Document:

Exhibit 4.1

 

 

INCYTE CORPORATION

 

4.75% CONVERTIBLE SENIOR NOTES DUE 2015

 

 

INDENTURE

 

DATED AS OF SEPTEMBER 30, 2009

 

 

U.S. BANK NATIONAL ASSOCIATION,

 

AS TRUSTEE

 

 

TABLE OF CONTENTS

 

	
  ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE

  	
  1

  
	
   

  	
   

  
	
  Section 1.01.

  	
  Definitions

  	
  1

  
	
  Section 1.02.

  	
  Other
  Definitions

  	
  15

  
	
  Section 1.03.

  	
  Incorporation
  by Reference of Trust Indenture Act

  	
  16

  
	
  Section 1.04.

  	
  Rules of
  Construction

  	
  16

  
	
  Section 1.05.

  	
  Acts
  of Holders

  	
  16

  
	
   

  	
   

  	
   

  
	
  ARTICLE 2 THE SECURITIES

  	
  18

  
	
   

  	
   

  
	
  Section 2.01.

  	
  Form and
  Dating

  	
  18

  
	
  Section 2.02.

  	
  Execution
  and Authentication

  	
  19

  
	
  Section 2.03.

  	
  Registrar,
  Paying Agent and Conversion Agent

  	
  20

  
	
  Section 2.04.

  	
  Paying
  Agent to Hold Money and Securities in Trust

  	
  21

  
	
  Section 2.05.

  	
  Holder
  Lists

  	
  21

  
	
  Section 2.06.

  	
  Transfer
  and Exchange

  	
  21

  
	
  Section 2.07.

  	
  Replacement
  Securities

  	
  27

  
	
  Section 2.08.

  	
  Outstanding
  Securities

  	
  27

  
	
  Section 2.09.

  	
  Temporary
  Securities

  	
  28

  
	
  Section 2.10.

  	
  Cancellation

  	
  28

  
	
  Section 2.11.

  	
  Persons
  Deemed Owners

  	
  28

  
	
  Section 2.12.

  	
  Transfer
  of Securities

  	
  29

  
	
  Section 2.13.

  	
  CUSIP
  and ISIN Numbers

  	
  34

  
	
   

  	
   

  	
   

  
	
  ARTICLE 3 REDEMPTION AND
  REPURCHASES

  	
  35

  
	
   

  	
   

  
	
  Section 3.01.

  	
  No
  Company Right to Redeem

  	
  35

  
	
  Section 3.02.

  	
  Repurchase
  of Securities at Option of the Holder Upon a Fundamental Change

  	
  35

  
	
   

  	
   

  	
   

  
	
  ARTICLE 4 COVENANTS

  	
  39

  
	
   

  	
   

  
	
  Section 4.01.

  	
  Payment
  of Securities

  	
  39

  
	
  Section 4.02.

  	
  SEC
  and Other Reports

  	
  39

  
	
  Section 4.03.

  	
  Compliance
  Certificate

  	
  41

  
	
  Section 4.04.

  	
  Further
  Instruments and Acts

  	
  41

  

 

i

 

	
  Section 4.05.

  	
  Maintenance
  of Office or Agency

  	
  41

  
	
  Section 4.06.

  	
  Existence

  	
  42

  
	
  Section 4.07.

  	
  Maintenance
  of Properties

  	
  42

  
	
  Section 4.08.

  	
  Payment
  of Taxes and Other Claims

  	
  42

  
	
  Section 4.09.

  	
  Stay,
  Extension and Usury Laws

  	
  42

  
	
  Section 4.10.

  	
  Limitation on the Incurrence of Additional
  Indebtedness and on Certain Actions

  	
  43

  
	
  Section 4.11.

  	
  Pledge
  and Escrow Agreement

  	
  43

  
	
   

  	
   

  	
   

  
	
  ARTICLE 5 SUCCESSOR CORPORATION

  	
  44

  
	
   

  	
   

  
	
  Section 5.01.

  	
  Company
  May Consolidate, Etc., Only on Certain Terms

  	
  44

  
	
  Section 5.02.

  	
  Successor
  Substituted

  	
  44

  
	
   

  	
   

  	
   

  
	
  ARTICLE 6 DEFAULTS AND REMEDIES

  	
  44

  
	
   

  	
   

  
	
  Section 6.01.

  	
  Events
  of Default

  	
  44

  
	
  Section 6.02.

  	
  Acceleration
  of Maturity; Rescission and Annulment

  	
  46

  
	
  Section 6.03.

  	
  Collection
  of Indebtedness and Suits for Enforcement by Trustee

  	
  47

  
	
  Section 6.04.

  	
  Trustee
  May File Proofs of Claim

  	
  47

  
	
  Section 6.05.

  	
  Trustee
  May Enforce Claims Without Possession of Securities

  	
  48

  
	
  Section 6.06.

  	
  Application
  of Money Collected

  	
  48

  
	
  Section 6.07.

  	
  Limitation
  on Suits

  	
  48

  
	
  Section 6.08.

  	
  Unconditional
  Right of Holders to Receive Principal and Interest and to Convert

  	
  49

  
	
  Section 6.09.

  	
  Restoration
  of Rights and Remedies

  	
  49

  
	
  Section 6.10.

  	
  Rights
  and Remedies Cumulative

  	
  49

  
	
  Section 6.11.

  	
  Delay
  or Omission Not Waiver

  	
  50

  
	
  Section 6.12.

  	
  Control
  by Holders

  	
  50

  
	
  Section 6.13.

  	
  Waiver
  of Past Defaults and Rescission

  	
  50

  
	
  Section 6.14.

  	
  Undertaking
  for Costs

  	
  51

  
	
  Section 6.15.

  	
  Notice
  of Default

  	
  51

  
	
   

  	
   

  	
   

  
	
  ARTICLE 7 TRUSTEE

  	
  51

  
	
   

  	
   

  
	
  Section 7.01.

  	
  Duties
  of Trustee

  	
  51

  
	
  Section 7.02.

  	
  Rights
  of Trustee

  	
  52

  
	
  Section 7.03.

  	
  Individual
  Rights of Trustee

  	
  53

  

 

ii

 

	
  Section 7.04.

  	
  Trustee’s
  Disclaimer

  	
  53

  
	
  Section 7.05.

  	
  Reports
  by Trustee to Holders

  	
  54

  
	
  Section 7.06.

  	
  Compensation
  and Indemnity

  	
  54

  
	
  Section 7.07.

  	
  Replacement
  of Trustee

  	
  55

  
	
  Section 7.08.

  	
  Successor
  Trustee by Merger

  	
  56

  
	
  Section 7.09.

  	
  Eligibility;
  Disqualification

  	
  56

  
	
  Section 7.10.

  	
  Preferential
  Collection of Claims Against Company

  	
  56

  
	
  Section 7.11.

  	
  Trustee’s
  Application for Instructions from the Company

  	
  56

  
	
   

  	
   

  	
   

  
	
  ARTICLE 8 DISCHARGE OF INDENTURE

  	
  56

  
	
   

  	
   

  
	
  Section 8.01.

  	
  Discharge
  of Liability on Securities

  	
  56

  
	
  Section 8.02.

  	
  Repayment
  to the Company

  	
  57

  
	
   

  	
   

  	
   

  
	
  ARTICLE 9 AMENDMENTS

  	
  57

  
	
   

  	
   

  
	
  Section 9.01.

  	
  Without
  Consent of Holders

  	
  57

  
	
  Section 9.02.

  	
  With
  Consent of Holders

  	
  58

  
	
  Section 9.03.

  	
  Compliance
  with Trust Indenture Act

  	
  59

  
	
  Section 9.04.

  	
  Revocation
  and Effect of Consents, Waivers and Actions

  	
  59

  
	
  Section 9.05.

  	
  Notation
  on or Exchange of Securities

  	
  59

  
	
  Section 9.06.

  	
  Trustee
  to Sign Supplemental Indentures

  	
  59

  
	
  Section 9.07.

  	
  Effect
  of Supplemental Indentures

  	
  60

  
	
   

  	
   

  	
   

  
	
  ARTICLE 10 CONVERSIONS

  	
  60

  
	
   

  	
   

  
	
  Section 10.01.

  	
  Right
  to Convert

  	
  60

  
	
  Section 10.02.

  	
  Conversion
  Procedures

  	
  60

  
	
  Section 10.03.

  	
  Conversion
  into Shares of Series A Preferred Stock

  	
  61

  
	
  Section 10.04.

  	
  Settlement
  Upon Conversion

  	
  63

  
	
  Section 10.05.

  	
  Adjustment
  of Conversion Rate

  	
  65

  
	
  Section 10.06.

  	
  Adjustment
  to Conversion Rate Upon Conversion Upon Make-Whole Fundamental Changes

  	
  72

  
	
  Section 10.07.

  	
  Taxes
  on Conversion

  	
  74

  
	
  Section 10.08.

  	
  Shares
  to be Fully Paid; Compliance with Governmental Requirements

  	
  74

  
	
  Section 10.09.

  	
  Responsibility
  of Trustee

  	
  75

  
	
  Section 10.10.

  	
  Company
  Determination Final

  	
  75

  

 

iii

 

	
  ARTICLE 11 PAYMENT OF INTEREST

  	
  75

  
	
   

  	
   

  
	
  Section 11.01.

  	
  Payment
  of Interest

  	
  75

  
	
  Section 11.02.

  	
  Defaulted
  Interest

  	
  75

  
	
  Section 11.03.

  	
  Interest
  Rights Preserved

  	
  76

  
	
   

  	
   

  	
   

  
	
  ARTICLE 12 COLLATERAL SECURITY

  	
  76

  
	
   

  	
   

  
	
  Section 12.01.

  	
  Collateral
  Security

  	
  76

  
	
   

  	
   

  	
   

  
	
  ARTICLE 13 MISCELLANEOUS

  	
  78

  
	
   

  	
   

  
	
  Section 13.01.

  	
  Trust
  Indenture Act Controls

  	
  78

  
	
  Section 13.02.

  	
  Notices

  	
  78

  
	
  Section 13.03.

  	
  Communication
  by Holders with Other Holders

  	
  79

  
	
  Section 13.04.

  	
  Certificate
  and Opinion as to Conditions Precedent

  	
  79

  
	
  Section 13.05.

  	
  Statements
  Required in Certificate or Opinion

  	
  79

  
	
  Section 13.06.

  	
  Separability
  Clause

  	
  79

  
	
  Section 13.07.

  	
  Rules by
  Trustee, Paying Agent, Conversion Agent, and Registrar

  	
  80

  
	
  Section 13.08.

  	
  Legal
  Holidays

  	
  80

  
	
  Section 13.09.

  	
  Governing
  Law

  	
  80

  
	
  Section 13.10.

  	
  No
  Recourse Against Others

  	
  80

  
	
  Section 13.11.

  	
  Successors

  	
  80

  
	
  Section 13.12.

  	
  Multiple
  Originals

  	
  80

  
	
  Section 13.13.

  	
  Table
  of Contents; Headings

  	
  80

  
	
  Section 13.14.

  	
  Submission
  to Jurisdiction

  	
  80

  
	
   

  	
   

  	
   

  
	
  Exhibits

  	
   

  	
   

  
	
  A.

  	
  Form of
  Security

  	
   

  
	
  B.

  	
  Form of
  Transfer Certificate

  	
   

  
	
  C.

  	
  Restricted
  Stock Legend

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Schedule

  	
   

  	
   

  
	
  A.            

  	
  Make-Whole Table

  	
   

  

 

iv

 

INDENTURE dated as of September 30, 2009
between INCYTE CORPORATION, a Delaware corporation (“Company”)
and U.S. BANK NATIONAL ASSOCIATION, as trustee (“Trustee”).

 

Each party agrees as follows for the benefit of the
other party and for the equal and ratable benefit of the Holders of the Company’s
4.75% Senior Convertible Notes due 2015:

 

ARTICLE
1

DEFINITIONS AND INCORPORATION BY REFERENCE

 

Section 1.01.          Definitions.

 

“Additional Interest”
means all amounts, if any, payable pursuant to Section 4.02(b), Section 4.02(c) or
Section 6.02(b).

 

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

 

“Affiliate Free Trade Date”
means, with respect to any particular Affiliate Securities, the date that is
the later of (x) the Free Trade Date and (y) the date that is 90 days
after the Holder of such Affiliate Securities ceases to be an Affiliate of the
Company.

 

“Affiliate Security Legend”
means a legend in the form set forth in Exhibit A.

 

“Affiliate Restricted Stock
Legend” means a legend in the form set forth in Exhibit C.

 

“Affiliate Securities”
means any Securities acquired by any Affiliate of the Company.

 

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

 

“Base Underlying Shares”
means the number of shares of Common Stock issuable upon conversion of the
Securities, which number shall be 39,886,035 as of the Issue Date of the
initial Securities issued hereunder.  The
Base Underlying Shares will be adjusted from time to time to reflect (1) any
increase in the Base Underlying Shares due to the issuance of Option
Securities, if and when applicable, (2) any decrease in the Base
Underlying Shares upon the repurchase or conversion of any Securities, and (3) any
increase or decrease in the Conversion Rate pursuant to Section 10.05.

 

1

 

“Board of Directors”
means the board of directors of the Company or a committee of such board of
directors duly authorized to act for it hereunder.

 

“Board Resolution”
means a copy of one or more resolutions certified by the Secretary or an
Assistant Secretary of the Company to have been duly adopted by the Board of
Directors, or officers of the Company to which authority to act on behalf of
the Board of Directors has been delegated, and to be in full force and effect
on the date of such certification, and delivered to the Trustee.

 

“Business Day”
means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day
on which banking institutions in the City of New York are authorized or
obligated by law or executive order to close.

 

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

 

“Certificated Securities”
means securities that are in registered definitive form.

 

“Close of Business”
means 5:00 p.m. (New York City time).

 

“Common Authorized Shares”
means, at any time, the number of shares of Common Stock that, at such time,
the Company has reserved for issuance under the Securities, which number shall
be 20,200,000 as of Issue Date of the initial Securities issued hereunder.

 

“Common Equity”
of any corporation means the common stock, common equity interests, ordinary
shares or depositary shares or other certificates representing common equity
interests of such corporation.

 

“Common Stock”
means the shares of common stock, $.001 par value per share, of the Company
existing on the date of this Indenture or any other shares of Capital Stock of
the Company into which such shares of common stock shall be reclassified or
changed.

 

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

 

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

 

“Conversion Price”
means at any time the amount equal to $1,000 divided by the then applicable
Conversion Rate.

 

“Corporate Trust Office”
means the corporate trust office of the Trustee at which at any time the trust
created by this Indenture shall be administered, which office at the date
hereof is located at U.S. Bank National Association, 633 West Fifth Street,
24th Floor, Los Angeles, CA 90071, Attention: Corporate Trust Services (Incyte
Corporation — 4.75% Convertible Senior Notes due 2015) or such other address as
the Trustee may designate from time to time by notice to the Holders and the
Company, or the corporate trust office of any successor Trustee at which 

 

2

 

such trust shall be
administered (or such other address as a successor Trustee may designate from
time to time by notice to the Holders and the Company).

 

“Current Market Price”
means the average of the Last Reported Sale Prices of the Common Stock over the
ten (10) consecutive Trading-Day period ending on the Trading Day
immediately preceding the Ex-Date for the distribution requiring such
computation.

 

“Default” means
any event that is, or after the giving of notice or the passage of time or both
would be, an Event of Default.

 

“Disqualified Equity Interests” means,
as to any Person, any class of Equity Interests of such Person that, by its
terms (or by the terms of any security into which it is convertible or for
which it is exchangeable), or upon the happening of any event or the passage of
time, matures or is redeemable (other than upon a Fundamental Change), in whole
or in part, on or prior to the Maturity Date; provided,
however, that any class of Equity
Interests of such Person that, by its terms, authorizes such Person to satisfy
in full its obligations with respect to the payment of dividends or upon
maturity, redemption (pursuant to a sinking fund or otherwise) or repurchase
thereof or otherwise by the delivery of Equity Interests that are not
Disqualified Equity Interests (other than the payment of cash in lieu of
delivery of fractional shares of Equity Interests), and that is not convertible
into or exchangeable for Disqualified Equity Interests or Indebtedness, will
not be deemed to be Disqualified Equity Interests so long as such Person satisfies
its obligations with respect thereto solely by the delivery of Equity Interests
that are not Disqualified Equity Interests (other than the payment of cash in
lieu of delivery of fractional shares of Equity Interests); provided further, however, that
in no event shall rights issued pursuant to a stockholder rights plan or
preferred stock issuable upon exercise of such rights be deemed to be
Disqualified Equity Interests; and provided  further, however, that
if such Equity Interests are issued to any employee or to any plan for the
benefit of employees of such Person or any of the Subsidiaries of such Person
or by any such plan to such employees, such Equity Interests shall not
constitute Disqualified Equity Interests solely because they may be required to
be repurchased by such Person or any of the Subsidiaries of such Person in
order to satisfy applicable statutory or regulatory obligations or as a result
of such employee’s termination, death or disability.

 

“Effective Date”
means, with respect to any issuance or distribution on the Common Stock, the
first date on which shares of the Common Stock trade on the applicable exchange
or in the applicable market, regular way, reflecting such issuance or
distribution.

 

“Equity Interests”
means, as to any Person, (i) any and all shares or other equity interests
(including common stock, preferred stock, limited liability company interests
and partnership interests) in such Person and (ii) all rights to purchase,
warrants or options (whether or not currently exercisable), participations or
other equivalents of or interests in (however designated) such shares or other
interests in such Person; provided, however, that no Indebtedness under the Company’s 31/2% convertible senior notes due 2011, 31/2% convertible subordinated notes due 2011 or
$20,000,000 aggregate principal amount of convertible subordinated notes issued
to Pfizer Inc. or its Affiliates shall be deemed to be Equity Interests of
the Company prior to conversion thereof into such Equity Interests.

 

3

 

“Escrow Account”
means the escrow account established pursuant to the Pledge and Escrow
Agreement.

 

“Escrow Agent” means U.S. Bank National Association, in its capacity as escrow agent
under the Pledge and Escrow Agreement, and any permitted successors thereto.

 

“Ex-Date” means,
with respect to any dividend or distribution on the Common Stock, the first
date on which the shares of the Common Stock trade on the applicable exchange
or in the applicable market, regular way, without the right to receive such dividend
or distribution.

 

“Exchange Act”
means the Securities Exchange Act of 1934, as amended.

 

“Free Trade Date”
means the date that is one year after the last Issue Date of the Securities
(including of the Option Securities).

 

“Freely Tradable”
means, with respect to the Securities and the Common Stock issuable upon
conversion of the Securities, securities that are eligible to be sold by a
Person who has not been the Company’s Affiliate during the preceding three
months without any volume or manner of sale restrictions under the Securities
Act and that have been assigned an unrestricted CUSIP number.

 

“Full Underlying Shares”
means the maximum number of shares of Common Stock that may be issued upon
conversion of the Securities in connection with a Make-Whole Fundamental Change
as set forth in Section 10.06, which number shall be 50,872,080 as of the
Issue Date of the initial Securities issued hereunder  The Full Underlying Shares will be adjusted
from time to time to reflect (1) any increase in the Full Underlying
Shares due to the issuance of Option Securities, if and when applicable, (2) any
decrease in the Full Underlying Shares upon the repurchase or conversion of any
Securities, and (3) any increase or decrease in the Conversion Rate
pursuant to Section 10.05.

 

“Fundamental Change”
shall be deemed to have occurred at the time after the Securities are
originally issued that any of the following occurs:

 

(1) a “person” or “group” within the meaning of
Section 13(d) of the Exchange Act other than the Company, its
Subsidiaries or the Company’s or its Subsidiaries’ employee benefit plans,
files a Schedule TO or any schedule, form or report under the Exchange Act
disclosing that such person or group has become the direct or indirect “beneficial
owner,” as defined in Rule 13d-3 under the Exchange Act, of the
Company’s Common Equity representing more than 50% of the voting power of all
classes of the Company’s Common Equity entitled to vote generally in the
election of directors;

 

(2) consummation of (A) any
recapitalization, reclassification or change of the Common Stock (other than
changes resulting from a subdivision or combination) as a result of which the
Common Stock would be converted into, or exchanged for, stock, other
securities, other property or assets or (B) any share exchange,
consolidation or merger of the Company pursuant to which the Common Stock will
be converted into cash, securities or other property or any conveyance,
transfer, sale, lease or other disposition in one transaction or a series of
transactions of all or substantially all of the consolidated assets of the
Company and its Subsidiaries, taken as a whole, 

 

4

 

to any Person other than one
of the Company’s Subsidiaries; provided, however,
that neither (a) a transaction pursuant to which the holders of 50% or
more of the total voting power of all classes of the Company’s Common Equity
entitled to vote generally in the election of directors  immediately prior to such transaction have
the right to exercise 50% or more of the total voting power of all classes of
Common Equity of the continuing or surviving corporation (or any parent
thereof) entitled to vote generally in elections of directors of such
corporation (or any parent thereof) immediately after such event, nor (b) any
merger primarily for the purpose of changing the Company’s jurisdiction of
incorporation and resulting in a reclassification, conversion or exchange of
outstanding shares of the Common Stock solely into shares of common stock of
the surviving entity shall be a Fundamental Change;

 

(3) the Company’s stockholders approve any plan
or proposal for its liquidation or dissolution; or

 

(4) the Common Stock (or other common stock
into which the Securities are then convertible) ceases to be listed on any of
the NASDAQ Global Market, the NASDAQ Global Select Market, the New York Stock
Exchange or any other national securities exchange in the United States.

 

A fundamental change as a result of clause (1) or
(2) above shall not be deemed to have occurred, however, if at least 90%
of the consideration paid for the Common Stock, excluding cash payments for
fractional shares and cash payments made pursuant to dissenters’ appraisal
rights, in the transaction or transactions constituting the Fundamental Change
consists of shares of common stock or American Depositary Shares representing
common stock or similar common equity interests listed on any of the NASDAQ
Global Market, the NASDAQ Global Select Market or the New York Stock Exchange
(or any of their respective successors) or will be so listed immediately
following such Fundamental Change (these securities being referred to as “publicly
traded securities”) and as a result of such transaction or transactions the
Securities become convertible into such publicly traded securities, excluding
cash payments for fractional shares, on the basis set forth under Section 10.05(l),
subject to Section 10.02.

 

“GAAP” means
generally accepted accounting principles in the United States of America as in
effect and, to the extent optional, adopted by the Company, on the date of this
Indenture, consistently applied.

 

“Global Security”
means a permanent Global Security that is in the form of the Security attached
hereto as Exhibit A, and that is deposited with and registered in
the name of the Depositary.

 

“Government Securities”
means noncallable direct obligations of, or noncallable obligations the payment
of principal of and interest on which are unconditionally guaranteed by, the
United States of America.

 

“Guarantee” means,
as applied to any Indebtedness of another Person, (i) a guarantee, direct
or indirect, in any manner, of any part or all of such Indebtedness, or (ii) any
direct or indirect obligation, contingent or otherwise, of a Person
guaranteeing or having the effect of guaranteeing the Indebtedness of any other
Person in any manner (other than in each case, by 

 

5

 

endorsement of negotiable
instruments for collection in the ordinary course of business) (and “Guaranteed” and “Guaranteeing”
shall have meanings that correspond to the foregoing).

 

“Holder” or “Holders” means a Person or Persons in whose name a Security
is registered in the Register.

 

“Indebtedness” means, as to any Person, all of the following: (i) all
obligations for borrowed money and all obligations evidenced by bonds,
debentures, notes, or other similar instruments, (ii) all obligations
under capital or synthetic leases of such Person, (iii) all obligations of
such Person to pay the deferred purchase price of property or services (other
than trade accounts payable in the ordinary course of business), which purchase
price is due more than nine (9) months from the date of incurrence of the
obligations in respect thereof, (iv) indebtedness (excluding prepaid
interest thereon) of others secured by a non-statutory Lien on property owned
or being purchased by such Person (including indebtedness arising under
conditional sale or other title retention agreements), whether or not such
indebtedness shall have been assumed by such Person or is limited in recourse, (v) direct
or contingent obligations of such Person arising under letters of credit
(including standby and commercial), bankers’ acceptances, bank guaranties,
surety bonds and similar instruments, (vi) net obligations of such Person
under any hedging or swap contracts and (vii) all Guarantees of such
Person in respect of any of the foregoing. For all purposes hereof, the
Indebtedness of any Person shall include the Indebtedness of any partnership or
joint venture (other than a joint venture that is itself a corporation or
limited liability company) in which such Person is a general partner or a joint
venturer to the extent such Indebtedness is recourse to such Person.

 

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

 

“Initial Purchasers”
means Goldman, Sachs & Co, Morgan Stanley & Co. Incorporated
and J.P. Morgan Securities Inc.

 

“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.

 

“JAK Inhibitor Compounds” means the
compounds known as INCB18424 and INCB28050 and any other compounds for the
treatment of myeloproliferative disorders, cancer and/or inflammatory diseases
wherein the mechanism of action or the primary intended target for such
compounds is the modulation of human Janus Kinase 1 and/or human Janus Kinase 2
pathways and all salts, prodrugs, esters, metabolites, solvates, stereoisomers
and polymorphs of the foregoing.

 

“JAK Intellectual Property
Assets” means any trademarks or patent rights of the Company or its
Subsidiaries relating to, or in respect of, the JAK Inhibitor Compounds, and
any products, proceeds, royalties, and revenues derived from or payable in
respect of any JAK Inhibitor Compounds.

 

“Last Reported Sale Price”
on any date means, with respect to the Common Stock, Common Equity, Capital
Stock or similar equity interest, as the case may be, (i) the closing sale

 

6

 

price per share (or if no
closing sale price is reported, the average of the bid and ask prices or, if
more than one in either case, the average of the average bid and the average
ask prices) on that date as reported by the NASDAQ Global Market; or (ii) if
the Common Stock, Common Equity, Capital Stock or similar equity interest, as
the case may be, is not listed for trading on the NASDAQ Global Market, the
closing sale price per share (or if no closing sale price is reported, the
average of the bid and ask prices or, if more than one in either case, the
average of the average bid and the average ask prices) on that date as reported
in composite transactions for the principal U.S. national or regional
securities exchange on which the Common Stock, Common Equity, Capital Stock or
similar equity interest, as the case may be, is traded; or (iii) if the
Common Stock, Common Equity, Capital Stock or similar equity interest, as the
case may be, is not listed for trading on a U.S. national or regional
securities exchange, the closing sale price per share (or if no closing sale
price is reported, the average of the bid and ask prices or, if more than one
in either case, the average of the average bid and the average ask prices) for
the Common Stock, Common Equity, Capital Stock or similar equity interest, as
the case may be, on that date as reported by the Pink OTC Markets Inc. or
similar organization; or (iv) if the Common Stock, Common Equity, Capital
Stock or similar equity interest, as the case may be, is not so quoted by Pink
OTC Markets Inc. or similar organization, the average of the mid-point of the
last bid and ask prices for the Common Stock, Common Equity, Capital Stock or
similar equity interest, as the case may be, on the relevant date from a
nationally recognized independent investment banking firm selected by the
Company for this purpose. Any such determination shall be made by the Company
in good faith and shall be conclusive absent manifest error. The Last Reported
Sale Price of the Common Stock, Common Equity, Capital Stock or similar equity
interest, as the case may be, will be determined without reference to extended
or after-hours trading. If, during a period applicable for calculating the Last
Reported Sale Price of the Common Stock, an event occurs that requires an
adjustment to the Conversion Rate, the Last Reported Sale Price shall be
calculated for such period in a manner determined by the Company in good faith
to appropriately reflect the impact of such event on the price of the Common
Stock during such period.

 

“Lien” means any
mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance,
lien (statutory or other), charge, or preference, priority or other security
interest or preferential arrangement in the nature of a security interest of
any kind or nature whatsoever (including any conditional sale or other title
retention agreement, any easement, right of way or other encumbrance on title
to real property, and any financing lease having substantially the same
economic effect as any of the foregoing). 
For purposes of clarity, a non-exclusive license to intellectual
property shall not be deemed to be a Lien.

 

“Make-Whole Fundamental
Change” means any transaction or event that constitutes a
Fundamental Change pursuant to clause (1), (2) (disregarding the proviso
in clause (2)), (3) or (4) under the definition of Fundamental Change
(subject to the exception set forth in the last paragraph of the definition
thereof).

 

“Market Disruption Event”
means the occurrence or existence 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 stock exchange or
otherwise) in the Common Stock or in any options contracts or futures contracts
relating to the Common Stock, and such suspension or limitation occurs or
exists at any time within the 30 minutes prior to the closing time of the
relevant exchange on such Scheduled Trading Day.

 

7

 

“Maturity Date”
when used with respect to any Security, means October 1, 2015.

 

“Non-Affiliate Securities”
means all Securities other than Affiliate Securities.

 

“Non-Affiliate Restricted
Stock Legend” means a legend in the form set forth in Exhibit C.

 

“NYSE” means The
New York Stock Exchange.

 

“Offering Circular”
means the final offering circular for the offering and sale of the Securities
dated September 24, 2009.

 

“Officer” means
the Chairman of the Board, the Chief Executive Officer, the President, the
Chief Financial Officer, any Vice President (whether or not designated by a
number or numbers or word or words added before or after the title), the Treasurer
or the Secretary or any Assistant Treasurer or Assistant Secretary of the
Company.

 

“Officers’ Certificate”
means a written certificate (i) containing the information specified in
Sections 13.04 and 13.05, signed in the name of the Company by any two
Officers, and delivered to the Trustee, (ii) if given pursuant to Section 4.03,
signed by the principal executive, financial or accounting Officer of the
Company, which certificate need not contain the information specified in
Sections 13.04 and 13.05, and (iii) if given pursuant to Section 10.03(b),
signed by the principal financial or accounting Officer of the Company, which
certificate need not contain the information specified in Sections 13.04 and
13.05.

 

“Open of Business”
means 8:00 a.m. (New York City time).

 

“Opinion of Counsel”
means a written opinion from legal counsel containing the information specified
in Sections 13.04 and 13.05. The counsel may be an employee of, or counsel to,
the Company who is reasonably acceptable to the Trustee.

 

“Permitted
Disposition”, with respect JAK Intellectual Property Assets,
means (i) any Permitted Liens, (ii) any asset disposition permitted
by Article 5 that constitutes a disposition of all or substantially all of
the Company’s and its Subsidiaries’ assets, taken as a whole, (iii) exclusive
worldwide or geographically limited licenses of JAK Intellectual Property
Assets to Pharmaceutical Companies, (iv) non-exclusive licenses of JAK
Intellectual Property Assets in the ordinary course of business consistent with
industry practices, (v) sales of inventory in the ordinary course of
business, including, without limitation, sales by the Company or any of its
Subsidiaries of therapeutic, diagnostic or other commercial products derived
from or based on any JAK Inhibitor Compounds, (vi) the surrender or waiver
of contractual rights and the settlement or waiver of contractual or litigation
claims in the ordinary course of business and (vii) the transfer, sale or
other disposition resulting from any involuntary loss of title, involuntary
loss or damage to or destruction of, or any condemnation or other taking of,
any property or assets of the Company or any of its Subsidiaries.

