs, expenses and
         liabilities which might be incurred by it in compliance with such
         request or direction.

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

                  (8) The Trustee shall not be deemed to have notice or
         knowledge of any Default, Event of Default, or Fundamental Change
         unless a Responsible Officer of the Trustee has actual knowledge
         thereof or unless written notice of any event which is in fact such a
         Default is received by the Trustee at the Corporate Trust Office, and
         such notice references the Securities and this Indenture. In the
         absence of receipt of such notice or actual knowledge, the Trustee may
         conclusively assume that there is no Default, Event of Default, or
         Fundamental Change.

                                       54
<PAGE>

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

                  (10) The right of the Trustee to perform any discretionary act
         enumerated in this Indenture shall not be construed as a duty, and the
         Trustee shall not be answerable for other than its own gross negligence
         or willful misconduct in the performance of such act.

         Section 8.03. Individual Rights of Trustee.

         The Trustee in its individual or any other capacity may become the
owner or pledgee of Securities and may otherwise deal with the Company or an
Affiliate of the Company with the same rights it would have if it were not
Trustee. Any Agent may do the same with like rights. However, the Trustee is
subject to Sections 8.10 and 8.11.

         Section 8.04. Trustee's Disclaimer.

         The Trustee makes no representation as to the validity or adequacy of
this Indenture or the Securities and the Trustee assumes no responsibility for
their correctness. It shall not be accountable for the Company's use of the
proceeds from the Securities and it shall not be responsible for any statement
in the Securities other than its certificate of authentication.

         Section 8.05. Notice of Default or Events of Default.

         If a Default or an Event of Default occurs and is continuing and if it
is known to the Trustee, the Trustee shall mail to each Holder of a Security
notice of all uncured Defaults or Events of Default known to it within 90 days
after it occurs or, if later, within 15 days after it becomes known to the
Trustee. However, the Trustee may withhold the notice if and for so long as a
committee of its Trust Officers in good faith determines that withholding notice
is in the interests of Holders of Securities, except in the case of a Default or
an Event of Default in payment of the principal of, or premium, if any, or
interest on any Security when due or in the payment of any redemption or
purchase obligation, or the Company's failure to convert Securities when
obligated to convert them. This Section 8.05 is in lieu of section 315(b) of the
TIA and such provision is expressly excluded from this Indenture as permitted by
the TIA.

         Section 8.06. Reports by Trustee to Holders.

         (a) If a report is required by TIA Section 313, within 60 days after
each May 15, beginning with the May 15 following the date of this Indenture, the
Trustee shall mail to each Holder of Securities a brief report dated as of such
May 15 that complies with TIA Section 313(a). If required by TIA Section 313,
the Trustee also shall comply with TIA Sections 313(b)(2) and (c).

                                       55
<PAGE>

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

         Section 8.07. Compensation and Indemnity.

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

         (b) The Company shall indemnify the Trustee or any predecessor Trustee
(which for purposes of this Section 8.07 shall include its officers, directors,
employees and agents) for, and hold it harmless against, any and all loss,
liability or expense including taxes (other than franchise taxes and taxes based
upon, measured by or determined by the income of the Trustee), incurred by it
arising out of or in connection with the acceptance or administration of its
duties under this Indenture or any action or failure to act as authorized or
within the discretion or rights or powers conferred upon the Trustee hereunder
including the reasonable costs and expenses of the Trustee and its counsel in
defending (including reasonable legal fees and expenses) itself against any
claim or liability in connection with the exercise or performance of any of its
powers or duties hereunder. The Trustee shall notify the Company promptly of any
claim asserted against the Trustee for which it may seek indemnity. The Company
need not pay for any settlement effected without its prior written consent,
which shall not be unreasonably withheld. Anything in this Indenture to the
contrary notwithstanding, in no event shall the Trustee be liable for special,
indirect or 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.

         (c) The Company need not reimburse the Trustee for any expense or
indemnify it against any loss or liability incurred by it resulting from its
gross negligence, willful misconduct or bad faith.

         (d) The Trustee shall have a senior claim to which the Securities are
hereby made subordinate on all money or property held or collected by the
Trustee. The obligations of the Company under this Section 8.07 shall survive
the satisfaction and discharge of this Indenture or the resignation or removal
of the Trustee.

         (e) When the Trustee incurs expenses or renders services after an Event
of Default specified in clause (8) or (9) of Section 7.01(a) occurs, the
expenses and the compensation for the services are intended to constitute
expenses of administration under any Bankruptcy Law. The provisions of this
Section shall survive the termination of this Indenture.

                                       56
<PAGE>

         Section 8.08. Replacement of Trustee.

         (a) The Trustee may resign by so notifying the Company. The Holders of
a majority in aggregate principal amount of the Securities then outstanding may
remove the Trustee by so notifying the Trustee and the Company and may, with the
Company's written consent, appoint a successor Trustee. The Company may remove
the Trustee at any time, so long as no Default or Event of Default has occurred
and is continuing, and appoint a Successor Trustee in accordance with this
Section 8.08.

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

         (c) If a successor Trustee does not take office within 30 days after
the retiring Trustee resigns or is removed, the retiring Trustee, the Company or
the Holders of 10% in principal amount of the Securities then outstanding may
petition any court of competent jurisdiction for the appointment of a successor
Trustee at the expense of the Company.

         (d) If the Trustee fails to comply with Section 8.10, any Holder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.

         (e) A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after that,
the retiring Trustee shall transfer all property held by it as Trustee to the
successor Trustee and be released from its obligations (exclusive of any
liabilities that the retiring Trustee may have incurred while acting as Trustee)
hereunder, the resignation or removal of the retiring Trustee shall become
effective, and the successor Trustee shall have all the rights, powers and
duties of the Trustee under this Indenture. A successor Trustee shall mail
notice of its succession to each Holder.

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

         (g) Notwithstanding replacement of the Trustee pursuant to this Section
8.08, the Company's obligations under Section 8.07 shall continue for the
benefit of the retiring Trustee.

         Section 8.09. Successor Trustee by Merger, Etc.

         If the Trustee consolidates with, merges or converts into, or transfers
all or substantially all of its corporate trust business (including the
administration of this Indenture) to, another corporation, the resulting,
surviving or transferee corporation, without any further act, shall be the
successor Trustee; provided such transferee corporation shall qualify and be
eligible under Section 8.10. Such successor Trustee shall promptly mail notice
of its succession to the Company and each Holder.

                                       57
<PAGE>

         Section 8.10. Eligibility; Disqualification.

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

         Section 8.11. Preferential Collection of Claims Against Company.

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

                                    ARTICLE 9
                     SATISFACTION AND DISCHARGE OF INDENTURE

         Section 9.01. Satisfaction and Discharge of Indenture.

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

                           (A) all Securities theretofore authenticated and
                  delivered (other than (i) Securities which have been
                  destroyed, lost or stolen and which have been replaced or paid
                  as provided in Section 2.07 and (ii) Securities for whose
                  payment money has theretofore been deposited in trust and
                  thereafter repaid to the Company as provided in Section 9.03)
                  have been delivered to the Trustee for cancellation; or

                           (B) all such Securities not theretofore delivered to
                  the Trustee for cancellation have become due and payable,

         provided, that

                  (1) the Company has deposited with the Trustee, a Paying Agent
         (other than the Company or any of its Affiliates) or a Conversion
         Agent, if applicable, immediately available funds in trust for the
         purpose of and in an amount sufficient to pay and discharge all
         indebtedness and obligations related to such Securities not theretofore
         delivered to the Trustee for cancellation, for principal and interest
         (including Additional Interest, if any) to the date of such deposit;

                                       58
<PAGE>

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

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

         (b) Notwithstanding the satisfaction and discharge of this Indenture,
the obligations of the Company with respect to the conversion privilege and the
Conversion Rate of the Securities pursuant to Article 4, the obligations of the
Company to the Trustee under Section 8.07 and, if money shall have been
deposited with the Trustee pursuant to clause (2) of Section 9.01(a), the
provisions of Sections 2.03, 2.04, 2.05, 2.06, 2.07, 2.12, 5.01 and 11.05,
Article 4, and this Article 9, shall survive until the Securities have been paid
in full.

         Section 9.02. Application of Trust Money. Subject to the provisions of
Section 9.03, the Trustee or a Paying Agent shall hold in trust, for the benefit
of the Holders, all money deposited with it pursuant to Section 9.01 and shall
apply the deposited money in accordance with this Indenture and the Securities
to the payment of the principal of and interest on the Securities.

         Section 9.03. Repayment to Company. The Trustee and each Paying Agent
shall promptly pay to the Company upon request any excess money (1) deposited
with them pursuant to Section 9.01 and (2) held by them at any time.

         (a) The Trustee and each Paying Agent shall, subject to applicable
abandonment property laws, pay to the Company upon request any money held by
them for the payment of principal or interest that remains unclaimed for two
years after a right to such money has matured; provided, however, that the
Trustee or such Paying Agent, before being required to make any such payment,
may at the expense of the Company cause to be mailed to each Holder entitled to
such money notice that such money remains unclaimed and that after a date
specified therein, which shall be at least 30 days from the date of such
mailing, any unclaimed balance of such money then remaining will be repaid to
the Company. After payment to the Company, Holders entitled to money must look
to the Company for payment as general creditors unless an applicable abandoned
property law designates another person.

         Section 9.04. Reinstatement. If the Trustee or any Paying Agent is
unable to apply any money in accordance with Section 9.02 by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, then
the Company's obligations under this Indenture and the Securities shall be
revived and reinstated as though no deposit had occurred pursuant to Section
9.01 until such time as the Trustee or such Paying Agent is permitted to apply
all such money in accordance with Section 9.02; provided, however, that if the
Company has made any payment of the principal of or interest on any Securities
because of the reinstatement of its obligations, the Company shall be subrogated
to the rights of the Holders of such Securities to receive any such payment from
the money held by the Trustee or such Paying Agent.

                                       59
<PAGE>

                                   ARTICLE 10
                       AMENDMENTS; SUPPLEMENTS AND WAIVERS

         Section 10.01. Without Consent of Holders.

         (a) The Company and the Trustee may amend or supplement this Indenture
or the Securities without notice to or consent of any Holder of a Security for
the purpose of:

                  (1) evidencing a successor to the Company and the assumption
         by that successor of the Company's obligations under this Indenture and
         the Securities;

                  (2) adding to the Company's covenants for the benefit of the
         Holders or surrendering any right or power conferred upon the Company;

                  (3) increasing the Conversion Rate;

                  (4) securing the Company's obligations in respect of the
         Securities;

                  (5) evidencing and providing for the acceptance of the
         appointment of a successor trustee in accordance with Article 8;

                  (6) complying with the requirements of the SEC in connection
         with the registration of the public offer and sale of the Securities
         under the Securities Act pursuant to the Registration Rights Agreement
         or the qualification of this Indenture under the TIA;

                  (7) adding guarantees with respect to the Securities;

                  (8) curing any ambiguity, omission, inconsistency or
         correcting or supplementing any defective provision contained in this
         Indenture; or

                  (9) modifying any other provisions of this Indenture in any
         manner that will not adversely affect the rights of the Holders in any
         material respect.