 

“Permitted
Indebtedness” means (i) Indebtedness in respect of
the Securities, (ii) Indebtedness outstanding on the date of the initial
issuance of the Securities, (iii) unsecured Indebtedness, which, by its
terms, either ranks equally in right of payment with or is expressly 

 

8

 

subordinated to the Securities;
provided, that no principal of such
Indebtedness is scheduled to mature (or subject to mandatory repurchase or put
rights, other than repurchase rights upon a Fundamental Change) prior to October 2,
2015, (iv) Indebtedness under any Working Capital Facility, (v) Project
Debt, (vi) other unsecured Indebtedness, which, by its terms, either ranks
equally in right of payment with or is expressly subordinated to the
Securities, in an aggregate principal amount not to exceed $25,000,000 at any
one time outstanding, (vii) Refinancing Indebtedness, (viii) Indebtedness
(including capital lease, synthetic lease and purchase money obligations)
incurred in the ordinary course of business for the purpose of financing all or
any part of the purchase price, or the cost of installation, construction or
improvement, of real or personal property or assets, (ix) intercompany
Indebtedness among the Company and any of its Subsidiaries; provided, that any Indebtedness owed by the Company to its
Subsidiaries shall be subordinated to the Securities, (x) Indebtedness to
a Pharmaceutical Company, (xi) Indebtedness to a Smaller Pharmaceutical Company
in connection with the development and commercialization of assets (other than
JAK Intellectual Property Assets), (xii) Indebtedness secured by the inventory,
accounts receivable or real property of the Company or of its Subsidiaries that
is non-recourse to the Company or any of its Subsidiaries, (xiii) Indebtedness
of an acquired entity assumed in an acquisition (but not incurred in connection
with or in contemplation of such acquisition) and unsecured Indebtedness
arising from agreements of the Company or any of its Subsidiaries providing for
indemnification, adjustment of purchase price, earn-out or similar obligations,
in each case assumed with the acquisition or disposition of any business, (xiv)
Indebtedness incurred in connection with the acquisition of any intellectual
property, product or other rights (or the acquisition of any license of the
foregoing); provided, that no such Indebtedness
shall be secured by any Lien on JAK Intellectual Property Assets, (xv)
endorsement of instruments or other payment items for deposit, (xvi)
Indebtedness arising from the honoring by a bank or other financial institution
of a check, draft or similar instrument inadvertently (except in the case of
daylight overdrafts) drawn against insufficient funds in the ordinary course of
business; provided, that such Indebtedness is
extinguished within two Business Days of incurrence, (xvii) Indebtedness
incurred in settlement of litigation and owed to a party in such litigation; provided, that no such Indebtedness shall be secured by any
Lien on JAK Intellectual Property Assets, (xviii) Indebtedness under hedging or
swap contracts entered into in the ordinary course of business to hedge or
mitigate risks to which the Company or any of its Subsidiaries are exposed in
the conduct of their business or the management of their liabilities and not
for speculative purposes, (xix) sponsor support agreements and like agreements
not in the nature of a Guarantee entered into in connection with the incurrence
by one of the Company’s Subsidiaries of Project Debt; provided,
that the payment obligations under such agreements are limited to funding
deficiencies and warranty obligations relating to the property being acquired
or constructed, (xx) Guarantees by the Company or any of its Subsidiaries of
Indebtedness of the Company or any of its Subsidiaries (other than Project Debt
and Indebtedness that is required to be non-recourse to the Company or its
Subsidiaries) to the extent that the Guaranteed Indebtedness is permitted to be
incurred by another of the clauses above in this definition of Permitted
Indebtedness; provided, that if the
Indebtedness being Guaranteed ranks equally in right of payment or is expressly
subordinated to the Securities, then the Guarantee must rank equally in right
of payment or be expressly subordinated, as applicable, to the same extent as
the Indebtedness Guaranteed and (xxi) Indebtedness (other than Indebtedness for
money borrowed) in respect of workers’ compensation claims, self-insurance
obligations, bankers’ acceptances, performance and surety bonds in the ordinary
course of business.

 

9

 

“Permitted Liens”
means (i) Liens existing at the date of the initial issuance
of the Securities, (ii)      Liens in
favor of the Company, (iii) Liens on property or assets (or Equity
Interests) of a Person existing at the time such Person is merged with or into
or consolidated with the Company or any of its Subsidiaries, or becomes a
Subsidiary of the Company or any of its Subsidiaries, and Liens on property
existing at the time of acquisition thereof by the Company or any of its
Subsidiaries; provided, that such Liens were
not placed on such property in connection with or in contemplation of the
consummation of such merger, consolidation or acquisition and do not extend to
any property or assets other than those of the Person merged into or
consolidated with the Company or its Subsidiary, or the property or assets so
acquired (and property or assets affixed or appurtenant thereto), (iv) Liens
on inventory and accounts receivable to secure Indebtedness under any Working
Capital Facility, (v) Liens that (a) are not in the nature of a
security interest, (b) do not secure Indebtedness and (c) are
incurred in connection with, or that are, exclusive licenses of intellectual
property granted (A), in the case of exclusive licenses of JAK Intellectual
Property Assets for topical or ocular application, to a Smaller Pharmaceutical
Company, or (B), in the case of exclusive licenses of JAK Intellectual Property
Assets for any other application, to a Pharmaceutical Company, (vi) licenses
granted by the Company to sell therapeutic, diagnostic or other commercial
products derived from or based on any JAK Inhibitor Compounds, (vii) Liens
to secure capital lease, synthetic lease and purchase money obligations and any
Liens to secure any Project Debt; provided, that
such Liens do not extend to or cover any assets other than such assets acquired
or constructed with the proceeds of such capital lease, synthetic lease or
purchase money obligation or Project Debt and, in the case of Project Debt, the
equity securities of the Company’s Subsidiary that incurs the Project Debt, (viii) Liens
securing the Securities, (ix) Liens (other than Liens on JAK Intellectual
Property Assets) not otherwise permitted under this Indenture securing
obligations in an aggregate amount not to exceed $10,000,000 at any one time
outstanding, (x) Liens (other than Liens on JAK Intellectual Property
Assets) securing obligations arising from agreements of the Company or any of
its Subsidiaries incurred in connection with the acquisition of intellectual
property, product or other rights (or the acquisition of any license to the
foregoing); provided, that such Liens do not extend
to any property or assets other than the licenses, intellectual property,
products or other rights being so acquired, (xi) Liens on intellectual property
of the Company or its Subsidiaries (other than Liens on JAK Intellectual
Property Assets) granted to a Smaller Pharmaceutical Company in connection with
the development and commercialization of assets (other than JAK Intellectual
Property Assets), provided, that such Liens do not
extend to any assets other than the intellectual property subject to such
development and commercialization and any intellectual property obtained or
derived from such development or commercialization, (xii) Liens (other than
Liens on JAK Intellectual Property Assets) on intellectual property of the
Company or its Subsidiaries that are incurred in connection with licenses of
such intellectual property or in the ordinary course of business; provided, that such Liens do not secure Indebtedness, (xiii)
Liens (other than exclusive licenses) on JAK Intellectual Property Assets that
are not in the nature of a security interest, that do not secure Indebtedness,
and that are incurred in the ordinary course of business, (xiv) Liens securing
Refinancing Indebtedness to the extent the Indebtedness being refinanced was
secured; provided, that such Liens do not extend
to or cover any assets other than those securing the Indebtedness being
refinanced, (xv) Liens securing reimbursement obligations with respect to
letters of credit that encumber documents and other property relating to such
letters of credit, (xvi) Liens on insurance policies and proceeds thereof, or
other deposits, to secure insurance premium 

 

10

 

financings,
(xvii) Liens on specific items of inventory or other goods (and the proceeds
thereof) of any Person securing such Person’s obligations in respect of bankers’
acceptances issued or created in the ordinary course of business for the
account of such Person to facilitate the purchase, shipment or storage of such
inventory or other goods and (xviii) Liens arising out of conditional sale,
title retention, consignment or similar arrangements for the sale of goods
entered into in the ordinary course of business.

 

“Permitted Money Market Fund” means any
registered investment company that meets the conditions of paragraphs (c)(2),
(c)(3) and (c)(4) of Rule 2a-7 under the Investment
Company Act of 1940, as amended, that invests exclusively in securities of the
U.S. government, securities of government-sponsored enterprises created
by the U.S. Congress and privately issued money market securities that have been
rated by at least one “nationally recognized statistical rating organization”
(as that term is used in Section 15E of the Exchange Act) and received the
highest credit rating (as of the Issue Date of the initial Securities issued
hereunder, A1 in the case of Standard & Poor’s Ratings Service and P1
in the case of Moody’s Investor Service, Inc.) from each nationally
recognized statistical rating organization that has rated them.

 

“Permitted Money Market Securities”
means money market securities issued by Permitted Money Market Funds.

 

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

 

“Pharmaceutical
Company” means a company that (a) together with its
Affiliates is engaged as its primary business in the business of
commercializing pharmaceutical, biopharmaceutical or diagnostic products, and
(b), as of the date of measurement, either (i) has Common Equity traded on
a national securities exchange with a market capitalization (based on the
number of outstanding shares of Common Equity and the Last Reported Sale Price
on the trading day immediately preceding such date), of at least $5,000,000,000
(or the U.S. dollar equivalent thereof) or (ii) revenues for the most
recent fiscal year then ended of at least $500,000,000 (or the U.S. dollar
equivalent thereof).

 

“Pledge and Escrow
Agreement” means the Pledge and Escrow Agreement, dated as of September 30,
2009, by and among the Company, the Trustee and the Escrow Agent.

 

“Pledged
Securities” means the Government Securities or Permitted Money
Market Securities to be purchased by the Company and held in the Escrow Account
in accordance with the Pledge and Escrow Agreement.

 

“Project Debt” means Indebtedness of any
of the Company’s Subsidiaries to finance the acquisition of any real property
or the acquisition or construction of any plant or facility (or equipment
relating thereto); provided, that
such Indebtedness is non-recourse to the Company or any other Subsidiary of the
Company.

 

“Qualified Equity Interests” means
Equity Interests of the Company other than Disqualified Equity Interests.

 

11

 

“Qualified Transaction”
means any transaction described in the last paragraph of the definition of
Fundamental Change (other than a transaction with a shell company (as defined
in Rule 12b-1 under the Exchange Act)) in which (A) holders of the
Common Stock receive publicly traded securities representing no more than 30%
of the outstanding Common Equity or similar Equity Interests of the acquiring
entity (or any direct or indirect parent entity thereof), and (B) the
market value (based on the last sale price on the trading day prior to the
execution of the merger or other definitive agreement relating to such
transaction) of the publicly traded securities to be issued to the holders of
the Common Stock shall be at least 150% of the Company’s outstanding
obligations that constitute Indebtedness within clauses (i) and (ii) of
the definition of Indebtedness as of such trading day.

 

“Qualifying Tender Offer”
shall be deemed to have occurred if at any time after the Securities are
originally issued and prior to the date on which the number of Common
Authorized Shares equals or exceeds the Full Underlying Shares, a “person” or “group”
within the meaning of Section 13(d) of the Exchange Act other than
the Company, its Subsidiaries or the Company’s or its Subsidiaries’ employee
benefit plans, files a Schedule TO or any schedule, form or report
under the Exchange Act disclosing that such person or group acquired in a
tender or exchange offer direct or indirect “beneficial ownership,” as defined
in Rule 13d-3 under the Exchange Act, of the Company’s Common Equity
representing more than 50% of the voting power of all classes of the Company’s
Common Equity entitled to vote generally in the election of directors.

 

“Record Date”
means, in respect of any dividend or distribution, the date fixed for
determination of stockholders entitled to receive such dividend or distribution
or, if earlier, the Ex-Date.

 

“Refinancing Indebtedness” means
Indebtedness of the Company or any of its Subsidiaries issued to refinance
Indebtedness of the Company or any of its Subsidiaries so long as:

 

(1)           the aggregate principal
amount (or initial accreted value, if applicable) of such new Indebtedness as
of the date of such proposed refinancing does not exceed the aggregate principal
amount (or accreted value as of such date, if applicable) of the Indebtedness
being refinanced (plus the amount of any premium required to be paid under the
terms of the instrument governing such Indebtedness and the amount of
reasonable expenses incurred by the Company or any of the Company’s
Subsidiaries in connection with such refinancing);

 

(2)           such new Indebtedness has (a) a
weighted average life to maturity that is equal to or greater than the weighted
average life to maturity of the Indebtedness being refinanced, and (b) a
final maturity that is equal to or later than the final maturity of the
Indebtedness being refinanced; and

 

(3)           if the Indebtedness being refinanced
is (a) Indebtedness of the Company or any of its Subsidiaries, then such
Refinancing Indebtedness shall be Indebtedness of the Company or such
Subsidiary, as the case may be, and (b) subordinated Indebtedness, then
such Refinancing Indebtedness shall be subordinate to the Securities, at least
to the same extent and in the same manner as the Indebtedness being refinanced.

 

12

 

 

“Responsible
Officer” means any officer of the Trustee within the Corporate Trust
Office of the Trustee with direct responsibility for the administration of this
Indenture and also, with respect to a particular matter, any other officer of
the Trustee to whom such matter is referred because of such officer’s knowledge
and familiarity with the particular subject.

 

“Restricted Securities
Legend” means a legend in the form set forth in Exhibit A.

 

“Restricted Stock Legend”
means the Affiliate Restricted Stock Legend, the Non-Affiliate Restricted Stock
Legend or both, as the context may require, as set forth in Exhibit C.

 

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

 

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

 

“Scheduled Trading Day”
means any day on which the primary U.S. national or regional securities
exchange or market on which the Common Stock is listed or admitted for trading
is scheduled to be open for trading or, if the Common Stock is not listed or
admitted for trading on any exchange or market, any Business Day.

 

“SEC” means the
Securities and Exchange Commission.

 

“Securities”
means any of the Company’s 4.75% Convertible Senior Notes due 2015, as amended
or supplemented from time to time, issued under this Indenture.

 

“Securities Act”
means the Securities Act of 1933, as amended.

 

“Series A Preferred
Stock” means the shares of Series A Preferred Stock, $.001 par
value per share, of the Company existing on the date of this Indenture.

 

“Significant Subsidiary”
means any Subsidiary that would be a “Significant Subsidiary” of the Company
within the meaning of Rule 1-02(w) of Regulation S-X promulgated by
the SEC.

 

“Smaller Pharmaceutical
Company” means a company that (a) together with its Affiliates
is engaged as its primary business in the business of commercializing
pharmaceutical, biopharmaceutical or diagnostic products, and (b), as of the
date of measurement, either (i) has Common Equity traded on a national
securities exchange with a market capitalization (based on the number of
outstanding shares of Common Equity and the Last Reported Sale Price on the
trading day immediately preceding such date), of at least $250,000,000 (or the
U.S. dollar equivalent thereof) or (ii) revenues for the most recent
fiscal year then ended of at least $75,000,000 (or the U.S. dollar equivalent
thereof).

 

“Stated Maturity”
means, with respect to any installment of interest or principal on any series
of Indebtedness, the date on which the payment of interest or principal was
scheduled to be paid in the documentation governing such Indebtedness as of the
date of this Indenture, and 

 

13

 

will not include any
contingent obligations to repay, redeem or repurchase any such interest or
principal prior to the date originally scheduled for the payment thereof.

 

“Subsidiary”
means a Person more than 50% of the outstanding Voting Stock of which is owned,
directly or indirectly, by the Company or by one or more other Subsidiaries of
the Company, or by the Company and one or more other Subsidiaries of the
Company.

 

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

 

“Trading Day”
means a day on which (i) there is no Market Disruption Event and (ii) trading
in the Company’s securities generally occurs on The NASDAQ Stock Market, or if
shares of Common Stock are not listed on The NASDAQ Stock Market, then as
reported by the NYSE or the principal other national or regional securities
exchange on which the shares of Common Stock are then traded, or if the Common
Stock is not listed or approved for trading on the NYSE or another national or
regional securities exchange, on the principal market on which shares of the
Common Stock are then traded, provided, that
if the Common Stock is not so listed or traded, then a “Trading Day” shall have
the same meaning as Business Day.

 

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

 

“Uniform Commercial Code”
means the New York Uniform Commercial Code as in effect from time to time.

 

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

 

“Wholly Owned Subsidiary”
means, at any time, a Subsidiary all the Voting Stock of which (except
directors’ qualifying shares which shall be deemed to include investments by
foreign nationals mandated by applicable law) is at such time owned, directly
or indirectly, by the Company and its other Wholly Owned Subsidiaries.

 

“Working Capital Facility”
means one or more debt facilities or commercial paper facilities, in each case
with banks or other institutional lenders providing for revolving credit loans,
term debt or letters of credit, the proceeds of which are used to finance
general corporate and working capital purposes.

 

14

 

Section 1.02.          Other Definitions.

 

	
  Term
  Section:

  	
   

  	
  Defined in:

  
	
   

  	
   

  	
   

  
	
  “Act”

  	
   

  	
  1.05

  
	
  “Additional Shares”

  	
   

  	
  10.06(a)

  
	
  “Affiliate Restricted Securities”

  	
   

  	
  2.06(f)

  
	
  “Agent Members”

  	
   

  	
  2.12(e)

  
	
  “Certificate of Designation”

  	
   

  	
  10.03(g)

  
	
  “Common Proportion”

  	
   

  	
  10.03(a)

  
	
  “Conversion Agent”

  	
   

  	
  2.03

  
	
  “Conversion Date”

  	
   

  	
  10.02(b)

  
	
  “Conversion Notice”

  	
   

  	
  10.02(a)

  
	
  “Conversion Rate”

  	
   

  	
  10.01

  
	
  “Defaulted Interest”

  	
   

  	
  11.02

  
	
  “Depositary”

  	
   

  	
  2.01(a)

  
	
  “DTC”

  	
   

  	
  2.01(a)

  
	
  “Event of Default”

  	
   

  	
  6.01(a)

  
	
  “Expiration Date”

  	
   

  	
  10.05(e)

  
	
  “Expiration Time”

  	
   

  	
  10.05(e)

  
	
  “Fundamental Change Expiration Time”

  	
   

  	
  3.02(c)

  
	
  “Fundamental Change Repurchase Date”

  	
   

  	
  3.02(a)

  
	
  “Fundamental Change Repurchase Notice”

  	
   

  	
  3.02(a)

  
	
  “Fundamental Change Repurchase Right Notice”

  	
   

  	
  3.02(b)

  
	
  “Fundamental Change Repurchase Price”

  	
   

  	
  3.02(a)

  
	
  “Global Securities Legend”

  	
   

  	
  Exhibit A

  
	
  “Interest Payment Date”

  	
   

  	
  11.01(a)

  
	
  “Initial Trigger Date”

  	
   

  	
  10.03(d)

  
	
  “Legal Holiday”

  	
   

  	
  13.08

  
	
  “Make-Whole Effective Date”

  	
   

  	
  10.06(b)

  
	
  “Merger Event”

  	
   

  	
  10.05(l)

  
	
  “Option Securities”

  	
   

  	
  2.02

  
	
  “Paying Agent”

  	
   

  	
  2.03

  
	
  “Preferred Proportion”

  	
   

  	
  10.03(a)

  
	
  “QIB”

  	
   

  	
  2.01(a)

  
	
  “Qualifying Tender Offer Interest”

  	
   

  	
  10.03(e)

  
	
  “Reference Property”

  	
   

  	
  10.05(l)

  
	
  “Register”

  	
   

  	
  2.03

  
	
  “Regular Record Date”

  	
   

  	
  11.01(a)

  
	
  “Registrar”

  	
   

  	
  2.03

  
	
  “Reporting Default”

  	
   

  	
  6.02(b)

  
	
  “Reserve Interest”

  	
   

  	
  10.03(d)

  
	
  “Restricted Securities”

  	
   

  	
  2.06(f)

  
	
  “Second Trigger Date”

  	
   

  	
  10.03(d)

  
	
  “Special Record Date”

  	
   

  	
  11.02(a)

  
	
  “Spin-off”

  	
   

  	
  10.05(c)

  
	
  “Start Date”

  	
   

  	
  4.02(b)

  
	
  “Stock Price”

  	
   

  	
  10.06(b)

  
	
  “Surrendered Securities”

  	
   

  	
  Exhibit B

  
	
  “transfer”

  	
   

  	
  2.06(f)

  
	
  “Valuation Period”

  	
   

  	
  10.05(c)

  

 

15

 

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

 

“Commission”
means the SEC.

 

“indenture securities”
means the Securities.

 

“indenture to be qualified”
means this Indenture.

 

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

 

“obligor” on the
indenture securities means the Company and any other obligor on the indenture
securities.

 

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

 

Section 1.04.          Rules of Construction.

 

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

 

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

 

(3) “or” is not
exclusive;

 

(4) “including”
means including, without limitation;

 

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

 

(6) all references to $, dollars, cash payments
or money refer to United States currency; and

 

(7) except as otherwise specifically indicated
herein, all references to payments of interest on the Securities shall include
Additional Interest, if any, payable in accordance with the terms of Sections
4.02(b), 4.02(c) or 6.02(b), Reserve Interest, if any, payable in
accordance with the terms of Section 10.03(d) and Qualifying Tender
Offer Interest, if any, payable in accordance with the terms of Section 10.03(e) hereof.

 

Section 1.05.          Acts of Holders.  Any request, demand, authorization,
direction, notice, consent, waiver or other action provided by this Indenture
to be given or taken by Holders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed 

 

16

 

by such Holders in person or by agent duly
appointed in writing and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and to the Company. Such instrument or instruments (and the
action embodied therein and evidenced thereby) are herein sometimes referred to
as the “Act” of Holders signing such instrument
or instruments. Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this Indenture
and conclusive in favor of the Trustee and the Company, if made in the manner
provided in this Section.

 

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

 

(b)           The ownership of Securities
shall be proved by the register for the Securities.

 

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

 

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

 

17

 

ARTICLE
2

THE
SECURITIES

 

Section 2.01.          Form and Dating. The
Securities and the Trustee’s certificate of authentication shall be
substantially in the form of Exhibit A, which is a part of this
Indenture. The Securities may have notations, legends or endorsements required
by law, stock exchange rule or usage (provided that any such notation,
legend or endorsement required by usage is in a form acceptable to the
Company). The Company shall provide any such notations, legends or endorsements
to the Trustee in writing. Each Security shall be dated the date of its
authentication. Except as otherwise expressly permitted in this Indenture, all
Securities shall be identical in all respects. Notwithstanding any differences
among them, all Securities issued under this Indenture shall vote and consent
together on all matters as one class.

 

(a)           Initial Securities.

 

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

 

(ii)           Securities originally
offered and sold by the Initial Purchasers to Affiliates of the Company will be
issued in the form of one or more Certificated Securities.  Upon such issuance, the Registrar shall
register such Affiliate Securities in the name of such Affiliate as the owner
or owners of such Security (or the nominee of such owner or owners) and deliver
the certificates for such Affiliate Securities to the respective Affiliate (or
the nominee of such owner or owners). Affiliate Securities shall bear the
Affiliate Securities Legend unless otherwise agreed by the Company (with
written notice thereof to the Trustee). 
Notwithstanding the foregoing, the Initial Purchasers shall be entitled
to deliver to the Trustee, or to the Company for delivery to the Trustee, at
any time after the date hereof any such Affiliate Securities not purchased by
Affiliates as agreed by the Initial Purchasers and such Affiliates prior to the
date hereof, with written instructions directing the Trustee to make, or to
direct the Registrar to make, an adjustment on its books and records with
respect to the Global Security described in Section 2.01(a)(i) to
reflect an increase in the aggregate principal amount of the Securities
represented by such Global Security, such instructions to contain information
regarding the Depositary account to be credited with such increase.  Upon receipt of such Affiliate Securities and
written instructions, the Trustee shall cancel such Affiliate Securities
delivered to it and cause, or direct the Registrar to cause, in accordance with
the standing instructions and procedures existing between the Depositary and
the Registrar, the aggregate principal amount of Securities represented by such
Global Security to be increased by the aggregate principal amount of the
Affiliate Securities delivered to the Trustee, and shall credit or cause to be
credited to the account of the Person specified in such instructions a
beneficial interest in the Global Security equal to the principal amount of the
Affiliate Securities so cancelled.

 

18

 

(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 principal amount of outstanding
Securities from time to time endorsed thereon and that the aggregate principal
amount of outstanding Securities represented thereby may from time to time be
reduced or increased, as appropriate, to reflect exchanges, redemptions,
repurchases and conversions.

 

Any adjustment of the
aggregate principal amount of a Global Security to reflect the amount of any
increase or decrease in the amount of outstanding Securities represented
thereby shall be made by the Trustee in accordance with instructions given by
the Holder thereof as required by Section 2.12 hereof and shall be made on
the records of the Trustee and the Depositary. Payment of the principal,
accrued and unpaid interest (including any Additional Interest, Qualifying
Tender Offer Interest and Reserve Interest), if any, and payment of the
Fundamental Change Repurchase Price on the Global Security shall be made to the
Holder of such Security on the date of payment, unless a Regular Record Date or
other means of determining Holders eligible to receive payment is provided for
herein.

 

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

 

The Company shall execute and the Trustee shall, in
accordance with this Section 2.01(c), authenticate and deliver initially
one or more Global Securities that (a) shall be registered in the name of
the Depositary, (b) shall be delivered by the Trustee to the Depositary or
pursuant to the Depositary’s instructions and (c) shall bear the legends
substantially to the effect of those required by Section 2.01(d).

 

(d)           Legends.

 

(i)            Each Global Security shall bear the Global Securities
Legend set forth in Exhibit A.

 

(ii)           Each Restricted Security that is a Non-Affiliate
Security shall bear the Restricted Securities Legend set forth in Exhibit A.
Each Security that bears or is required to bear the Restricted Securities
Legend shall be subject to the restrictions on transfer set forth therein, and
each Holder of such Security, by such Holder’s acceptance thereof, agrees to be
bound by all such restrictions on transfer.

 

(iii)          Each Affiliate Security shall bear the Affiliate
Security Legend set forth in Exhibit A.

 

(iv)          Every stock certificate representing Common Stock or
Series A Preferred Stock issued in the circumstances described in Section 2.06(g) hereof
shall bear the applicable Restricted Stock Legend set forth in Exhibit C
unless removed in accordance with the provisions of Section 2.06(k).

 

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

 

19

 

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.

 

At any time after the execution and delivery of this
Indenture, the Company may deliver Securities executed by the Company to the
Trustee for authentication, together with a written order of the Company in the
form of an Officers’ Certificate for the authentication and delivery of such
Securities, and the Trustee, in accordance with such written order of the
Company, shall authenticate and deliver such Securities.

 

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

 

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

 

The Trustee shall initially authenticate and deliver
Securities for original issuance in an aggregate principal amount of
$350,000,000, upon receipt of one or more Company Orders. The Trustee shall
authenticate and deliver Securities for original issuance in an additional
aggregate principal amount of up to $50,000,000, upon receipt of one or more
Company Orders upon exercise of the option granted to the initial purchasers of
the Securities described in the Offering Circular (the “Option
Securities”). The aggregate principal amount of Securities
outstanding at any time may not exceed $400,000,000.

 

The Trustee may appoint authenticating agents. The
Trustee may at any time after the execution of this Indenture appoint an
authenticating agent acceptable to the Company to authenticate Securities. An
authenticating agent may authenticate Securities whenever the Trustee may do
so, except any Securities issued pursuant to Section 2.07. Each reference
in this Indenture to authentication by the Trustee includes authentication by
such agent. An authenticating agent shall have the same right to deal with the
Company as the Trustee with respect to such matters for which it has been
appointed.

 

Section 2.03.          Registrar, Paying Agent and
Conversion Agent. The Company shall maintain an office or agency
where Securities may be presented for registration of transfer or for exchange
(“Registrar”), an office or agency in the
Borough of Manhattan, City of New York, where Securities may be presented for
payment (“Paying Agent”), an office or agency
where Securities may be presented for conversion (“Conversion
Agent”) and an office or agency where notices to or upon the Company
in respect of the Securities and this Indenture may be served. The Registrar
shall keep a register for the recordation of, and shall record, the names and
addresses of Holders of the Securities, the Securities held by each Holder and
the transfer, exchange and conversion of Securities (the “Register”).
The entries in the Register shall be conclusive, and the parties may treat each
Person whose name is recorded in the Register pursuant to the terms hereof as a
Holder hereunder for all purposes of this Indenture. The Company may have one
or more co-registrars, one or more additional paying agents and one or more
additional conversion agents. The term Paying Agent includes any additional
paying agent, including any named pursuant to Section 4.05. The term
Conversion Agent includes any additional conversion agent, including any named
pursuant to Section 4.05.

 

20

 

The Company shall enter into an appropriate agency
agreement with any Registrar, Paying Agent, Conversion Agent or co-registrar
not a party to this Indenture, which shall incorporate the terms of the TIA.
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
such agent. If the Company fails to maintain a Registrar, Paying Agent or
Conversion Agent, the Trustee may agree to act as such and shall be entitled to
appropriate compensation therefor pursuant to Section 7.06. The Company or
any of its domestically incorporated Wholly Owned Subsidiaries may act as
Paying Agent, Registrar, Conversion Agent or co-registrar.

 

The Company initially appoints the U.S. Bank
National Association as the Paying Agent, the Conversion Agent, and the
Registrar, in connection with the Securities, and the office of U.S. Bank Trust
National Association, an Affiliate of the Trustee, at 100 Wall Street, Suite 1600,
New York, New York 10005, attention: Corporate Trust Services (Incyte
Corporation — 4.75% Convertible Senior Notes due 2015), to be such office or
agency of the Company for the aforesaid purposes. The Company may at any time
rescind the designation of the Paying Agent, Conversion Agent or the Registrar
or approve a change in the location through which any of them acts.

 

Section 2.04.          Paying Agent to Hold Money and
Securities in Trust. Except as otherwise provided herein, on or prior
to each due date of payment in respect of any Security, the Company shall
deposit with the Paying Agent a sum of money (in immediately available funds if
deposited on the due date) sufficient to make such payments when so becoming
due. The Paying Agent shall (or, if the Paying Agent is not a party hereto, the
Company shall require each Paying Agent to agree in writing that such Paying
Agent shall) hold in trust for the benefit of Holders or the Trustee all money
held by the Paying Agent for the making of payments in respect of the
Securities and shall notify the Trustee of any default by the Company in making
any such payment. At any time during the continuance of any such default, the
Paying Agent (if not the Trustee) shall, upon the written request of the
Trustee, forthwith pay to the Trustee all money so held in trust.  If the Company or a Wholly Owned Subsidiary
acts as Paying Agent, it shall segregate the money held by it as Paying Agent
and hold it as a separate trust fund. The Company at any time may require a
Paying Agent to pay all money held by it to the Trustee and to account for any
funds disbursed by the Paying Agent. Upon complying with this Section, the
Paying Agent shall have no further liability for the money delivered to the
Trustee.

 

Section 2.05.          Holder Lists. The Trustee
shall preserve in as current a form as is reasonably practicable the most
recent list available to it of the names and addresses of Holders. If the
Trustee is not the Registrar, the Company shall furnish to the Trustee, in
writing at least five (5) Business Days 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.

 

Section 2.06.          Transfer and Exchange.

 

(a)           Subject to Section 2.12
hereof, upon surrender for registration of transfer of any Security, together
with a written instrument of transfer satisfactory to the Registrar duly
executed by the Holder or such Holder’s attorney-in-fact duly authorized in
writing, at the office or agency of the Company designated as the Registrar or
co-Registrar pursuant to Section 2.03, (i) the 

 

21

 

Company shall execute, and the Trustee (or
any authenticating agent) shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Securities of any
authorized denomination or denominations, of a like aggregate principal amount
and bearing such restrictive legends as may be required by this Indenture and (ii) the
Registrar shall record the information required pursuant to Section 2.03
regarding the designated transferee or transferees in the Register. The Company
shall not charge a service charge for any registration of transfer or exchange,
but the Company may require payment of a sum sufficient to pay all taxes,
assessments or other governmental charges that may be imposed in connection
with the registration of, transfer or exchange of the Securities from the
Holder requesting such transfer or exchange.

 

At the option of the Holder, Securities may be
exchanged for other Securities of any authorized denomination or denominations,
of a like aggregate principal amount, upon surrender of the Securities to be
exchanged, together with a written instrument of transfer satisfactory to the
Registrar duly executed by the Holder or such Holder’s attorney-in-fact duly
authorized in writing, at such office or agency and documents of identity and
title satisfactory to Registrar. Whenever any Securities are so surrendered for
exchange, the Company shall execute, and the Trustee shall authenticate and
deliver, the Securities that the Holder making the exchange is entitled to
receive, bearing registration numbers not contemporaneously outstanding.

 

The Company shall not be required to make, and the
Registrar need not register, transfers or exchanges of Securities in respect of
which a Fundamental Change Repurchase Notice has been given and not withdrawn
by the Holder thereof in accordance with the terms of this Indenture (except,
in the case of Securities to be repurchased in part, the portion thereof not to
be repurchased).

 

(b)           Notwithstanding any
provision to the contrary herein, so long as a Global Security remains
outstanding and is held by or on behalf of the Depositary, transfers of a
Global Security, in whole or in part, shall be made only in accordance with Section 2.12
and this Section 2.06(b). Transfers of a Global Security shall be limited
to transfers of such Global Security to the Depositary, to nominees of the
Depositary or to a successor of the Depositary or such successor’s nominee.

 

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

 

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

 

22

 

(f)

 

(i)            Every Non-Affiliate Security that bears or is
required under this Section 2.06(f) to bear the Restricted Securities
Legend required by Section 2.01(d) (the “Restricted
Securities”) shall be subject to the restrictions on transfer set
forth in the Restricted Securities Legend and in this Section 2.06(f),
unless such restrictions on transfer shall be eliminated or otherwise waived by
written consent of the Company, and the Holder of each such Restricted
Security, by such Holder’s acceptance thereof, agrees to be bound by all such
restrictions on transfer. As used in this Section 2.06(f), Section 2.06(g) and
Sections 2.12(b) and (c), the term “transfer”
encompasses any sale, pledge, transfer, loan, hypothecation or other
disposition whatsoever of any Restricted Security or Affiliate Restricted
Security, as the case may be.  Except as
otherwise provided in this Indenture with respect to any Restricted Securities
(including, without limitation, Section 2.06(i) below) or as
permitted under the terms of the Restricted Securities Legend thereon, if a
request is made to remove the legend on any Restricted Security, the legend
shall not be removed unless there is delivered to the Company and the Registrar
such satisfactory evidence, which may include an opinion of counsel, as may be
reasonably required by the Company and the Registrar, that neither the Restricted
Securities 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 or that such Securities are not “restricted” within the
meaning of Rule 144. In such a case, upon (i) provision of such
satisfactory evidence, or (ii) notification by the Company to the Trustee
and Registrar of the sale of such Security pursuant to a registration statement
that is effective at the time of such sale, the Trustee, pursuant to a Company
Order, shall authenticate and deliver a Security that does not bear the
Restricted Securities Legend.  If the
Restricted Security surrendered for exchange is represented by a Global
Security bearing a Restricted Securities Legend, the principal amount of the
Global Security so legended shall be reduced by the appropriate principal
amount and the principal amount of a Global Security without the Restricted
Securities Legend shall be increased by an equal principal amount. If a Global
Security without the Restricted Securities Legend is not then outstanding, the
Company shall execute and the Trustee shall authenticate and deliver a Global
Security without the Restricted Securities Legend to the Depositary.  If the Restricted Securities Legend is removed
from the face of a Security and the Security is subsequently held by the
Company or an Affiliate of the Company, an Affiliate Security Legend shall be
added to such Security.

 

(ii)           Except as provided elsewhere in this Indenture
(including, without limitation, Section 2.06(i) below), until the
Free Trade Date, any certificate evidencing a Non-Affiliate Security (and all
securities issued in exchange therefor or substitution thereof, other than
Common Stock or Series A Preferred Stock, if any, issued upon conversion
thereof, which shall bear the Non-Affiliate Restricted Stock Legend, if
required) shall bear the Restricted Securities Legend unless such Non-Affiliate
Securities have been transferred (A) to the Company, (B) to an
Affiliate of the Company, or (C) under a registration statement that has
been declared effective under the Securities Act, provided,
that in the case of (A) and (B) above, an Affiliate Security Legend
shall be added to such Security.

 

(iii)          Every Affiliate Security that bears or is required
under this Section 2.06(f) to bear the Affiliate Security Legend
required by Section 2.01(d) (the “Affiliate 

 

23

 

Restricted Securities”) shall be subject to the
restrictions on transfer set forth in the Affiliate Security Legend and this Section 2.06(f),
unless such restrictions on transfer shall be eliminated or otherwise waived by
written consent of the Company, and the Holder of each such Affiliate
Restricted Security, by such Holder’s acceptance thereof, agrees to be bound by
all such restrictions on transfer. 
Except as otherwise provided in this Indenture with respect to any
Affiliate Restricted Securities (including, without limitation, Section 2.06(j) below)
or as permitted under the terms of the Affiliate Securities Legend thereon, if
a request is made to remove the legend on any Affiliate Restricted Security,
the legend shall not be removed unless there is delivered to the Company and
the Registrar such satisfactory evidence, which may include an opinion of
counsel, as may be reasonably required by the Company and the Registrar, that
such Affiliate Securities have been transferred under a registration statement
that has been declared effective under the Securities Act or resold pursuant to
an exemption from the registration requirements of the Securities Act in a
transaction that results in such Affiliate Security no longer being “restricted
securities” (as defined under Rule 144). 
In such case, upon (i) delivery of such satisfactory evidence, or (ii) notification
by the Company to the Trustee and Registrar of the sale of such Security
pursuant to a registration statement that is effective at the time of such
sale, the Trustee, pursuant to a Company Order, shall authenticate and deliver
a Security that does not bear the Affiliate Securities Legend or a Restricted
Security Legend.

 

(iv)          Except as provided elsewhere in this Indenture
(including, without limitation, Section 2.06(j) below), until the
Affiliate Free Trade Date any certificate evidencing an Affiliate Security (and
all securities issued in exchange therefor or substitution thereof, other than
Common Stock or Series A Preferred Stock, if any, issued upon conversion
thereof, which shall bear the Affiliate Restricted Stock Legend, if required)
shall bear the Affiliate Securities Legend

 

(v)           No transfer of any Security prior to the Free Trade
Date, in case of Non-Affiliate Securities, or the Affiliate Free Trade Date, in
the case of Affiliate Securities, will be registered by the Registrar unless
the applicable box on the Form of Transfer Certificate has been checked.

 

(g)

 

(i)            Except as provided elsewhere in this Indenture
(including, without limitation, Section 2.06(i) below), until the
Free Trade Date, any stock certificate representing Common Stock or Series A
Preferred Stock issued upon conversion of a Non-Affiliate Security shall bear
the Non-Affiliate Restricted Stock Legend unless such Non-Affiliate Security,
Common Stock or Series A Preferred Stock has been transferred (A) to
the Company, (B) to an Affiliate of the Company, or (C) under a
registration statement that has been declared effective under the Securities
Act, provided, that in the case of (A) and
(B) above, an Affiliate Restricted Stock Legend shall be added to such
stock certificate.

 

(ii)           Except as provided elsewhere in this Indenture
(including, without limitation, Section 2.06(j) below), until the
later of (x) the date that is one year after the

 

24

 

 

last Issue Date of the Securities (including of the Option Securities)
and (y) the date that is 90 days after the holder of such Common Stock or Series A
Preferred Stock ceases to be an Affiliate of the Company, any stock certificate
representing Common Stock or Series A Preferred Stock issued upon
conversion of an Affiliate Security shall bear the Affiliate Restricted Stock
Legend unless such Affiliate Security, Common Stock or Series A Preferred
Stock has been transferred under a registration statement that has been
declared effective under the Securities Act or resold pursuant to an exemption
from the registration requirements of the Securities Act in a transaction that
results in such Common Stock or Series A Preferred Stock, as the case may
be, no longer being “restricted securities” (as defined under Rule 144).

 

(iii)          Any such Common Stock or Series A Preferred
Stock as to which such restrictions on transfer shall have expired in
accordance with their terms may, upon surrender of the certificates representing
such shares of Common Stock or Series A Preferred Stock for exchange in
accordance with the procedures of the transfer agent for the Common Stock or Series A
Preferred Stock, be exchanged for a new certificate or certificates for a like
aggregate number of shares of Common Stock or Series A Preferred Stock
which shall not bear the applicable Restricted Stock Legend.

 

(h)           The Company shall not permit
any Security, Common Stock or Series A Preferred Stock issued upon the
conversion or exchange of a Security that is purchased or owned by the Company
to be resold by the Company unless registered under the Securities Act or
resold pursuant to an exemption from the registration requirements of the
Securities Act in a transaction that results in such Securities, Common Stock
or Series A Preferred Stock, as the case may be, no longer being “restricted
securities” (as defined under Rule 144).

 

(i)            So long as and to the extent
that the Non-Affiliate Securities are represented by one or more Global
Securities held by or on behalf of the Depositary only, the Company may
accomplish any delegending of such Non-Affiliate Securities represented by such
Global Securities at any time on or after the Free Trade Date by:

 

(i)            providing written notice to the Trustee that the
Free Trade Date has occurred and instructing the Trustee to remove the
Restricted Securities Legend from the Securities;

 

(ii)           providing written notice to Holders of the
Non-Affiliate Securities that the Restricted Securities Legend has been removed
or deemed removed;

 

(iii)          providing written notice to the Trustee and the
Depositary to change the CUSIP number for the Non-Affiliate Securities to the
applicable unrestricted CUSIP number; and

 

(iv)          complying with any Applicable Procedures for
delegending; whereupon the Restricted Securities Legend shall be deemed removed
from any Global Securities without further action on the part of Holders.

 

(j)            So long as and to the extent
that the Affiliate Securities are represented by one or more Certificated
Securities, the Company may accomplish any delegending of such Affiliate 

 

25

 

Securities represented by such Certificated
Securities at any time on or after the Affiliate Free Trade Date by:

 

(i)            providing written notice to the Trustee and the
Holders of the Affiliate Securities that the Affiliate Free Trade Date has
occurred, which notice shall request that the Holders of Affiliate Securities
surrender their Certificated Securities to the Trustee for exchange of such
Certificated Securities for a beneficial interest in a Global Security;

 

(ii)           upon the option and direction of each Holder of
Affiliate Securities and upon surrender by such Holder of its Certificated
Security, either (A) providing written instructions directing the Trustee
to make, or to direct the Registrar to make, an adjustment on its books and
records with respect to a Global Security to reflect an increase in the
aggregate principal amount of the Securities represented by the Global
Security, such instructions to contain information regarding the Depositary
account to be credited with such increase, then the Trustee shall cancel such
Holder’s Certificated Security and cause, or direct the Registrar to cause, in
accordance with the standing instructions and procedures existing between the
Depositary and the Registrar, the aggregate principal amount of Securities
represented by the Global Security to be increased by the aggregate principal
amount of the Certificated Security to be exchanged, and shall credit or cause
to be credited to the account of the Person specified in such instructions a
beneficial interest in the Global Security equal to the principal amount of the
Certificated Security so cancelled; provided, that
if no Global Securities are then outstanding, the Company shall issue and the
Trustee shall authenticate, upon written order of the Company in the form of an
Officers’ Certificate, a new Global Security in the appropriate principal
amount, or (B) providing written instructions directing the Trustee to
exchange such Holder’s Certificated Security for an equal aggregate principal
amount of a Certificated Security that does not bear the Affiliate Securities
Legend, and the Trustee, pursuant to a Company Order, shall authenticate and
deliver a Certificated Security that does not bear the Affiliate Securities
Legend; and

 

(iii)          providing written notice to Holders of the Affiliate
Securities that the Affiliate Securities Legend has been removed or deemed
removed.

 

(k)

 

(i)            On and after the Free Trade Date, the Company shall
also (A) instruct the transfer agent for the Common Stock and Series A
Preferred Stock to remove the Non-Affiliate Restricted Stock Legend from any
Common Stock or Series A Preferred Stock issued upon conversion of the
Non-Affiliate Securities that bear the Non-Affiliate Restricted Stock Legend; (B) notify
the holders of any Common Stock and Series A Preferred Stock issued upon
conversion of the Non-Affiliate Securities (to the extent any Common Stock or Series A
Preferred Stock has been issued upon conversion of the Non-Affiliate
Securities) that such Non-Affiliate Restricted Stock Legend has been removed; (C) if
relevant, notify the transfer agent for the Common Stock and Series A
Preferred Stock to change the CUSIP number for the Common Stock and Series A
Preferred Stock issued upon conversion of the Non-Affiliate Securities to the
applicable unrestricted CUSIP number; and (D) comply with any Applicable
Procedures for delegending any 

 

26

 

Common Stock or Series A Preferred Stock issued upon conversion of
a Security including the Non-Affiliate Restricted Stock Legend.

 

(ii)           On and after the Affiliate Free Trade Date, the
Company shall also (A) instruct the transfer agent for the Common Stock
and Series A Preferred Stock to remove the Affiliate Restricted Stock
Legend from any Common Stock or Series A Preferred Stock issued upon
conversion of the Affiliate Securities that bear the Affiliate Restricted Stock
Legend; (B) notify the holders of any Common Stock and Series A
Preferred Stock issued upon conversion of the Affiliate Securities (to the
extent any Common Stock or Series A Preferred Stock has been issued upon
conversion of the Affiliate Securities) that such Affiliate Restricted Stock
Legend has been removed; (C) if relevant, notify the transfer agent for
the Common Stock and Series A Preferred Stock to change the CUSIP number
for the Common Stock and Series A Preferred Stock issued upon conversion
of the Affiliate Securities to the applicable unrestricted CUSIP number; and (D) comply
with any Applicable Procedures for delegending any Common Stock or Series A
Preferred Stock issued upon conversion of a Security including the Affiliate
Restricted Stock Legend.

 

Section 2.07.          Replacement Securities. If a
mutilated Security is surrendered to the Registrar or if the Holder of a
Security claims that a Security has been lost, destroyed or stolen and the
Holder provides evidence of the loss, theft or destruction satisfactory to the
Company and the Trustee, the Company shall issue and the Trustee shall
authenticate a replacement Security if the requirements of Section 8-405
of the Uniform Commercial Code are met and the Holder satisfies any other
reasonable requirements of the Trustee. If required by the Trustee or the
Company, such Holder shall furnish an indemnity bond sufficient in the judgment
of the Company and the Trustee to protect the Company, the Trustee, the Paying
Agent, the Registrar and any co-registrar from any loss that any of them may
suffer if a Security is replaced. The Company and the Trustee may charge the
Holder for their expenses in replacing a Security.

 

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

 

Every new Security issued pursuant to this Section 2.07
in exchange for any mutilated Security, or in lieu of any destroyed, lost or
stolen Security, shall constitute an original additional contractual obligation
of the Company and any other obligor upon the Securities, 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.

 

Section 2.08.          Outstanding Securities. Securities
outstanding at any time are all Securities authenticated by the Trustee except
for those cancelled by it, those delivered to it for cancellation and those
described in this Section 2.08 as not outstanding. A Security does not
cease to be outstanding because the Company or an Affiliate of the Company
holds the Security; provided, however,
that, except as set forth in Section 9.02, in determining whether the
Holders of the requisite principal amount of Securities have given or concurred
in any request, demand, 

 

27

 

authorization, direction, notice, consent,
waiver or other action hereunder, Securities owned by the Company or any
obligor upon the Securities or any Affiliate of the Company or such other
obligor shall be disregarded (from both the numerator and the denominator) and
deemed not to be outstanding, except that, in determining whether the Trustee
shall be protected in relying upon any such request, demand, authorization,
direction, notice, consent, waiver or other action, only Securities which a
Responsible Officer of the Trustee actually knows to be so owned shall be so
disregarded. Subject to the foregoing, only Securities outstanding at the time
of such determination shall be considered in any such determination (including,
without limitation, determinations pursuant to Articles 6 and 9).

 

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

 

If the Paying Agent holds, in accordance with this
Indenture, on a Fundamental Change Repurchase Date or on the Maturity Date,
money sufficient to pay Securities payable on that date, then immediately after
such Fundamental Change Repurchase Date or Maturity Date, as the case may be,
such Securities shall cease to be outstanding and interest (including
Additional Interest, Qualifying Tender Offer Interest and Reserve Interest), if
any, on such Securities shall cease to accrue and such Securities shall cease
to be convertible.

 

If a Security is converted in accordance with Article 10,
then from and after the time of conversion on the Conversion Date, such
Security shall cease to be outstanding and interest (including Additional
Interest, Qualifying Tender Offer Interest and Reserve Interest), if any, shall
cease to accrue on such Security.

 

Section 2.09.          Temporary Securities. Until
definitive Securities are ready for delivery, the Company may prepare and the
Trustee shall authenticate temporary Securities. Temporary Securities shall be
substantially in the form of definitive Securities but may have variations that
the Company considers appropriate for temporary Securities. Without
unreasonable delay, the Company shall prepare and the Trustee shall
authenticate definitive Securities and deliver them in exchange for Temporary
Securities.

 

Section 2.10.          Cancellation. The Company
at any time may deliver Securities to the Trustee for cancellation. The
Registrar and the Paying Agent shall forward to the Trustee any Securities
surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all Securities surrendered for
registration of transfer, exchange, payment or cancellation and shall dispose
of such cancelled Securities in its customary manner. The Company may not issue
new Securities to replace Securities it has paid or delivered to the Trustee
for cancellation or that any Holder has converted pursuant to Article 10.

 

Section 2.11.          Persons Deemed Owners. Prior to due
presentment of a Security for registration of transfer, the Company, the
Trustee and any agent of the Company or the Trustee may treat the Person in
whose name such Security is registered in the Register as the owner of such
Security for the purpose of receiving payment of principal, interest (including
any Additional Interest, Qualifying Tender Offer Interest and Reserve
Interest), and payment of the Fundamental Change Repurchase Price thereon, for
the purpose of conversion and for all other 

 

28

 

purposes whatsoever, whether or not such
Security be overdue, and neither the Company, the Trustee nor any agent of the
Company or the Trustee shall be affected by notice to the contrary.

 

Section 2.12.          Transfer of Securities.

 

(a)           Notwithstanding any other
provisions of this Indenture or the Securities, (A) transfers of a Global
Security, in whole or in part, shall be made only in accordance with Section 2.06
and Section 2.12(a)(i), (B) transfers of a beneficial interest in a
Global Security for a Certificated Security shall comply with Section 2.06
and Section 2.12(a)(ii) below, and (C) transfers of a
Certificated Security shall comply with Section 2.06 and 2.12(a)(iii) and
(iv) below. Any such transfer shall comply with the Applicable Procedures
to the extent so required.

 

(i)            Transfer of Global Security. A Global
Security may not be transferred, in whole or in part, to any Person other than
the Depositary or a nominee or any successor thereof, and no such transfer to
any such other Person may be registered; provided, that
this clause (i) shall not prohibit any transfer of a 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. Nothing in this Section 2.12(a)(i) shall
prohibit or render ineffective any transfer of a beneficial interest in a
Global Security effected in accordance with the other provisions of this Section 2.12(a).

 

(ii)           Restrictions on Transfer of a Beneficial interest
in a Global Security for a Certificated Security. A beneficial
interest in a Global Security may not be exchanged for a Certificated Security
except:

 

(A)          Certificated Securities shall be issued to all
owners of beneficial interests in a Global Security in exchange for such
interests if:

 

(1)           DTC notifies the Company that it is unwilling or unable
to continue as Depositary for such Global Security and a successor Depositary
is not appointed by the Company within 90 days of such notice;

 

(2)           DTC ceases to be registered as a “clearing agency”
under the Exchange Act and a successor Depositary is not appointed by the
Company within 90 days thereof; or

 

(3)           the Company, at any time, in its sole discretion,
executes and delivers to the Trustee and the Registrar an Officers’ Certificate
stating that the entire Global Security shall be so exchangeable.

 

In connection with the exchange of an entire Global
Security for Certificated Securities pursuant to this clause (ii), such Global
Security shall be deemed to be surrendered to the Trustee for cancellation, and
the Company shall execute, and upon receipt of a Company Order the Trustee
shall authenticate and deliver, to each beneficial owner identified by DTC in
exchange for its beneficial interest in such Global Security, an equal
aggregate principal amount of Certificated Securities of authorized denominations.

 

29

 

(B)           The owner of a beneficial interest in a Global
Security shall be entitled to receive a Certificated Security in exchange for
such interest if an Event of Default has occurred and is continuing.

 

Upon receipt by the Registrar of instructions from
the Holder of a Global Security directing the Registrar to (x) issue one
or more Certificated Securities in the amounts specified to the owner of a
beneficial interest in such Global Security and (y) debit or cause to be
debited an equivalent amount of beneficial interest in such Global Security,
subject to the Applicable Procedures:

 

(1) the Registrar shall notify the Company and
the Trustee of such instructions, identifying the owner and amount of such
beneficial interest in such Global Security;

 

(2) the Company shall promptly execute, and
upon Company Order the Trustee shall authenticate and deliver, to such
beneficial owner Certificated Security(ies) in an equivalent amount to such
beneficial interest in such Global Security; and

 

(3) the Registrar shall decrease such Global
Security by such amount in accordance with the foregoing.

 

(iii)          Transfer and Exchange of Certificated Securities. When
Certificated Securities are presented to the Registrar with a request: (x) to
register the transfer of such Certificated Securities; or (y) to exchange
such Certificated Securities for an equal principal amount of Certificated
Securities of other authorized denominations, the Registrar shall register the
transfer or make the exchange as requested if its reasonable requirements for
such transaction are met; provided, however, that the Certificated Securities surrendered for
transfer or exchange:

 

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

 

(2) so long as such Securities are “restricted
securities” (as defined under Rule 144) or are Affiliate Securities, such
Securities are being transferred or exchanged pursuant to an effective
registration statement under the Securities Act or pursuant to clause (A), (B),
(C) or (D) below, and are accompanied by the following additional
information and documents, as applicable:

 

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

 

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

 

(C)           if such Certificated Securities are being
transferred to a Person the seller reasonably believes is a QIB that is
purchasing for its own account or for the account of another QIB pursuant to a
valid private placement exception under 

 

30

 

the Securities Act and to whom notice is given that the transfer is
being made in reliance on Rule 144A, all in compliance with Rule 144A,
(i) a certification to that effect (in the form set forth in Exhibit B,
if applicable) and (ii) if the Company so requests, an opinion of counsel
in form and substance reasonably satisfactory to it or other evidence in form
and substance reasonably satisfactory to it as to the compliance with the
restrictions set forth in the legend thereon; or

 

(D)          if such Certificated Securities are being
transferred pursuant to an exemption from registration, (i) a
certification to that effect (in the form set forth in Exhibit B,
if applicable) and (ii) if the Company so requests, an opinion of counsel
in form and substance reasonably satisfactory to it or other evidence in form
and substance reasonably satisfactory to it as to the compliance with the
restrictions set forth in the legend thereon; provided,
that in the case of any transfer of an Affiliate Security to a Person taking
delivery thereof as a Certificated Security, any transfer shall be made only to
Persons who agree to be bound by the restrictions applicable to such Holders
for as long as such transferred Securities are either Restricted Securities or
Affiliate Restricted Securities, as the case may be.

 

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

 

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

 

(A)          if such Certificated Securities are being
transferred pursuant Rule 144, (i) a certification to that effect (in
the form set forth in Exhibit B, if applicable) and (ii) if
the Company so requests, an opinion of counsel in form and substance reasonably
satisfactory to it or other evidence in form and substance reasonably
satisfactory to it as to the compliance with the restrictions set forth in the
legend thereon;

 

(B)           if such Certificated Securities are being exchanged
pursuant to an effective registration statement under the Securities Act, a
certification to that effect (in the form set forth in Exhibit B,
if applicable) and

 

(C)           written instructions directing the Trustee to make,
or to direct the Registrar to make, an adjustment on its books and records with
respect to such Global Security to reflect an increase in the aggregate
principal amount of the Securities represented by the Global Security, such
instructions to contain information regarding the Depositary account to be
credited with such increase, then the Trustee shall cancel such Certificated
Security and cause, or direct the Registrar to cause, in accordance with the
standing instructions and procedures existing between the Depositary and the
Registrar, the aggregate principal amount of Securities represented by the
Global Security to be increased by the aggregate principal amount of the
Certificated Security to be exchanged, and shall credit or 

 

31

 

cause to be credited to the account of the Person specified in such
instructions a beneficial interest in the Global Security equal to the
principal amount of the Certificated Security so cancelled. If no Global Securities
are then outstanding, the Company shall issue and the Trustee shall
authenticate, upon written order of the Company in the form of an Officers’
Certificate, a new Global Security in the appropriate principal amount.

 

Notwithstanding any other provisions of this
Indenture or the Securities, the Company shall not permit any Affiliate
Security represented by a Certificated Security to be exchanged for a
beneficial interest in a Global Security unless such Affiliate Security has
been registered under the Securities Act, resold pursuant to an exemption from
the registration requirements of the Securities Act in a transaction that
results in such Affiliate Security no longer being “restricted securities” (as
defined under Rule 144), or, at any time following the Affiliate Free
Trade Date, such Affiliate Security otherwise ceases being “restricted
securities” (as defined under Rule 144).

 

(b)           Subject to the succeeding Section 2.12(c),
every Security shall be subject to the restrictions on transfer provided in Section 2.06(f),
including the delivery of an opinion of counsel, if so required. Whenever any
Restricted Security or Affiliate Security is presented or surrendered for
registration of transfer or for 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 B, 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 registration of transfer or exchange any Security
not so accompanied by a properly completed certificate.

 

(c)           The restrictions imposed by Section 2.06(f) upon
the transferability of any Non-Affiliate 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
or, if earlier, upon the expiration of the holding period applicable to sales
thereof under Rule 144 by a Person other than an Affiliate or a former
Affiliate of the Company.  Any
Non-Affiliate Security as to which such restrictions on transfer shall have
expired in accordance with their terms or shall have terminated may, upon a surrender
of such Security for exchange to the Registrar in accordance with the
provisions of this Section 2.12 (accompanied, in the event that such
restrictions on transfer have terminated by reason of a transfer in compliance
with Rule 144 or any successor provision, by an opinion of counsel having
substantial experience in practice under the Securities Act and otherwise
reasonably acceptable in form and substance to the Company, addressed to the
Company, to the effect that the transfer of such Security has been made in
compliance with Rule 144), be exchanged for a new Security, of like tenor
and aggregate principal amount, which shall not bear the legends required by Section 2.01(d).
The Company shall provide the Trustee written notice upon the occurrence of the
Free Trade Date and promptly after a registration statement with respect to the
Securities or any Common Stock or Series A Preferred Stock issued upon
conversion of the Securities has been declared effective 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.

 

32

 

 

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

 

(i)            Notwithstanding any other provisions of this
Indenture or the Securities, a Global Security shall not be exchanged in whole
or in part for a Security registered in the name of any Person other than the
Depositary or one or more nominees thereof; provided, that,
subject to Section 2.12(a)(ii) a Global Security may be exchanged for
Securities registered in the name 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
or (B) an Event of Default has occurred and is continuing with respect to
the Securities. Any Global Security exchanged pursuant to clause (A) above
shall be so exchanged in whole and not in part, and any Global Security
exchanged pursuant to clause (B) above may be exchanged in whole or from
time to time in part as directed by the Depositary. Any Security issued in
exchange for a Global Security or any portion thereof shall be a Global
Security; provided, that any such Security so
issued that is registered in the name of a Person other than the Depositary or
a nominee thereof shall be a Certificated Security.

 

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

 

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

 

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

 

(e)           Neither any members of, or
participants in, the Depositary (collectively, the “Agent
Members”) nor any other Persons on whose behalf Agent Members may
act shall have any rights under this Indenture with respect to any Global
Security registered in the name of the 

 

33

 

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. The registered
Holder of a Global Security may grant proxies and otherwise authorize any
Person, including Agent Members and Persons that may hold interests through
Agent Members, to take any action that a Holder is entitled to take under this
Indenture or the Securities.

 

Section 2.13.          CUSIP and ISIN Numbers.

 

(a)           The Company, in issuing the
Global Securities, will use restricted CUSIP and ISIN numbers for such Global
Securities (if then generally in use) until such time as the Restricted
Securities Legend is removed pursuant to Section 2.06(i). At such time as
the Restricted Securities Legend is removed from such Securities pursuant to Section 2.06(i),
the Company will use an unrestricted CUSIP number for such Security, but only
with respect to the Securities where the Restricted Securities Legend is so
removed. Neither the Company nor the Trustee shall have any responsibility for
any defect in the CUSIP or ISIN number that appears on any Security, check, or
advice of payment, and any such notice may state that no representation is made
as to the correctness of such numbers either as printed on the Securities and
that reliance may be placed only on the other identification numbers printed on
the Securities. The Company shall promptly notify the Trustee in the event of
any change in the CUSIP or ISIN numbers.

 

(b)           The Company, upon issuing
shares of Common Stock or Series A Preferred Stock upon conversion of any
Restricted Securities, will use a restricted CUSIP number for such shares of
Common Stock and Series A Preferred Stock. With respect to any share of
Common Stock or Series A Preferred Stock, until such time as the
Non-Affiliate Restricted Stock Legend is removed pursuant to Section 2.06(k)(i) from
such share of Common Stock or Series A Preferred Stock such restricted
CUSIP will be the CUSIP number for such share of Common Stock or Series A
Preferred Stock, as the case may be.  At
such time as the Non-Affiliate Restrictive Stock Legend is removed from such
share of Common Stock or Series A Preferred Stock pursuant to Section 2.06(k)(i) or
otherwise, an unrestricted CUSIP number for such share of Common Stock or Series A
Preferred Stock, as the case may be, will be deemed to be the CUSIP number
therefor, but only with respect to the shares where Non-Affiliate Restricted
Securities Legend is so removed.

 

(c)           The Company, upon issuing
shares of Common Stock or Series A Preferred Stock upon conversion of any
Affiliate Restricted Securities, will use a restricted CUSIP number for such
shares of Common Stock and Series A Preferred Stock. With respect to any
share of Common Stock or Series A Preferred Stock, until such time as the
Affiliate Restricted Stock Legend is removed pursuant to Section 2.06(k)(ii) from
such share of Common Stock or Series A Preferred Stock such restricted
CUSIP will be the CUSIP number for such share of Common Stock or Series A
Preferred Stock, as the case may be.  At
such time as the Affiliate Restrictive 

 

34

 

Stock Legend is removed from such share of
Common Stock or Series A Preferred Stock pursuant to Section 2.06(k)(ii) or
otherwise, an unrestricted CUSIP number for such share of Common Stock or Series A
Preferred Stock, as the case may be, will be deemed to be the CUSIP number
therefor, but only with respect to the shares where Affiliate Restricted
Securities Legend is so removed.

 

ARTICLE
3

REDEMPTION
AND REPURCHASES

 

Section 3.01.          No Company Right to Redeem.   The Company shall have no right to redeem the
Securities before the Maturity Date.

 

Section 3.02.          Repurchase of Securities at
Option of the Holder Upon a Fundamental Change.

 

(a)           If a Fundamental Change
occurs at any time, then each Holder shall have the right, at such Holder’s
option, to require the Company to repurchase all of such Holder’s Securities,
or any portion of the principal amount thereof that is equal to $1,000 or an
integral multiple of $1,000, for cash on the date (the “Fundamental
Change Repurchase Date”) specified by the Company that is not less
than twenty (20) Business Days and not more than thirty-five (35) Business Days
after the date of the Fundamental Change Repurchase Right Notice at a
repurchase price equal to 100% of the principal amount thereof, together with
accrued and unpaid interest thereon to, but excluding, the Fundamental Change
Repurchase Date (unless the Fundamental Change Repurchase Date is after a
Regular Record Date and on or prior to the Interest Payment Date to which it
relates, in which case the Company shall instead pay the full interest amount
payable on such Interest Payment Date to the record holder as of such Regular
Record Date and the repurchase price shall be equal to 100% of the principal
amount of the Securities to be repurchased) (the “Fundamental
Change Repurchase Price”).

 

Repurchases
of Securities under this Section 3.02 shall be made, at the option of the
Holder thereof, upon:

 

(i)            in the case of Certificated Securities, delivery to the Trustee (or
other Paying Agent appointed by the Company) by a Holder of a duly completed
notice (the “Fundamental Change Repurchase Notice”)
in the form set forth on the reverse of the Security or, in the case of Global
Securities, a notice that complies with the Applicable Procedures, prior to the
Close of Business on the Business Day immediately preceding the Fundamental
Change Repurchase Date, subject to extension to comply with applicable law; and

 

(ii)           delivery or book-entry transfer of the Securities (together with all necessary
endorsements) to the Trustee (or other Paying Agent appointed by the Company)
at any time after delivery of the Fundamental Change Repurchase Notice and
prior to the Close of Business on the Business Day immediately preceding the
Fundamental Change Repurchase Date, subject to extension to comply with
applicable law, at the Corporate Trust Office of the Trustee (or other Paying
Agent appointed by the Company), such delivery being a condition to receipt by
the Holder of the Fundamental Change Repurchase Price therefor; provided, that such Fundamental Change Repurchase Price
shall be so paid pursuant to this Section 3.02 only if the

 

35

 

Security so delivered to the
Trustee (or other Paying Agent appointed by the Company) shall conform in all
respects to the description thereof in the related Fundamental Change
Repurchase Notice.

 

The
Fundamental Change Repurchase Notice shall state:

 

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

 

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

 

(C)           that the Securities are to
be repurchased by the Company pursuant to the applicable provisions of the
Securities and this Indenture; provided, however,
that if the Securities are not in certificated form, the Fundamental Change
Repurchase Notice must also comply with the Applicable Procedures.

 

Any purchase by the Company contemplated pursuant to
the provisions of this Section 3.02 shall be consummated by the delivery
of the consideration to be received by the Holder promptly following the later
of the Fundamental Change Repurchase Date and the time of the book-entry
transfer or delivery of the Security.

 

The Trustee (or other Paying Agent appointed by the
Company) shall promptly notify the Company of the receipt by it of any
Fundamental Change Repurchase Notice or written notice of withdrawal thereof in
accordance with the provisions of Section 3.02(c).