         Section 10.02. With Consent of Holders. The Company and the Trustee may
amend or supplement this Indenture or the Securities with the written consent of
the Holders of not less than a majority in aggregate principal amount of the
Securities then outstanding. However, subject to Section 10.04, without the
written consent of each Holder affected, an amendment, supplement or waiver may
not:

                  (1) alter the manner of calculation or rate of accrual of
         interest on any Security or change the time of payment of any
         installment of interest on, or any Additional Interest with respect to,
         any Security;

                  (2) make any of the Securities payable in money or securities
         other than that stated in the Securities;

                  (3) change the stated maturity of any Security;

                                       60
<PAGE>

                  (4) reduce the principal amount or Fundamental Change Purchase
         Price (as applicable) with respect to any of the Securities;

                  (5) reduce the Conversion Rate or make any change that
         adversely affects the conversion rights of a Holder in any material
         respect other than as provided herein;

                  (6) make any change that adversely affects the rights of
         Holders to require the Company to purchase Securities at the option of
         Holders;

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

                  (8) change the currency of payment of principal of, or
         interest on, the Securities;

                  (9) except as otherwise permitted or contemplated by Section
         4.10, adversely affect the conversion rights of the Securities; or

                  (10) change the percentage in aggregate principal amount of
         Securities outstanding necessary to modify or amend this Indenture or
         to waive any past Default or otherwise change the provisions in this
         Indenture that relate to modifying or amending this Indenture.

         (b) Without limiting the provisions of Section 10.02(a) hereof, the
Holders of a majority in principal amount of the Securities then outstanding
may, on behalf of all the Holders of all Securities, (i) waive compliance by the
Company with the restrictive provisions of this Indenture, and (ii) waive any
past Default or Event of Default under this Indenture and its consequences,
except a default in the payment when due of the principal amount, accrued and
unpaid interest, accrued and unpaid Additional Interest or Fundamental Change
Purchase Price of or in respect of any Security, or in the delivery when due of
cash, and, if applicable, Common Stock upon conversion of Securities, or in
respect of any provision which under this Indenture cannot be modified or
amended without the consent of the Holder of each outstanding Security affected.

         (c) After an amendment, supplement or waiver under this Section 10.02
becomes effective, the Company shall promptly mail to the Holders affected
thereby a notice briefly describing the amendment, supplement or waiver. Any
failure of the Company to mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such amendment,
supplement or waiver.

         Section 10.03. Compliance with Trust Indenture Act. Every amendment to
or supplement of this Indenture or the Securities shall comply with the TIA as
in effect at the date of such amendment or supplement.

         Section 10.04. Revocation and Effect of Consents. Until an amendment,
supplement or waiver becomes effective, a consent to it by a Holder is a
continuing consent by the Holder and every subsequent Holder of a Security or
portion of a Security that evidences the same debt as the consenting Holder's
Security, even if notation of the consent is not made on any Security.

                                       61
<PAGE>

However, any such Holder or subsequent Holder may revoke the consent as to its
Security or portion of a Security if the Trustee receives the notice of
revocation before the date the amendment, supplement or waiver becomes
effective.

         (a) After an amendment, supplement or waiver becomes effective, it
shall bind every Holder of a Security.

         Section 10.05. Notation on or Exchange of Securities. If an amendment,
supplement or waiver changes the terms of a Security, the Trustee may require
the Holder of the Security to deliver it to the Trustee. The Trustee may place
an appropriate notation on the Security about the changed terms and return it to
the Holder. Alternatively, if the Company or the Trustee so determines, the
Company in exchange for the Security shall issue and the Trustee shall
authenticate a new Security that reflects the changed terms.

         Section 10.06. Trustee to Sign Amendments, Etc. The Trustee shall sign
any amendment or supplemental indenture authorized pursuant to this Article 10
if the amendment or supplemental indenture does not adversely affect the rights,
duties, liabilities or immunities of the Trustee. If it does, the Trustee may,
in its sole discretion, but need not sign it. In signing or refusing to sign
such amendment or supplemental indenture, the Trustee shall be entitled to
receive and, subject to Section 8.01, shall be fully protected in relying upon,
an Opinion of Counsel stating that such amendment or supplemental indenture is
authorized or permitted by this Indenture. The Company may not sign an amendment
or supplement indenture until the Board of Directors approves it.

         Section 10.07. Effect of Supplemental Indentures. Upon the execution of
any supplemental indenture under this Article 10, this Indenture shall be
modified in accordance therewith, and such supplemental indenture shall form a
part of this Indenture for all purposes; and every Holder of Securities
theretofore or thereafter authenticated and delivered hereunder shall be bound
thereby.

                                   ARTICLE 11
                                  MISCELLANEOUS

         Section 11.01. Trust Indenture Act Controls. If any provision of this
Indenture limits, qualifies or conflicts with the duties imposed by any of
Sections 310 to 317, inclusive, of the TIA through operation of Section 318(c)
thereof, such imposed duties shall control.

         Section 11.02. Notices. Any demand, authorization notice, request,
consent or communication shall be given in writing and delivered in person or
mailed by first-class mail, postage prepaid, addressed as follows or transmitted
by facsimile transmission (confirmed by delivery in person or mail by
first-class mail, postage prepaid, or by guaranteed overnight courier) to the
following facsimile numbers:

                                       62
<PAGE>

                  If to the Company, to:

                  Chattem, Inc.
                  1715 West 38th Street
                  Chattanooga, Tennessee  37409
                  Attention:  Theodore K. Whitfield, Jr., General Counsel
                  Fax:  (423) 821-0395

                  with a copy to:

                  Miller & Martin PLLC
                  Suite 1000 Volunteer Building
                  832 Georgia Avenue
                  Chattanooga, Tennessee  37402
                  Attention:  Hugh F. Sharber
                  Fax:  (423) 785-8480

                  if to the Trustee, to:

                  U.S. Bank, National Association
                  150 Fourth Avenue North, 2nd Floor
                  Nashville, Tennessee  37219
                  Attention:  Corporate Trust Services
                  (Chattem, Inc. [  ]% Convertible Senior Notes due 2014)
                  Fax:  (621) 251-0738

                  with a copy to:

                  Adams and Reese LLP
                  424 Church Street, Suite 2800
                  Nashville, Tennessee 37219
                  Attention:  Cynthia M. Barnett
                  Fax:  (615) 259-1470

                  Such notices or communications shall be effective when
                  received.

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

                  Any notice or communication mailed to a Holder of a Security
shall be mailed by first-class mail or delivered by an overnight delivery
service to it at its address shown on the register kept by the Primary
Registrar.

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

                                       63
<PAGE>

                  If the Company mails any notice to a Holder of a Security, it
shall mail a copy to the Trustee and each Registrar, Paying Agent and Conversion
Agent.

         Section 11.03. Communications By Holders with Other Holder. Holders of
Securities may communicate pursuant to TIA Section 312(b) with other Holders of
Securities with respect to their rights under this Indenture or the Securities.
The Company, the Trustee, the Registrar and any other person shall have the
protection of TIA Section 312(c).

         Section 11.04. Certificate and Opinion as to Conditions Precedent. Upon
any request or application by the Company to the Trustee to take any action
under this Indenture, the Company shall furnish to the Trustee at the request of
the Trustee:

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

                  (2) an Opinion of Counsel stating that, in the opinion of such
         counsel, all such conditions precedent (including any covenants,
         compliance with which constitutes a condition precedent) have been
         complied with.

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

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

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

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

                  (4) a statement as to whether or not, in the opinion of such
         person, such condition or covenant has been complied with; provided,
         however, that with respect to matters of fact an Opinion of Counsel may
         rely on an Officers' Certificate or certificates of public officials.

         Section 11.05. Record Date for Vote or Consent of Holders of
Securities. The Company (or, in the event deposits have been made pursuant to
Section 9.01, the Trustee) may set a record date for purposes of determining the
identity of Holders entitled to vote or consent to any action by vote or consent
authorized or permitted under this Indenture, which record date shall not be
more than 30 days prior to the date of the commencement of solicitation of such
action. Notwithstanding the provisions of Section 10.04, if a record date is
fixed, those persons who were Holders of Securities at the close of business on
such record date (or their duly designated proxies), and only those persons,
shall be entitled to take such action by vote or consent or to

                                       64
<PAGE>

revoke any vote or consent previously given, whether or not such persons
continue to be Holders after such record date.

         Section 11.06. Rules by Trustee, Paying Agent, Registrar and Conversion
Agent. The Trustee may make reasonable rules (not inconsistent with the terms of
this Indenture) for action by or at a meeting of Holders. Any Registrar, Paying
Agent or Conversion Agent may make reasonable rules for its functions.

         Section 11.07. Legal Holidays. A "Legal Holiday" is a Saturday, Sunday
or a day on which state or federally chartered banking institutions in New York,
New York are authorized or obligated to close. If a payment date is a Legal
Holiday, payment shall be made on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue for the intervening period. If a Regular
Record Date is a Legal Holiday, the record date shall not be affected.

         Section 11.08. Governing Law. This Indenture and the Securities shall
be governed by, and construed in accordance with, the laws of the State of New
York.

         Section 11.09. No Adverse Interpretation of Other Agreements. This
Indenture may not be used to interpret another indenture, loan or debt agreement
of the Company or a Subsidiary of the Company. Any such indenture, loan or debt
agreement may not be used to interpret this Indenture.

         Section 11.10. No Recourse Against Others. All liability described in
paragraph 15 of the Securities of any director, officer, employee or
shareholder, as such, of the Company hereby is waived and released by each of
the Holders.

         Section 11.11. No Security Interest Created. Nothing in this Indenture
or in the Securities, express or implied, shall be construed to constitute a
security interest under the Uniform Commercial Code or similar legislation, now
in effect or hereafter enacted and made effective, in any jurisdiction.

         Section 11.12. Successors. All agreements of the Company in this
Indenture and the Securities shall bind its successor. All agreements of the
Trustee in this Indenture shall bind its successor.

         Section 11.13. Multiple Counterparts. The parties may sign multiple
counterparts of this Indenture. Each signed counterpart shall be deemed an
original, but all of them together represent the same agreement.

         Section 11.14. Separability. If any provisions in this Indenture or in
the Securities shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.

         Section 11.15. Table of Contents, Headings, Etc. The table of contents,
cross-reference sheet and headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not to be
considered a part hereof, and shall in no way modify or restrict any of the
terms or provisions hereof.

                                       65
<PAGE>

         Section 11.16. Calculations In Respect of Securities. The Company shall
be responsible for making all calculations called for under the Securities. All
calculations made by the Company shall be made in good faith and be final and
binding on the Holders of the Securities absent manifest error. The Company
shall provide a schedule of calculations to the Trustee, and the Trustee shall
be entitled to conclusively rely upon the accuracy of the calculations by the
Company without independent verification. The Trustee shall forward calculations
made by the Company to any Holder of Securities upon request.

                            [SIGNATURE PAGE FOLLOWS]

                                       66
<PAGE>

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

                                CHATTEM, INC.

                                By: /s/ Robert E. Bosworth
                                    --------------------------------
                                    Name:  Robert E. Bosworth
                                    Title: President and Chief Operating Officer

                                U.S. BANK, NATIONAL ASSOCIATION

                                By: /s/ Jaci L. Kitch
                                    --------------------------------
                                    Name:  Jaci L. Kitch
                                    Title: Vice President

                                       67
<PAGE>

                                    EXHIBIT A

                           [FORM OF FACE OF SECURITY]

                  UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE COMPANY OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT
HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. THIS SECURITY
IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO
AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS
SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER
THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED
IN THE INDENTURE AND, UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR
SECURITIES IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A
WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE
DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE
DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH
SUCCESSOR DEPOSITARY.(1)

                  THIS SECURITY AND THE SHARES OF COMMON STOCK ISSUABLE UPON
CONVERSION OF THIS SECURITY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER
THIS SECURITY, THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THIS
SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN OR THEREIN MAY BE REOFFERED,
SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION UNDER THE SECURITIES ACT.(2)

                  BY ITS ACQUISITION HEREOF, THE HOLDER AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER SUCH SECURITY PRIOR TO THE DATE THAT IS TWO YEARS AFTER THE
LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH CHATTEM, INC.
(THE "COMPANY") OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY
(OR ANY PREDECESSOR OF SUCH SECURITY) (THE "RESALE RESTRICTION TERMINATION
DATE") ONLY (A) TO THE

------------------
(1) This paragraph should be included only if the Security is a Global Security.

(2) This paragraph should be included only if the Security is a Restricted
Security.

                                       A-1
<PAGE>

COMPANY OR ANY SUBSIDIARY THEREOF, (B) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE
144A, TO A PERSON IT REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER AS
DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING
MADE IN RELIANCE ON RULE 144A, OR (D) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE
COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER
PURSUANT TO CLAUSE (D) PRIOR TO THE RESALE RESTRICTION TERMINATION DATE TO
REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS AND/OR OTHER
INFORMATION SATISFACTORY TO EACH OF THEM, AND IN EACH OF THE FOREGOING CASES, TO
REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE
OF THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE.
THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE
RESTRICTION TERMINATION DATE.(3)

------------------
(3) This paragraph should be included only if the Security is a Restricted
Security.

                                       A-2
<PAGE>

                                  CHATTEM, INC.
                    1.625% Convertible Senior Notes due 2014

No. 1                                                          CUSIP: 162456 AQO

                  Chattem, Inc., a Tennessee corporation, promises to pay to
Cede & Co. or registered assigns the principal amount of one hundred million
dollars ($100,000,000) on May 1, 2014.

                  This Security shall bear interest as specified on the other
side of this Security. This Security is convertible as specified on the other
side of this Security.

                  Additional provisions of this Security are set forth on the
other side of this Security.

Dated:  April 11, 2007

                            [SIGNATURE PAGE FOLLOWS]

                                       A-3
<PAGE>

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

                                  CHATTEM, INC.

                                  By:
                                      --------------------------
                                      Name:
                                      Title:

Dated: April 11, 2007

Trustee's Certificate of Authentication: This is one of the Securities referred
to in the within-mentioned Indenture.

U.S. BANK, NATIONAL ASSOCIATION as Trustee

By:
    --------------------------
    Authorized Signatory

                                       A-4
<PAGE>

                       [FORM OF REVERSE SIDE OF SECURITY]

                                  CHATTEM, INC.
                    1.625% CONVERTIBLE SENIOR NOTES DUE 2014

1.       INTEREST

         Chattem, Inc., a Tennessee corporation (the "Company", which term shall
include any successor corporation under the Indenture hereinafter referred to),
promises to pay interest on the principal amount of this Security at the rate of
1.625% per annum. The Company shall pay interest semiannually on May 1 and
November 1 of each year (each, an "Interest Payment Date"), commencing November
1, 2007. Each payment of interest will include interest accrued through the day
before the relevant Interest Payment Date (or purchase date). Cash interest will
be computed on the basis of a 360-day year comprised of twelve 30-day months.
Any payment required to be made on a day that is not a Business Day shall be
made on the next succeeding Business Day. Any reference herein to interest
accrued or payable as of any date shall include any Additional Interest accrued
or payable on such date as provided in the Registration Rights Agreement.

         No sinking fund is provided for the Securities.

2.       METHOD OF PAYMENT

         The Company shall pay interest on this Security (except defaulted
interest) to the person who is the Holder of this Security at the close of
business on April 15 or October 15, as the case may be (each, a "Regular Record
Date"), next preceding the related Interest Payment Date. The Holder must
surrender this Security to a Paying Agent to collect payment of principal. The
Company will pay principal and interest in money of the United States that at
the time of payment is legal tender for payment of public and private debts. The
Company may pay principal and interest in respect of any Certificated Security
by check or wire payable in such money; provided, however, that a Holder with an
aggregate principal amount in excess of $2,000,000 will be paid by wire transfer
in immediately available funds at the election of such Holder if such Holder has
provided wire transfer instructions to the Trustee at least 10 Business Days
prior to the Payment Date. The Company may mail an interest check to the
Holder's registered address. Notwithstanding the foregoing, so long as this
Security is registered in the name of a Depositary or its nominee, all payments
hereon shall be made by wire transfer of immediately available funds to the
account of the Depositary or its nominee.

         Any wire transfer instructions received by the Trustee will remain in
effect until revoked by the Holder.

3.       PAYING AGENT, REGISTRAR AND CONVERSION AGENT

         Initially, U.S. BANK, NATIONAL ASSOCIATION (the "Trustee", which term
shall include any successor trustee under the Indenture hereinafter referred to)
will act as Paying Agent, Registrar and Conversion Agent. The Company may change
any Paying Agent, Registrar or Conversion Agent without notice to the Holder.
The Company or any of its Subsidiaries may, subject to certain limitations set
forth in the Indenture, act as Paying Agent or Registrar.

                                       A-5
<PAGE>

4.       INDENTURE, LIMITATIONS

         This Security is one of a duly authorized issue of Securities of the
Company designated as its 1.625% Convertible Senior Notes Due 2014 (the
"Securities"), issued under an Indenture dated as of April 11, 2007 (together
with any supplemental indentures thereto, the "Indenture"), between the Company
and the Trustee. The terms of this Security include those stated in the
Indenture and those required by or made part of the Indenture by reference to
the Trust Indenture Act of 1939, as amended, as in effect on the date of the
Indenture. This Security is subject to all such terms, and the Holder of this
security is referred to the Indenture and said Act for a statement of them.
Capitalized terms not otherwise defined herein have the meaning ascribed to such
terms in the Indenture.

         The Securities are unsecured obligations of the Company limited to
$100,000,000 aggregate principal amount. The Indenture does not limit other debt
of the Company, secured or unsecured.

5.       PURCHASE OF SECURITIES OF HOLDERS' OPTION UPON A FUNDAMENTAL CHANGE

         If a Fundamental Change occurs prior to the Final Maturity Date, at the
option of the Holder and subject to the terms and conditions of the Indenture,
the Company shall become obligated to purchase for cash, all or any part
specified by the Holder (so long as the principal amount of such part is $1,000
or an integral multiple of $1,000) of the Securities held by such Holder on a
date specified by the Company that is not less than 30 nor more than 45 days
after the Fundamental Change Effective Date, at a purchase price equal to 100%
of the principal amount thereof together with accrued and unpaid interest, if
any, and accrued and unpaid Additional Interest, if any, to, but excluding, the
Fundamental Change Purchase Date. The Holder shall have the right to withdraw
any Fundamental Change Purchase Notice (in whole or in a portion thereof that is
$1,000 or an integral multiple of $1,000) at any time prior to the close of
business on the Business Day next preceding the Fundamental Change Purchase Date
by delivering a written notice of withdrawal to the Paying Agent in accordance
with the terms of the Indenture.

6.       CONVERSION

         Subject to and upon compliance with the provisions of the Indenture and
upon the occurrence of the events specified in the Indenture, a Holder may
surrender for conversion any Security that is $1,000 principal amount or
integral multiples thereof. In lieu of receiving shares of Common Stock, a
Holder will receive, for each $1,000 principal amount of Securities surrendered
for conversion:

         o    cash in an amount equal to the lesser of (1) $1,000 and (2) the
              Conversion Value; and

         o    if the Conversion Value is greater than $1,000, a number of shares
              of Common Stock equal to the sum of the Daily Share Amounts, for
              each of the twenty

                                       A-6
<PAGE>

              consecutive Trading Days in the Conversion Reference Period,
              appropriately adjusted to reflect stock splits, stock dividends,
              combinations or similar events occurring during the Conversion
              Reference Period, subject to the Company's right to deliver cash
              in lieu of all or a portion of such shares as described in the
              Indenture;

provided that in no event shall the aggregate number of shares of Common Stock
to be issued pursuant to the foregoing clause, per $1,000 principal amount of
Securities, exceed the Aggregate Share Cap, as defined in the Indenture.

         The Conversion Rate on any Securities surrendered in connection with a
Fundamental Change may be increased by an amount, if any, determined in
accordance with Section 4.01(j) of the Indenture.

7.       DENOMINATIONS, TRANSFER, EXCHANGE

         The Securities are in registered form, without coupons, in
denominations of $1,000 principal amount and integral multiples of $1,000
principal amount. A Holder may register the transfer of or exchange Securities
in accordance with the Indenture. The Registrar may require a Holder, among
other things, to furnish appropriate endorsements and transfer documents.

8.       PERSONS DEEMED OWNERS

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

9.       UNCLAIMED MONEY

         If money for the payment of principal or interest remains unclaimed for
two years, the Trustee and any Paying Agent will pay the money back to the
Company at its written request, subject to applicable unclaimed property law and
the provisions of the Indenture. After that, Holders entitled to money must look
to the Company for payment as general creditors unless an applicable abandoned
property law designates another person.

10.      AMENDMENT, SUPPLEMENT AND WAIVER

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

                                       A-7
<PAGE>

11.      SUCCESSOR ENTITY

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

12.      DEFAULTS AND REMEDIES

         An Event of Default shall occur upon the occurrence of any of the
events specified in Section 7.01 of the Indenture. Upon the occurrence of an
Event of Default, the principal amount of this Security and accrued and unpaid
interest shall be subject to becoming due and payable on the terms set forth in
the Indenture. Holders of Securities may, on the terms set forth in the
Indenture, rescind and annul the consequences of any such acceleration.

         Holders may not enforce the Indenture or the Securities except as
provided in the Indenture. The Trustee may require indemnity satisfactory to it
before it enforces the Indenture or the Securities. Subject to certain
limitations, Holders of a majority in aggregate principal amount of the
Securities then outstanding may direct the Trustee in its exercise of any trust
or power. The Trustee may withhold from Holders notice of any continuing Default
(except a Default in payment of principal or interest) if and so long as it
determines that withholding notice is in their interests. The Company is
required to file periodic certificates with the Trustee as to the Company's
compliance with the Indenture and knowledge or status of any Default.

13.      TRUSTEE DEALINGS WITH THE COMPANY

         U.S. Bank, National Association, the initial Trustee under the
Indenture, in its individual or any other capacity, may make loans to, accept
deposits from and perform services for the Company or an Affiliate of the
Company, and may otherwise deal with the Company or an Affiliate of the Company,
as if it were not the Trustee.

14.      NO RECOURSE AGAINST OTHERS

         A director, officer, employee or shareholder, as such, of the Company
shall not have any liability for any obligations of the Company under the
Securities or the Indenture nor for any claim based on, in respect of or by
reason of such obligations or their creation. The Holder of this Security by
accepting this Security waives and releases all such liability. The waiver and
release are part of the consideration for the issuance of this Security.

15.      AUTHENTICATION

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

16.      ABBREVIATIONS AND DEFINITIONS

         Customary abbreviations may be used in the name of the Holder or an
assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (= joint

                                       A-8
<PAGE>

tenants with right of survivorship and not as tenants in common), CUST (=
Custodian) and UGMA (= Uniform Gifts to Minors Act).

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

17.      INDENTURE TO CONTROL; GOVERNING LAW

         In the case of any conflict between the provisions of this Security and
the Indenture, the provisions of the Indenture shall control. This Security and
the Indenture shall be governed by, and construed in accordance with, the laws
of the State of New York.