 

Any Security that is to be repurchased only in part
shall be surrendered to the Trustee (with, if the Company or the Trustee so
requires, due endorsement by, or a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by the Holder thereof
or his attorney-in-fact duly authorized in writing), and the Company shall
execute, and the Trustee shall authenticate and make available for delivery to
the Holder of such Security without service charge, a new Security or
Securities, containing identical terms and conditions, each in an authorized
denomination in aggregate principal amount equal to and in exchange for the
unrepurchased portion of the principal of the Security so surrendered.

 

(b)           On or before the fifteenth
(15th) day after the occurrence of a Fundamental Change, the Company shall
provide to all Holders of the Securities and the Trustee and Paying Agent a
written notice (the “Fundamental Change
Repurchase Right Notice”) of the occurrence of such Fundamental
Change and of the repurchase right at the option of the Holders arising as a
result thereof.

 

Each
Fundamental Change Repurchase Right Notice shall specify (if applicable):

 

(i)            the events causing the
Fundamental Change;

 

(ii)           the date of the Fundamental
Change;

 

36

 

(iii)          the last date on which a
Holder may exercise its repurchase rights under this Section 3.02;

 

(iv)          the Fundamental Change
Repurchase Price;

 

(v)           the Fundamental Change
Repurchase Date;

 

(vi)          the name and address of the
Paying Agent and the Conversion Agent, if applicable;

 

(vii)         that the Securities are
eligible to be converted, the applicable Conversion Rate and any adjustments to
the applicable Conversion Rate;

 

(viii)        that the Securities with
respect to which a Fundamental Change Repurchase Notice has been delivered by a
Holder may be converted only if the Holder withdraws the Fundamental Change
Repurchase Notice in accordance with the terms of this Indenture;

 

(ix)           that the Holder must
exercise its repurchase right by the Close of Business on the Business Day
immediately preceding the Fundamental Change Repurchase Date;

 

(x)            that the Holder has the
right to withdraw any Securities tendered for repurchase prior to the Close of
Business on the Business Day immediately preceding the Fundamental Change
Repurchase Date; and

 

(xi)           the procedures the Holder
must follow to require the Company to purchase its Securities under this Section 3.02.

 

No failure of the Company to give the foregoing
notices and no defect therein shall limit the Holders’ repurchase rights or
affect the validity of the proceedings for the repurchase of the Securities
pursuant to this Section 3.02.

 

(c)           A Fundamental Change
Repurchase Notice may be withdrawn (in whole or in part) by a written notice of
withdrawal delivered to the Paying Agent at any time prior to the Close of
Business on the Business Day prior to the Fundamental Change Repurchase Date
(the “Fundamental Change Expiration Time”),
specifying:

 

(i)            the principal amount of the
withdrawn Securities;

 

(ii)           if Certificated Securities
have been issued, the certificate numbers of the withdrawn Securities; and

 

(iii)          the principal amount, if
any, of such Security that remains subject to the original Fundamental Change
Repurchase Notice, which portion must be in principal amounts of $1,000 or a
multiple of $1,000;

 

37

 

provided, however, that if the
Securities are not in certificated form, the notice must comply with the
Applicable Procedures.

 

(d)           On or prior to 10:00 a.m.,
New York City time, on the Fundamental Change Repurchase Date, the Company
shall deposit with the Trustee (or other Paying Agent appointed by the Company
or if the Company is acting as its own Paying Agent, set aside, segregate and
hold in trust as provided in Section 2.04) an amount of money sufficient
to repurchase on the Fundamental Change Repurchase Date all of the Securities
to be repurchased on such date at the Fundamental Change Repurchase Price.
Subject to receipt of funds by the Trustee (or other Paying Agent appointed by
the Company), payment for Securities properly surrendered for repurchase (and
not withdrawn) prior to the Fundamental Change Expiration Time shall be made
promptly on or after the later of (x) the Fundamental Change Repurchase
Date with respect to such Security (provided the Holder has satisfied the
conditions to the payment of the Fundamental Change Repurchase Price in this Section 3.02),
and (y) the time of book-entry transfer or the delivery of such Security
to the Trustee (or other Paying Agent appointed by the Company) by the Holder
thereof in the manner required by this Section 3.02 by mailing checks for
the amount payable to the Holders of such Securities entitled thereto as they
shall appear in the Security Register; provided, however,
that all payments shall be subject to Section 3.02(a) and payments to
the Depositary shall be made by wire transfer of immediately available funds to
the account of the Depositary or its nominee. 
The Trustee shall, promptly after such payment and upon written demand
by the Company, return to the Company any funds in excess of the Fundamental
Change Repurchase Price.

 

(e)           If the Trustee (or other
Paying Agent appointed by the Company) holds money sufficient to repurchase on
the Fundamental Change Repurchase Date all the Securities or portions thereof
that are to be purchased on the Fundamental Change Repurchase Date, then (i) such
Securities shall cease to be outstanding and interest shall cease to accrue on
such Securities (whether or not book-entry transfer of the Securities is made
or whether or not the Security is delivered or transferred to the Paying
Agent), and (ii) all other rights of the Holders of such Securities shall
terminate other than the right to receive the Fundamental Change Repurchase
Price and previously accrued and unpaid interest upon delivery or transfer of
the Securities.

 

(f)            No Securities may be
repurchased at the option of Holders upon a Fundamental Change if there has
occurred and is continuing an Event of Default other than an Event of Default
that is cured by the payment of the Fundamental Change Repurchase Price of the
Securities.

 

(g)           In connection with any
repurchase upon the occurrence of a Fundamental Change, to the extent required
by applicable law, the Company shall:

 

(i)            comply with the provisions
of Rule 13e-4, Rule 14e-1 and any other tender offer rules under
the Exchange Act that may then be applicable;

 

(ii)           file the related Schedule TO
(or any successor schedule, form or report) or any other schedule required
under the Exchange Act; and

 

38

 

(ii)           otherwise comply with all
federal and state securities laws as necessary to effect a repurchase of
Securities by the Company at the option of such Holder.

 

ARTICLE
4

COVENANTS

 

Section 4.01.          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 or pursuant to this Indenture. Any amounts of cash
to be given to the Trustee or Paying Agent shall be deposited with the Trustee
or Paying Agent by 10:00 a.m. (New York City time) by the Company on the
required date.

 

(b)           On the Maturity Date, each
Holder will be entitled to receive on such date $1,000 in cash for each $1,000
in principal amount of Securities, together with accrued and unpaid interest
to, but not including, the Maturity Date, unless earlier converted or
repurchased. With respect to Global Securities, principal and interest will be
paid to the Depositary in immediately available funds. With respect to any
Certificated Securities, principal and interest will be payable at the office
or agency maintained by the Company for such purpose.

 

(c)           The Company will pay or
cause to be paid interest on:

 

(i)            Global Securities to the Depositary in immediately
available funds;

 

(ii)           any Certificated Securities having a principal
amount of less than $5,000,000, by check mailed to the Holders of those
Securities, or, at the Company’s option, by wire transfer in immediately
available funds; provided, however, at maturity, interest
will be payable as described in Section 4.01(b); and

 

(iii)          any Certificated Securities having a principal
amount of $5,000,000 or more, by wire transfer in immediately available funds
at the Company’s option or the election of the Holders of those Securities duly
delivered to the Trustee at least five (5) Business Days prior to the
relevant interest payment date; provided, however, at maturity, interest will be payable as described
in Section 4.01(b).

 

(d)           The Company shall make any
required interest (including any Additional Interest, Qualifying Tender Offer
Interest and Reserve Interest) payments to the Person in whose name each
Security is registered at the Close of Business on the Regular Record Date for
such interest payment. The principal, accrued and unpaid interest (including
Additional Interest, Qualifying Tender Offer Interest and Reserve Interest), if
any, and payment of the Fundamental Change Repurchase Price shall be considered
paid on the applicable date due if on such date the Trustee or the Paying Agent
holds, in accordance with this Indenture, cash sufficient to pay all such
amounts then due.

 

Section 4.02.          SEC and Other Reports.

 

(a)           So long as any Securities
are outstanding, the Company shall deliver to the Trustee, within fifteen (15)
days after the Company would have been required to file with the 

 

39

 

SEC (giving effect to any grace period
provided by Rule 12b-25 under the Exchange Act), copies of the
Company’s annual reports and of the information, documents and other reports
(or copies of such portions of any of the foregoing as the SEC may by rules and
regulations prescribe) that the Company is required to file with the SEC
pursuant to Section 13 or 15(d) of the Exchange Act.  Documents filed by the Company with the SEC
via its EDGAR system (or any successor thereto) shall be deemed to be filed
with the Trustee as of the time such documents are so filed. In the event the
Company is at any time no longer subject to the reporting requirements of Section 13
or 15(d) of the Exchange Act, it shall continue to provide the Trustee
with reports containing substantially the same information as would have been
required to be filed with the SEC had the Company continued to have been
subject to such reporting requirements. In such event, such reports shall be
provided at the times the Company would have been required to provide reports
had it continued to have been subject to such reporting requirements. The
Company also shall comply with the provisions of TIA Section 314(a) as
it relates to reports, information and documents that the Company may be
required to file with the Trustee pursuant to TIA Section 314(a) and
shall furnish to Holders, beneficial owners and prospective purchasers of the Securities
or shares of Common Stock or Series A Preferred Stock issuable upon
conversion of the Securities, upon their request, the information required to
be delivered pursuant to Rule 144A(d)(4) under the Securities Act
until the time as the Securities and shares of Common Stock and Series A
Preferred Stock issuable upon conversion of the Securities are no longer “restricted
securities” within the meaning of Rule 144 under the Securities Act,
assuming that the Securities and shares of Common Stock and Series A
Preferred Stock issuable upon conversion of the Securities have not been held
by an Affiliate of the Company. 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).

 

(b)           If, at any time during the
six-month period beginning on, and including, the date which is six months
after the last Issue Date of the Securities (including of the Option
Securities) (such date, the “Start Date”),
the Company fails to timely file any periodic report that the Company is
required to file with the SEC pursuant to Section 13 or 15(d) of the
Exchange Act, as applicable (giving effect to any grace period provided by Rule 12b-25
under the Exchange Act and other than current reports on Form 8-K), the
Company shall pay Additional Interest on the Securities at an annual rate equal
to 0.50% of the aggregate principal amount of the Securities outstanding for
each day during such period in which the Company has failed to make such
filings.  So long as such condition
described in this Section 4.02(b) continues, the Company shall pay
such Additional Interest on April 1 and October 1 of each year to the
Holders of record of the Securities on the immediately preceding March 15
and September 15. When such condition ceases to continue, accrued and
unpaid Additional Interest through the date of cessation shall be paid in cash
on the subsequent Interest Payment Date to the record holder. In no event will
the Company be required to pay Additional Interest (including any Additional
Interest otherwise payable under this Section 4.02(b), Section 4.02(c) or
Section 6.02(b)) at an annual rate in excess of 0.50%.

 

(c)           Additionally, the Company
shall pay Additional Interest on the Securities if the Company fails to cause
the Securities (other than Affiliate Securities) to become Freely Tradable 

 

40

 

on or prior to one year from the last Issue
Date of the Securities (including of the Option Securities) at an annual rate
equal to 0.50% of the aggregate principal amount of the Securities outstanding.
Such Additional Interest shall be payable in the same manner as Additional
Interest payable pursuant to Section 4.02(b).

 

(d)           In the event that the Company
is required to pay Additional Interest to Holders of Securities pursuant to Section 4.02(b),
Section 4.02(c) or Section 6.02(b), the Company shall provide a
direction or order in the form of a written notice to the Trustee (and if the
Trustee is not the Paying Agent, to the Paying Agent) of the Company’s
obligation to pay such Additional Interest no later than three (3) Business
Days prior to the date on which any such Additional Interest is scheduled to be
paid. Such notice shall set forth the amount of Additional Interest to be paid
by the Company on such payment date and direct the Trustee (or, if the Trustee
is not the Paying Agent, to the Paying Agent) to make payment to the extent it
receives funds from the Company to do so. The Trustee shall not at any time be
under any duty or responsibility to any Holder to determine whether Additional
Interest is payable, or with respect to the nature, extent, or calculation of
the amount of Additional Interest owed, or with respect to the method employed
in such calculation of Additional Interest.

 

Section 4.03.          Compliance Certificate. The Company
shall deliver to the Trustee within 120 days after the end of each fiscal year
(beginning with the fiscal year ending December 31, 2009) of the Company
an Officers’ Certificate, stating whether or not to the best knowledge of the
signers thereof, the Company is in default in the performance and observance of
any of the terms, provisions and conditions of this Indenture (without regard
to any period of grace or requirement of notice provided hereunder) and if the
Company shall be in default, specifying all such defaults and the nature and
status thereof of which they may have knowledge.

 

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

 

Section 4.05.          Maintenance of Office or Agency. The Company
shall maintain in New York, New York, an office or agency of the Trustee,
Registrar, Paying Agent and Conversion Agent where Securities may be presented
or surrendered for payment, where Securities may be surrendered for
registration of transfer, exchange, repurchase or conversion and where notices
and demands to or upon the Company in respect of the Securities and this
Indenture may be served. The office of U.S. Bank Trust National Association, an
Affiliate of the Trustee, at 100 Wall Street, Suite 1600, New York, New
York 10005, attention: Corporate Trust Services (Incyte Corporation — 4.75%
Convertible Senior Notes due 2015), shall initially be such office or agency
for all of the aforesaid purposes. The Company shall give prompt written notice
to the Trustee of the location, and of any change in the location, of any such
office or agency (other than a change in the location of the Corporate Trust
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 13.02.

 

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 

 

41

 

time to time rescind such
designations; provided, however, that no such
designation or rescission shall in any manner relieve the Company of its
obligation to maintain an office or agency in New York, New York for such
purposes.

 

Section 4.06.          Existence.  Subject to Article 5, the Company shall
do or cause to be done all things necessary to preserve and keep in full force
and effect its existence and rights (charter and statutory); provided, that the Company shall not be required to preserve
any such right if the Company shall determine that the preservation thereof is
no longer desirable in the conduct of the business of the Company and that the
loss thereof is not disadvantageous in any material respect to the Holders.

 

Section 4.07.          Maintenance of Properties.  The Company shall cause all properties used
or useful in the conduct of its business or the business of any Significant
Subsidiary to be maintained and kept in good condition, repair and working
order and supplied with all necessary equipment and will cause to be made all
necessary repairs, renewals, replacements, betterments and improvements thereof,
all as is consistent with the Company’s past practice and is in the judgment of
the Company may be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times; provided, that nothing in this Section 4.07 shall prevent the Company from discontinuing the
operation or maintenance of any of such properties if such discontinuance is,
in the judgment of the Company, desirable in the conduct of its business or the
business of any Subsidiary and not disadvantageous in any material respect to
the Holders.

 

Section 4.08.          Payment of Taxes and Other Claims.  The Company shall pay or discharge, or cause
to be paid or discharged, before the same may become delinquent, (i) all
taxes, assessments and governmental charges levied or imposed upon the Company
or any Significant Subsidiary or upon the income, profits or property of the
Company or any Significant Subsidiary, (ii) all claims for labor,
materials and supplies which, if unpaid, might by law become a Lien upon the
property of the Company or any Significant Subsidiary and (iii) all stamp
taxes and other duties, if any, which may be imposed by the United States or
any political subdivision thereof or therein in connection with the issuance,
transfer, exchange, conversion or repurchase of any Securities or with respect
to this Indenture other than pursuant to Sections 2.07 and 10.07; provided, that, in the case of clauses (i) and (ii),
the Company shall not be required to pay or discharge or cause to be paid or
discharged any such tax, assessment, charge or claim (A) if the failure to
do so will not, in the aggregate, have a material adverse impact on the Company
and its Subsidiaries, taken as a whole, or (B) if the amount,
applicability or validity is being contested in good faith by appropriate
proceedings.  The Company shall be
authorized to withhold an amount sufficient to satisfy its U.S. federal income
tax withholding obligation from any cash payment made with respect to the
Securities (including a repurchase of the Securities) or upon a conversion of
the Securities.  The Company shall
promptly remit the full amount withheld to the relevant taxing authority in
accordance with applicable law.

 

Section 4.09.          Stay, Extension and Usury Laws.  The Company (to the extent that it may
lawfully do so) shall not at any time insist upon, plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay, extension or
usury law or other law which would prohibit or forgive the Company from paying
all or any portion of the principal of or interest (including any Additional
Interest, Qualifying Tender Offer Interest and Reserve Interest) on the 

 

42

 

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 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 4.10.          Limitation
on the Incurrence of Additional Indebtedness and on Certain Actions.

 

(a)           The
Company shall not, and shall not permit any of its Subsidiaries
to:

 

(i)            incur any Indebtedness, except for Permitted
Indebtedness, issue any Disqualified Equity Interests or, in the case of the
Company’s Subsidiaries, issue any preferred stock;

 

(ii)           create, incur, assume or suffer to exist (a) any
Lien on any of the properties or assets of the Company to secure Indebtedness,
or (b) any Lien on JAK Intellectual Property Assets, except in each case,
for Permitted Liens; or

 

(iii)          sell, lease, license, transfer or otherwise dispose
of any of JAK Intellectual Property Assets, except for licenses of the JAK
Intellectual Property Assets to one or more Pharmaceutical Companies in the
ordinary course of business and except for Permitted Dispositions.

 

(b)           The accrual of interest, the
accretion or amortization of original issue discount, the payment of interest
on any Indebtedness in the form of additional Indebtedness with the same terms
and the payment of dividends on the Company’s Disqualified Equity Interests in
the form of additional shares of the same class of Disqualified Equity
Interests (or in the form of Qualified Equity Interests) shall not be deemed to
be an incurrence of Indebtedness or issuance of Disqualified Equity Interests
for purposes of this Section 4.10.

 

(c)           If, on any date following
the initial issuance of the Securities, (a) the aggregate principal amount
of Securities outstanding is less than 25% of the aggregate principal amount of
Securities initially issued and (b) no Default or Event of Default has
occurred and is continuing under this Indenture, then this Section 4.10
shall no longer be applicable to the Securities.  In addition, if a Qualified Transaction
occurs, then immediately following the consummation of such transaction this Section 4.10
shall no longer be applicable to the Securities.

 

Section 4.11.          Pledge and Escrow Agreement.  The Company shall maintain the Pledge and
Escrow Agreement in full force and effect prior to its expiration in accordance
with its terms, shall comply with the terms thereof and shall not amend the
Pledge and Escrow Agreement in any manner adverse to the holders of the
Securities without the consent of the each Holder affected thereby.  Simultaneously with the original issuance of
the Securities, the Company shall deliver to the Escrow Agent for deposit in
the Escrow Account Pledged Securities in the amount of $56,268,631.42.

 

43

 

 

ARTICLE
5

SUCCESSOR CORPORATION

 

Section 5.01.          Company May Consolidate,
Etc., Only on Certain Terms.

 

The Company shall not
consolidate with or merge with or into any other Person or sell, convey,
transfer or lease all or substantially all of its properties and assets to
another Person, unless:

 

(i)            either (A) the Company
is the surviving corporation or (b) the resulting, surviving or transferee
Person (if other than the Company) is a corporation organized and existing
under the laws of the United States of America, any State thereof or the
District of Columbia, and such Person expressly assumes by supplemental
indenture all of the Company’s obligations under the Securities and this
Indenture;

 

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

 

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

 

Section 5.02.                          Successor
Substituted

 

Upon any consolidation of the Company with, or
merger of the Company into, any other Person or any conveyance, transfer or
lease of the properties and assets of the Company substantially as an entirety
in accordance with Section 5.01, 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, the predecessor Person shall be relieved of all obligations and
covenants under this Indenture and the Securities.  If the Company is still in existence after
the transaction, it will be released from its obligations and covenants
hereunder and under the Securities.

 

ARTICLE
6

DEFAULTS AND REMEDIES

 

Section 6.01.                          Events
of Default.

 

(a)           “Event of
Default”, wherever used herein, means any one of the following
events (whatever the reason for such Event of Default and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of
any administrative or governmental body):

 

44

 

(i)            default by the Company in
the payment of any interest upon any Security when it becomes due and payable,
and continuance of such default (x) for any Interest Payment Date through
and including October 1, 2012 for a period of ten (10) Business Days,
or (y) for any Interest Payment Date after October 1, 2012, for a
period of thirty (30) days;

 

(ii)           default by the Company in
the payment of the principal of any Security when due and payable at its Stated
Maturity, upon required repurchase, acceleration or otherwise;

 

(iii)          failure by the Company to
comply with its obligation to convert the Securities upon exercise of a Holder’s
conversion right and such failure continues for a period of five (5) days;

 

(iv)          failure by the Company to
comply with its obligations under Article 5;

 

(v)           failure by the Company to
issue a Fundamental Change Repurchase Right Notice in accordance with Section 3.02(b);

 

(vi)          failure by the Company for a
period of thirty (30) days after written notice from the Trustee or the Holders
of at least 25% in principal amount of the outstanding Securities has been
received by the Company to comply with the covenant set forth in Section 4.10;

 

(vii)         failure by the Company for a
period of sixty (60) days after written notice from the Trustee or the Holders
of at least 25% in principal amount of the outstanding Securities has been
received by the Company to comply with any of its agreements contained in the
Securities or this Indenture (other than any agreement the failure to comply
with is specifically addressed elsewhere in this Section 6.01(a));

 

(viii)        default under any
agreements, indentures or instruments under which the Company or any Subsidiary
of the Company then has outstanding, or by which there may be secured or
evidenced, any indebtedness for money borrowed having a principal amount,
together with accrued interest and premium, if any, in excess of $10,000,000 in
the aggregate, whether such indebtedness now exists or shall hereafter be
created, which default (i) shall have resulted in such indebtedness
becoming or being accelerated and declared due and payable prior to its Stated
Maturity or (ii) constituted a failure to pay at least $10,000,000 of such
indebtedness when due and payable at its Stated Maturity (and including any
grace period relating to such indebtedness), upon required repurchase or upon
acceleration, unless such indebtedness is discharged or such acceleration is
rescinded or annulled within ten (10) days of such acceleration;

 

(ix)           one or more judgments,
orders or decrees for the payment of money in excess of $10,000,000, either
individually or in the aggregate, shall be entered against the Company or any
of its Significant Subsidiaries and shall not be discharged, bonded, paid,
stayed, waived, subject to a negotiated settlement or subject to insurance
within 60 days after (i)

 

45

 

the date on which the right
to appeal thereof has expired if no such appeal has commenced, or (ii) the
date on which all rights to appeal have been extinguished;

 

(x)            the Pledge and Escrow
Agreement ceases to be in full force and effect or enforceable prior to its
expiration in accordance with its terms;

 

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

 

(xii)          an involuntary case or other
proceeding shall be commenced against the Company or any of its Significant
Subsidiaries seeking liquidation, reorganization or other relief with respect
to it or its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of the Company or any of its
Significant Subsidiaries or any substantial part of its respective property,
and such involuntary case or other proceeding shall remain undismissed and
unstayed for a period of sixty (60) consecutive days.

 

Section 6.02.          Acceleration of Maturity;
Rescission and Annulment.

 

(a)           If an Event of Default
occurs and is continuing, then and in every such case except as provided below,
the Trustee or the Holders of not less than 25% in principal amount of the
outstanding Securities may declare the principal of all the outstanding
Securities and accrued and unpaid interest, if any, to be due and payable
immediately, by a notice in writing to the Company (and to the Trustee if given
by Holders), and upon any such declaration such principal and accrued and
unpaid interest, if any, shall become immediately due and payable. However,
upon an Event of Default arising out of Section 6.01(a)(xi) or Section 6.01(a)(xii)
(except in each case with respect to any Significant Subsidiary) the principal
amount of all the outstanding Securities, plus accrued and unpaid interest to
the acceleration date, if any, shall be due and payable immediately without
notice from the Trustee or Holders.

 

(b)           Notwithstanding the
foregoing, at the election of the Company, the sole remedy with respect to an
Event of Default for the failure by the Company to comply with its covenants
set forth in Section 4.02 (any such Event of Default, a “Reporting Default”), shall for the first 365 days after the
occurrence of such Reporting Default consist exclusively of the right to
receive Additional Interest on the Securities at an annual rate equal to 0.50%
of the principal amount of the Securities. 
The Additional Interest shall accrue on all outstanding Securities from
and including the date on which such Reporting Default first occurs until, but
excluding, the 365th day thereafter (or such earlier date on which such
Reporting Default is cured or waived) and shall be payable in the same manner
as the Additional Interest payable pursuant to Section 4.02.  On the 365th day after such Reporting Default
(if such violation is not cured or waived 

 

46

 

prior to such 365th day), such Additional
Interest will cease to accrue and the Trustee or the Holders of not less than
25% in principal amount of the outstanding Securities may declare the principal
of and accrued and unpaid interest on all such Securities to be due and payable
immediately.

 

(c)           If the Company elects to pay
the Additional Interest as the sole remedy for the Reporting Default, the
Company shall notify in writing the Holders, the Paying Agent and the Trustee
of such election at any time on or before the Close of Business on the date on
which such Event of Default first occurs. 
If the Company fails to give such notice, the Trustee or the Holders of
not less than 25% of principal amount of the outstanding Securities may declare
the principal amount of and accrued and unpaid interest (including Additional
Interest, Qualified Tender Offer Interest and Reserve Interest, if any) on such
Securities to be due and payable immediately. 
Unless and until a Responsible Officer of the Trustee receives at the
Corporate Trust Office such a notice, the Trustee may assume without inquiry
that Additional Interest is not payable.

 

Section 6.03.          Collection of Indebtedness and
Suits for Enforcement by Trustee.

 

The
Company covenants that after the occurrence of an Event of Default specified in
Sections 6.01(a)(i) or 6.01(a)(ii), the Company shall, upon demand of the
Trustee, pay to it, for the benefit of the Holders of such Securities, the
whole amount then due and payable on such Securities for principal and
interest, and, to the extent that payment of such interest shall be legally
enforceable, interest on any overdue principal and on any overdue interest, at
the rate borne by the Securities, and, in addition thereto, 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.

 

If
an Event of Default occurs and is continuing, the Trustee may in its discretion
proceed to protect and enforce its rights and the rights of the Holders by such
appropriate judicial proceedings as the Trustee shall deem most effectual to
protect and enforce any such rights, whether for the specific enforcement of
any covenant or agreement in this Indenture or in aid of the exercise of any
power granted herein, or to enforce any other proper remedy.

 

Section 6.04.          Trustee May File Proofs of
Claim.

 

In case of any judicial proceeding relative to the
Company (or any other obligor upon the Securities), its property or its
creditors, the Trustee shall be entitled and empowered, by intervention in such
proceeding or otherwise, to take any and all actions authorized under the TIA
in order to have claims of the Holders and the Trustee allowed in any such
proceeding. In particular, the Trustee shall be authorized to collect and
receive any moneys or other property payable or deliverable on any such claims
and to distribute the same; and any custodian, receiver, assignee, trustee,
liquidator, sequestrator or other similar official in any such judicial
proceeding is hereby authorized by each Holder to make such payments to the
Trustee and, in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due 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 7.06.

 

47

 

No provision of this Indenture shall be deemed to
authorize the Trustee to authorize or consent to or accept or adopt on behalf
of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Securities or the rights of any Holder thereof or to
authorize the Trustee to vote in respect of the claim of any Holder in any such
proceeding.

 

Section 6.05.         Trustee May Enforce Claims
Without Possession of Securities.

 

All rights of action and claims under this Indenture
or the Securities may be prosecuted and enforced by the Trustee without the
possession of any of the Securities or the production thereof in any proceeding
relating thereto, and any such proceeding instituted by the Trustee shall be
brought in its own name as trustee of an express trust, and any recovery of
judgment shall, after provision for the payment of the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, be
for the ratable benefit of the Holders of the Securities in respect of which
such judgment has been recovered.

 

Section 6.06.         Application of Money Collected.

 

Any money or property money collected by the Trustee
pursuant to this Article shall be applied in the following order, at the
date or dates fixed by the Trustee and, in case of the distribution of such
money on account of principal or interest, upon presentation of the Securities
and the notation thereon of the payment if only partially paid and upon
surrender thereof if fully paid:

 

FIRST:  To the
payment of all amounts due the Trustee under Section 7.06;

 

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

 

THIRD:  The
balance, if any, to the Company or any other Person or Persons entitled
thereto.

 

Section 6.07.         Limitation on Suits.

 

Subject to Section 6.08, no Holder of any
Security shall have any right to institute any proceeding, judicial or
otherwise, with respect to this Indenture, or for the appointment of a receiver
or trustee, or for any other remedy hereunder, unless

 

(a)           such Holder has previously
given written notice to the Trustee of a continuing Event of Default;

 

(b)           the Holders of not less than
25% in principal amount of the outstanding Securities shall have made written
request to the Trustee to institute proceedings in respect of such Event of
Default in its own name as Trustee hereunder;

 

48

 

(c)           such Holder or Holders have
offered in writing to the Trustee security or indemnity satisfactory to it
against any loss, expenses and liabilities to be incurred in compliance with
such request;

 

(d)           the Trustee for sixty (60)
days after its receipt of such notice, request and offer of indemnity has failed
to institute any such proceeding; and

 

(e)           no direction that, in the
opinion of the Trustee, is inconsistent with such written request has been
given to the Trustee during such sixty (60) day period by the Holders of a
majority in principal amount of the outstanding Securities;

 

it being understood and
intended that no one or more Holders shall have any right in any manner
whatever by virtue of, or by availing of, any provision of this Indenture to
affect, disturb or prejudice the rights of any other Holders, or to obtain or
to seek to obtain priority or preference over any other Holders or to enforce
any right under this Indenture, except in the manner herein provided and for
the equal and ratable benefit of all the Holders.

 

Section 6.08.         Unconditional Right of Holders to
Receive Principal and Interest and to Convert.

 

Notwithstanding any other provision in this
Indenture, the Holder of any Security shall have the right, which is absolute
and unconditional, to receive payment of the principal of and interest on such
Security expressed in such Security and to convert such Security in accordance
with Article 10 and to institute suit for the enforcement of any such
payment and right to convert, and such rights shall not be impaired without the
consent of such Holder.

 

Section 6.09.         Restoration of Rights and
Remedies.

 

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

 

Section 6.10.         Rights and Remedies Cumulative.

 

No right or remedy herein conferred upon or reserved
to the Trustee or to the Holders is intended to be exclusive of any other right
or remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent
the concurrent assertion or employment of any other appropriate right or
remedy.

 

49

 

Section 6.11.         Delay or Omission Not Waiver.

 

No delay or omission of the Trustee or of any Holder
of any Security to exercise any right or remedy accruing upon any Event of
Default shall impair any such right or remedy or constitute a waiver of any
such Event of Default or an acquiescence therein.  Every right and remedy given by this Article or
by law to the Trustee or to the Holders may be exercised from time to time, and
as often as may be deemed expedient, by the Trustee (subject to the limitations
contained in this Indenture) or by the Holders, as the case may be.

 

Section 6.12.         Control by Holders.

 

The Holders of a majority in principal amount of the
outstanding Securities shall have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on the Trustee; provided,
that

 

(a)           such direction shall not be
in conflict with any rule of law or with this Indenture, and

 

(b)           the Trustee may take any
other action deemed proper by the Trustee which is not inconsistent with such
direction or this Indenture.

 

The Trustee shall have the right to decline to
follow any such direction if the Trustee in good faith shall, by a Responsible
Officer, determine that the proceeding so directed, subject to the Trustee’s
duties under the TIA, would involve the Trustee in personal liability or might
be unduly prejudicial to the Holders not involved in the proceeding.

 

Section 6.13.         Waiver of Past Defaults and
Rescission.

 

The Holders of not less than a majority in principal
amount of the outstanding Securities may, by written notice to the Company and
the Trustee, on behalf of the Holders of all the Securities:

 

(a)           waive any past default or
Event of Default hereunder and its consequences, except a default

 

(i)            in the payment of the
principal of, accrued and unpaid interest on any Security that remains uncured,

 

(ii)           in respect of the failure to
satisfy the Company’s obligations upon conversion of a Security in accordance
with Article 10 hereunder, or

 

(iii)          in the payment of any
applicable Fundamental Change Repurchase Price.

 

(b)           at any time after a
declaration of acceleration has been made, rescind and annul any such
declaration of acceleration with respect to the Securities and its consequences,
if:

 

(i)            such rescission will not
conflict with any judgment or decree of a court of competent jurisdiction; and

 

50

 

(ii)           such declaration is not the
result of a failure to pay principal or interest, a failure to satisfy the
Company’s obligations upon conversion of a Security or a payment default
arising from the Company’s failure to repurchase any Securities when required.