         The Company will furnish to any Holder, upon written request and
without charge, a copy of the Indenture. Requests may be made to: Chattem, Inc.,
1715 West 38th Street, Chattanooga, Tennessee 37409, Attention: Theodore K.
Whitfield, Jr., General Counsel, facsimile: (423) 821-0395.

                                       A-9
<PAGE>

                                 ASSIGNMENT FORM

         To assign this Security, fill in the form below:

         I or we assign and transfer this Security to

--------------------------------------------------------------------------------
                  (Insert assignee's soc. sec. or tax I.D. no.)

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

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

and irrevocably appoint

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

                                  Your Signature

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

* Signature guaranteed by:

By:
    ----------------------

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

                                      A-10
<PAGE>

                                CONVERSION NOTICE

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

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

         With respect to any shares of Common Stock that may be issuable upon
conversion, if you want the stock certificate made out in another person's name,
fill in the form below:

--------------------------------------------------------------------------------
                  (Insert assignee's soc. sec. or tax I.D. no.)

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

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

                                     Your Signature

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

* Signature guaranteed by:

By:
    --------------------------

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

                                      A-11
<PAGE>

                      FUNDAMENTAL CHANGE REPURCHASE NOTICE

To: Chattem, Inc.

         The undersigned registered owner of this Security hereby irrevocably
acknowledges receipt of a notice from Chattem, Inc. (the "Company") as to the
occurrence of a Fundamental Change with respect to the Company and requests and
instructs the Company to purchase the entire principal amount of this Security,
or the portion thereof (which is $1,000 or an integral multiple thereof) below
designated, in accordance with the terms of the Security and the Indenture
referred to in the Security at the Fundamental Change Purchase Price, together
with accrued and unpaid interest and Additional Interest, if any, to, but
excluding, such date, to the registered Holder hereof.

Date:
      --------------------     ---------------------------
                               Signature (s)

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

                               ---------------------------
                               Signature Guaranty

Principal amount to be redeemed (in an
integral multiple of $1,000, if less
than all):

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

                                      A-12
<PAGE>

                     SCHEDULE OF EXCHANGES OF SECURITIES(1)

         The following exchanges, purchase, redemptions, purchases or
conversions of a part of this Global Security have been made:
<TABLE><CAPTION>
<S>                              <C>                         <C>                          <C>
   Principal Amount of this
  Global Note Following Such                                    Amount of Decrease in        Amount of Increase in
Decrease Date of Exchange (or     Authorized Signatory of     Principal Amount of this     Principal Amount of this
          Increase)                 Securities Custodian             Global Note                  Global Note
          ---------                 --------------------             -----------                  -----------
</TABLE>

---------------
1.  This schedule should be included only if the Security is a Global Security.

                                      A-13
<PAGE>

            CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION
                      OF TRANSFER OF RESTRICTED SECURITIES

Re: 1.625% Convertible Senior Notes Due 2014 (the "Securities") of Chattem, Inc.

This certificate relates to $         principal amount of Securities owned in
(check applicable box)

[ ] book-entry or [ ] definitive form by                    (the "Transferor").

         The Transferor has requested a Registrar or the Trustee to exchange or
register the transfer of such Securities.

         In connection with such request and in respect of each such Security,
the Transferor does hereby certify that the Transferor is familiar with transfer
restrictions relating to the Securities as provided in Section 2.12 of the
Indenture dated as of April 11, 2007 between Chattem, Inc. and U.S. Bank,
National Association, as trustee (the "Indenture"), and the transfer of such
Security is being made pursuant to an effective registration statement under the
Securities Act of 1933, as amended (the "Securities Act"), or the transfer or
exchange, as the case may be, of such Security does not require registration
under the Securities Act because (check applicable box):

___      Such Security is being acquired for the Transferor's own account,
         without transfer.

___      Such Security is being transferred to the Company or a Subsidiary (as
         defined in the Indenture) of the Company.

___      Such security is being transferred to a person the Transferor
         reasonably believes is a "qualified institutional buyer" (as defined in
         Rule 144A or any successor provision thereto ("Rule 144A") under the
         Securities Act) that is purchasing for its own account or for the
         account of a "qualified institutional buyer", in each case to whom
         notice has been given that the transfer is being made in reliance on
         such Rule 144A, and in each case in reliance on Rule 144A.

___      Such Security is being transferred pursuant to and in compliance with
         an exemption from the registration requirements under the Securities
         Act in accordance with Rule 144 (or any successor thereto) ("Rule 144")
         under the Securities Act.

___      Such Security is being transferred to a non-U.S. Person in an offshore
         transaction in compliance with Rule 904 of Regulation S under the
         Securities Act (or any successor thereto).

___      Such Security is being transferred pursuant to and in compliance with
         an exemption from the registration requirements of the Securities Act
         (other than an exemption referred to above) and as a result of which
         such Security will, upon such transfer, cease to be a "restricted
         security" within the meaning of Rule 144 under the Securities Act.

                                      A-14
<PAGE>

         The Transferor acknowledges and agrees that, if the transferee will
hold any such Securities in the form of beneficial interests in a Global Note
which is a "restricted security" within the meaning of Rule 144 under the
Securities Act, then such transfer can only be made pursuant to (i) Rule 144A
under the Securities Act and such transferee must be a "qualified institutional
buyer" (as defined in Rule 144A) or (ii) Regulation S under the Securities Act.

Date:
      --------------------            ----------------------------------
                                      (Insert Name of Transferor)

                                      A-15EXHIBIT 10.2
                                                                    ------------

                          Registration Rights Agreement

                           Dated as of April 11, 2007

                                     between

                                  Chattem, Inc.

                                       and

               Merrill Lynch, Pierce, Fenner & Smith Incorporated

                                        1
<PAGE>

                          REGISTRATION RIGHTS AGREEMENT

                  This Registration Rights Agreement (the "Agreement") is made
and entered into this 11th day of April, 2007, between Chattem, Inc., a
Tennessee corporation (the "Company"), and Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("Merrill Lynch").

                  This Agreement is made pursuant to the Purchase Agreement (the
"Purchase Agreement"), dated April 4, 2007, between the Company and Merrill
Lynch, which provides for the sale by the Company to Merrill Lynch of
$85,000,000 aggregate principal amount ($100,000,000 aggregate principal amount
if Merrill Lynch exercises its over-allotment option in full) of the Company's
1.625% Convertible Senior Notes due 2014 (the "Notes" and together with the
shares of Common Stock of the Company into which the Notes are convertible, the
"Securities"). In order to induce Merrill Lynch to enter into the Purchase
Agreement, the Company has agreed to provide to Merrill Lynch and its direct and
indirect transferees the registration rights set forth in this Agreement. The
execution of this Agreement is a condition to the closing under the Purchase
Agreement.

                  In consideration of the foregoing, the parties hereto agree as
         follows:

                  1. Definitions.

                  As used in this Agreement, the following capitalized defined
         terms shall have the following meanings:

                  "1933 Act" shall mean the Securities Act of 1933, as amended
         from time to time.

                  "1934 Act" shall mean the Securities Exchange Act of l934, as
         amended from time to time.

                  "1939 Act" shall mean the Trust Indenture Act of 1939, as
         amended from time to time.

                  "Additional Interest" shall have the meaning set forth in
         Section 2.4 herein.

                  "Agreement" shall have the meaning set forth in the preamble.

                  "Closing Date" shall mean the Closing Time as defined in the
         Purchase Agreement.

                  "Common Stock" shall mean any shares of common stock, without
         par value, of the Company and any other shares of common stock as may
         constitute "Common Stock" for purposes of the Indenture.

                  "Company" shall have the meaning set forth in the preamble and
         shall also include the Company's successors.

                                        2
<PAGE>

                  "Depositary" shall mean The Depository Trust Company, or any
         other depositary appointed by the Company, provided, however, that such
         depositary must have an address in the Borough of Manhattan, in the
         City of New York.

                  "Effectiveness Period" shall have the meaning set forth in
         Section 2.1(b) herein.

                  "Holder" shall mean Merrill Lynch, for so long as it owns any
         Registrable Securities, and its successors, assigns and direct and
         indirect transferees who become owners, beneficial or otherwise, of
         Registrable Securities under the Indenture.

                  "Indenture" shall mean the Indenture relating to the
         Securities, dated as of the date hereof, between the Company and U.S.
         Bank, National Association, as Trustee, as the same may be amended,
         supplemented, waived or otherwise modified from time to time in
         accordance with the terms thereof.

                  "Issuer Free Writing Prospectus" shall have the meaning set
         forth in Section 2.1(f) herein.

                  "Majority Holders" shall mean the Holders of a majority of the
         aggregate principal amount of outstanding Registrable Securities;
         provided that, for purposes of this definition, (1) a Holder of shares
         of Common Stock that constitutes Registrable Securities which were
         issued upon conversion of the Notes shall be deemed to hold an
         aggregate principal amount at maturity of Registrable Securities (in
         addition to the principal amount at maturity of any Registrable
         Securities held by such Holder) equal to the principal amount at
         maturity of Registrable Securities which were converted into such
         shares of Common Stock and (2) such Registrable Securities which were
         converted into such shares of Common Stock shall be deemed to be
         outstanding; provided further, that whenever the consent or approval of
         Holders of a specified percentage of Registrable Securities is required
         hereunder, Registrable Securities held by the Company or any Affiliate
         (as defined in the Indenture) of the Company shall be disregarded in
         determining whether such consent or approval was given by the Holders
         of such required percentage amount.

                  "Merrill Lynch" shall have the meaning set forth in the
         preamble.

                  "Notes" shall have the meaning set forth in the preamble.

                  "Offering Memorandum" shall mean the offering memorandum of
         the Company, dated April 4, 2007, related to the Securities.

                  "Person" shall mean an individual, partnership (general or
         limited), corporation, limited liability company, trust or
         unincorporated organization, or a government or agency or political
         subdivision thereof.

                  "Prospectus" shall mean the prospectus included in a Shelf
         Registration Statement, including any preliminary prospectus, and any
         such prospectus as amended or supplemented by any prospectus
         supplement, including any such prospectus supplement with respect to
         the terms of the offering of any portion of the Registrable Securities

                                        3
<PAGE>

         covered by a Shelf Registration Statement, and by all other amendments
         and supplements to a prospectus, including post-effective amendments,
         and in each case including all materials incorporated by reference
         therein.

                  "Purchase Agreement" shall have the meaning set forth in the
         preamble.

                  "Questionnaire" shall have the meaning set forth in Section
         2.1(d) herein.

                  "Registrable Securities" shall mean all or any of the
         Securities; provided, however, that any such Securities shall cease to
         be Registrable Securities at the earlier of when (i) a Shelf
         Registration Statement with respect to such Securities shall have been
         declared effective or otherwise become effective under the 1933 Act and
         such Securities shall have been disposed of pursuant to such Shelf
         Registration Statement, (ii) such Securities have been sold to the
         public pursuant to Rule 144 or may be sold or transferred pursuant to
         Rule l44(k) (or any similar provision then in force, but not Rule 144A)
         under the 1933 Act by holders who are not "affiliates" of the Company,
         or (iii) such Securities shall have ceased to be outstanding.

                  "Registration Default" shall have the meaning set forth in
         Section 2.4 herein.

                  "Registration Expenses" shall mean any and all expenses
         incident to performance of or compliance by the Company with this
         Agreement, whether or not a Shelf Registration Statement becomes
         effective, including without limitation: (i) all SEC, stock exchange or
         National Association of Securities Dealers, Inc. (the "NASD")
         registration and filing fees, including, if applicable, the reasonable
         and documented fees and expenses of any "qualified independent
         underwriter" (and its counsel) that is required to be retained by any
         holder of Registrable Securities in accordance with the rules and
         regulations of the NASD, (ii) all fees and expenses incurred by the
         Company in connection with compliance with state securities or blue sky
         laws and compliance with the rules of the NASD (including reasonable
         and documented fees and disbursements of counsel for any underwriters
         or Holders in connection with blue sky qualification of any of the
         Registrable Securities and any filings with the NASD), (iii) all
         expenses of the Company in preparing or assisting in preparing, word
         processing, printing and distributing any Shelf Registration Statement,
         any Prospectus, any amendments or supplements thereto, any securities
         sales agreements and other documents relating to the performance of and
         compliance with this Agreement, (iv) all fees and expenses incurred by
         the Company in connection with the listing, if any, of any of the
         Registrable Securities on any securities exchange or exchanges, (v) all
         rating agency fees incurred by the Company, if any, (vi) the fees and
         disbursements of counsel for the Company and of the independent public
         accountants of the Company, including the expenses of any special
         audits or "comfort" letters required by or incident to such performance
         and compliance, (vii) the fees and expenses of the Trustee, and any
         escrow agent or custodian, (viii) the reasonable and documented fees
         and expenses of a single counsel to the Holders (the "Holders'
         Counsel") in connection with the Shelf Registration Statement, and (ix)
         any fees and expenses of any special experts retained by the Company in
         connection with any Shelf Registration Statement, but excluding any
         underwriting discounts and commissions and transfer taxes, if any,
         relating to the sale or disposition of Registrable Securities by a

                                        4
<PAGE>

         Holder and the fees and expenses of any counsel to the Holders, except
         as provided for in clause (viii) above.

                  "SEC" shall mean the Securities and Exchange Commission or any
         successor agency or government body performing the functions currently
         performed by the United States Securities and Exchange Commission.

                  "Securities" shall have the meaning set forth in the preamble.

                  "Shelf Registration" shall mean a registration effected
         pursuant to Section 2.1 hereof.

                  "Shelf Registration Statement" shall mean a "shelf"
         registration statement of the Company pursuant to the provisions of
         Section 2.1 of this Agreement which covers all of the Registrable
         Securities on an appropriate form under Rule 415 under the 1933 Act, or
         any similar rule that may be adopted by the SEC, and all amendments and
         supplements to such registration statement, including post-effective
         amendments, in each case including the Prospectus contained therein,
         all exhibits thereto and all materials incorporated by reference
         therein.

                  "Suspension Period" shall have the meaning set forth in
         Section 2.5 herein.

                  "Trustee" shall mean the trustee with respect to the
         Securities under the Indenture.

                  "Underwriter" shall have the meaning set forth in Section
         4(a).

                  2. Registration Under the 1933 Act.

                  2.1 Shelf Registration.

                  (a) The Company shall, at its cost, no later than 90 days
after the Closing Date, file with SEC, and thereafter shall use its commercially
reasonable efforts to cause to be declared effective as promptly as practicable
but no later than 180 days after making such filing, a Shelf Registration
Statement relating to the offer and sale of the Registrable Securities by the
Holders that have provided the information pursuant to Section 2.1(d).

                  (b) The Company shall, at its cost, use its commercially
reasonable efforts, subject to Section 2.5, to keep the Shelf Registration
Statement continuously effective in order to permit the Prospectus forming part
thereof to be usable by Holders beginning upon the effective date of the Shelf
Registration Statement (i) for a period of two years from the Closing Date or
(ii) for such shorter period that will terminate when all Securities covered by
the Shelf Registration Statement are no longer Registrable Securities (the
"Effectiveness Period").

                  (c) Notwithstanding any other provisions hereof, the Company
shall use its commercially reasonable efforts to provide that (i) any Shelf
Registration Statement and any amendment thereto and any Prospectus forming part
thereof and any supplement thereto complies in all material respects with the
1933 Act and the rules and regulations thereunder, (ii) any Shelf Registration
Statement and any amendment thereto does not, when it becomes

                                        5
<PAGE>

effective, contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading and (iii) any Prospectus forming part of any Shelf
Registration Statement, and any supplement to such Prospectus (as amended or
supplemented from time to time), does not include an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.

                  (d) Notwithstanding any other provision hereof, no Holder of
Registrable Securities may include any of its Registrable Securities in the
Shelf Registration Statement pursuant to this Agreement unless the Holder
furnishes to the Company a fully completed notice and questionnaire in the form
attached as Annex A to the Offering Memorandum (the "Questionnaire") and such
other information in writing as the Company may reasonably request in writing
for use in connection with the Shelf Registration Statement or Prospectus
included therein and in any application to be filed with or under state
securities laws. At least 30 days prior to the filing of the Shelf Registration
Statement, the Company will provide notice to the Holders of its intention to
file the Shelf Registration Statement. In order to be named as a selling
securityholder in the Prospectus at the time of effectiveness of the Shelf
Registration Statement, each Holder must, before the filing of the Shelf
Registration Statement and no later than the 20th day after being notified of
the Company's intention to file, furnish the completed Questionnaire and such
other information that the Company may reasonably request in writing, if any, to
the Company in writing and the Company shall include the information from the
completed Questionnaire and such other information, if any, in the Shelf
Registration Statement and the Prospectus in a manner so that upon effectiveness
of the Shelf Registration Statement the Holder will be permitted to deliver the
Prospectus to purchasers of the Holder's Registrable Securities. From and after
the date that the Shelf Registration Statement is first declared effective by
the SEC or otherwise becomes effective, upon receipt of a completed
Questionnaire and such other information that the Company may reasonably request
in writing, if any, the Company will use its commercially reasonable efforts to
file (i) within 20 business days any amendments or supplements to the Shelf
Registration Statement or (ii) within 10 business days any report filed with the
SEC under the 1934 Act, if the Company is permitted to do so pursuant to the
1933 Act and the regulations thereunder, necessary for such Holder to be named
as a selling securityholder in the Prospectus contained therein to permit such
Holder to deliver the Prospectus to purchasers of the Holder's Securities
(subject to the Company's right to suspend the Shelf Registration Statement as
described in Section 2.5 below); provided, however, that the Company shall not
be required to file more than one such amendment or supplement to the Shelf
Registration Statement pursuant to clause (i) of this paragraph in any calendar
quarter for all such Holders. Holders that do not deliver a completed written
Questionnaire and such other information, as provided for in this Section
2.1(d), will not be named as selling securityholders in the Prospectus. Each
Holder named as a selling securityholder in the Prospectus agrees to promptly
furnish to the Company all information required to be disclosed in order to make
information previously furnished to the Company by the Holder not materially
misleading and any other information regarding such Holder and the distribution
of such Holder's Registrable Securities as the Company may from time to time
reasonably request in writing.

                                        6
<PAGE>

                  (e) During the Effectiveness Period, each Holder agrees not to
sell any Registrable Securities pursuant to the Shelf Registration Statement
without delivering, or causing to be delivered, a Prospectus to the purchaser
thereof.

                  (f) The Company represents and agrees that, unless it obtains
the prior consent of Holders of a majority in principal amount of the
Registrable Securities that are registered under the Shelf Registration
Statement at such time or the approval of Holders' Counsel or the consent of the
managing underwriter in connection with any underwritten offering of Registrable
Securities, and each Holder represents and agrees that, unless it obtains the
prior consent of the Company and any such underwriter, it will not make any
offer relating to the Securities (which, for the avoidance of doubt, will not
include any shares of Common Stock which are not Securities within the meaning
of this Agreement) that would constitute an "issuer free writing prospectus," as
defined in Rule 433 under the 1933 Act (an "Issuer Free Writing Prospectus"), or
that would otherwise constitute a "free writing prospectus," as defined in Rule
405 under the 1933 Act, required to be filed with the SEC. The Company
represents that any Issuer Free Writing Prospectus will not include any
information that conflicts with the information contained in the Shelf
Registration Statement or Prospectus and that any Issuer Free Writing
Prospectus, when taken together with the information in the Shelf Registration
Statement and the Prospectus, will not include any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.

                  The Company will not permit any securities other than
Registrable Securities to be included in the Shelf Registration Statement. The
Company agrees to supplement or amend the Shelf Registration Statement if
required by the rules, regulations or instructions applicable to the
registration form used by the Company if required by the 1933 Act, or to the
extent the Company does not reasonably object, as reasonably requested in
writing by any Holder with respect to information relating to such Holder, and
to furnish to the Holders of Registrable Securities that are covered under such
Shelf Registration Statement copies of any such supplement or amendment promptly
after its being used or filed with the SEC in such amounts as they may
reasonably request.

                  2.2 Expenses. The Company shall pay all Registration Expenses
in connection with the registration pursuant to Section 2.1. Each Holder shall
pay all underwriting discounts and commissions and transfer taxes, if any,
relating to the sale or disposition of such Holder's Registrable Securities
pursuant to the Shelf Registration Statement.

                  2.3 Effectiveness. (a) The Company will be deemed not to have
used its commercially reasonable efforts to cause the Shelf Registration
Statement to become, or to remain, effective during the requisite period
(subject to Section 2.5) if the Company voluntarily takes any action that would,
or voluntarily omits to take any action which omission would, result in any such
Shelf Registration Statement not being declared effective or in the Holders of
Registrable Securities covered thereby not being able to offer and sell such
Registrable Securities during that period as and to the extent contemplated
hereby, unless such action or omission is required by applicable law.

                                        7
<PAGE>

                  (b) A Shelf Registration Statement will not be deemed to have
become effective unless it has been declared effective by the SEC or has become
automatically effective under the 1933 Act; provided, however, that if, after it
has been declared or become effective, the offering of Registrable Securities
pursuant to a Shelf Registration Statement is interfered with by any stop order,
injunction or other order or requirement of the SEC or any other governmental
agency or court, such Shelf Registration Statement will be deemed not to have
become effective during the period of such interference, until the offering of
Registrable Securities pursuant to such Shelf Registration Statement may legally
resume.

                  2.4 Interest. In the event that (a) a Shelf Registration
Statement is not filed with the SEC on or before the 90th calendar day following
the Closing Date, (b) a Shelf Registration Statement is not declared effective
or otherwise becomes effective on or prior to the 180th calendar day following
the making of such filing, (c) after effectiveness, subject to Section 2.5, the
Shelf Registration Statement ceases to be effective or fails to be usable by the
Holders without being succeeded within seven business days by a post-effective
amendment or a report filed with the SEC pursuant to the 1934 Act that
immediately cures the failure to be effective or usable, or (d) the Prospectus
is unusable by the Holders for any reason, and the Suspension Period (as defined
in Section 2.5 hereof) exceeds the number of days set forth in Section 2.5 (each
such event being a "Registration Default"), additional interest ("Additional
Interest") will accrue at a rate per annum of one-quarter of one percent (0.25%)
of the principal amount of the Securities for the first 90 day period from the
day following the Registration Default, and thereafter at a rate per annum of
one-half of one percent (0.50%) of the principal amount of the Securities;
provided that in no event shall Additional Interest accrue at a rate per annum
exceeding one half of one percent (0.50%) of the issue price of the Securities;
provided further that no Additional Interest shall accrue after the second
anniversary of the Closing Date. Upon the cure of all Registration Defaults then
continuing, the accrual of Additional Interest will automatically cease and the
interest rate borne by the Securities will revert to the original interest rate
at such time. Additional Interest shall be computed based on the actual number
of days elapsed in each 90-day period in which the Shelf Registration Statement
or the Prospectus is not effective or is unusable. Holders who have converted
Securities into Common Stock will not be entitled to receive any Additional
Interest with respect to such Common Stock or the issue price of the Securities
converted.