 

Upon any such waiver, such default shall cease to
exist, and any Event of Default arising therefrom shall be deemed to have been
cured, for every purpose of this Indenture, but no such waiver shall extend to
any subsequent or other default or impair any right consequent thereon.

 

Section 6.14.         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, suffered or omitted by it as Trustee, a court may require any party
litigant in such suit to file an undertaking to pay the costs of such suit, and
may assess costs against any such party litigant, in the manner and to the
extent provided in the TIA; provided, that
neither this Section nor the TIA shall be deemed to authorize any court to
require such an undertaking or to make such an assessment in any suit
instituted by the Company or in any suit for the enforcement of the right to
convert any Security in accordance with Article 10.

 

Section 6.15.         Notice of Default.

 

If a default occurs and is continuing and is known
to a Responsible Officer of the Trustee, the Trustee must send to each Holder
notice of the default within ninety (90) days after it occurs or, if later,
promptly after the Trustee obtains knowledge thereof.  Except in the case of a default in the
payment of principal of or interest on any Security, the Trustee may withhold
notice if and so long as the Trustee in good faith determines that withholding
notice is in the interests of the Holders. 
The Company shall deliver to the Trustee, within thirty (30) days after
the occurrence thereof, written notice in the form of an Officers’ Certificate
of any events which constitute a Default or Event of Default, their status and
what action the Company is taking or proposes to take with respect thereto.

 

ARTICLE
7

TRUSTEE

 

Section 7.01.         Duties of Trustee.

 

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

 

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

 

(i)            the Trustee undertakes to perform such duties and
only such duties as are specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture against the Trustee;
and

 

51

 

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

 

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

 

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

 

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

 

(iii)          the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.12.

 

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

 

(e)           The Trustee shall not be
liable for interest on any money received by it.

 

(f)            Money held in trust by the
Trustee need not be segregated from other funds except to the extent required
by law.

 

(g)           No provision of this
Indenture shall require the Trustee to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties
hereunder or in the exercise of any of its rights or powers.

 

(h)           Every provision of this
Indenture relating to the conduct or affecting the liability of or affording
protection to the Trustee shall be subject to the provisions of this Article 7
and to the provisions of the TIA, and the provisions of this Article 7
shall apply to the Trustee, Registrar, Paying Agent and Conversion Agent.

 

(i)            The Trustee shall not be
deemed to have notice of a Default or an Event of Default unless (i) a
Responsible Officer has received written notice thereof from the Company or any
Holder or (ii) a Responsible Officer shall have actual knowledge thereof.

 

Section 7.02.          Rights of Trustee.

 

(a)           The Trustee may conclusively
rely 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. The Trustee may, however, in its discretion 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 expense of the
Company and shall incur no liability of any kind by reason of such inquiry or
investigation.

 

52

 

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

 

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

 

(d)           The Trustee shall not be
liable for any action it takes or omits to take in good faith that it believes
to be authorized or within its rights or powers; provided,
however, that the Trustee’s conduct does
not constitute willful misconduct or negligence.

 

(e)           The Trustee may consult with
counsel of its own selection, and the advice or opinion of counsel with respect
to legal matters relating to this Indenture and the Securities shall be full
and complete authorization and protection from liability with respect to any
action taken, omitted or suffered by it hereunder in good faith and in
accordance with the advice or opinion of such counsel.

 

(f)            The permissive rights of the
Trustee to do things enumerated in this Indenture shall not be construed as a
duty unless so specified herein.

 

(g)           The Trustee shall be under
no obligation to exercise any of the rights or powers vested in it by this
Indenture at the request or direction of any of the Holders pursuant to this
Indenture, unless such Holders shall have offered to the Trustee security or
indemnity reasonably satisfactory to the Trustee against the costs, expenses
and liabilities that might be incurred by it in compliance with such request or
direction.

 

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

 

(i)            The Trustee may request that
the Company deliver an Officers’ Certificate setting forth the names of
individuals and/or titles of officers authorized at such time to take specified
actions pursuant to this Indenture, which Officers’ Certificate may be signed
by any Person authorized to sign an Officers’ Certificate, including any Person
specified as so authorized in any such certificate previously delivered and not
superseded.

 

Section 7.03.          Individual Rights of Trustee. The Trustee
in its individual or any other capacity may become the owner or pledgee of
Securities and may otherwise deal with the Company or its affiliates with the
same rights it would have if it were not Trustee. Any Paying Agent, Registrar,
Conversion Agent or co-registrar may do the same with like rights. However, the
Trustee must comply with Sections 7.09 and 7.10.

 

Section 7.04.          Trustee’s Disclaimer. The Trustee
shall not be responsible for and makes no representation as to the validity,
priority or adequacy of this Indenture or the Securities or the Pledge and
Escrow Agreement, it shall not be accountable for the Company’s use of the
proceeds

 

53

 

from the Securities, and it shall not be
responsible for any statement of the Company in this Indenture or in any
document issued in connection with the sale of the Securities or in the
Securities other than the Trustee’s certificate of authentication.

 

Section 7.05.          Reports by Trustee to Holders. As promptly
as practicable after each December 31 beginning with December 31,
2009, and in any event prior to March 31 in each year thereafter, the
Trustee shall mail to each Holder a brief report dated as of December 31
each year that complies with TIA Section 313(a), if and to the extent
required by such subsection. The Trustee shall also comply with TIA Section 313(b).

 

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

 

Section 7.06.          Compensation and Indemnity. The Company
shall pay to the Trustee from time to time such compensation as shall be agreed
upon from time to time in writing for its services. The Trustee’s compensation
shall not be limited by any law on compensation of a trustee of an express
trust. The Company shall reimburse the Trustee upon request for all reasonable
out-of-pocket fees and expenses incurred or made by it, including costs of
collection, in addition to the compensation for its services. Such expenses
shall include the reasonable compensation, fees and expenses, disbursements and
advances of the Trustee’s agents, counsel, accountants and experts. The Company
shall fully indemnify the Trustee against any and all loss, liability, claim,
damage or expense (including reasonable attorneys’ fees and expenses) incurred
by it in connection with the acceptance and administration of this trust and
the performance of its duties hereunder, including the costs and expenses of
defending itself against any claim (whether asserted by the Company, any Holder
or any other Person). The Trustee shall notify the Company promptly of any
claim for which it may seek indemnity. Failure by the Trustee to so notify the
Company of any claim for which it may seek indemnity of which a Responsible
Officer has actually received written notice shall not relieve the Company of
its obligations hereunder except to the extent such failure shall have
materially prejudiced the Company. The Company shall defend the claim and the
Trustee shall cooperate in the defense. If the Trustee is advised by counsel in
writing that it may have available to it defenses which are in conflict with
the defenses available to the Company, then the Trustee may have separate
counsel and the Company shall pay the reasonable fees and expenses of such
counsel. The Company need not reimburse any expense or indemnify against any
loss, liability or expense incurred by the Trustee through the Trustee’s own
willful misconduct or negligence. The Company need not pay for any settlement
made by the Trustee without the Company’s consent, such consent not to be
unreasonably withheld. All indemnifications and releases from liability granted
hereunder to the Trustee shall extend to its officers, directors, employees,
agents, attorneys, custodians, successors and assigns.

 

To secure the Company’s payment obligations in this Section 7.06,
the Trustee shall have a lien prior to the Securities on all money or property
held or collected by the Trustee other than the Pledged Securities and money or
property held in trust to pay the principal, accrued and unpaid interest
(including Additional Interest, Qualifying Tender Offer Interest and Reserve

 

54

 

Interest), if any, and
payment of the Fundamental Change Repurchase Price on particular Securities.

 

The Company’s payment obligations pursuant to this Section shall
survive the resignation or removal of the Trustee and the discharge of this
Indenture. In the event that the Trustee incurs expenses after the occurrence
of a Default specified in Section 6.01(a)(xi) or 6.01(a)(xii) with respect
to the Company, the expenses are intended to constitute expenses of
administration under the Bankruptcy Law.

 

Section 7.07.          Replacement of Trustee. The Trustee
may resign at any time by so notifying the Company at least thirty (30) days
prior to the proposed resignation. The Holders of a majority in aggregate
principal amount of the Securities then outstanding may remove the Trustee by
so notifying the Trustee. The Company shall remove the Trustee if:

 

(a)           the Trustee fails to comply
with Section 7.09;

 

(b)           the Trustee is adjudged
bankrupt or insolvent;

 

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

 

(d)           the Trustee otherwise
becomes incapable of acting.

 

If the Trustee resigns, is removed by the Company or
by the Holders of a majority in aggregate principal amount of the Securities
then outstanding, or if a vacancy exists in the office of Trustee for any
reason (the Trustee in such event being referred to herein as the retiring
Trustee), the Company shall promptly appoint a successor Trustee.

 

A successor Trustee shall deliver a written
acceptance of its appointment to the retiring Trustee and to the Company.
Thereupon the resignation or removal of the retiring Trustee shall become
effective, and the successor Trustee shall have all the rights, powers and
duties of the Trustee under this Indenture. The successor Trustee shall mail a
notice of its succession to Holders. The retiring Trustee shall upon payment of
all of its costs and the costs of its agents and counsel promptly transfer all
property held by it as Trustee to the successor Trustee, subject to the lien
provided for in Section 7.06.

 

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

 

If the Trustee fails to comply with Section 7.09,
any Holder who has been a bona fide Holder of a Security for at least six
months may petition any court of competent jurisdiction for the removal of the
Trustee and the appointment of a successor Trustee.

 

Notwithstanding the replacement of the Trustee
pursuant to this Section, the Company’s obligations under Section 7.06
shall continue for the benefit of the retiring Trustee.

 

55

 

Section 7.08.          Successor Trustee by Merger. If the
Trustee consolidates with, merges or converts into, or transfers all or
substantially all its corporate trust business or assets to, another
corporation or banking association, the resulting, surviving or transferee
corporation or banking association without any further act shall be the
successor Trustee.

 

In case at the time such successor or successors by
merger, conversion or consolidation to the Trustee shall succeed to the trusts
created by this Indenture, any of the Securities shall have been authenticated
but not delivered, any such successor to the Trustee may adopt the certificate
of authentication of any predecessor trustee, and deliver such Securities so
authenticated; and in case at that time any of the Securities shall not have
been authenticated, any such successor to the Trustee may authenticate such
Securities either in the name of any predecessor hereunder or in the name of
such successor.

 

Section 7.09.          Eligibility; Disqualification. The Trustee
shall at all times satisfy the requirements of TIA Section 310(a). The
Trustee shall have (or, in the case of a corporation included in a bank holding
company system, the related bank holding company shall have) a combined capital
and surplus of at least $50,000,000 as set forth in its (or its related bank
holding company’s) most recent published annual report of condition. The
Trustee shall comply with TIA Section 310(b), subject to the penultimate
paragraph thereof; provided, however,
that there shall be excluded from the operation of TIA Section 310(b)(1) any
indenture or indentures under which other securities or certificates of
interest or participation in other securities of the Company are outstanding if
the requirements for such exclusion set forth in TIA Section 310(b)(1) are
met.

 

Section 7.10.          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.

 

Section 7.11.          Trustee’s Application for
Instructions from the Company. Any application by the
Trustee for written instructions from the Company may, at the option of the
Trustee, set forth in writing any action proposed to be taken or omitted by the
Trustee under this Indenture and the date on and/or after which such action
shall be taken or such omission shall be effective. The Trustee shall not be
liable to the Company for any action taken by, or omission of, the Trustee in
accordance with a proposal included in such application on or after the date
specified in such application (which date shall not be less than three (3) Business
Days after the date any officer of the Company actually receives such
application, unless any such officer shall have consented in writing to any
earlier date) unless prior to taking any such action (or the effective date in
the case of any omission), the Trustee shall have received written instructions
in response to such application specifying the action to be taken or omitted.

 

ARTICLE
8

DISCHARGE OF INDENTURE

 

Section 8.01.          Discharge of Liability on
Securities. When (a) the Company delivers to the
Registrar all outstanding Securities (other than Securities replaced pursuant
to Section 2.07) for cancellation or (b) all outstanding Securities
have become due and payable, and the Company

 

56

 

(x) irrevocably deposits with the
Trustee, the Paying Agent or the Conversion Agent, as applicable, (i) cash
sufficient to pay at Stated Maturity or upon any Fundamental Change Repurchase
Date all principal and interest due or to become due to such Stated Maturity or
Fundamental Change Repurchase Date, as the case may be, and (ii) sufficient
shares of Common Stock or Series A Preferred Stock solely to satisfy all
outstanding conversions (if any) and (y) pays or causes to be paid all
other sums payable hereunder by the Company, then this Indenture shall cease to
be of further effect (except as to (A) remaining rights of registration of
transfer, substitution and exchange and conversion of Securities, (B) rights
hereunder of Holders to receive payments of principal of and interest on, the
Securities and the other rights, duties and obligations of Holders, as
beneficiaries hereof with respect to the amounts, if any, so deposited with the
Trustee and (C) the rights, obligations and immunities of the Trustee
hereunder), and the Trustee, on written demand of the Company accompanied by an
Officers’ Certificate and an Opinion of Counsel and at the reasonable cost and
expense of the Company, shall execute proper instruments acknowledging
satisfaction of and discharging this Indenture.

 

Section 8.02.          Repayment to the Company. Subject to
the terms of the Pledge and Escrow Agreement, the Trustee and the Paying Agent
shall promptly turn over to the Company upon request any excess money or
securities held by them at any time.

 

Subject to any applicable abandoned property law,
the Trustee and the Paying Agent shall pay to the Company upon request any money
held by them for payments on the Securities that remains unclaimed for two
years after the date on which such payments became due, and, thereafter,
Holders entitled to the money must look to the Company for payment as general
creditors and all liability of the Trustee or Paying Agent with respect to such
money shall cease.

 

ARTICLE
9

AMENDMENTS

 

Section 9.01.          Without Consent of Holders.  The Company and the Trustee may amend or
supplement this Indenture or the Securities without the consent of any Holder:

 

(a)           to cure any ambiguity,
omission, defect or inconsistency that does not adversely affect Holders of the
Securities;

 

(b)           to provide for the
assumption of the Company’s obligations under this Indenture by a successor
upon any merger, consolidation or asset transfer permitted under this Indenture
and to provide for conversion of the Securities into Reference Property;

 

(c)           to provide any security for
or add guarantees with respect to the Securities;

 

(d)           to comply with any
requirement of the SEC in connection with the qualification of this Indenture
under the TIA;

 

(e)           to add covenants that would
benefit the Holders or to surrender any rights the Company has under this
Indenture;

 

(f)            to provide for a successor
Trustee in accordance with the terms of this Indenture or to otherwise comply
with any requirement of this Indenture;

 

57

 

(g)           to increase the Conversion
Rate;

 

(h)           to add Events of Default
with respect to the Securities;

 

(i)            to add circumstances under
which the Company shall pay additional interest on the Securities;

 

(j)            to make any change that does
not adversely affect any Holder of outstanding Securities; and

 

(k)           to conform the terms of this
Indenture or the Securities to the “Description of Notes” section of the
Offering Circular.

 

After an amendment under this Section 9.01
becomes effective, the Company shall mail to Holders a notice briefly
describing such amendment. The failure to give such notice to all such Holders,
or any defect therein, shall not impair or affect the validity of an amendment
under this Section.

 

Section 9.02.          With Consent of Holders. With the
written consent of the Holders of at least a majority in aggregate principal
amount of the Securities at the time outstanding, the Company and the Trustee
may amend or supplement this Indenture or the Securities.  However, without the consent of each Holder
affected, an amendment to this Indenture or the Securities may not:

 

(a)           make any change in the
percentage of principal amount of Securities whose Holders must consent to an
amendment, supplement or waiver or to make any change in this provision for
modification;

 

(b)           reduce any rate of interest
or extend the time for payment of interest on the Securities;

 

(c)           reduce the principal amount
of, or the Fundamental Change Repurchase Price with respect to, the Securities,
or change their final Stated Maturity;

 

(d)           make payments on the
Securities payable in currency other than as originally stated in the Security;

 

(e)           impair any Holder’s right to
institute suit for the enforcement of any payment on the Securities;

 

(f)            adversely affect the ranking
of the Securities as the senior unsecured indebtedness of the Company;

 

(g)           waive a continuing default
or Event of Default regarding any payment on the Securities;

 

(h)           adversely affect the right
of any Holder to require the Company to repurchase all or any of its Securities
as provided in Article 3;

 

58

 

(i)            adversely affect the right
of any Holder to convert any Security as provided in Article 10; or

 

(j)            modify the provisions of the
Pledge and Escrow Agreement relating to the Pledged Securities in a manner
adverse to the Holders in any material respect.

 

Notwithstanding anything to the contrary herein, Section 4.10
of this Indenture may be modified or amended or any provision of such Section 4.10
may be waived with the consent of the Holders of the lesser of (a) a
majority in aggregate principal amount of the Securities then outstanding or (b) $100,000,000
aggregate principal amount of the then outstanding Securities, including in
each case, for this purpose, Securities held by any Affiliate of the Company
(other than a Subsidiary or direct or indirect parent entity of the Company).

 

It shall not be necessary for the consent of the
Holders under this Section 9.02 to approve the particular form of any
proposed amendment, but it shall be sufficient if such consent approves the
substance thereof.

 

After an amendment under this Section 9.02
becomes effective, the Company shall mail to each Holder a notice briefly
describing the amendment. The failure to give such notice to all such Holders,
or any defect therein, shall not impair or affect the validity of an amendment
under this Section.

 

Section 9.03.          Compliance with Trust Indenture
Act. Every supplemental indenture executed pursuant to this Article shall
comply with the TIA.

 

Section 9.04.          Revocation and Effect of
Consents, Waivers and Actions. A consent to an amendment
or a waiver by a Holder of a Security shall bind the Holder and every
subsequent Holder of that Security or portion of the Security that evidences
the same Indebtedness as the consenting Holder’s Security, even if notation of
the consent or waiver is not made on the Security.  However, any such Holder or subsequent Holder
may revoke the consent or waiver as to such Holder’s Security or portion of the
Security if the Trustee receives the notice of revocation before the date the
supplemental indenture setting forth the amendment or waiver becomes effective.
After an amendment or waiver becomes effective, it shall bind every Holder. An
amendment or waiver becomes effective in accordance with the terms of the
supplemental indenture, which shall become effective upon the execution thereof
by the Trustee.

 

Section 9.05.          Notation on or Exchange of
Securities. Securities authenticated and delivered after the
execution of any supplemental indenture pursuant to this Article may, and
shall if required by the Trustee, bear a notation in form approved by the
Trustee as to any matter provided for in such supplemental indenture. If the
Company shall so determine, new Securities so modified as to conform, in the
opinion of the Trustee and the Board of Directors, to any such supplemental
indenture may be prepared and executed by the Company and authenticated and
delivered by the Trustee in exchange for outstanding Securities.

 

Section 9.06.          Trustee to Sign Supplemental
Indentures. Upon the request of the Company, the Trustee shall
sign any supplemental indenture authorized pursuant to this Article 9 if
the amendment contained therein does not affect the rights, duties, liabilities
or immunities of the Trustee. If it does, the Trustee may, but need not, sign
such supplemental indenture. In

 

59

 

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

 

Section 9.07.        Effect of Supplemental Indentures. Upon the
execution of any supplemental indenture under this Article, this Indenture
shall be modified in accordance therewith, 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
10

CONVERSIONS

 

Section 10.01.      Right to Convert.  Subject to and upon compliance with the
procedures for conversion set forth in this Article 10, and except as set
forth in Section 10.03, a Holder shall have the right, at such Holder’s
option, to convert the principal amount of any Securities, or any portion of
such principal amount thereof which is $1,000 or a multiple thereof, into
Common Stock at an initial conversion rate (the “Conversion
Rate”) equivalent to 113.9601 shares of Common Stock per $1,000
principal amount of Securities, subject to adjustment as set forth in Section 10.05,
until the Close of Business on the second Scheduled Trading Day immediately
preceding the Maturity Date; provided, that
in the case of any conversion pursuant to this Article 10, the Holder must
deliver a Conversion Notice (as defined below) no later than the Close of
Business on the second Scheduled Trading Day immediately preceding the Maturity
Date.  The number of shares of Common
Stock and Series A Preferred Stock, if any, issuable and the cash payable
in lieu of fractional shares, if any, upon conversion of a Security shall be
determined as set forth in Section 10.03 and Section 10.04.

 

Section 10.02.      Conversion Procedures.  The following procedures shall apply to the
conversion of Securities:

 

(a)           In respect of Certificated
Securities, a Holder must (i) complete and manually sign the conversion
notice attached to the Security (the “Conversion Notice”),
or a facsimile of such Conversion Notice; (ii) deliver such Conversion
Notice, which is irrevocable, and the Security to the Conversion Agent at the
office maintained by the Conversion Agent; (iii) furnish endorsements and
transfer documents as may be required by the Conversion Agent and, if required
pursuant to Section 10.07 below, pay all transfer or similar taxes; and (iv) if
required pursuant to Section 10.04(b), pay funds equal to interest payable
on the next Interest Payment Date to which such Holder is not entitled.

 

(b)           In respect of a beneficial
interest in a Global Security, a beneficial owner must comply with Applicable
Procedures for converting a beneficial interest in a Global Security and, if
required pursuant to Section 10.04(b), pay funds equal to interest payable
on the next Interest Payment Date to which such Holder is not entitled and all
taxes or duties if required pursuant to Section 10.07 below.

 

The date a Holder satisfies the foregoing
requirements is the “Conversion Date”
hereunder.

 

60

 

No Conversion Notice with respect to any Securities
may be tendered by a Holder thereof if such Holder has also tendered a
Fundamental Change Repurchase Notice and not validly withdrawn such Fundamental
Change Repurchase Notice in accordance with the applicable provisions of Section 3.02.

 

Upon surrender of a Security that is converted in
part, the Company shall execute, and the Trustee or the Authenticating Agent
shall authenticate and deliver to the Holder, a new Security in an authorized
denomination equal in principal amount to the unconverted portion of the
Security surrendered.

 

Section 10.03.      Conversion into Shares of Series A
Preferred Stock.

 

(a)           Until the
Company has reserved for issuance upon conversion of the Securities a
number of Common Authorized Shares at least equal to the Base Underlying
Shares, the Securities shall be convertible into (i) a number of shares of
Common Stock (the “Common Proportion”)
equal to (A) the Conversion Rate multiplied by (B) the Common
Authorized Shares divided by the Base Underlying Shares and (ii) a number
(which may be a fraction rounded down to the nearest one-thousandth (1/1000th))
of shares of the Series A Preferred Stock (the “Preferred
Proportion”) equal to (A) 1.1 divided by 1,000 multiplied by (B) the
difference between the Conversion Rate and the Common Proportion, in each case,
per $1,000 principal amount of Securities. 
The Common Proportion shall be increased (and the Preferred Proportion
decreased) automatically from time to time whenever the Common Authorized
Shares are increased.  The Series A
Preferred Stock shall initially be convertible into Common Stock at a rate of
1,000 shares of Common Stock for every 1.1 shares of Series A Preferred
Stock.

 

(b)           The Company
shall reserve shares of Common Stock for issuance upon conversion of the
Securities, and the Common Authorized Shares shall be automatically increased,
when, and to the extent that, (A) shares of Common Stock or any of the
Company’s other Indebtedness convertible into shares of Common Stock are
repurchased, acquired or otherwise received by the Company or any of its
Subsidiaries after the Issue Date of the initial Securities issued hereunder
(whether or not in exchange for cash, fair value or any other consideration), (B) authorized
and unissued shares of Common Stock reserved for issuance in respect of other
transactions prior to the Issue Date of the initial Securities issued hereunder
become no longer so reserved after the Issue Date of the initial Securities
issued hereunder or (C) the Company authorizes any additional unissued
shares of Common Stock after the Issue Date of the initial Securities issued
hereunder; provided, that nothing herein shall
limit the Company’s ability to issue shares of Common Stock or reserve shares
of Common Stock for issuance pursuant to the Company’s concurrent offering of
Common Stock on or about September 30, 2009, including shares of Common
Stock issued or reserved for issuance pursuant to the underwriters option in
connection with such offering to purchase additional shares of Common
Stock.  The Company shall not, until the
number of Common Authorized Shares equals or exceeds the Full Underlying
Shares, use any shares of Common Stock that become available for potential
delivery under the Securities as a result of any event described in the
preceding sentence for the settlement or satisfaction of any transaction or
obligation other than the Securities or authorize or reserve any such shares of
Common Stock for future issuance for any purpose other than to satisfy the
Company’s conversion obligations under the Securities.  Until

 

61

 

the
number of Common Authorized Shares equals or exceeds the Full Underlying
Shares, the Company shall provide an Officers’ Certificate that sets forth the
number of Common Authorized Shares, the Common Proportion and the Preferred
Proportion, together with any supporting documentation and calculations, to the
Trustee and the Conversion Agent no later than 15 (fifteen) days following
(1) the end of each fiscal quarter of the Company and (2) any
adjustment of the Common Authorized Shares in an amount that exceeds 250,000
shares of Common Stock.

 

(c)           The Company
shall use reasonable efforts to (1) obtain the approval of the Company’s
stockholders of an increase in the Company’s authorized shares of Common Stock
and (2) increase the Common Authorized Shares to equal or exceed the Full
Underlying Shares.

 

(d)           In the event
that the number of Common Authorized Shares does not equal or exceed the Full
Underlying Shares by January 1, 2010 (the “Initial
Trigger Date”), the Securities shall accrue additional interest at
the rate of 5.25% per annum from and after the Initial Trigger Date, and in the
event that the Company has not established a sufficient reserve by June 30,
2010 (the “Second Trigger Date”), such
additional interest accruing on the Securities will increase from the rate of
5.25% per annum to the rate of 10.25% per annum from and after the Second
Trigger Date, and such additional interest shall increase by an additional 5%
per annum on each anniversary of the Second Trigger Date, and in each case,
such additional interest (all such additional interest, the “Reserve Interest”) shall accrue until the number of Common
Authorized Shares equals or exceeds the Full Underlying Shares and shall be
payable in the same manner as Additional Interest payable pursuant to Section 4.02(b).

 

(e)           In the event
that a Qualifying Tender Offer occurs, from and after such occurrence, in lieu
of the Reserve Interest described in Section 10.03(d), the Securities
shall accrue additional interest at a rate equal to the higher of (A) the
rate of Reserve Interest then in effect and (B) 10.25% per annum, which
additional interest shall increase by an additional 5% per annum on each
anniversary of such Qualifying Tender Offer thereafter.  Such additional interest (the “Qualifying Tender Offer Interest”) shall accrue until the
number of Common Authorized Shares equals or exceeds the Full Underlying Shares
and shall be payable in the same manner as Additional Interest payable pursuant
to Section 4.02(b).

 

(f)            In the event
that the Company is required to pay Reserve Interest to Holders of Securities
pursuant to Section 10.03(d) or Qualifying Tender Offer Interest to
Holders of Securities pursuant to Section 10.03(e), the Company shall
provide a direction or order in the form of a written notice to the Trustee
(and if the Trustee is not the Paying Agent, to the Paying Agent) of the
Company’s obligation to pay such Reserve Interest or Qualifying Tender Offer
Interest no later than three (3) Business Days prior to the date on which
any such Reserve Interest or Qualifying Tender Offer Interest is scheduled to
be paid. Such notice shall set forth the amount of Reserve Interest or
Qualifying Tender Offer Interest to be paid by the Company on such payment date
and direct the Trustee (or, if the Trustee is not the Paying Agent, to the
Paying Agent) to make payment to the extent it receives funds from the Company
to do so. The Trustee shall not at any time be under any duty or responsibility
to any Holder to determine whether Reserve Interest or Qualifying Tender Offer
Interest is payable, or with respect to the nature, extent, or calculation of
the amount of Reserve Interest or Qualifying Tender Offer

 

62

 

Interest
owed, or with respect to the method employed in such calculation of Reserve
Interest or Qualifying Tender Offer Interest.

 

(g)           The Company
shall authorize 100,000 shares of the Series A Preferred Stock pursuant to
a certificate of designation therefor (the “Certificate
of Designation”).  Until the
number of Common Authorized Shares equals or exceeds the Full Underlying
Shares, the Company shall increase the number of authorized shares of the Series A
Preferred Stock as necessary as a result of adjustments set forth in Section 10.05,
so that the Company maintains a sufficient number of authorized shares of Series A
Preferred Stock as may be needed upon conversion of the Securities.  The Company shall not issue any shares of Series A
Preferred Stock from and after the date on which the Common Authorized Shares
equals or exceeds the Full Underlying Shares.

 

(h)           Until the
number of Common Authorized Shares equals or exceeds the Full Underlying Shares
and any outstanding shares of Series A Preferred Stock have automatically
converted into shares of Common Stock in accordance with the Certificate of
Designation, the Company shall not amend or modify the Certificate of
Designation of the Series A Preferred Stock in a manner that would
adversely affect (1) the interests of the Holders of such Series A
Preferred Stock or (2) the conversion rights of Holders of the Securities
in any material respect without the consent of the Holders of the Securities
given in the same manner as provided in Section 9.2 of this Indenture
(and, if required pursuant to such Certificate of Designation and applicable
Delaware Law, approval by the holders of any outstanding Series A
Preferred Stock).

 

(i)            Unless the context is clear
otherwise, references to shares of Common Stock issuable upon conversion of the
Securities in this Indenture shall be deemed to include shares of Series A
Preferred Stock issuance upon conversion of the Securities and the same terms
shall apply to the Series A Preferred Stock as apply to the Common Stock,
except that information regarding the number of shares of Common Stock issuable
upon conversion of the Securities, and the formulas for determining such
numbers, shall be adjusted proportionately on the basis of the ratio of 1.1
shares of Series A Preferred Stock to 1,000 shares of Common Stock.

 

Section 10.04.      Settlement Upon Conversion.

 

(a)           Upon any conversion of any
Security, the Company shall deliver to converting Holders, in respect of each
$1,000 principal amount of Securities tendered for conversion on the third Business
Day immediately following the Conversion Date (or, if earlier, on the Maturity
Date), a number of shares of Common Stock equal to the Conversion Rate on the
relevant Conversion Date (plus cash in lieu of fractional shares, if
applicable).

 

(b)           Payment of Interest Upon
Conversion.

 

(i)            Upon conversion, Holders
shall not receive any additional cash payment or shares of Common Stock or Series A
Preferred Stock for accrued and unpaid interest, except as described in Section 10.04(b)(ii).  Upon conversion, accrued and unpaid interest
to the Conversion Date is deemed to be paid in full rather than cancelled,
extinguished or forfeited.

 

63

 

(ii)           If any Security is converted
after the Close of Business on a Regular Record Date for an Interest Payment
Date but prior to the corresponding Interest Payment Date, Holders of record of
such Security at the Close of Business on such Regular Record Date will receive
on the corresponding Interest Payment Date the interest accrued and unpaid on
such Securities, notwithstanding the conversion prior to the Interest Payment
Date.  Securities surrendered for
conversion during the period from the Close of Business on any Regular Record
Date to the Open of Business on the immediately following Interest Payment Date
must be accompanied by funds equal to the amount of interest payable on such
Interest Payment Date for the Securities so converted; provided,
that no such payment need be made:

 

(A)          for conversions after the
Close of Business on the Regular Record Date for the Maturity Date;

 

(B)           if the Company has specified
a Fundamental Change Repurchase Date that is after a Regular Record Date and on
or prior to the corresponding Interest Payment Date; or

 

(C)           to the extent of any overdue
interest, if any overdue interest exists at the time of conversion with respect
to such Security.

 

(c)           Cash Payments in Lieu of
Fractional Shares.

 

(i)            The Company shall not issue fractional
shares of Common Stock upon conversion of the Securities.  If any fractional share of Common Stock would
be issuable upon the conversion of any Securities, the Company shall make
payment of an amount in cash for the current market value of the fractional
shares of Common Stock.  The current
market value of a fractional share of Common Stock shall be determined
(calculated to the nearest one-ten-thousandth (1/10,000th) of a share) by
multiplying (A) the Last Reported Sale Price of a full share of Common
Stock on the Conversion Date (or, if the Conversion Date is not a Trading Day,
the next following Trading Day) by (B) the fractional amount and rounding
the product to the nearest whole cent.