                  The Company shall notify the Trustee within five business days
after each and every date on which an event occurs in respect of which
Additional Interest is required to be paid. Additional Interest shall be paid by
depositing with the Trustee, in trust, for the benefit of the Holders of
Registrable Securities, on or before the applicable semiannual interest payment
date, in immediately available funds in sums sufficient to pay the Additional
Interest then due. The Additional Interest due shall be payable in arrears on
each interest payment date to the record Holder of Registrable Securities
entitled to receive the interest payment to be paid on such date as set forth in
the Indenture. Each obligation to pay Additional Interest shall be deemed to
accrue from and including the day following the Registration Default to but
excluding the day on which the Registration Default is cured.

                  A Registration Default under clause (a) above shall be cured
on the date that the Registration Statement is filed with the SEC. A
Registration Default under clause (b) above shall be cured on the date that the
Shelf Registration Statement is declared effective by the SEC

                                        8
<PAGE>

or deemed to become automatically effective under the 1933 Act. A Registration
Default under clauses (c) or (d) above shall be cured on the date an amended
Shelf Registration Statement is declared effective by the SEC or deemed to
become automatically effective under the 1933 Act, or the Company otherwise
declares the Shelf Registration Statement and the Prospectus useable, as
applicable. The Company will have no liabilities for monetary damages other than
the Additional Interest with respect to any Registration Default.

                  2.5 Suspension. Notwithstanding any other provision hereof,
the Company may suspend the use of any Prospectus, without incurring or accruing
any obligation to pay Additional Interest pursuant to Section 2.4 hereof or
being deemed in violation of any other provision hereof, for a period or periods
(each, a "Suspension Period") not to exceed an aggregate 45 calendar days in any
three-month period, or an aggregate of 120 calendar days in any twelve-month
period, if management of the Company shall have determined in good faith that
because of valid business reasons (not including avoidance of the Company's
obligations hereunder), including without limitation proposed or pending
corporate developments and similar events or because of filings with the SEC, it
is in the best interests of the Company to suspend such use, and prior to
suspending such use the Company provides the Holders with written notice of such
suspension, which notice need not specify the nature of the event giving rise to
such suspension. Each Holder shall keep confidential any communications received
by it from the Company regarding the suspension of the use of the Prospectus,
except as required by applicable law.

                  3. Registration Procedures.

                  In connection with the obligations of the Company with respect
to the Shelf Registration, the Company shall, subject to the rights of the
Company to invoke and maintain a Suspension Period in accordance with Section
2.5 without being in violation of any of the provisions hereunder:

                  (a) prepare and file with the SEC a Shelf Registration
Statement, within the relevant time period specified in Section 2, on the
appropriate form under the 1933 Act, which form (i) shall be selected by the
Company, (ii) shall be available for the sale of the Registrable Securities by
the selling Holders thereof, (iii) shall comply as to form in all material
respects with the requirements of the applicable form and include or incorporate
by reference all financial statements required by the SEC to be filed therewith
or incorporated by reference therein, and (iv) shall comply in all respects with
the applicable requirements of Regulation S-T under the 1933 Act, if any, and
use commercially reasonable efforts to cause such Shelf Registration Statement
to become effective and remain effective in accordance with Section 2 hereof;

                  (b) prepare and file with the SEC such amendments and
post-effective amendments to the Shelf Registration Statement as may be
necessary under applicable law to keep the Shelf Registration Statement
effective for the Effectiveness Period, subject to Section 2.5; and cause each
Prospectus to be supplemented by any required prospectus supplement, and as so
supplemented to be filed pursuant to Rule 424 (or any similar provision then in
force) under the 1933 Act and comply during the Effectiveness Period with the
provisions of the 1933 Act, the 1934 Act and the rules and regulations
thereunder required to enable the disposition of

                                        9
<PAGE>

all Registrable Securities covered by the Shelf Registration Statement in
accordance with the intended method or methods of distribution by the selling
Holders thereof;

                  (c) (i) notify each Holder of Registrable Securities of the
filing of a Shelf Registration Statement with respect to the Registrable
Securities; (ii) furnish to each Holder of Registrable Securities that has
provided the information required by Section 2.1(d) and to each underwriter of
an underwritten offering of Registrable Securities, if any, without charge,
electronic copies of each Prospectus, including each preliminary Prospectus, and
any amendment or supplement thereto and such other documents as such Holder or
underwriter may reasonably request, including financial statements and schedules
and, if the Holder so requests, all exhibits in order to facilitate the
unrestricted sale or other disposition of the Registrable Securities; and (iii)
subject to Section 2.5 hereof and to any notice by the Company in accordance
with Section 3(e) hereof of the existence of any fact of the kind described in
Sections 3(e)(ii), (iii), (iv), (v) and (vi) hereof, hereby consent to the use
of the Prospectus or any amendment or supplement thereto by each of the selling
Holders of Registrable Securities that has provided the information required by
Section 2.1(d) in connection with the offering and sale of the Registrable
Securities;

                  (d) use commercially reasonable efforts to register or qualify
the Registrable Securities for exemptions under all applicable state securities
or "blue sky" laws of such jurisdictions as any Holder of Registrable Securities
covered by a Shelf Registration Statement and each underwriter of an
underwritten offering of Registrable Securities shall reasonably request, and do
any and all other acts and things which may be reasonably necessary or advisable
to enable each such Holder and underwriter to consummate the disposition in each
such jurisdiction of such Registrable Securities owned by such Holder; provided,
however, that the Company shall not be required to (i) qualify as a foreign
corporation or as a dealer in securities in any jurisdiction where it would not
otherwise be required to qualify but for this Section 3(d), or (ii) take any
action which would subject it to general service of process or taxation in any
such jurisdiction where it is not then so subject;

                  (e) notify promptly each Holder of Registrable Securities
under a Shelf Registration Statement that has provided the information required
by Section 2.1(d) and, if requested by such Holder, confirm such advice in
writing promptly (i) when a Shelf Registration Statement has become effective
and when any post-effective amendments thereto have become effective, (ii) of
any request by the SEC or any state securities authority for post-effective
amendments and supplements to a Shelf Registration Statement and Prospectus or
for additional information relating thereto after the Shelf Registration
Statement has become effective, (iii) of the issuance by the SEC or any state
securities authority of any stop order suspending the effectiveness of a Shelf
Registration Statement or the initiation of any proceedings for that purpose,
(iv) of the happening of any event or the discovery of any facts during the
period a Shelf Registration Statement is effective which makes any statement
made in such Shelf Registration Statement or the related Prospectus untrue in
any material respect or which requires the making of any changes in such Shelf
Registration Statement or Prospectus in order to make the statements therein (in
the case of the Prospectus in light of the circumstances under which they were
made) not misleading, (v) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Registrable Securities for
sale in any jurisdiction or the initiation or threatening of any proceeding for
such purpose and (vi) of any determination by the Company that a post-effective
amendment to such Shelf Registration

                                       10
<PAGE>

Statement would be appropriate, other than a post-effective amendment solely to
add selling Holders;

                  (f) furnish to Holders' Counsel on behalf of the Holders of
Registrable Securities (i) copies of any comment letters received from the SEC
with respect to a Shelf Registration Statement, and, if requested, with respect
to any documents incorporated therein and (ii) any other request by the SEC or
any state securities authority for amendments or supplements to a Shelf
Registration Statement and Prospectus or for additional information with respect
to the Shelf Registration Statement and Prospectus;

                  (g) use commercially reasonable efforts to obtain the
withdrawal of any order suspending the effectiveness of a Shelf Registration
Statement at the earliest possible moment and provide prompt notice to each
Holder of the withdrawal of such order;

                  (h) furnish to each Holder of Registrable Securities that has
provided the information required by Section 2.1(d), and each underwriter, if
any, without charge, at least one conformed copy of each Shelf Registration
Statement and any post-effective amendment thereto, including financial
statements and schedules (without documents incorporated therein by reference
and all exhibits thereto, unless requested);

                  (i) if electronic global certificates for the Registrable
Securities are not then available, cooperate with the selling Holders of
Registrable Securities to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold and not bearing any
restrictive legends (other than as required by applicable law); and enable such
Registrable Securities to be in such denominations (consistent with the
provisions of the Indenture) and registered in such names as the selling Holders
or the underwriters, if any, may reasonably request at least three business days
prior to the closing of any sale of Registrable Securities;

                  (j) upon the occurrence of any event or the discovery of any
facts, each as contemplated by Sections 3(e)(ii), (iii), (iv), (v) and (vi)
hereof, as promptly as practicable after the occurrence of such an event, use
commercially reasonable efforts to prepare a supplement or post-effective
amendment to the Shelf Registration Statement or the related Prospectus or any
document incorporated therein by reference or file any other required document
so that, as thereafter delivered to the purchasers of the Registrable
Securities, such Prospectus will not contain at the time of such delivery any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading or will remain so qualified. At such time as such
public disclosure is otherwise made or the Company determines that such
disclosure is not necessary, in each case to correct any misstatement of a
material fact or to include any omitted material fact, the Company agrees
promptly to notify each Holder of Registrable Securities covered by such Shelf
Registration Statement of such determination and to furnish each Holder such
number of copies of the Prospectus as amended or supplemented, as such Holder
may reasonably request;

                  (k) no less than three business days after the filing of any
Shelf Registration Statement, any Prospectus, any amendment to a Shelf
Registration Statement or

                                       11
<PAGE>

amendment or supplement to a Prospectus (other than amendments and supplements
that do nothing more than name Holders and provide information with respect
thereto), provide copies of such document to the Trustee on behalf of such
Holders, and make representatives of the Company, as shall be reasonably
requested by the Holders' Counsel, available for discussion of such document;

                  (l) obtain CUSIP numbers for all Registrable Securities not
later than the effective date of the Shelf Registration Statement and provide
the Trustee with printed certificates for the Registrable Securities in a form
eligible for deposit with the Depositary;

                  (m) (i) cause the Indenture to be qualified under the 1939 Act
in connection with the registration of the Registrable Securities, (ii)
cooperate with the Trustee and the Holders to effect such changes to the
Indenture as may be required for the Indenture to be so qualified in accordance
with the terms of the 1939 Act, and (iii) execute, and use commercially
reasonable efforts to cause the Trustee to execute, all documents as may be
required to effect such changes, and all other forms and documents required to
be filed with the SEC to enable the Indenture to be so qualified in a timely
manner;

                  (n) subject to the last paragraph of this Section 3(n), enter
into such customary agreements (including, if requested, an underwriting
agreement in customary form) and take all other customary and appropriate
actions, if any, as the Majority Holders shall reasonably request in writing in
order to expedite or facilitate the disposition of such Registrable Securities,
including, but not limited to:

                           (i) obtain opinions of counsel to the Company and
                  updates thereof addressed to each selling Holder and the
                  underwriters, if any, covering the matters set forth in the
                  opinions of such counsel delivered at the Closing Date as are
                  customarily covered in legal opinions in connection with
                  underwritten offering of securities;

                           (ii) obtain "comfort" letters and updates thereof
                  from the Company's independent certified public accountants
                  (and, if necessary, any other independent certified public
                  accountants of the subsidiary of the Company or of any
                  business acquired by the Company for which financial
                  statements are, or are required to be, included in the Shelf
                  Registration Statement) addressed to the underwriters, if any,
                  and use reasonable efforts to have such letter addressed to
                  the selling Holders of Registrable Securities (to the extent
                  consistent with Statement on Auditing Standards No. 72 of the
                  American Institute of Certified Public Accounts);

                           (iii) if an underwriting agreement is entered into,
                  cause the same to set forth indemnification provisions and
                  procedures substantially equivalent to the indemnification
                  provisions and procedures set forth in Section 4 hereof with
                  respect to the underwriters and all other parties to be
                  indemnified pursuant to said Section or, at the request of any
                  underwriters, in the form customarily provided to such
                  underwriters in similar types of transactions; and

                                       12
<PAGE>

                           (iv) deliver such documents and certificates as may
                  be reasonably requested and as are customarily delivered in
                  similar offerings to the Holders of a majority in principal
                  amount of the Registrable Securities being sold and the
                  managing underwriters, if any.

The above shall be done only in connection with any underwritten offering of not
less than one half of the Registrable Securities using such Shelf Registration
Statement pursuant to an underwriting or similar agreement as and to the extent
required thereunder, and as reasonably requested by the Majority Holders
thereto. Anything herein to the contrary notwithstanding, the Company will not
be required to pay the costs and expenses of, or to participate in the marketing
or "road show" presentations of, more than one underwritten offering of
Registrable Securities every 12 months commencing on the Closing Date. The
Company will not be required to pay the costs and expenses of, or to participate
in the marketing or "road show" presentations of, an underwritten offering of
Registrable Securities unless requested by the Majority Holders;

                  (o) if reasonably requested in connection with a disposition
of Registrable Securities, make available for inspection during business hours
by representatives of the Holders of the Registrable Securities, any
underwriters participating in any disposition pursuant to a Shelf Registration
Statement and any counsel or accountant retained by any of the foregoing, all
appropriate financial and other records, pertinent corporate documents and
properties of the Company reasonably requested in writing by any such persons,
and cause the respective officers, directors, employees, and any other agents of
the Company to supply all information reasonably requested by any such
representative, underwriter, special counsel or accountant in connection with a
Shelf Registration Statement, and make such representatives of the Company
available for discussion of such documents as shall be reasonably requested by
Merrill Lynch, in each case as is customary for "due diligence" investigations;
provided that, to the extent the Company, in its reasonable discretion, agrees
to disclose material non-public information, such persons shall first agree in
writing with the Company that any such non-public information shall be kept
confidential by such persons and shall be used solely for the purposes of
exercising rights under this Agreement and such person shall not engage in
trading any securities of the Company until such material non-public information
becomes properly publicly available, unless (i) disclosure of such information
is required by court or administrative order or is necessary to respond to
inquiries of regulatory authorities, (ii) disclosure of such information is
required by law (including any disclosure requirements pursuant to federal
securities laws in connection with the filing of any Shelf Registration
Statement or the use of any Prospectus referred to in this Agreement upon a
customary opinion of counsel for such persons delivered and reasonably
satisfactory to the Company), (iii) such information becomes generally available
to the public other than as a result of a disclosure or failure to safeguard by
any such person, (iv) such information becomes available to any such person from
a source other than the Company and such source is not bound by a
confidentiality agreement, or (v) such non-public information ceases to be
material; provided further, that, the foregoing inspection and information
gathering shall, to the greatest extent possible, be coordinated on behalf of
all the Holders and the other parties entitled thereto by Holders' Counsel;

                  (p) if requested in writing by any selling Holder of
Registrable Securities that has provided the information required by Section
2.1(d), a reasonable time prior to filing the Shelf Registration Statement, any
Prospectus forming a part thereof, any amendment to

                                       13
<PAGE>

the Shelf Registration Statement or amendment or supplement to such Prospectus
(other than amendments and supplements that do nothing more than name Holders
and provide information with respect thereto), (i) provide copies of such
document to the Holders of Registrable Securities that have provided the
information required by Section 2.1(d), to Holders' Counsel and to the
underwriter or underwriters of an underwritten offering of Registrable
Securities, if any, (ii) make such changes in any such document prior to the
filing thereof as Holders' Counsel or the underwriter or underwriters reasonably
agree should be included therein and provide to the Company in writing for
inclusion therein within three business days of delivery of such copies, (iii)
if requested by any selling Holder of Registrable Securities that has provided
the information required by Section 2.1(d), not file any such document in a form
(A) to which the Majority Holders, Holders' Counsel or any underwriter shall not
have previously been advised and furnished a copy of or (B) to which the
Majority Holders, Holders' Counsel or any underwriter shall reasonably object
within three business days of delivery of such copies, and (iv) make the
representatives of the Company available for discussion of such document as
shall be reasonably requested in writing by the Holders of Registrable
Securities, Holders' Counsel or any underwriter; provided, however, that the
foregoing discussion shall be coordinated on behalf of the parties entitled
thereto by the Holders' Counsel;

                  (q) if requested by any selling Holder or the underwriters, if
any, incorporate in the Shelf Registration Statement or Prospectus, pursuant to
a supplement or post-effective amendment if necessary, such information as such
selling Holder or underwriter, if any, may reasonable request in writing to have
included therein with respect to the name or names of such selling Holder, the
number of shares of Common Stock or principal amount of Securities owned by such
Holder, the plan of distribution of the Registrable Securities (as required by
Item 508 of Regulation S-K), the principal amount of Securities or number of
shares of Common Stock being sold, the purchase price being paid therefor, and
any other terms of the offering of the Registrable Securities to be sold in such
offering;

                  (r) use commercially reasonable efforts to cause all
Registrable Securities to be listed on any securities exchange or inter-dealer
quotation system on which similar debt securities issued by the Company are then
listed if requested by the Majority Holders, or if requested by the underwriter
or underwriters of an underwritten offering of Registrable Securities, if any;

                  (s) [intentionally deleted];

                  (t) otherwise comply with all applicable rules and regulations
of the SEC and make available to its security holders, as soon as reasonably
practicable, an earnings statement covering at least 12 months which shall
satisfy the provisions of Section 11(a) of the 1933 Act and Rule 158 thereunder;
and

                  (u) cooperate and assist in any filings required to be made
with the NASD and in the performance of any due diligence investigation by any
underwriter and its counsel (including any "qualified independent underwriter"
that is required to be retained in accordance with the rules and regulations of
the NASD).

                                       14
<PAGE>

                  Without limiting the provisions of Section 2.1(d), the Company
may (as a condition to such Holder's participation in the Shelf Registration)
require each Holder of Registrable Securities to furnish to the Company such
information regarding the Holder and the proposed distribution by such Holder of
such Registrable Securities as the Company may from time to time reasonably
request in writing.

                  Each Holder agrees that, upon receipt of any notice from the
Company of the happening of any event or the discovery of any facts, each of the
kind described in Section 3(e)(ii), (iii), (iv), (v) or (vi) hereof, such Holder
will forthwith discontinue disposition of Registrable Securities pursuant to the
Prospectus included in the Shelf Registration Statement until such Holder's
receipt of the copies of the supplemented or amended Prospectus contemplated by
Section 3(j) hereof or written notice from the Company that the Shelf
Registration Statement is again effective and no amendment or supplement is
needed, and, if so directed by the Company, such Holder will deliver to the
Company (at its expense) all copies in such Holder's possession, other than
permanent file copies then in such Holder's possession, of the Prospectus
covering such Registrable Securities current at the time of receipt of such
notice.

                  If any of the Registrable Securities covered by any Shelf
Registration Statement are to be sold in an underwritten offering, the
underwriter or underwriters and manager or managers that will manage such
offering will be selected by the Majority Holders of such Registrable Securities
included in such offering and shall be acceptable to the Company. No Holder of
Registrable Securities may participate in any underwritten registration
hereunder unless such Holder (a) agrees to sell such Holder's Registrable
Securities on the basis provided in any underwriting arrangements approved by
the persons entitled hereunder to approve such arrangements and (b) completes
and executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents required under the terms of such underwriting
arrangements.

                  4. Indemnification; Contribution.

                  (a) The Company agrees to indemnify and hold harmless Merrill
Lynch, each Holder, each Person who participates as an underwriter, if any (any
such Person being an "Underwriter") and each Person, if any, who controls any
such Holder or Underwriter within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act as follows:

                           (i) against any and all loss, liability, claim,
         damage and expense whatsoever, as incurred, arising out of any untrue
         statement or alleged untrue statement of a material fact contained in
         any Shelf Registration Statement (or any amendment or supplement
         thereto) pursuant to which Registrable Securities were registered under
         the 1933 Act, including all documents incorporated therein by
         reference, or the omission or alleged omission therefrom of a material
         fact required to be stated therein or necessary to make the statements
         therein not misleading, or arising out of any untrue statement or
         alleged untrue statement of a material fact contained in any Prospectus
         (or any amendment or supplement thereto) or any Issuer Free Writing
         Prospectus (or any amendment or supplement thereto) or the omission or
         alleged omission therefrom of a material fact necessary in order to
         make the statements therein, in the light of the circumstances under
         which they were made, not misleading;

                                       15
<PAGE>

                           (ii) against any and all loss, liability, claim,
         damage and expense whatsoever, as incurred, to the extent of the
         aggregate amount paid in settlement of any litigation, or any
         investigation or proceeding by any governmental agency or body,
         commenced or threatened, or of any claim whatsoever based upon any such
         untrue statement or omission, or any such alleged untrue statement or
         omission; provided that (subject to Section 4(d) below) any such
         settlement is effected with the written consent of the Company; and

                           (iii) against any and all expense whatsoever, as
         incurred (including the reasonable and documented fees and
         disbursements of counsel chosen by any indemnified party), reasonably
         incurred and documented in investigating, preparing or defending
         against any litigation, or any investigation or proceeding by any
         governmental agency or body, commenced or threatened, or any claim
         whatsoever based upon any such untrue statement or omission, or any
         such alleged untrue statement or omission, to the extent that any such
         expense is not paid under subparagraph (i) or (ii) above;

provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of (A) any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by or
on behalf of Merrill Lynch, any Holder or Underwriter, if any, expressly for use
in a Shelf Registration Statement (or any amendment thereto), any Prospectus (or
any amendment or supplement thereto) or any Issuer Free Writing Prospectus (or
any amendment or supplement thereto), (B) use of a Prospectus during a period
when use of such Prospectus has been validly suspended pursuant to Section 2.5
hereof, provided that such Holder has received prior notice of such suspension,
(C) failure of such Holder to deliver a prospectus, as then amended or
supplemented, as required by applicable laws, provided that the Company shall
have delivered to such Holder such Prospectus, as then amended or supplemented,
or (D) the gross negligence, willful misconduct or bad faith of any such party
seeking indemnification.

                  (b) Each Holder, severally, but not jointly, agrees to
indemnify and hold harmless the Company, Merrill Lynch, each Underwriter, if
any, and the other selling Holders, and each of their respective directors and
officers, and each Person, if any, who controls the Company, Merrill Lynch, any
Underwriter or any other selling Holder within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act, against any and all loss, liability,
claim, damage and expense described in the indemnity contained in Section 4(a)
hereof, as incurred and documented, but only with respect to untrue statements
or omissions, or alleged untrue statements or omissions, made in the Shelf
Registration Statement (or any amendment thereto) or any Prospectus included
therein (or any amendment or supplement thereto) or any Issuer Free Writing
Prospectus in reliance upon and in conformity with written information with
respect to such Holder furnished to the Company by or on behalf of such Holder
expressly for use in the Shelf Registration Statement (or any amendment thereto)
or such Prospectus (or any amendment or supplement thereto) or any Issuer Free
Writing Prospectus; provided, however, that no such Holder shall be liable for
any claims hereunder in excess of the amount of net proceeds received by such
Holder from the sale of Registrable Securities pursuant to such Shelf
Registration Statement.