 

(ii)           The Company shall issue
fractional shares of Series A Preferred Stock down to one-thousandth
(1/1,000th) of a share of Series A Preferred Stock upon conversion of the
Securities.  If any fractional share of Series A
Preferred Stock that is less than one-thousandth (1/1,000th) of a share of Series A
Preferred Stock would be issuable upon the conversion of any Securities, the
Company shall make payment of an amount in cash based upon the current market
value of the shares of Common Stock into which such fractional shares of Series A
Preferred Stock are convertible.  The
current market value of such shares of Common Stock shall be determined
(calculated to the nearest one-ten-thousandth (1/10,000th) of a share) by
multiplying (A) the Last Reported Sale Price of a full share of Common
Stock on the Conversion Date (or, if the Conversion Date is not a Trading Day,
the next following Trading Day) by (B) the number of shares of Common
Stock that such fractional shares of Series A Preferred Stock are
convertible into at the rate of 1,000 shares of Common Stock for every 1.1
shares of Series A Preferred Stock and rounding the product to the nearest
whole cent.

 

64

 

(iii)          For the purposes of clauses (i) and
(ii) above, if multiple Securities shall be surrendered for conversion at
one time by the same Holder, the number of full shares of Common Stock or Series A
Preferred Stock, as the case may be, which shall be issuable upon conversion
(and the number of fractional shares, if any, for which cash shall be
delivered) 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.

 

Section 10.05.                        Adjustment
of Conversion Rate.  The
Conversion Rate shall be adjusted from time to time by the Company if any of
the following events occurs as described below, except that the Company shall
not make any adjustment to the Conversion Rate if Holders may participate in
any transaction described below as an adjustment event as a result of holding
the Securities, without having to convert their Securities, on a basis
equivalent to a holder of a number of shares of Common Stock equal to the
principal amount of Securities held divided by the applicable Conversion Price.  This exception will not apply to any
adjustment to the Conversion Rate upon conversion upon a Make-Whole Fundamental
Change as described in Section 10.06. 
In no event will the Company adjust the Conversion Rate to the extent
that the adjustment would reduce the Conversion Price below the par value per
share of Common Stock.

 

(a)           If the Company issues shares
of Common Stock as a dividend or distribution on shares of Common Stock, or the
Company effects a share split or share combination of Common Stock, the
Conversion Rate will be adjusted based on the following formula:

 

 

where,

 

CR0                           =              the Conversion
Rate in effect at the Close of Business on the Record Date for such dividend or
distribution, or the Effective Date of such share split or share combination,
as applicable;

 

CR1                           =              the Conversion
Rate in effect immediately prior to the Open of Business on the day following
such Record Date or Effective Date, as applicable;

 

OS0                           =              the number of
shares of Common Stock outstanding at the Close of Business on such Record Date
or Effective Date, as applicable; and

 

OS1                           =              the number of
the shares of Common Stock outstanding immediately after, and solely as a
result of, giving effect to such dividend, distribution, share split or share
combination.

 

Any adjustment made under
this Section 10.05(a) shall become effective immediately prior to the
Open of Business on the day following (x) the Record Date for such
dividend or distribution or (y) the Effective Date of such share split or
share combination. If any dividend or distribution of the type described in
this Section 10.05(a) is declared but is not so paid or made, the 

 

65

 

Conversion Rate shall be
readjusted to the Conversion Rate that would then be in effect if such dividend
or distribution had not been declared or announced.

 

(b)           If the Company distributes
to all or substantially all holders of Common Stock any rights, options or
warrants (other than pursuant to a stockholder rights plan adopted by the
Company) entitling such holders for a period of not more than sixty (60) days
to subscribe for or purchase shares of Common Stock at a price per share less
than the Current Market Price of Common Stock, the Conversion Rate will be
adjusted based on the following formula:

 

 

where,

 

CR0                           =              the Conversion
Rate in effect at the Close of Business on the Record Date for such issuance;

 

CR1                           =              the Conversion
Rate in effect immediately prior to the Open of Business on the day following
such Record Date;

 

OS0                           =              the number of
shares of Common Stock outstanding at the Close of Business on such Record
Date;

 

X                                       =              the total
number of shares of Common Stock issuable pursuant to such rights, options or
warrants; and

 

Y                                        =              the number of
shares of Common Stock equal to the aggregate price payable to exercise such
rights or warrants divided by the Current Market Price.

 

Any adjustment made pursuant
to this Section 10.05(b) shall be made successively whenever any such
rights, options or warrants are distributed and shall become effective
immediately prior to the Close of Business on the day following the Record Date
for such distribution. If such rights, options or warrants described in this Section 10.05(b) are
not so distributed, the Conversion Rate shall be readjusted to the Conversion
Rate that would then be in effect if such Record Date for such distribution had
not occurred.  To the extent that such
rights, options or warrants are not exercised prior to their expiration or
shares of Common Stock are otherwise not delivered pursuant to such rights,
options or warrants upon the exercise of such rights, options 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, options or
warrants been made on the basis of delivery of only the number of shares of
Common Stock actually delivered.

 

For purposes of this Section 10.05(b), in
determining whether any rights, options or warrants entitle the Holders to
subscribe for or purchase shares of Common Stock at a price less than the
Current Market Price of such Common Stock, and in determining the aggregate
price payable for shares of such Common Stock, there shall be taken into
account any consideration 

 

66

 

received by the Company for
such rights, options or warrants and any amount payable on exercise or
conversion thereof, with the value of such consideration, if other than cash,
to be determined by the Board of Directors in good faith.

 

(c)           If the Company distributes
shares of its Capital Stock, evidences of its indebtedness, other assets or
property of the Company or rights, options or warrants to acquire the Company’s
Capital Stock or other securities, to all or substantially all holders of
Common Stock, excluding:

 

(i)                                     any dividends
or distributions referred to in Section 10.05(a) or Section 10.05(e);

 

(ii)                                  any rights,
options or warrants referred to in Section 10.05(b);

 

(iii)                               except as
otherwise described below, rights issued pursuant to the Company’s stockholder
rights plan, or the detachment of such rights under the terms of such rights
plan;

 

(iv)                              any dividends
or distributions referred to in Section 10.05(d);

 

(v)                                 any dividends
or distributions in connection with a Merger Event resulting in a change in the
conversion consideration pursuant to Section 10.05(l); and

 

(vi)                              any Spin-Off to
which the provisions set forth in this Section 10.05(c) shall apply;

 

then the Conversion Rate
will be adjusted based on the following formula:

 

 

where,

 

CR0                           =              the Conversion
Rate in effect at the Close of Business on the Record Date for such
distribution;

 

CR1                           =              the Conversion
Rate in effect immediately prior to the Open of Business on the day following
such Record Date;

 

SP0                             =              the Current
Market Price; and

 

FMV                     =              the fair market
value (as determined by the Board of Directors in good faith) on the Record
Date for such distribution of the shares of Capital Stock, evidences of
indebtedness, or other assets, property, rights, options or warrants so
distributed, expressed as an amount per share of Common Stock.

 

67

 

With respect to an adjustment pursuant to this Section 10.05(c) where
there has been a payment of a dividend or other distribution on Common Stock of
any class or series of, or similar equity interest in, a Subsidiary or other
business unit of the Company (a “Spin-Off’),
that are, or, when issued, will be, quoted or listed on any securities exchange
or other market, the Conversion Rate will instead be adjusted based on the
following formula:

 

 

where,

 

CR0                           =              the Conversion
Rate in effect immediately prior to the Close of Business on the last Trading
Day of the Valuation Period (as defined below);

 

CR1:                        =              the Conversion
Rate in effect immediately after the Close of Business on the last Trading Day
of the Valuation Period;

 

FMVo                =              the average of
the Last Reported Sale Prices of the Capital Stock or similar equity interest
distributed to holders of Common Stock applicable to one share of Common Stock
over the first ten (10) consecutive Trading-Day period commencing on, and
including, the effective date of the Spin-Off (the “Valuation
Period”); and

 

MP0                        =              the average of
the Last Reported Sale Prices of the Common Stock over the Valuation Period.

 

The adjustment to the Conversion Rate under the
preceding paragraph shall occur at the Close of Business on the last day of the
Valuation Period; provided, that in respect of any
conversion during the Valuation Period, references within Section 10.05(c) to
ten (10) Trading Days shall be deemed replaced with such lesser number of
Trading Days as have elapsed between the effective date of such Spin-Off and
the Conversion Date in determining the applicable Conversion Rate.

 

If any distribution of the type described in this Section 10.05(c) is
declared but not so made (other than a Spin-Off), the Conversion Rate shall be
readjusted to the Conversion Rate that would then be in effect if such
distribution had not been declared.

 

(d)           If the Company pays any cash
dividend or distribution to all or substantially all holders of Common Stock,
the Conversion Rate will be adjusted based on the following formula:

 

 

where,

 

68

 

CR0                           =              the Conversion
Rate in effect immediately at the Close of Business on the Record Date for such
dividend or distribution;

 

CR1                           =              the Conversion
Rate in effect immediately prior to the Open of Business on the day following
such Record Date;

 

SP0                             =              the Current
Market Price; and

 

C                                        =              the amount in
cash per share the Company distributes to holders of Common Stock.

 

Any adjustment made under this Section 10.05(d) shall
become effective immediately prior to the Open of Business on the day following
the Record Date for such dividend or distribution.  If any dividend or distribution of the type described
in this Section 10.05(d) is declared but not so paid or made, the
Conversion Rate shall be readjusted to the Conversion Rate that would then be
in effect if such dividend or distribution had not been declared.

 

(e)           If the Company or any
Subsidiary of the Company makes a payment in respect of a tender offer or
exchange offer for Common Stock subject to the tender offer rules, to the
extent that the cash and value of any other consideration included in the
payment per share of Common Stock exceeds the Last Reported Sale Price of the
Common Stock on the Trading Day immediately succeeding the last date (the “Expiration Date”) on which tenders or exchanges may be made
pursuant to such tender or exchange offer, the Conversion Rate will be adjusted
based on the following formula:

 

 

where,

 

CR0                           =              the Conversion
Rate in effect immediately prior to the Close of Business on the Expiration
Date;

 

CR1                           =              the Conversion
Rate in effect immediately after the Expiration Date;

 

FMV                     =              the fair market
value (as determined by the Board of Directors in good faith), on the
Expiration Date, of the aggregate value of all cash and any other consideration
paid or payable for shares of Common Stock validly tendered or exchanged and
not withdrawn as of the Expiration Date;

 

OS0                           =              the number of
shares of Common Stock outstanding immediately prior to the last time tenders
or exchanges may be made pursuant to such tender offer or exchange offer (the “Expiration Time”);

 

OS1                           =              the number of
shares of Common Stock outstanding immediately after the Expiration Time (after
giving effect to the purchase of all shares of

 

69

 

Common Stock accepted for purchase exchange in such tender or exchange
offer); and

 

SP1                             =                                         the average of
the Last Reported Sale Prices of Common Stock over the ten (10) consecutive
Trading-Day period commencing on, and including, the Trading Day immediately
following the Expiration Date.

 

Any adjustment made pursuant to this Section 10.05(e) shall
become effective immediately prior to the Open of Business on the Trading Day
immediately following the Expiration Date; provided, that
in respect of any conversion within ten (10) Trading Days immediately
following, and including, the expiration date of any tender or exchange offer,
references with respect to ten (10) Trading Days shall be deemed replaced
with such lesser number of Trading Days as have elapsed between the expiration
date of such tender or exchange offer and the Conversion Date in determining
the applicable Conversion Rate.

 

In the event that the Company or one of its
Subsidiaries is obligated to purchase shares of Common Stock pursuant to any
such tender offer or exchange offer, but the Company, or any such Subsidiary,
is permanently prevented by applicable law from effecting any such purchases,
or all such purchases are rescinded, then the Conversion Rate shall be adjusted
to be the Conversion Rate that would then be in effect if such tender offer or
exchange offer had not been made. Except as set forth in the preceding
sentence, if the application of the formula in this Section 10.05(e) to
any tender offer or exchange offer would result in a decrease in the Conversion
Rate, no adjustment shall be made for such tender offer or exchange offer under
this Section 10.05(e).

 

(f)            To the extent that the
Company has a stockholder rights plan in effect upon conversion of the
Securities into Common Stock, Holders of Securities will receive, in addition
to Common Stock, the rights under the stockholder rights plan, unless prior to
any conversion, the rights have separated from the Common Stock, in which case
the Conversion Rate will be adjusted at the time of separation as if the
Company distributed to all Holders of its Common Stock, shares of its Capital
Stock, evidences of indebtedness or assets as described in clause Section 10.05(c) above,
subject to readjustment in the event of the expiration, termination or
redemption of such rights.  Any
distribution of rights or warrants pursuant to a rights plan that would allow
Holders to receive upon conversion, in addition to any shares of Common Stock,
the right or warrants described therein with respect to such Common Stock
(unless such rights or warrants have separated from the Common Stock) shall not
constitute a distribution of rights or warrants that would entitle Holders to
an adjustment of the Conversion Rate.

 

(g)           For purposes of Sections
10.05(c) and 10.05(d), except with respect to a Spin-Off, in cases where
the fair market value of assets, debt securities or certain rights, options or
warrants to purchase the Company’s securities, or the amount of the cash
dividend or distribution applicable to one share of Common Stock, distributed
to all or substantially all stockholders:

 

(i)            equals or exceeds the
average of the Last Reported Sale Prices of Common Stock over the relevant
consecutive Trading-Day period ending on the Trading Day immediately preceding
the Ex-Date for such distribution; or

 

70

 

(ii)           such average Last Reported
Sale Price exceeds the fair market value of such assets, debt securities or
rights, warrants or options or the amount of cash so distributed by less than
$1.00,

 

rather than being entitled
to an adjustment in the Conversion Rate, the Holder of a Security shall be
entitled to receive upon conversion, in addition to shares of Common Stock, the
kind and amount of assets, debt securities or rights, warrants or options
comprising the distribution, if any, that such Holder would have received if
such Holder had held a number of shares of Common Stock equal to the principal
amount of the Securities held divided by the Conversion Price in effect
immediately prior to the Record Date for determining the stockholders entitled
to receive the distribution; provided, that
if the Board of Directors determines fair market value for purposes of any such
adjustment 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 Current Market Price.

 

(h)           Except as provided in this Section 10.05,
the Company shall not adjust the Conversion Rate for the issuance of shares of
the Common Stock, or any securities convertible into or exchangeable for shares
of Common Stock or the right to purchase shares of Common Stock or such
convertible or exchangeable securities. 
In addition, the Conversion Rate shall not be adjusted:

 

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

 

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

 

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

 

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

 

(v)           for accrued and unpaid
interest on the Securities, if any.

 

(i)            The Company, to the extent
permitted by law and the rules of The NASDAQ Global Market or any other
securities exchange on which the Common Stock is then listed, may increase the
Conversion Rate of the Securities by any amount for a period of at least twenty
(20) Business Days if the Board of Directors determines that such increase
would be in the Company’s best interest. 
The Company may also (but is not required to) increase the Conversion
Rate to avoid or diminish income tax to holders of Common Stock or rights to

 

71

 

purchase shares of Common
Stock in connection with a dividend or distribution of shares of Common Stock
(or rights to acquire shares of Common Stock) or similar event.

 

(j)            The Company shall not take
any voluntary action that would result in an adjustment pursuant to any of the
provisions in Section 10.05(b), Section 10.05(c), Section 10.05(d) or
Section 10.05(e)  without complying, if applicable, with the
stockholder approval rules of The NASDAQ Stock Market (including NASDAQ
Market Rule 5635, which requires stockholder approval of certain issuances
of the Common Stock) or any similar rule of any other stock exchange on
which the Common Stock is listed at the relevant time.

 

(k)           Adjustments to the
applicable Conversion Rate shall be calculated to the nearest one
ten-thousandth (1/10,000th) of a share. 
The Company shall not be required to make an adjustment in the
Conversion Rate unless such adjustment would require a change of at least 1% in
the applicable Conversion Rate.  However,
the Company shall carry forward any adjustments that are less than 1% of the
Conversion Rate and make such carried-forward adjustments, regardless of
whether the aggregate adjustment is less than 1%, upon conversion of the
Securities (solely with respect to the Securities to be converted).

 

(l)            In the event (a “Merger Event”) of:

 

(i)            any reclassification of the
Common Stock;

 

(ii)           any Fundamental Change
described in clause (2) of the definition thereof;

 

(iii)          a share exchange,
consolidation, or merger involving the Company; or

 

(iv)          a conveyance, transfer,
sale, lease or other disposition to another Person of all or substantially all
of the Company’s assets, in which holders of Common Stock received cash,
securities or other property (the “Reference Property”)
in exchange for their shares of Common Stock, the Securities shall become
convertible based on the type and amount of consideration that the Holders of a
number of shares of Common Stock equal to the principal amount of the
Securities divided by the Conversion Price would have received in such
reclassification, change, share exchange, consolidation, merger, conveyance,
transfer, sale, lease or other disposition. 
For purposes of the foregoing, the type and amount of consideration that
a holder of Common Stock received in the case of reclassifications, change,
share exchanges, consolidations, mergers, conveyances, transfers, sales, leases
or other dispositions that cause Common Stock to be exchanged for more than a
single type of consideration (determined based in part upon any form of
stockholder election) will be deemed to be the weighted average of the types
and amounts of consideration received by holders of Common Stock that affirmatively
made such an election.  The above
provisions of this Section 10.05(l) shall similarly apply to
successive Merger Events.

 

Section 10.06.        Adjustment to Conversion Rate
Upon Conversion Upon Make-Whole Fundamental Changes

 

72

 

(a)           If a Make-Whole Fundamental
Change occurs and a Holder elects to convert its Securities in connection with
such Make-Whole Fundamental Change, the Company shall increase the Conversion
Rate for the Securities so surrendered for conversion by a number of additional
shares of Common Stock (the “Additional Shares”)
as described below.  A conversion of
Securities shall be deemed for these purposes to be “in connection with” such
Make-Whole Fundamental Change if the Conversion Notice of the Securities is
received by the Conversion Agent from, and including, the Make-Whole Effective
Date up to, and including, the Business Day immediately prior to the related
Fundamental Change Repurchase Date, or, in the case of a Make-Whole Fundamental
Change that does not also constitute a Fundamental Change, the thirty-fifth
(35th) Trading Day immediately following the Make-Whole Effective Date.

 

(b)           The number of Additional
Shares by which the Conversion Rate will be increased shall be determined by reference
to the table attached as Schedule A, hereto, based on the date on which
the Make-Whole Fundamental Change occurs or becomes effective (the “Make-Whole Effective Date”) and the price (the “Stock Price”) paid per share of Common Stock in the Make-Whole
Fundamental Change. If holders of Common Stock receive only cash in a
Make-Whole Fundamental Change, the Stock Price shall be the cash amount paid
per share. Otherwise, the Stock Price shall be the average of the Last Reported
Sale Prices of the Common Stock over the five (5) consecutive Trading Day
period ending on, and including, the Trading Day preceding the relevant
Make-Whole Effective Date.

 

(c)           The Stock Prices set forth
in the row headings of the table in Schedule A hereto shall be
adjusted as of any date on which the Conversion Rate of the Securities is
otherwise adjusted. The adjusted Stock Prices shall equal the Stock Prices
immediately prior to such adjustment, multiplied by a fraction, the numerator
of which is the Conversion Rate immediately prior to the adjustment giving rise
to the Stock Price adjustment and the denominator of which is the Conversion
Rate as so adjusted.  The number of
Additional Shares set forth in Schedule A shall be adjusted in the same
manner as the Conversion Rate as set forth in Section 10.05.

 

(d)           In the event that either the
exact Stock Price or the Make-Whole Effective Date is not set forth in the
table in Schedule A:

 

(i)            If the Stock Price is
between two adjacent Stock Price amounts in the table or the Make-Whole Effective
Date is between two adjacent Make-Whole Effective Dates in the table, the
number of Additional Shares by which the Conversion Rate will be increased will
be determined by a straight-line interpolation between the number of Additional
Shares set forth for the higher and lower Stock Price amounts and the two
Make-Whole Effective Dates, as applicable, based on a 365-day year.

 

(ii)           If the Stock Price is
greater than $75.00 per share (subject to adjustment in the same manner as the
Stock Prices as set forth in the row headings of the table in Schedule A),
no Additional Shares shall be added to the Conversion Rate.

 

73

 

(iii)                               If the Stock
Price is less than $6.88 per share (subject to adjustment in the same manner as
the Stock Prices as set forth in the row headings of the table in Schedule A),
no Additional Shares shall be added to the Conversion Rate.

 

Notwithstanding the foregoing, in no event shall the
Conversion Rate exceed 145.3488 per $1,000 principal amount of Securities,
subject to adjustments in the same manner as the Conversion Rate as set forth
in Section 10.05.

 

(e)                                  If a Holder of
Securities elects to convert its Securities prior to the effective date of any
Fundamental Change, such Holder shall not be entitled to an increased
Conversion Rate in connection with such conversion.

 

(f)                                    Until the
number of Common Authorized Shares equals or exceeds the Full Underlying
Shares, Series A Preferred Stock shall be issued in lieu of Additional
Shares upon the conversion of Securities in connection with a Make-Whole
Fundamental Change, which conversion shall be on the basis of the ratio of 1.1
shares of Series A Preferred Stock to 1,000 shares of Common Stock.

 

(g)                                 The Company
shall notify Holders, the Trustee and the Conversion Agent in writing of the
Make-Whole Effective Date of any Make-Whole Fundamental Change no later than
five (5) Business Days after such Make-Whole Effective Date.

 

Section 10.07. Taxes on Conversion. 
Any issue of share certificates on conversion of any Securities shall be
made without charge to the converting Holder for any documentary, transfer,
stamp or any similar tax in respect of the issue thereof, and the Company shall
pay any and all documentary, stamp or similar issue or transfer taxes that may
be payable in respect of the issue or delivery of shares of Common Stock and Series A
Preferred Stock, if any, on conversion of Securities pursuant hereto.  The Company shall not, however, be required
to pay any such tax which may be payable in respect of any transfer involved in
the issue and delivery of shares in any name other than that of the Holder of
any Securities converted, and the Company shall not be required to issue or
deliver any such share certificate unless and until the Person or Persons
requesting the issue thereof shall have paid to the Company the amount of such
tax or shall have established to the satisfaction of the Company that such tax
has been paid.  Nothing herein shall
preclude any U.S. federal income tax withholding required by law or
regulations.

 

Section 10.08. Shares to be Fully Paid; Compliance with Governmental Requirements.  The Company covenants that all shares of
Common Stock and Series A Preferred Stock that may be issued upon
conversion of Securities shall be newly issued shares or treasury shares, shall
be duly authorized, validly issued, fully paid and non-assessable and shall be
free from preemptive rights and free and clear from any Lien or adverse claim.

 

The Company shall use its reasonable efforts to list
or cause to have quoted any shares of Common Stock to be issued upon conversion
of Securities on each national securities exchange or over-the-counter or other
domestic market on which the Common Stock is then listed or quoted.  The Company shall not be required to list or
cause to have quoted any shares of Series A Preferred Stock to be issued
upon conversion of Securities on any national securities exchange or over-the-counter
or any other domestic market.

 

74

 

Section 10.09. Responsibility of Trustee. 
The Trustee and any other Conversion Agent shall not at any time be
under any duty or responsibility to any Holder to determine the Conversion Rate
or whether any facts exist which may require any adjustment of the Conversion
Rate, or with respect to the nature or extent or calculation of any such
adjustment when made, or with respect to the method employed, or herein or in
any supplemental indenture provided to be employed, in making the same.  The Trustee and any other Conversion Agent
shall not be accountable with respect to the validity or value (or the kind or
amount) of any Common Stock or Series A Preferred Stock, or of any
securities or property, which may at any time be issued or delivered upon the
conversion of any Securities, and the Trustee and any other Conversion Agent
make no representations with respect thereto. 
Neither the Trustee nor any Conversion Agent shall be responsible for
any failure of the Company to issue, transfer or deliver any Common Stock or Series A
Preferred Stock or share certificates or other securities or property or cash
upon the surrender of any Securities for the purpose of conversion or to comply
with any of the duties, responsibilities or covenants of the Company contained
in this Article 10.

 

Section 10.10. Company Determination Final. 
Any determination that the Company or its Board of Directors must make
pursuant to this Article 10 shall be conclusive if made in good faith,
absent manifest error.  Whenever the
Conversion Rate is adjusted as herein provided, the Company shall promptly file
with the Trustee and any Conversion Agent an Officers’ Certificate setting
forth the Conversion Rate after such adjustment and setting forth a brief
statement of the facts requiring such adjustment.  Unless and until a Responsible Officer shall
have received such Officers’ Certificate, the Trustee shall not be deemed to
have knowledge of any adjustment of the Conversion Rate and may assume without
inquiry that the last Conversion Rate of which it has knowledge is still in
effect.

 

ARTICLE
11

 

PAYMENT
OF INTEREST

 

Section 11.01. Payment of Interest.   The
Company shall pay interest on the Securities at a rate of 4.75% per annum,
payable semi-annually in arrears on April 1 and October 1 of each
year (each, an “Interest Payment Date”),
commencing April 1, 2010. Any payment required to be made on any day that
is not a Business Day shall be made on the next succeeding Business Day and no
interest or other amount shall be paid as a result of any such
postponement.  Interest on a Security
shall be paid to the Holder of such Security at the Close of Business on March 15
or September 15 (each, a “Regular Record Date”),
as the case may be, next preceding the related Interest Payment Date, and shall
be computed on the basis of a 360-day year comprised of twelve 30-day months.
In the event of the maturity, conversion, or purchase of a Security by the
Company at the option of the Holder, interest (including any Additional
Interest, Qualifying Tender Offer Interest and Reserve Interest) shall cease to
accrue on such Security.

 

Section 11.02. Defaulted Interest. 
Any installment of interest that is payable, but is not punctually paid
or duly provided for on any Interest Payment Date (“Defaulted
Interest”), shall forthwith cease to be payable to the Holders in
whose names the Securities were registered on the Regular Record Date
applicable to such installment of interest. Defaulted Interest (including any
interest on such Defaulted Interest) may be paid by the Company, at its
election, as provided in this Section 11.02(a) or (b).

 

75

 

(a)                                  The Company may
elect to make payment of any Defaulted Interest (including any interest on such
Defaulted Interest) to the Holders in whose names the Securities are registered
at the Close of Business on a special record date for the payment of such
Defaulted Interest (a “Special Record Date”),
which shall be fixed in the following manner. The Company shall notify the
Trustee in writing of the amount of Defaulted Interest proposed to be paid and
the date of the proposed payment, and at the same time the Company shall
deposit with the Trustee an amount of money equal to the aggregate amount
proposed to be paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Trustee for such deposit prior to the date of
the proposed payment, such money when deposited to be held in trust for the
benefit of the Holders entitled to such Defaulted Interest as provided in this Section 11.02(a).
Thereupon the Trustee shall fix a Special Record Date for the payment of such
Defaulted Interest, which shall be not more than fifteen (15) days and not less
than ten (10) days prior to the date of the proposed payment and not less
than ten (10) days after the receipt by the Trustee of the notice of the
proposed payment. The Trustee shall promptly notify the Company of such Special
Record Date and, in the name and at the expense of the Company, shall cause
notice of the proposed payment of such Defaulted Interest and the Special
Record Date therefor to be sent, first-class mail, postage prepaid, to each
Holder at such Holder’s address as it appears in the registration books of the
Registrar, not less than ten (10) days prior to such Special Record Date.
Notice of the proposed payment of such Defaulted Interest and the Special
Record Date therefor having been mailed as aforesaid, such Defaulted Interest
shall be paid to the Holders in whose names the Securities are registered at
the Close of Business on such Special Record Date and shall no longer be
payable pursuant to Section 11.02(b).

 

(b)                                 Alternatively,
the Company may make payment of any Defaulted Interest (including any interest
on such Defaulted Interest) in any other lawful manner not inconsistent with
the requirements of any securities exchange on which the Securities may be
listed, and upon such notice as may be required by such exchange if, after
notice given by the Company to the Trustee of the proposed payment pursuant to
this Section 11.02(b), such manner of payment shall be deemed practicable
by the Trustee.

 

Section 11.03. Interest Rights Preserved. 
Subject to the foregoing provisions of this Article 11 and Section 2.06,
each Security delivered under this Indenture upon registration of transfer of
or in exchange for or in lieu of any other Security shall carry the rights to
interest (including any Additional Interest, Qualifying Tender Offer Interest
and Reserve Interest) accrued and unpaid, and to accrue, which were carried by
such other Security.

 

ARTICLE
12

 

COLLATERAL
SECURITY

 

Section 12.01. Collateral Security.

 

(a)                                  On the Issue Date of the initial Securities
issued hereunder, the Company shall (i) enter into the Pledge and Escrow
Agreement and thereafter comply with the terms and provisions of such agreement
and (ii) pledge the Pledged Securities to the Escrow Agent for the benefit
of the Trustee and the ratable benefit of the Holders in such amount as will be
sufficient upon receipt of scheduled interest and/or principal payments of such
Pledged Securities to provide for 

 

76

 

payment in full of the first six scheduled interest payments (excluding any
Additional Interest, Qualifying Tender Offer Interest and Reserve Interest) due on the Securities. The Pledged
Securities shall be pledged by the Company to the Escrow Agent for the benefit
of the Trustee and the ratable benefit of the Holders and shall be held by the
Escrow Agent in the Pledge Account pending disposition pursuant to the Pledge
and Escrow Agreement. The Pledged Securities shall also secure the due and
punctual payment and performance of all obligations (including any Additional
Interest, Qualifying Tender Offer Interest and Reserve Interest) of the
Company, whether now or hereafter existing, under the Securities, this
Indenture and the Pledge and Escrow Agreement, including, without limitation,
interest accrued on the Securities after the commencement of a bankruptcy,
reorganization or similar proceeding involving the Company.

 

(b)                                 Each Holder, by its acceptance of a
Security, consents and agrees to the terms of the Pledge and Escrow Agreement
(including, without limitation, the provisions providing for foreclosure and
release of the Pledged Securities) as such agreement may be in effect or may be
amended from time to time in accordance with their terms, and authorizes and
directs the Escrow Agent and the Trustee to enter into the Pledge and Escrow
Agreement and to perform their respective obligations and exercise their
respective rights under such agreement in accordance therewith. The Company
will do or cause to be done all such acts and things as may be necessary, or as
may be required by the provisions of the Pledge and Escrow Agreement, to assure
and confirm to the Escrow Agent and the Trustee the security interest in the
Pledged Securities contemplated hereby, by the Pledge and Escrow Agreement or
any part of such agreement, as from time to time constituted, so as to render
the same available for the security and benefit of this Indenture and of the
Securities secured hereby, according to the intent and purposes herein and
therein expressed. The Company shall take, or cause to be taken, any and all
actions reasonably required to create and maintain, as security for the
obligations of the Company under this Indenture and the Securities, a valid,
enforceable and perfected first priority lien in and on all the Pledged
Securities, in favor of the Escrow Agent for the benefit of the Trustee and the
ratable benefit of the Holders, superior to and prior to the rights of third
Persons and subject to no other liens.

 

(c)                                  The release of any portion of the Pledged
Securities pursuant to the Pledge and Escrow Agreement will not be deemed to
impair the security under this Indenture in contravention of the provisions
hereof if and to the extent the Pledged Securities are released pursuant to
this Indenture and the Pledge and Escrow Agreement. To the extent applicable,
the Company shall cause TIA Section 314(d) relating to the release of
property or securities from the lien and security interest of the Pledge and
Escrow Agreement and relating to the substitution therefor of any property or
securities to be subjected to the lien and security interest of the Pledge and
Escrow Agreement to be complied with. Any certificate or opinion required by
TIA Section 314(d) may be made by an Officer of the Company, except
in cases where TIA Section 314(d) requires that such certificate or
opinion be made by an independent Person, which Person shall be an independent
engineer, appraiser or other expert selected by the Company. The Company shall
cause TIA Section 314(b), relating to opinions of counsel regarding the
lien under the Pledge and Escrow Agreement, to be complied with.

 

(d)                                 The Escrow Agent and the Trustee may, in
their sole discretion and without the consent of the Holders, on behalf of the
Holders, take all reasonable actions in accordance with the Pledge and Escrow
Agreement, necessary or appropriate in order to (i) enforce any of the 

 

77

 

terms of the Pledge and Escrow Agreement and (ii) collect and
receive any and all amounts payable in respect of the obligations of the
Company under such agreement. The Escrow Agent and the Trustee shall have power
(but not the obligation) to institute and to maintain such suits and
proceedings as the they may reasonably deem expedient to preserve or protect
their interests and the interests of the Holders in the Pledged Securities
(including power to institute and maintain suits or proceedings to restrain the
enforcement of or compliance with any legislative or other governmental
enactment, rule or order that may be unconstitutional or otherwise invalid
if the enforcement of, or compliance with, such enactment, rule or order
would impair the security interest hereunder or be prejudicial to the interests
of the Holders, the Escrow Agent or of the Trustee).