                                       16
<PAGE>

                  (c) Each indemnified party shall give notice as promptly as
reasonably practicable to each indemnifying party of any action or proceeding
commenced against it in respect of which indemnity may be sought hereunder, but
failure to so notify an indemnifying party shall not relieve such indemnifying
party from any liability hereunder to the extent it is not materially prejudiced
as a result thereof and in any event shall not relieve it from any liability
which it may have otherwise than on account of this indemnity agreement. In case
any such action, claim, suit, investigation or proceeding shall be brought
against any indemnified party and it shall notify the Company of the
commencement thereof, the Company shall be entitled to participate therein and
to assume the defense thereof; provided, however, that in the event that any
such action, claim, suit, investigation or proceeding includes both an
indemnified party and the Company, and such indemnified party reasonably
concludes that there may be legal defenses available to it or other indemnified
parties that are different from or in addition to those available to the
Company, or if the Company fails to assume the defense of the action, claim,
suit, investigation or proceeding, in either case in a timely manner, then such
indemnified party may employ separate counsel to represent or defend it in any
such action, claim, suit, investigation or proceeding and the Company will pay
the reasonable fees and disbursements of such counsel; provided, further, that
the Company will not be required to pay the fees and disbursements of more than
one counsel for all indemnified parties (and one separate local counsel). In any
action, claim, suit, investigation or proceeding the defense of which the
Company assumes, the indemnified party will have the right to participate in
such litigation and to retain its own counsel at such indemnified party's own
expense. No indemnifying party shall (i) without the prior written consent of
the indemnified parties (which consent shall not be unreasonably withheld),
settle or compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 4 (whether or
not the indemnified parties are actual or potential parties thereto), unless
such settlement, compromise or consent (A) includes an unconditional release of
each indemnified party from all liability arising out of such litigation,
investigation, proceeding or claim and (B) does not include a statement as to or
an admission of fault, culpability or a failure to act by or on behalf of any
indemnified party or (ii) be liable for any settlement of any such action
effected without its prior written consent (which consent shall not be
unreasonably withheld).

                  (d) Notwithstanding clause (ii) of Section 4(c), if at any
time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel, such
indemnifying party agrees that it shall be liable for any settlement of the
nature contemplated by Section 4(a)(ii) effected without its written consent if
(i) such settlement is entered into more than 45 days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying party shall
have received notice of the terms of such settlement at least 30 days prior to
such settlement being entered into and (iii) such indemnifying party shall not
have reimbursed such indemnified party in accordance with such request prior to
the date of such settlement.

                  (e) If the indemnification provided for in this Section 4 is
for any reason unavailable to or insufficient to hold harmless an indemnified
party in respect of any losses, liabilities, claims, damages or expenses
referred to therein, then each indemnifying party shall contribute to the
aggregate amount of such losses, liabilities, claims, damages and expenses

                                       17
<PAGE>

incurred by such indemnified party, as incurred, in such proportion as is
appropriate to reflect the relative fault of the Company on the one hand and the
Holders and Merrill Lynch on the other hand in connection with the statements or
omissions which resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations.

                  The relative fault of the Company on the one hand and the
Holders and Merrill Lynch on the other hand shall be determined by reference to,
among other things, whether any such untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by the Company, or by the Holders or Merrill Lynch and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission.

                  The Company, the Holders and Merrill Lynch agree that it would
not be just and equitable if contribution pursuant to this Section 4 were
determined by pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to above in this
Section 4. The aggregate amount of losses, liabilities, claims, damages and
expenses incurred and documented by an indemnified party and referred to above
in this Section 4 shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in investigating, preparing or
defending against any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever
based upon any such untrue or alleged untrue statement or omission or alleged
omission.

                  Notwithstanding the provisions of this Section 4, Merrill
Lynch shall not be required to contribute any amount in excess of the amount by
which the total price at which the Securities sold by it were offered exceeds
the amount of any damages which Merrill Lynch has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission.

                  No Person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation.

                  For purposes of this Section 4, each Person, if any, who
controls Merrill Lynch or any Holder within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act shall have the same rights to
contribution as Merrill Lynch or the Holder, and each director of the Company,
and each Person, if any, who controls the Company within the meaning of Section
15 of the 1933 Act or Section 20 of the 1934 Act shall have the same rights to
contribution as the Company. The obligations of the Company, Merrill Lynch and
the Holders pursuant to this Section 4 shall be in addition to any liability
that such party may otherwise have.

                  5. Miscellaneous.

                  5.1 Rule 144 and Rule 144A. During the Effectiveness Period,
for so long as the Company is subject to the reporting requirements of Section
13 or 15(d) of the 1934 Act, the Company covenants that it will file the reports
required to be filed by it under Section 13 of 15(d) of the 1934 Act and the
rules and regulations adopted by the SEC thereunder. If during the

                                       18
<PAGE>

Effectiveness Period the Company ceases to be so required to file such reports,
the Company covenants that it will upon the request of any Holder of Registrable
Securities (a) make publicly available such information as is necessary to
permit sales pursuant to Rule 144 under the 1933 Act, (b) deliver such
information to a prospective purchaser as is necessary to permit sales pursuant
to Rule 144A under the 1933 Act and it will take such further action as any
Holder of Registrable Securities may reasonably request for such purpose, and
(c) take such further action that is reasonable in the circumstances, in each
case, to the extent required from time to time to enable such Holder to sell its
Registrable Securities without registration under the 1933 Act within the
limitation of the exemptions provided by (i) Rule 144 under the 1933 Act, as
such Rule may be amended from time to time, (ii) Rule 144A under the 1933 Act,
as such Rule may be amended from time to time, or (iii) any similar rules or
regulations hereafter adopted by the SEC. During the Effectiveness Period, upon
the request of any Holder of Registrable Securities, the Company will deliver to
such Holder a written statement as to whether it has complied with such
requirements.

                  5.2 No Inconsistent Agreements. The Company has not entered
into and the Company shall not, after the date of this Agreement, enter into any
agreement which is inconsistent in any material respect with the rights granted
to the Holders of Registrable Securities in this Agreement or otherwise
conflicts with the provisions hereof. The rights granted to the Holders
hereunder do not and will not for the term of this Agreement in any way conflict
with the rights granted to the holders of any of the Company's other issued and
outstanding securities under any such agreements.

                  5.3 No Adverse Actions Affecting Registration Rights. Subject
to the rights of the Company to invoke and maintain a Suspension Period, the
Company shall not, directly or indirectly, intentionally take any action with
respect to the Registrable Securities as a class that would adversely affect the
ability of the Holders of Registrable Securities to include such Registrable
Securities in a registration undertaken pursuant to this Agreement.

                  5.4 Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless the Company has obtained the written consent of Holders
of at least a majority in aggregate principal amount of the outstanding
Registrable Securities (with Holders of Securities deemed to be the Holders, for
purposes of this Section 5.4, of the number of outstanding shares of Common
Stock into which such Registrable Securities are or could be convertible on the
date that consent would be required) affected by such amendment, modification,
supplement, waiver or departure. Notwithstanding the foregoing, this Agreement
may be amended by a written agreement between the Company and Merrill Lynch,
without the consent of the Holders of the Registrable Securities, in order to
cure any ambiguity or to correct or supplement any provision contained herein,
provided that no such amendment shall adversely affect the interest of the
Holders of Registrable Securities. Each Holder of Registrable Securities
outstanding at the time of any amendment, modification, waiver or consent
pursuant to this Section 5.4, shall be bound by such amendment, modification,
waiver or consent, whether or not any notice or writing indicating such
amendment, modification, waiver or consent is delivered to such Holder.

                                       19
<PAGE>

                  5.5 Notices. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand delivery, registered
first-class mail, facsimile, or any courier guaranteeing overnight delivery (a)
if to a Holder, at the most current address given by such Holder to the Company
in a Questionnaire or by means of a notice given in accordance with the
provisions of this Section 5.5, which address initially is the address set forth
in the Purchase Agreement with respect to Merrill Lynch; and (b) if to the
Company, initially at the Company's address set forth in the Purchase Agreement,
and thereafter at such other address of which notice is given in accordance with
the provisions of this Section 5.5.

                  All such notices and communications shall be deemed to have
been duly given: at the time delivered by hand, if personally delivered; two
business days after being deposited in the mail, postage prepaid, if mailed;
when receipt is acknowledged, if sent by facsimile; and on the next business day
if timely delivered to an overnight courier.

                  Copies of all such notices, demands, or other communications
shall be concurrently delivered by the person giving the same to the Trustee
under the Indenture, at the address specified in such Indenture.

                  5.6 Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors, assigns and transferees of each
of the parties, including, without limitation and without the need for an
express assignment, subsequent Holders; provided that nothing herein shall be
deemed to permit any assignment, transfer or other disposition of Registrable
Securities in violation of the terms of the Purchase Agreement or the Indenture.
If any transferee of any Holder shall acquire Registrable Securities, in any
manner, whether by operation of law or otherwise, such Registrable Securities
shall be held subject to all of the terms of this Agreement, and by taking and
holding such Registrable Securities such person shall be conclusively deemed to
have agreed to be bound by and to perform all of the terms and provisions of
this Agreement, including the restrictions on resale set forth in this Agreement
and, if applicable, the Purchase Agreement, and such person shall be entitled to
receive the benefits hereof.

                  5.7 Third Party Beneficiaries. Merrill Lynch (even if Merrill
Lynch is not a Holder of Registrable Securities) shall be a third party
beneficiary to the agreements made hereunder between the Company, on the one
hand, and the Holders, on the other hand, and shall have the right to enforce
such agreements directly to the extent it deems such enforcement necessary or
advisable to protect its rights or the rights of Holders hereunder. Each Holder
of Registrable Securities shall be a third party beneficiary to the agreements
made hereunder between the Company, on the one hand, and Merrill Lynch, on the
other hand, and shall have the right to enforce such agreements directly to the
extent it deems such enforcement necessary or advisable to protect its rights
hereunder.

                  5.8 Specific Enforcement. Without limiting the remedies
available to Merrill Lynch and the Holders, the Company acknowledges that any
failure by the Company to comply with its obligations under Section 2.1 hereof
may result in material irreparable injury to Merrill Lynch or the Holders for
which there is no adequate remedy at law, that it may not be possible to measure
damages for such injuries precisely and that, in the event of any such failure,
Merrill

                                       20
<PAGE>

Lynch or any Holder may seek such relief as may be required to specifically
enforce the Company's obligations under Section 2.1 hereof.

                  5.9 Counterparts. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.

                  5.10 Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.

                  5.11 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
THE PRINCIPLES OF CONFLICT OF LAWS THEREOF.

                  5.12 Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.

                  5.13 Entire Agreement. This Agreement is intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein with respect to the registration rights granted by the Company with
respect to the Registrable Securities. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.

                                       21
<PAGE>

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

                                          CHATTEM, INC.

                                          By /s/ Theodore K. Whitfield, Jr.
                                             -----------------------------------
                                             Name:  Theodore K. Whitfield, Jr.
                                             Title: Vice President, General
                                                    Counsel and Secretary

                          Registration Rights Agreement
                                 Signature Page
<PAGE>

Confirmed and accepted as of the date first above written:

MERRILL LYNCH, PIERCE,
FENNER & SMITH INCORPORATED

By: /s/ Andreas Matthaeus
    ----------------------------
    Name:  Andreas Matthaeus
    Title: Director

                          Registration Rights Agreement
                                 Signature Page

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