 

ARTICLE
13

 

MISCELLANEOUS

 

Section 13.01. Trust Indenture Act Controls.  If any provision of this Indenture limits,
qualities, or conflicts with another provision which is required to be included
in this Indenture by the TIA, the provision required by the TIA shall control.

 

Section 13.02. Notices.  Any request,
demand, authorization, notice, waiver, consent or communication shall be in
writing and delivered in Person or mailed by first-class mail, postage prepaid,
addressed as follows or transmitted by facsimile transmission (confirmed by
guaranteed overnight courier) to the following facsimile numbers:

 

if to the Company:

 

Incyte
Corporation

Route
141 and Henry Clay Road, Building 336

Wilmington,
Delaware 19880

Facsimile:
(302) 425-2707

Attention:
General Counsel

 

if
to the Trustee:

 

U.S.
Bank National Association

633
West Fifth Street, 24th Floor

Los
Angeles, CA 90071

Facsimile:
(213) 615-6197

Attention:
Corporate Trust Services (Incyte Corporation — 4.75% Convertible Senior Notes
due 2015)

 

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

 

Any notice or communication given to a Holder shall
be mailed to the Holder, by first-class mail, postage prepaid, at the Holder’s
address as it appears on the registration books of the Registrar and shall be
deemed given on the date of such mailing.

 

78

 

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

 

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

 

Section 13.03. Communication by Holders with Other Holders.  Holders may communicate pursuant to TIA Section 312(b) with
other Holders with respect to their rights under this Indenture or the
Securities.  The Company, the Trustee,
the Registrar, the Paying Agent, the Conversion Agent and anyone else shall
have the protection of TIA Section 312(c).

 

Section 13.04. 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 (except for
application for the authentication of Securities pursuant to Section 2.02),
the Company shall furnish to the Trustee:

 

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

 

(b)                                 an Opinion of
Counsel stating that, in the opinion of such counsel, all such conditions
precedent relating to the proposed action (to the extent of legal conclusions)
have been complied with.

 

Section 13.05. Statements Required in Certificate or Opinion.  Each Officers’ Certificate or Opinion of
Counsel with respect to compliance with a covenant or condition provided for in
this Indenture shall include:

 

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

 

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

 

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

 

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

 

Section 13.06. Separability Clause. 
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.

 

79

 

Section 13.07. Rules by Trustee, Paying Agent, Conversion Agent, and Registrar.  The Trustee may make reasonable rules for
action by or a meeting of Holders. The Registrar, the Conversion Agent and the
Paying Agent may make reasonable rules for their functions.

 

Section 13.08.   Legal Holidays.  A “Legal Holiday”
is a Saturday, a Sunday or a day on which banking institutions are not required
to be open in the State of New York. 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 (including Additional Interest, Qualifying Tender Offer
Interest and Reserve Interest) shall accrue for the intervening period. If a
Regular Record Date is a Legal Holiday, the Regular Record Date shall not be
affected.

 

Section 13.09. Governing Law. THIS INDENTURE AND THE SECURITIES SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO
THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE
REQUIRED THEREBY.

 

Section 13.10. No Recourse Against Others. 
A director, officer, employee, incorporator,  stockholder or partner, as such, of the
Company shall not have any liability for any obligations of the Company under
the Securities or this Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. By accepting a Security, each
Holder shall waive and release all such liability.  The waiver and release shall be part of the
consideration for the issue of the Securities.

 

Section 13.11. Successors.  All
agreements of the Company, the Trustee, the Registrar, the Paying Agent and the
Conversion Agent in this Indenture and the Securities shall bind their
respective successors.

 

Section 13.12. Multiple Originals. 
The parties may sign any number of copies of this Indenture.  Each signed copy shall be an original, but
all of them together represent the same agreement.

 

Section 13.13.  Table
of Contents; Headings.  The
table of contents and headings of the Articles and Sections of this Indenture
have been inserted for convenience of reference only, are not intended to be
considered a part hereof and shall not modify or restrict any of the terms or
provisions hereof.

 

Section 13.14. Submission to Jurisdiction. 
The Company (i) agrees that any suit, action or proceeding against
it arising out of or relating to this Indenture or the Securities, as the case
may be, may be instituted in any federal court sitting in The City of New York;
(ii) waives, to the fullest extent permitted by applicable law, any
objection which it may now or hereafter have to the laying of venue of any such
suit, action or proceeding, and any claim that any suit, action or proceeding
in such a court has been brought in an inconvenient forum; and (iii) submits
to the non-exclusive jurisdiction of such courts in any suit, action or
proceeding.

 

[The
remainder of this page intentionally left blank.]

 

80

 

IN WITNESS WHEREOF, the undersigned, being duly
authorized, has executed this Indenture as of the date first above written.

 

	
   

  	
  INCYTE
  CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  David C. Hastings

  
	
   

  	
  Name:

  	
  David
  C. Hastings

  
	
   

  	
  Title:

  	
  Executive
  Vice President and Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
  U.S.
  BANK NATIONAL ASSOCIATION, as Trustee

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Brad E. Scarbrough

  
	
   

  	
  Name:

  	
  Brad
  E. Scarbrough

  
	
   

  	
  Title:

  	
  Vice
  President

  

 

[Signature Page to Indenture]

 

 

EXHIBIT A

FORM OF SECURITY

 

[FORM OF FACE OF SECURITY]

 

[Include the
following legend for Global Securities only (the “Global
Securities Legend”).]

 

THIS IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE
DEPOSITARY OR A NOMINEE OF THE DEPOSITARY, WHICH MAY BE TREATED BY THE
COMPANY, THE TRUSTEE AND ANY AGENT THEREOF AS OWNER AND HOLDER OF THIS
CONVERTIBLE SECURITY FOR ALL PURPOSES.

 

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

 

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

 

[Include the following legend on
all Securities that are Restricted Securities other than the Affiliate
Securities (the “Restricted Securities Legend”):]

 

THE SALE OF THIS SECURITY HAS NOT BEEN REGISTERED
UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”),
AND ACCORDINGLY, THIS SECURITY MAY NOT BE OFFERED OR SOLD EXCEPT AS SET
FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER AGREES (1) THAT
IT WILL NOT WITHIN THE LATER OF (X) ONE YEAR AFTER THE LAST DATE OF
ORIGINAL ISSUANCE OF SECURITIES (INCLUDING OPTION SECURITIES ISSUED PURSUANT TO
THE EXERCISE OF THE INITIAL PURCHASERS’ OPTION TO PURCHASE OPTION SECURITIES)
AND (Y) 90- DAYS AFTER IT CEASES TO BE AN AFFILIATE (WITHIN THE MEANING OF
RULE 144 UNDER THE SECURITIES ACT) OF INCYTE CORPORATION (THE “COMPANY”),
OFFER, RESELL, PLEDGE OR OTHERWISE TRANSFER THE SECURITIES EVIDENCED 

 

A-1

 

HEREBY OR THE COMMON STOCK
OR SERIES A PREFERRED STOCK ISSUABLE UPON CONVERSION OF SUCH SECURITIES,
EXCEPT (A) TO THE COMPANY; (B) UNDER A REGISTRATION STATEMENT THAT
HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT; (C) TO A PERSON THE
SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT) THAT IS PURCHASING FOR ITS OWN ACCOUNT OR
FOR THE ACCOUNT OF ANOTHER QUALIFIED INSTITUTIONAL BUYER AND TO WHOM NOTICE IS
GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, ALL IN
COMPLIANCE WITH RULE 144A (IF AVAILABLE); OR (D) UNDER ANY OTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT; AND (2) THAT
IT WILL, PRIOR TO ANY TRANSFER OF THIS SECURITY PURSUANT TO THE FOREGOING
CLAUSE (D), FURNISH TO THE TRUSTEE AND THE COMPANY SUCH CERTIFICATIONS, LEGAL
OPINIONS OR OTHER INFORMATION AS THEY MAY REQUIRE AND MAY RELY UPON
TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR
IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT. IN ANY EVENT, NO AFFILIATE OF THE COMPANY MAY RESELL THIS
SECURITY OTHER THAN IN CONFORMITY WITH THE RESTRICTIONS SET FORTH HEREIN BEFORE
ONE YEAR AFTER THE LAST DATE OF ORIGINAL ISSUANCE OF SECURITIES (INCLUDING
OPTION SECURITIES ISSUED PURSUANT TO THE EXERCISE OF THE INITIAL PURCHASERS’
OPTION TO PURCHASE OPTION SECURITIES). THE RESTRICTIONS SET FORTH IN THIS
LEGEND SHALL CEASE TO HAVE EFFECT ONE YEAR AFTER THE LAST DATE OF ORIGINAL
ISSUANCE OF SECURITIES (INCLUDING OPTION SECURITIES ISSUED PURSUANT TO THE
EXERCISE OF THE INITIAL PURCHASERS’ OPTION TO PURCHASE OPTION SECURITIES)

 

[Include the following legend on
all Securities that are Affiliate Securities (the “Affiliate
Security Legend”):]

 

THE SALE OF THIS SECURITY HAS NOT BEEN REGISTERED
UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”),
AND ACCORDINGLY, THIS SECURITY MAY NOT BE OFFERED OR SOLD EXCEPT AS SET
FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER AGREES (1) THAT
IT WILL NOT WITHIN THE LATER OF (X) ONE YEAR AFTER THE LAST DATE OF
ORIGINAL ISSUANCE OF SECURITIES (INCLUDING OPTION SECURITIES ISSUED PURSUANT TO
THE EXERCISE OF THE INITIAL PURCHASERS’ OPTION TO PURCHASE OPTION SECURITIES)
AND (Y) 90- DAYS AFTER IT CEASES TO BE AN AFFILIATE (WITHIN THE MEANING OF
RULE 144 UNDER THE SECURITIES ACT) OF INCYTE CORPORATION (THE “COMPANY”),
OFFER, RESELL, PLEDGE OR OTHERWISE TRANSFER THE SECURITIES EVIDENCED HEREBY OR
THE COMMON STOCK OR SERIES A PREFERRED STOCK ISSUABLE UPON CONVERSION OF
SUCH SECURITIES, EXCEPT (A) TO THE COMPANY; (B) UNDER A REGISTRATION
STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT; (C) TO
A PERSON THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) THAT IS PURCHASING FOR ITS OWN
ACCOUNT OR 

 

A-2

 

FOR THE ACCOUNT OF ANOTHER
QUALIFIED INSTITUTIONAL BUYER AND TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A, ALL IN COMPLIANCE WITH RULE 144A (IF
AVAILABLE); (D) A PLEDGE TO AN AFFILIATE OF THE HOLDER SO LONG AS SUCH
PLEDGEE AGREES IN WRITING TO BE BOUND BY THE TRANSFER RESTRICTIONS SET FORTH IN
THIS LEGEND AND IN THE AGREEMENT, DATED SEPTEMBER 24, 2009, AMONG BAKER/TISCH
INVESTMENTS, L.P., BAKER BROS. INVESTMENTS II, L.P., 667, L.P., BAKER BROTHERS
LIFE SCIENCES, L.P. AND 14159, L.P. AND THE COMPANY OR (E) UNDER ANY OTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT;
AND (2) THAT IT WILL, PRIOR TO ANY TRANSFER OF THIS SECURITY PURSUANT TO
THE FOREGOING CLAUSE (E), FURNISH TO THE TRUSTEE AND THE COMPANY SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS THEY MAY REQUIRE
AND MAY RELY UPON TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO
AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. IN ANY EVENT, NO AFFILIATE OF THE COMPANY MAY RESELL
THIS SECURITY OTHER THAN IN CONFORMITY WITH THE RESTRICTIONS SET FORTH HEREIN
BEFORE ONE YEAR AFTER THE LAST DATE OF ORIGINAL ISSUANCE OF SECURITIES
(INCLUDING OPTION SECURITIES ISSUED PURSUANT TO THE EXERCISE OF THE INITIAL
PURCHASERS’ OPTION TO PURCHASE OPTION SECURITIES).

 

A-3

 

 

No. 

CUSIP: 

ISIN:

 

Principal Amount $

as revised by the Schedule of Increases

and Decreases in the Global Security attached hereto

 

Incyte Corporation

 

4.75% Convertible Senior Notes due 2015

 

Incyte Corporation, a Delaware corporation, promises
to pay to        [include “Cede &
Co.” for Global Security] or registered assigns, the principal
amount of $          on October 1,
2015 (the “Maturity Date”).

 

Interest Payment Dates: April 1 and October 1.

 

Regular Record Dates: March 15 and September 15.

 

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

 

	
  Dated:

  	
  INCYTE
  CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

TRUSTEE’S CERTIFICATE OF
AUTHENTICATION

 

U.S. BANK NATIONAL ASSOCIATION, as Trustee,
certifies that this is one of the Securities referred to in the
within-mentioned Indenture.

 

	
  By:

  	
   

  	
   

  
	
   

  	
  Authorized Signatory

  	
   

  

 

Dated:

 

A-4

 

[FORM OF REVERSE OF SECURITY]

 

4.75% Convertible Senior Notes due 2015

 

1.                                       Interest.

 

This Security shall bear cash interest at the rate
of 4.75% per annum.  Interest on this
Security shall accrue from September 30, 2009 (the “Issue Date”)
or from the most recent date to which interest has been paid or provided for.
Interest shall be payable semiannually in arrears on April 1 and October 1
of each year, beginning on April 1, 2010, to the Holder of record of
Securities at the Close of Business on the March 15 or September 15
immediately preceding such Interest Payment Date (or repurchase or Maturity Date,
as applicable). Each payment of cash interest on this Security shall include
interest accrued for the period commencing on and including the immediately
preceding Interest Payment Date (or, if none, the Issue Date) through the day
before the applicable Interest Payment Date, Fundamental Change Repurchase Date
or Maturity Date, as applicable.  Any
payment required to be made on any day that is not a Business Day shall be made
on the next succeeding Business Day and no interest or other amount shall be paid
as a result of any such postponement. 
Interest shall be calculated using a 360-day year composed of twelve
30-day months.  Interest shall cease to
accrue on this Security upon its Maturity Date, conversion or repurchase by the
Company, including a repurchase at the option of the Holder upon a Fundamental
Change in accordance with Paragraph 5 hereof.

 

If
any Security is converted after the Close of Business on a Regular Record Date
for an Interest Payment Date but prior to the corresponding Interest Payment
Date, the Holder of record of such Security at the Close of Business on such
Regular Record Date will receive on the corresponding Interest Payment Date the
interest accrued and unpaid on such Securities, notwithstanding the conversion
prior to the Interest Payment Date. 
Securities surrendered for conversion during the period from the Close
of Business on any Regular Record Date to the Open of Business on the
immediately following Interest Payment Date must be accompanied by funds equal
to the amount of interest payable on such Interest Payment Date for the
Securities so converted; provided, that
no such payment need be made:

 

(A)                              for conversions
after the Close of Business on the Regular Record Date for the Maturity Date;

 

(B)                                if the Company
has specified a Fundamental Change Repurchase Date that is after a Regular
Record Date and on or prior to the corresponding Interest Payment Date; or

 

(C)                                to the extent
of any overdue interest, if any overdue interest exists at the time of
conversion with respect to such Security.

 

2.                                       Method of
Payment.

 

The Company shall promptly make all payments in
respect of the Securities on the dates and in the manner provided herein and in
the Indenture.  The Company will pay
interest (except Defaulted Interest) on the principal amount of the Securities
on each April 1 and October 1 to the 

 

A-5

 

Persons who are registered
Holders of Securities at the Close of Business on the March 15 and September 15
next preceding the Interest Payment Date even if Securities are canceled or
repurchased after such Regular Record Date and on or before the Interest
Payment Date.  Payment of the principal
of the Securities shall be made at the office or agency maintained by the
Company for such purpose 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.  Payment of interest
including Additional Interest, Qualifying Tender Offer Interest and Reserve
Interest, if any, on Certificated Securities shall be made by check mailed to
the address of the Person entitled thereto as such address appears in the
Register, or, at the Company’s option, by wire transfer in immediately
available funds; provided, however,
that Holders with Securities in an aggregate principal amount in excess of
$5,000,000 shall be paid, at their written election provided in accordance with
the Indenture, by wire transfer in immediately available funds. Notwithstanding
the foregoing, so long as the Securities are registered in the name of a
Depositary or its nominee, all payments with respect to the Securities shall be
made by wire transfer of immediately available funds to the account of the
Depositary or its nominee.  If an
Interest Payment Date is a date other than a Business Day, payment may be made
at that place on the next succeeding day that is a Business Day and no interest
shall accrue for the intervening period.

 

3.                                       Paying Agent,
Conversion Agent and Registrar.

 

Initially, U.S. Bank National Association will act
as Trustee, Paying Agent, Conversion Agent and Registrar. The Company may
appoint and change any Paying Agent, Conversion Agent or Registrar without
notice, other than notice to the Trustee; provided, that
the Company will maintain at least one Paying Agent in the United States of
America, which shall initially be an office or agency of the Trustee.  The Company or any of its Subsidiaries or any
of their affiliates may act as Paying Agent, Conversion Agent or Registrar.

 

4.                                       Indenture.

 

The Company issued the Securities under an Indenture
dated as of September 30, 2009 (the “Indenture”),
between the Company and the Trustee.  The
terms of the Securities include those stated in the Indenture and those made
part of the Indenture by reference to the Trust Indenture Act of 1939, as in
effect from time to time (the “TIA”).
Capitalized terms used herein and not defined herein have the meanings ascribed
thereto in the Indenture.  The Securities
are subject to all such terms, and Holders are referred to the Indenture and
the TIA for a statement of those terms.

 

The Securities are general unsecured and
unsubordinated obligations of the Company limited to an aggregate principal
amount of not more than $400,000,000.

 

5.                                       Purchase By the
Company at the Option of the Holder upon a Fundamental Change.

 

(a)                                  At the option of the Holder, and subject to the terms and conditions of
the Indenture, if a Fundamental Change occurs, each Holder of Securities
will have the right, at its option, to require the Company to repurchase for
cash all of its Securities, or any portion of the principal amount thereof that
is equal to $1,000 or an integral multiple of $1,000, at a Fundamental Change
Repurchase Price equal to 100% of the principal amount of Securities to be 

 

A-6

 

repurchased plus accrued and
unpaid interest (including Additional Interest, Qualifying Tender Offer
Interest and Reserve Interest), if any, to (but excluding) the Fundamental
Change Repurchase Date (unless the Fundamental Change Repurchase Date is after
a Regular Record Date and on or prior to the Interest Payment Date to which it
relates, in which case the Company will instead pay the full interest amount
payable on such Interest Payment Date to the record holder as of such Regular
Record Date and the repurchase price will be equal to 100% of the principal
amount of the Securities to be repurchased). 
To exercise the repurchase right, the Holder must deliver, prior to the
Close of Business on the Business Day immediately preceding the Fundamental
Change Repurchase Date, written notice to the Trustee of such Holder’s exercise
of its repurchase right, together with the Securities with respect to which the
right is being exercised. Subject to such Holder’s satisfaction of certain
requirements in the Indenture, the Company is required to repurchase the
Securities on the date that is no fewer than twenty (20) Business Days and no
more than thirty (35) Business Days after the date of the Fundamental Change
Notice delivered by the Company.

 

(b)                                 Holders have the right to
withdraw (in whole or in part) any Fundamental Change Repurchase Notice
delivered pursuant to Paragraph 5(a) above by delivering to the Paying
Agent a written notice of withdrawal in accordance with the provisions of the
Indenture at any time prior to the Close of Business on the Business Day prior
to the Fundamental Change Repurchase Date. If cash sufficient to pay the
Fundamental Change Repurchase Price of all Securities or portions thereof to be
repurchased as of the Fundamental Change Repurchase Date is deposited with the
Paying Agent on the Fundamental Change Repurchase Date, such Security will
cease to be outstanding and interest will cease to accrue on such Securities,
and the Holder thereof shall have no other rights as such other than the right
to receive the Fundamental Change Repurchase Price and previously accrued and
unpaid interest upon delivery or transfer of such Security.

 

6.                                       Conversion.

 

(a)                                  Holders may surrender
Securities, in integral multiples of $1,000 principal amount, for conversion
into shares of Common Stock until the second Scheduled Trading Day immediately
preceding the Maturity Date; provided, that
until the Company has reserved for issuance under conversion of the Securities
a number of Common Authorized Shares at least equal to the Base Underlying
Shares, the Company shall issue (i) a number of shares of Common Stock
(the “Common Proportion”) equal to (A) the
Conversion Rate multiplied by (B) the Common Authorized Shares divided by
the Base Underlying Shares and (ii) a number (which may be a fraction
rounded down to the nearest one-thousandth (1/1000th)) of shares of the Series A
Preferred Stock (the “Preferred Proportion”)
equal to (A) 1.1 divided by 1,000 multiplied by (B) the difference
between the Conversion Rate and the Common Proportion, in each case, per $1,000
principal amount of Securities.  The
Common Proportion shall be increased (and the Preferred Proportion decreased)
automatically from time to time whenever the Common Authorized Shares are
increased.  The Series A Preferred
Stock shall be convertible into Common Stock at a rate of 1,000 shares of
Common Stock for every 1.1 shares of Series A Preferred Stock.

 

(b)                                 The initial Conversion Rate
is 113.9601 shares of Common Stock per $1,000 principal amount, subject to
adjustment in certain events described in the Indenture.  Upon conversion, subject to the provisions in
Section 6(a), a Holder will receive, for each $1,000 

 

A-7

 

principal amount of
Securities tendered for conversion on the third Business Day immediately
following the Conversion Date (or, if earlier, on the Maturity Date), a number
of shares of Common Stock equal to the Conversion Rate on the relevant
Conversion Date; provided, however,
that for any conversion that occurs on or after the record date for the payment
of interest on the Securities at maturity, the Company will deliver such shares
on the Maturity Date; provided, further, that
the Company will, under certain circumstances, deliver a combination of shares
of Common Stock and Series A Preferred Stock to converting Holders in
accordance with the provisions of the Indenture.  Notwithstanding the foregoing, the Company
will not deliver any fractional shares of Common Stock upon conversion;
instead, Holders will receive cash in lieu of fractional shares of Common Stock
based on the Last Reported Sale Price of the Common Stock on the Conversion
Date (or, if the Conversion Date is not a Trading Day, the next following
Trading Day).

 

(c)                                  To surrender a Security for
conversion, a Holder must (1) complete and manually sign the irrevocable
conversion notice below (or complete and manually sign a facsimile of such
notice) and deliver such notice to the Conversion Agent; (2) deliver the
Security to the Conversion Agent; (3) furnish appropriate endorsements and
transfer documents and pay any transfer or similar tax, if required; and (4) if
required pursuant to the Indenture, pay funds equal to the interest payable on
the next Interest Payment Date to which such Holder is not entitled.

 

(d)                                 A Holder may convert a
portion of a Security if the principal amount of such portion is $1,000 or an
integral multiple of $1,000.  No payment
or adjustment will be made for dividends on the shares of Common Stock, except
as provided in the Indenture.  Except as
provided in the Indenture, on conversion of a Security, the Holder will not
receive any cash payment representing accrued and unpaid interest with respect
to the converted Securities.  Instead,
upon conversion the Company will deliver to the Holder shares of Common Stock
and Series A Preferred Stock, if any, and any cash payment to account for
fractional shares of Common Stock and for certain fractional shares of Series A
Preferred Stock, if any. Accrued and unpaid interest will be deemed paid in
full rather than cancelled, extinguished or forfeited.  The Company will not adjust the Conversion
Rate to account for accrued and unpaid interest.

 

7.                                       Pledge and
Escrow Agreement.

 

The Company has entered into the Pledge and Escrow
Agreement and pledged to the Trustee for the equal and ratable benefit of the
Holders of the Securities the Pledged Securities in an amount sufficient to
fund, when due, the total aggregate amount of the first six scheduled interest
payments on the Securities, excluding Additional Interest, Qualifying Tender
Offer Interest and Reserve Interest, if any. 
The Pledged Securities will be pledged by the Company to the Trustee for
the equal and ratable benefit of the Holders and will be held by the Trustee in
the Escrow Account pending disbursement pursuant to the Pledge and Escrow
Agreement.

 

8.                                       Denominations;
Transfer; Exchange.

 

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

 

A-8

 

required by law or permitted
by the Indenture.  The Registrar need not
transfer or exchange any Securities in respect of which a Fundamental Change
Repurchase Notice has been given and not withdrawn (except, in the case of a
Security to be repurchased in part. the portion of the Security not to be
repurchased).

 

9.                                       Persons Deemed Owners.

 

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

 

10.                                 Unclaimed Money or
Securities.

 

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

 

11.                                 Trustee Dealings with the
Company.

 

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

 

12.                                 Calculations in Respect of
Securities.

 

The Company will be responsible for making all
calculations called for under the Securities. These calculations include, but
are not limited to, determinations of the Last Reported Sale Price of the
Common Stock, the Conversion Rate of the Securities and any accrued interest
payable on the Securities.

 

The Company will make these calculations in good
faith and, absent manifest error, the calculations will be final and binding on
Holders of the Securities.  The Company
will provide to the Trustee and Conversion Agent a schedule of its calculations,
and each of the Trustee and Conversion Agent is entitled to rely conclusively
upon the accuracy of such calculations without independent verification.  The Trustee will forward the Company’s
calculations to any Holder of the Securities upon the request of such Holder.

 

13.                                 No Recourse Against Others.

 

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

 

A-9

 

14.                                 Authentication.

 

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

 

15.                                 Abbreviations.

 

Customary abbreviations may be used in the name of a
Holder or an assignee, such as TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= custodian), and U/G/M/A (= Uniform
Gift to Minors Act).

 

16.                                 GOVERNING LAW.

 

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

 

17.                                 Additional Interest; Reserve
Interest and Qualifying Tender Offer Interest.

 

Holders of Securities shall be entitled to payments
of Additional Interest, Reserve Interest and Qualifying Tender Offer Interest
to the extent set forth in the Indenture.

 

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

 

Incyte Corporation

Route 141 and Henry Clay
Road, Building 336

Wilmington, Delaware 19880

Facsimile: (302) 425-2707

Attention: General Counsel

 

A-10

 

ASSIGNMENT FORM

 

To assign this Security, fill
in the form below:

I or we assign and transfer
this Security

 

 

 

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

 

 

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

 

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

 

CONVERSION NOTICE

 

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

 

To convert only part of this
Security, state the principal amount to be converted

(which must be $1,000 or an integral multiple of $1,000):

 

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

 

 

 

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

 

 

 

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

 

 

	
  Date:

  	
   

  	
   

  	
  Your Signature:

  	
   

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

  

 

	
  Signature
  Guaranteed

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Participant
  in a Recognized Signature

  	
   

  
	
  Guarantee Medallion
  Program

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Authorized Signatory

  	
   

  

 

A-11

 

[Include for Global Security]

SCHEDULE OF INCREASES AND DECREASES OF GLOBAL SECURITY

Initial Principal amount of Global Security: $         .

 

	
  Date:

  	
   

  	
  Amount of

  Increase in

  Principal

  Amount of

  Global Security

  	
   

  	
  Amount of

  Decrease in

  Principal

  Amount of

  Global

  Security

  	
   

  	
  Principal

  Amount of

  Global

  Security After

  Increase or

  Decrease

  	
   

  	
  Notation by

  Registrar or

  Security

  Custodian

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

A-12

 

EXHIBIT B

FORM OF TRANSFER CERTIFICATE

 

4.75% Convertible Senior Notes due 2015

 

Transfer Certificate

 

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

 

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

 

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

 

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

 

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

 

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

 

o            The transferee is an Affiliate of
the Company.

 

	
  DATE:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature(s)

  

 

B-1

 

(If the registered owner is a corporation,
partnership or fiduciary, the title of the Person signing on behalf of such
registered owner must be stated.)

 

 

	
  Signature
  Guaranteed

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Participant
  in a Recognized Signature

  	
   

  
	
   

  	
   

  
	
  Guarantee
  Medallion Program

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Authorized
  Signatory

  	
   

  

 

B-2

 

EXHIBIT C

RESTRICTED STOCK LEGEND

 

Non-Affiliate Restricted Stock Legend

 

THE
SALE OF THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT
OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND ACCORDINGLY, THIS SECURITY
MAY NOT BE OFFERED OR SOLD EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE.
BY ITS ACQUISITION HEREOF, THE HOLDER AGREES (1) THAT IT WILL NOT WITHIN
THE LATER OF (X) ONE YEAR AFTER THE LAST DATE OF ORIGINAL ISSUANCE OF
SECURITIES (INCLUDING OPTION SECURITIES ISSUED PURSUANT TO THE EXERCISE OF THE
INITIAL PURCHASERS’ OPTION TO PURCHASE OPTION SECURITIES) UPON THE CONVERSION
OF WHICH THIS SECURITY WAS ISSUED AND (Y) 90- DAYS AFTER IT CEASES TO BE
AN AFFILIATE (WITHIN THE MEANING OF RULE 144 UNDER THE SECURITIES ACT) OF
INCYTE CORPORATION (THE “COMPANY”), OFFER, RESELL, PLEDGE OR OTHERWISE TRANSFER
THE SECURITY EVIDENCED HEREBY, EXCEPT (A) TO THE COMPANY; (B) UNDER A
REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT; (C) TO A PERSON THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) THAT IS
PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF ANOTHER QUALIFIED
INSTITUTIONAL BUYER PURSUANT TO A VALID PRIVATE PLACEMENT EXEMPTION UNDER THE
SECURITIES ACT AND TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN
RELIANCE ON SUCH AN EXEMPTION; OR (D) UNDER ANY OTHER AVAILABLE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT; AND (2) AGREES
THAT IT WILL, PRIOR TO ANY TRANSFER OF THIS SECURITY PURSUANT TO THE FOREGOING
CLAUSE (D), FURNISH TO THE TRANSFER AGENT AND THE COMPANY SUCH CERTIFICATIONS,
LEGAL OPINIONS OR OTHER INFORMATION AS THEY MAY REQUIRE AND MAY RELY
UPON TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM,
OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT. IN ANY EVENT, NO AFFILIATE OF THE COMPANY MAY RESELL THIS
SECURITY OTHER THAN IN CONFORMITY WITH THE RESTRICTIONS SET FORTH HEREIN BEFORE
ONE YEAR AFTER THE LAST DATE OF ORIGINAL ISSUANCE OF SECURITIES (INCLUDING
OPTION SECURITIES ISSUED PURSUANT TO THE EXERCISE OF THE INITIAL PURCHASERS’
OPTION TO PURCHASE OPTION SECURITIES). THE RESTRICTIONS SET FORTH IN THIS
LEGEND SHALL CEASE TO HAVE EFFECT ONE YEAR AFTER THE LAST DATE OF ORIGINAL
ISSUANCE OF SECURITIES (INCLUDING OPTION SECURITIES ISSUED PURSUANT TO THE
EXERCISE OF THE INITIAL PURCHASERS’ OPTION TO PURCHASE OPTION SECURITIES) UPON
THE CONVERSION OF WHICH THIS SECURITY WAS ISSUED.

 

C-1

 

Affiliate Restricted Stock Legend

 

THE SALE OF THIS SECURITY
HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), AND ACCORDINGLY, THIS SECURITY MAY NOT BE OFFERED
OR SOLD EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION
HEREOF, THE HOLDER AGREES (1) THAT IT WILL NOT WITHIN THE LATER OF (X) ONE
YEAR AFTER THE LAST DATE OF ORIGINAL ISSUANCE OF SECURITIES (INCLUDING OPTION
SECURITIES ISSUED PURSUANT TO THE EXERCISE OF THE INITIAL PURCHASERS’ OPTION TO
PURCHASE OPTION SECURITIES) UPON THE CONVERSION OF WHICH THIS SECURITY WAS
ISSUED AND (Y) 90- DAYS AFTER IT CEASES TO BE AN AFFILIATE (WITHIN THE
MEANING OF RULE 144 UNDER THE SECURITIES ACT) OF INCYTE CORPORATION (THE “COMPANY”),
OFFER, RESELL, PLEDGE OR OTHERWISE TRANSFER THE SECURITY EVIDENCED HEREBY,
EXCEPT (A) TO THE COMPANY; (B) UNDER A REGISTRATION STATEMENT THAT
HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT; (C) TO A PERSON THE
SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT) THAT IS PURCHASING FOR ITS OWN ACCOUNT OR
FOR THE ACCOUNT OF ANOTHER QUALIFIED INSTITUTIONAL BUYER PURSUANT TO A VALID
PRIVATE PLACEMENT EXEMPTION UNDER THE SECURITIES ACT AND TO WHOM NOTICE IS
GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON SUCH AN EXEMPTION; (D) A
PLEDGE TO AN AFFILIATE OF THE HOLDER SO LONG AS SUCH PLEDGEE AGREES IN WRITING
TO BE BOUND BY THE TRANSFER RESTRICTIONS SET FORTH IN THIS LEGEND AND IN THE
AGREEMENT, DATED SEPTEMBER 24, 2009, AMONG BAKER/TISCH INVESTMENTS, L.P., BAKER
BROS. INVESTMENTS II, L.P., 667, L.P., BAKER BROTHERS LIFE SCIENCES, L.P. AND
14159, L.P. AND THE COMPANY OR (E) UNDER ANY OTHER AVAILABLE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT; AND (2) AGREES
THAT IT WILL, PRIOR TO ANY TRANSFER OF THIS SECURITY PURSUANT TO THE FOREGOING
CLAUSE (D), FURNISH TO THE TRANSFER AGENT AND THE COMPANY SUCH CERTIFICATIONS,
LEGAL OPINIONS OR OTHER INFORMATION AS THEY MAY REQUIRE AND MAY RELY
UPON TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM,
OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT. IN ANY EVENT, NO AFFILIATE OF THE COMPANY MAY RESELL THIS
SECURITY OTHER THAN IN CONFORMITY WITH THE RESTRICTIONS SET FORTH HEREIN BEFORE
ONE YEAR AFTER THE LAST DATE OF ORIGINAL ISSUANCE OF SECURITIES (INCLUDING
OPTION SECURITIES ISSUED PURSUANT TO THE EXERCISE OF THE INITIAL PURCHASERS’
OPTION TO PURCHASE OPTION SECURITIES) UPON THE CONVERSION OF WHICH THIS
SECURITY WAS ISSUED.

 

C-2

 

Schedule A

 

Make-Whole Table

 

	
   

  	
   

  	
  Make-Whole Effective Date

  	
   

  
	
  Stock Price

  	
   

  	
  September 30,

  2009

  	
   

  	
  October 1,

  2010

  	
   

  	
  October 1,

  2011

  	
   

  	
  October 1,

  2012

  	
   

  	
  October 1,

  2013

  	
   

  	
  October 1,

  2014

  	
   

  	
  October 1,

  2015

  	
   

  
	
  $

  	
   6.88

  	
   

  	
  31.3887

  	
   

  	
  31.3887

  	
   

  	
  31.3887

  	
   

  	
  31.3887

  	
   

  	
  31.3887

  	
   

  	
  31.3887

  	
   

  	
  31.3887

  	
   

  
	
  $

  	
   7.00

  	
   

  	
  31.3887

  	
   

  	
  31.1180

  	
   

  	
  29.1399

  	
   

  	
  27.6343

  	
   

  	
  26.3858

  	
   

  	
  25.5368

  	
   

  	
  28.8970

  	
   

  
	
  $

  	
   7.25

  	
   

  	
  31.3887

  	
   

  	
  29.4411

  	
   

  	
  27.3926

  	
   

  	
  25.7188

  	
   

  	
  24.1531

  	
   

  	
  22.6541

  	
   

  	
  23.9709

  	
   

  
	
  $

  	
   7.50

  	
   

  	
  30.2752

  	
   

  	
  27.9158

  	
   

  	
  25.8139

  	
   

  	
  24.0023

  	
   

  	
  22.1724

  	
   

  	
  20.1270

  	
   

  	
  19.3732

  	
   

  
	
  $

  	
   8.25

  	
   

  	
  26.4097

  	
   

  	
  24.0839

  	
   

  	
  21.8995

  	
   

  	
  19.8177

  	
   

  	
  17.4500

  	
   

  	
  14.2892

  	
   

  	
  7.2520

  	
   

  
	
  $

  	
   9.00

  	
   

  	
  23.3585

  	
   

  	
  21.1044

  	
   

  	
  18.9175

  	
   

  	
  16.7177

  	
   

  	
  14.0880

  	
   

  	
  10.4037

  	
   

  	
  0.0000

  	
   

  
	
  $

  	
   10.00

  	
   

  	
  20.1837

  	
   

  	
  18.0543

  	
   

  	
  15.9345

  	
   

  	
  13.7179

  	
   

  	
  10.9982

  	
   

  	
  7.1769

  	
   

  	
  0.0000

  	
   

  
	
  $

  	
   12.00

  	
   

  	
  15.7772

  	
   

  	
  13.9212

  	
   

  	
  12.0315

  	
   

  	
  9.9973

  	
   

  	
  7.4945

  	
   

  	
  4.1729

  	
   

  	
  0.0000

  	
   

  
	
  $

  	
   15.00

  	
   

  	
  11.7752

  	
   

  	
  10.2871

  	
   

  	
  8.7572

  	
   

  	
  7.1033

  	
   

  	
  5.1151

  	
   

  	
  2.6907

  	
   

  	
  0.0000

  	
   

  
	
  $

  	
   20.00

  	
   

  	
  8.0762

  	
   

  	
  7.0761

  	
   

  	
  5.9873

  	
   

  	
  4.8207

  	
   

  	
  3.4510

  	
   

  	
  1.8501

  	
   

  	
  0.0000

  	
   

  
	
  $

  	
   25.00

  	
   

  	
  5.8267

  	
   

  	
  5.3031

  	
   

  	
  4.4925

  	
   

  	
  3.6283

  	
   

  	
  2.6145

  	
   

  	
  1.4197

  	
   

  	
  0.0000

  	
   

  
	
  $

  	
   50.00

  	
   

  	
  2.2816

  	
   

  	
  1.9715

  	
   

  	
  1.6900

  	
   

  	
  1.3928

  	
   

  	
  1.0286

  	
   

  	
  0.5722

  	
   

  	
  0.0000

  	
   

  
	
  $

  	
   75.00

  	
   

  	
  1.0985

  	
   

  	
  0.9342

  	
   

  	
  0.8038

  	
   

  	
  0.6719

  	
   

  	
  0.5066

  	
   

  	
  0.2900

  	
   

  	
  0.0000Exhibit 10.1

 

PLEDGE AND ESCROW AGREEMENT

 

by and among

 

INCYTE CORPORATION, as Pledgor,

 

U.S. BANK NATIONAL ASSOCIATION, as Trustee,

 

and

 

U.S. BANK NATIONAL ASSOCIATION, as Escrow
Agent

 

Dated as of September 30, 2009

 

 

PLEDGE AND ESCROW AGREEMENT

 

THIS PLEDGE AND ESCROW AGREEMENT (this “Agreement”),
dated as of September 30, 2009, is by and among Incyte Corporation (the “Company”), as pledgor, U.S. Bank National
Association, as trustee under the Indenture referred to below (the “Trustee”), and U.S. Bank National
Association, in its capacity as securities intermediary and escrow agent (the “Escrow Agent”).

 

RECITALS

 

The
Company and the Trustee have entered into an Indenture dated as of September 30,
2009 (as the same may be supplemented and amended from time to time, the “Indenture”)
pursuant to which the Company will issue $400,000,000 in aggregate principal
amount of its 4.75% Convertible Senior Notes due 2015 (the “Notes”).

 

The
Company desires to establish an escrow account with the Escrow Agent into which
certain sums, as fully described in Section 2(a) below, will be,
simultaneously with the original issuance of the Notes, deposited by the
Company to be held and distributed in accordance with the terms and conditions
set forth herein, and the Escrow Agent is willing to establish such an account
and to accept such funds in accordance with the terms hereinafter set forth.

 

Capitalized
terms used but not defined herein shall have the meanings assigned to such
terms in the Indenture.

 

AGREEMENT

 

NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:

 

SECTION 1.                                Establishment of Escrow Account. The Escrow Agent shall establish on the
date hereof and maintain in the Trustee’s name a “securities account” (within
the meaning of Article 8 of the Uniform Commercial Code of the State of
New York as in effect from time to time (the “New York UCC”)) identified as ABA
Number: 091000022; Account Number: 134507001; Account Name : Incyte CSN 2009
Secured Interest Acct (the “Escrow Account”) to which there shall be
immediately credited and held amounts received by the Escrow Agent from the
Company in accordance with Section 3 hereof. The funds credited to the
Escrow Account shall be applied and disbursed only as provided herein. The
Escrow Agent shall segregate the funds credited to the Escrow Account from its
other funds held as an agent or in trust. The Escrow Agent shall treat all
property held by it in the Escrow Account as “financial assets” (as defined in Section 8-l02(a)(9) of
the New York UCC) in accordance with Section 8-501 (or successor section)
of the New York UCC.

 

SECTION 2.                                Deposit To The Escrow Account; Investments.

 

(a)                                  (i) Simultaneously with the original
issuance of the Notes, the Company shall deliver to the Escrow Agent for
deposit in the Escrow Account “Permitted Securities” (as defined below) with an
original purchase price equal to $56,268,631.42 (the “Escrow Funds”). 

 

1

 

A description of the Permitted Securities that are being deposited in
the Escrow Account as of the date of this Agreement is contained on Exhibit A
hereto.

 

(ii)                                  [Intentionally omitted].

 

(iii)                               All amounts to be deposited with the
Escrow Agent shall be transferred by wire transfer of immediately available
funds to the following account:

 

U.S. Bank National
Association

ABA No.  91000022

Account No. 180121167365

Acct Name: U.S. Bank Corporate Trust Department

Attn: Brad. E. Scarbrough

 

(iv)                              The Escrow Agent may assume without
inquiry that all amounts deposited by the Company under this Section 2
have been correctly computed in accordance with the requirements of the
Indenture, that no additional amounts are required to be so delivered and that the
Escrow Agent is not required under the Indenture to hold in the Escrow Account
any additional amounts other than income earned on investments made in
accordance with this Section 2.

 

(b)                                 To the extent immediately available funds
are deposited in the Escrow Account, promptly following the deposit of any such
funds into the Escrow Account, the Company, after consulting with the Initial
Purchasers, shall provide written instructions to the Escrow Agent as to the
specific Permitted Securities in which funds are to be invested and until such
instructions are given by the Company, the Escrow Agent shall not invest such
funds. For purposes of this Agreement, “Permitted Securities”
shall mean “Money Market Securities” and/or “Government Securities.” “Money
Market Securities “ shall mean money market securities issued by
Money Market Funds. “Money Market Fund”
means any registered investment company that meets the conditions of paragraphs
(c)(2), (c)(3) and (c)(4) of Rule 2a-7 under the Investment
Company Act of 1940, as amended, that invests exclusively in securities of the
U.S. government, securities of government-sponsored enterprises created by the
U.S. Congress and privately issued money market securities that have been rated
by at least one “nationally recognized statistical rating organization” (as
that term is used in Section 15E of the Securities Exchange Act of 1934,
as amended) and received the highest credit rating (as of the date hereof, A1
in the case of Standard & Poor’s Ratings Service and P1 in the case of
Moody’s Investor Service, Inc.) from each nationally recognized
statistical rating organization that has rated them. “Government Securities “ shall mean
noncallable direct obligations of, or noncallable obligations the payment of
principal of and interest on which are unconditionally guaranteed by, the
United States of America. All such amounts shall remain so invested until the
close of business on the Business Day prior to any withdrawal by the Escrow
Agent pursuant to Section 4 hereof. All interest accrued on the Escrow
Funds shall be added to the Escrow Account and be part of the Escrow Account
for all purposes hereunder.  The Escrow
Agent shall not be liable for any loss incurred by the actions of third parties
or for any loss arising by error, failure or delay in the making of an
investment or reinvestment, and the Escrow Agent shall not be liable for any
loss of principal or income in connection therewith, unless such error, failure
or delay results from the Escrow Agent’s gross negligence or willful
misconduct.  As and when the Escrow 

 

2

 

Funds and any interest or income thereon is to be released under this
Agreement, the Escrow Agent shall cause the Permitted Securities to be
converted into cash in accordance with its customary procedures and shall not
be liable for any loss of principal or income in connection therewith.  The Escrow Agent shall not be liable for any
loss of principal or income due to the choice of Permitted Securities as
investments or the choice of Permitted Securities converted into cash pursuant
to this Section 2.  All Permitted
Securities from time to time credited to the Escrow Account constituting a “security
entitlement” as defined in Section 8-102(a)(17) of the New York UCC shall
be held in the name of the Trustee or the Escrow Agent (or either of their
nominee names) and in no event shall the Company be or be deemed to be the “entitlement
holder” (as such term is defined in Section 8-102(a)(7) of the New
York UCC) with respect thereto.

 

SECTION 3.                                Security Interest.

 

(a)                                 Pledge and Assignment. As security for the Secured Obligations
(as defined below), the Company hereby irrevocably pledges, assigns and grants
to the Trustee, for the equal and ratable benefit of the Holders of the Notes,
a first priority continuing security interest in, and control of, all of the
Company’s right, title and interest in and to all of the following whether now
owned or existing or hereafter acquired or created (collectively, the “Collateral”):

 

(i)                                     the Escrow Account, all security
entitlements from time to time carried in the Escrow Account, all funds from
time to time held in the Escrow Account, including, without limitation, the
Escrow Funds and all certificates and instruments, if any, from time to time,
representing or evidencing the Escrow Account or the Escrow Funds;

 

(ii)                                  all investments of funds in the Escrow
Account, all of which shall constitute Permitted Securities, and whether held
by or registered in the name of the Escrow Agent or any nominee, all
certificates and instruments, if any, from time to time representing or
evidencing any such Permitted Securities and all security entitlements to such
Permitted Securities;

 

(iii)                               all promissory notes, certificates of
deposit, deposit accounts, checks and other instruments evidencing Permitted
Securities from time to time hereafter delivered to or otherwise possessed by
the Escrow Agent, for or on behalf of the Company, in substitution for or in
addition to any or all of the then existing Collateral;

 

(iv)                              all interest, dividends, cash,
instruments, securities and other properties from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of the then existing Collateral; and

 

(v)                                 all proceeds of the foregoing.

 

The
Trustee hereby appoints the Escrow Agent to act as the Trustee’s agent, on
behalf of the Holders of the Notes, for purposes of perfecting the foregoing
pledge, assignment and security interest in the Collateral, and the Escrow
Agent hereby accepts such appointment. For so long as the foregoing pledge,
assignment and security interest remains in effect, the Escrow Agent hereby
waives any right of set off or banker’s lien that it, in its individual
capacity or in its 

 

3

 

capacity as an agent for Persons other than the
Trustee and the Holders of the Notes, may have with respect to any or all of
the Collateral.

 

(b)                                 Secured Obligations. This Agreement secures the due and
punctual payment and performance of all obligations of the Company, whether now
or hereafter existing, under the Notes, the Indenture and this Agreement,
including, without limitation, interest and premium, if any, accrued on the
Notes after the commencement of a bankruptcy, reorganization or similar
proceeding involving the Company to the extent permitted by applicable law
(collectively, the “Secured Obligations”).

 

(c)                                  Delivery of Collateral. All certificates or instruments, if
any, representing or evidencing all or any portion of the Collateral shall be
held by the Escrow Agent on behalf of the Trustee pursuant hereto and shall be
in suitable form for transfer by delivery, or shall be accompanied by duly
executed instruments of transfer or assignments in blank, all in form and
substance sufficient to convey a valid security interest in such Collateral to
the Trustee. All securities in uncertificated or book-entry form and all
security entitlements, if any, in each case representing or evidencing the
Collateral shall be registered in the name of the Trustee (or any of its
nominees) as the registered owner thereof, by book-entry or as otherwise
appropriate so as to properly identify the interest of the Trustee
therein.  In addition, the Escrow Agent
shall have the right, at any time following the occurrence of an Event of
Default, to transfer to or to register in the name of the Trustee or any of its
nominees any or all of the other Collateral. Except as otherwise provided
herein, all Collateral shall be deposited and held in the Escrow Account.  The Escrow Agent shall have the right at any
time to exchange certificates or instruments representing or evidencing all or
any portion of the Collateral for certificates or instruments of smaller or
larger denominations in the same aggregate amount.

 

(d)                                Maintaining the Escrow
Account. So long
as this Agreement is in full force and effect:

 

(i)                                     subject to the other terms and conditions
of this Agreement, all Collateral held by the Escrow Agent pursuant to this
Agreement shall be held in the Escrow Account, which shall be subject to the
exclusive dominion and control of the Trustee for the benefit of the Trustee
and the equal and ratable benefit of the Holders of the Notes;

 

(ii)                                  the Escrow Account and all Collateral
from time to time therein shall remain segregated from all other funds or other
property otherwise held by the Trustee or the Escrow Agent, as applicable;

 

(iii)                               all amounts (including, without
limitation, any Escrow Funds or interest on or other proceeds of the Escrow
Funds or any Permitted Securities held in the Escrow Account) shall remain on
deposit in the Escrow Account until withdrawn in accordance with this
Agreement;

 

(iv)                              the parties intend that the Trustee is
the holder or entitlement holder (as the case may be) of all of the Collateral
and that either the Trustee for the equal and ratable benefit of the Holders of
the Notes or, to the extent required by applicable law, the Escrow Agent, for
the benefit of the Trustee and the equal and ratable benefit of the 

 

4

 

Holders of the
Notes, is the holder or entitlement holder of all Permitted Securities and
other uncertificated securities on the books of the applicable Federal Reserve
Bank or other applicable securities intermediary; and

 

(v)                                 notwithstanding anything to the contrary
herein, the Escrow Agent shall comply with all instructions from the Trustee
with respect to the Escrow Account and the security entitlements carried
therein without further consent from the Company.

 

(e)                                 Further Assurances. The Company shall, at the Company’s
expense, execute and deliver to the Trustee or its designee such other
instruments and documents, and take all further action as the Trustee
deems reasonably necessary or advisable or may reasonably request to confirm or
perfect the security interest of the Trustee granted or purported to be granted
hereby or to enable the Trustee to exercise and enforce its rights and remedies
hereunder with respect to any Collateral, and the Company shall take all
necessary action to preserve and protect the security interest created hereby
as a first priority, perfected lien and encumbrance upon the Collateral.

 

SECTION 4.                                Distributions from Escrow Account. Assets on deposit in the Escrow Account
shall be withdrawn by the Escrow Agent and transferred only in accordance with
this Section 4:

 

(a)                                 Event of Default.

 

(i)                                    For so long as an Event of Default has
occurred and is continuing under the Indenture, no amounts shall be disbursed
from the Escrow Account, except as provided in Section 4(a)(ii) below.

 

(ii)                                 If any Event of Default has occurred and
is continuing under Section 6.01 of the Indenture:

 

(1)                                 The Trustee may, without notice to the
Company except as required by applicable law and at any time or from time to
time, direct the Escrow Agent to redeem or sell all Collateral and transfer all
proceeds thereof to the Paying Agent to apply such funds in accordance with Section 6.06
of the Indenture.

 

(2)                                 If requested by the Holders of the
Securities pursuant to Section 6.12 of the Indenture, the Trustee (and/or
the Escrow Agent at its direction and on its behalf) may also, in addition to
the other rights and remedies provided for herein, exercise in respect of the
Collateral all the rights and remedies of a secured party upon default under
the New York UCC, and may also, without notice except as specified below,
redeem or sell the Collateral or any part thereof in one or more parcels at
public or private sales, at any of the Trustee’s or the Escrow Agent’s offices
or elsewhere, for cash, on credit or for future delivery, and upon such other
terms as the Trustee may deem commercially reasonable. The Company agrees that,
to the extent notice of sale shall be required by law, at least ten (10) days’
notice to the Company of the time and place of any public sale or the time
after which any private sale is to be made shall constitute reasonable

 

5

 

notification. The
Trustee and the Escrow Agent shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. The Trustee (or the
Escrow Agent on its behalf) may adjourn any public or private sale from time to
time by announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was so
adjourned.

 

(3)                                  Any cash held by the Escrow Agent as
Collateral and all net cash proceeds received by the Trustee or the Escrow
Agent in respect of any sale or liquidation of, collection from, or other
realization upon all or any part of the Collateral may, in the discretion of
the Trustee, be held by the Trustee or the Escrow Agent as collateral for, and
then or at any time thereafter be applied (after payment of any costs and
expenses incurred in connection with any redemption, sale, liquidation or
disposition of or realization upon the Collateral and the payment of any
amounts payable to the Trustee or the Escrow Agent) in whole or in part by the
Trustee for the equal and ratable benefit of the Holders of the Notes against
all or any part of the Secured Obligations in such order as described in Section 6.06
of the Indenture.

 

(b)                                 Scheduled Interest
Payments. Pursuant
to the Notes, the Company is obligated to make payments of interest (excluding
any Additional Interest, Reserve Interest and Qualifying Tender Offer Interest,
if applicable) on the Notes on each of April 1, 2010, October 1,
2010, April 1, 2011, October 1, 2011, April 1, 2012 and October 1,
2012 (each, a “Scheduled Interest Payment”).
The Scheduled Interest Payments due on the Notes are to be made, at the
election of the Company, from (1) amounts held in the Escrow Account in
accordance with the procedures set forth in Section 4(b)(i) below or (2) other
sources of funds available to the Company, as anticipated in Section 4(b)(ii) below,
or from any combination of (1) and (2) above; provided, however,
that nothing herein shall be construed as limiting the Company’s obligation to
make all interest payments due on the Notes at the times and in the amounts
required by the Notes, which obligation shall be absolute and unconditional.

 

(i)                                                 Payment of Interest. If the Company elects to cause a
Scheduled Interest Payment to be made using funds held in the Escrow Account,
then, not later than five (5) Business Days prior to the date of the
applicable Scheduled Interest Payment, the Company shall direct the Escrow
Agent in writing pursuant to the form of notice attached hereto as Exhibit B
(upon which the Escrow Agent may conclusively rely) to transfer from the Escrow
Account to the Trustee funds (or Permitted Securities that are scheduled to
mature or that can be liquidated on or before the date of the applicable Scheduled
Interest Payment) in a specified amount necessary to provide for payment in
full (or, if the Company intends to make a portion of such interest payment
with funds or Permitted Securities in the Escrow Account and the remainder of
such interest payment with funds other than those in the Escrow Account, such
portion) of the next Scheduled Interest Payment on the Notes. At or prior to
1:00 p.m., New York City time, on the day that is no later than one (1) Business
Day following receipt of such notice, the Escrow Agent shall transfer such
funds (or such Permitted Securities, as applicable) to the Paying Agent as set
forth in Section 4(d)(ii) hereof, and shall notify the Company in
writing that it has made such transfer to the Paying Agent. If the Company does
not 

 

6

 

intend to utilize the
funds (or Permitted Securities) in the Escrow Account to make any such
Scheduled Interest Payment in full, or does not direct the Escrow Agent in
writing to make any such Scheduled Interest Payment, then the Company shall
make the Scheduled Interest Payment from Company Funds (as defined in Section 4(b)(ii) below).

 

(ii)                                              Release of Funds to the Company Due to
Direct Payment of Interest by the Company. If the Company makes any Scheduled Interest Payment
or a portion of any Scheduled Interest Payment from a source of funds other
than the Escrow Account (“ Company Funds
“), the Company may, after payment in full of such Scheduled Interest Payment
and upon at least five (5) Business Days’ prior notice, direct the Escrow
Agent in writing pursuant to the form of notice attached hereto as Exhibit B
(upon which the Escrow Agent may conclusively rely), so long as no Event of
Default has occurred and is continuing, to release to the Company (or at the
direction of the Company, to release to a designated third party) an amount of
funds or Permitted Securities from the Escrow Account, the sum of the
cumulative interest payments which is less than or equal to the amount of
Company Funds so expended in making the Scheduled Interest Payment. Upon
receipt of such notice, the Escrow Agent shall pay over or transfer to the
Company the requested amount.

 

(c)                                  Excess Escrow Funds. 
If, (x) in the course of funding the Escrow Account pursuant to Section 2(a) hereof,
the Company either elects or is required to deposit in the Escrow Account funds
in an amount greater than that which is required to fund the payment of the sum
of (A) all remaining Scheduled Interest Payments and (B) any
Additional Interest, Reserve Interest and Qualifying Tender Interest, if
applicable, in respect of all outstanding Notes (such sum, the “Remaining Interest Payments”) (in order to permit the Escrow
Agent to purchase an amount of Permitted Securities equal to or greater than
that which is required to fund the payment of the Remaining Interest Payments
or otherwise) or (y) the balance of the Escrow Account exceeds the
Remaining Interest Payments as a result of cumulative interest payments on the
Permitted Securities held in the Escrow Account (any such excess amounts under
clauses (x) and (y) being hereinafter referred to as “ Excess Escrow Funds “), the Company may,
upon at least five (5) Business Days’ prior written notice pursuant to the
form of notice attached hereto as Exhibit B (upon which the Escrow
Agent may conclusively rely), direct the Escrow Agent, so long as no Event of
Default has occurred and is continuing, to release to the Company (or at the
direction of the Company, to release to a designated third party) an amount of
funds or Permitted Securities from the Escrow Account, the sum of which
(including aggregate principal amount of such Permitted Securities) is less
than or equal to the amount of the Excess Escrow Funds. Upon receipt of such
notice, the Escrow Agent shall pay over or transfer to the Company (or its
designated third party, as the case may be) the requested amount or Permitted
Securities.

 

(d)                                 Wire Transfer.

 

(i)                                     All funds distributed from the Escrow
Account to the Company shall be transferred by wire transfer of immediately
available funds to the following account:

 

	
  Account Name:

  	
  Incyte Corporation

  
	
  Account No.:

  	
  200131160-01

  
	
  Routing No.:

  	
  122000496

  

 

7

 

	
  Bank Name:

  	
  Union Bank of
  California, N.A.

  
	
  Bank Address:

  	
  Monterey Park, CA 91755

  

 

(ii)                                  All funds (or Permitted Securities that
are scheduled to mature or that can be liquidated on or before the date of the
applicable Scheduled Interest Payment) distributed from the Escrow Account to
the Paying Agent for payment on the Notes shall be transferred by an
account-to-account transfer of immediately available funds to the following
account:

 

U.S. Bank National
Association

ABA No.  91000022

Account No. 180121167365

Acct Name: U.S. Bank Corporate Trust Department

Attn: Brad. E. Scarbrough

 

(e)                                  Written Instructions;
Certificates. The
Company shall, upon request by the Escrow Agent, execute and deliver to the
Escrow Agent such additional written instructions and certificates hereunder as
may be reasonably required by the Escrow Agent to give effect to this Section 4.

 

SECTION 5.                                Termination of Security
Interest. Upon
payment in full of the Scheduled Interest Payments, the security interest
evidenced by this Agreement in any Collateral remaining in the Escrow Account shall
automatically terminate and be of no further force and effect. Furthermore,
upon the release of any Collateral from the Escrow Account in accordance with
the terms of this Agreement, whether upon release of such Collateral to Holders
of Notes as payment of interest on the Notes or to the Company pursuant to
Sections 4(b)(ii) or 4(c), the security interest evidenced by this
Agreement in such Collateral so released shall automatically terminate and be
of no further force and effect. The Trustee and the Escrow Agent shall, upon
request by the Company, execute and deliver to the Company such additional
written instructions and certificates hereunder as may be reasonably required
by the Company to give effect to this Section 5.

 

SECTION 6.                                Attorneys-in-Fact. The Company hereby irrevocably appoints
each of the Trustee and the Escrow Agent as the Company’s attorney-in-fact,
coupled with an interest, with full authority in the place and stead of the
Company and in the name of the Company or otherwise, from time to time to take
any action and to execute any instrument that may be necessary or advisable to
accomplish the purposes of this Agreement, including, without limitation, to
receive, endorse and collect all instruments made payable to the Company
representing any interest payment, dividend or other distribution in respect of
the Collateral or any part thereof and to give full discharge for the same, and
the expenses of the Trustee and the Escrow Agent incurred in connection
therewith shall be payable by the Company; provided that neither the Trustee
nor the Escrow Agent is under any obligation or duty to exercise any authority
under this Section 6.

 

SECTION 7.                                Trustee or Escrow Agent May Perform. Without limiting the authority granted
under Section 6 hereof, if the Company fails to perform any agreement
contained herein, the Trustee or the Escrow Agent may, but shall not be
obligated to, itself perform, or cause 

 

8

 

performance of, such agreement, and the expenses of the Trustee or the
Escrow Agent incurred in connection therewith shall be payable by the Company
and shall be secured by the Collateral.

 

SECTION 8.                                Representations, Warranties and Agreements.

 

(a)                                  The Company represents and warrants that:

 

(i)                                     The execution, delivery and performance
by the Company of this Agreement are within its corporate power, have been duly
authorized by all necessary corporate action of the Company, and do not
contravene, or constitute a default under, any provision of applicable law or
regulation or of any judgment, injunction or order or of any material agreement
or other material instrument binding upon the Company or of the certificate of
incorporation or by-laws of the Company or result in the creation or imposition
of any Lien on any assets of the Company other than the Lien contemplated
hereby.

 

(ii)                                  The Company (A) is duly organized,
validly existing and in good standing under the laws of the State of Delaware, (B) has
full corporate power and authority to enter into this Agreement and (C) has
the right to pledge and grant a security interest in the Collateral as provided
by this Agreement.

 

(iii)                               This Agreement has been duly executed and
delivered by the Company and constitutes a legal, valid and binding obligation
of the Company, enforceable against the Company in accordance with its terms
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, receivership, moratorium or other similar laws affecting
creditors’ rights generally and by general principles of equity.

 

(iv)                              Upon the execution and delivery of this
Agreement by the parties hereto and the delivery to the Escrow Agent of the
Collateral, the pledge of the Collateral pursuant to this Agreement creates a
valid and perfected first priority security interest in the Collateral,
securing the payment of the Secured Obligations for the benefit of the Trustee,
the Escrow Agent and the Holders of the Notes, enforceable as such against all
creditors of the Company and any persons purporting to purchase any of the
Collateral from each of them.

 

(v)                                 Other than the filing of a UCC financing
statement in respect of the security interest granted hereunder, no consent of
any other person and no consent, authorization, approval, or other action by,
and no notice to or filing with, any governmental authority or regulatory body
is required either (A) for the pledge by the Company of the Collateral
pursuant to this Agreement or for the execution, delivery or performance of
this Agreement by the Company or (B) for the exercise by the Trustee or
the Escrow Agent of the remedies in respect of the Collateral pursuant to this
Agreement.

 

(vi)                              No litigation, investigation or
proceeding of or before any arbitrator or governmental authority is pending or,
to the best knowledge of the Company, threatened by or against the Company or
against any of its properties or revenues with respect to this Agreement or any
of the transactions contemplated hereby.

 

9

 

(vii)                           The pledge of the Collateral pursuant to
this Agreement is not prohibited by any applicable law or governmental
regulation, release, interpretation or opinion of the Board of Governors of the
Federal Reserve System or other regulatory agency (including, without limitation,
Regulations T, U and X of the Board of Governors of the Federal Reserve
System).

 

(viii)                        All information set forth herein relating
to the Collateral is accurate and complete in all material respects.

 

(b)                                 The Company covenants and agrees that:

 

(i)                                     it will not (and will not purport to) (A) sell,
assign (by operation of law or otherwise) or otherwise dispose of, or grant any
option or warrant with respect to, any of the Collateral nor (B) create or
permit to exist any Lien upon or with respect to any of the Collateral (except
for the liens and security interests granted under this Agreement) and at all
times will have the right to pledge the Collateral, free and clear of any Lien
or adverse claims (except for the liens and security interests granted under
this Agreement);

 

(ii)                                  it will not (A) enter into any
agreement or understanding (other than the Indenture) that restricts or
inhibits or purports to restrict or inhibit the Trustee’s or the Escrow Agent’s
rights or remedies hereunder, including, without limitation, their right to
sell or otherwise dispose of the Collateral or (B) fail to pay or
discharge any tax, assessment or levy of any nature with respect to the
Collateral not later than three Business Days prior to the date of any proposed
sale under any judgment, writ or warrant of attachment with respect to the
Collateral; and

 

(iii)                               it will not change its jurisdiction of
incorporation without 30 days’ prior written notice to the Trustee.

 

(c)                                  The Escrow Agent represents and warrants
that it is a bank with trust powers that in the ordinary course of its business
maintains securities accounts for others and is acting solely in such capacity
in respect of the Escrow Account.  The
Escrow Agent further represents and warrants that it is a “securities intermediary”
within the meaning of Section 8-102(a)(14) of the New York UCC.

 

(d)                                 For purposes of this Section, “Lien” means, with respect to any asset, any
mortgage, deed of trust, lien, pledge, hypothecation, encumbrance, charge or
security interest in, on or of such asset.

 

SECTION 9.                                Fees and Expenses of Escrow Agent.

 

(a)                                  The Company agrees to pay the Escrow
Agent its agreed-upon compensation for its services as Escrow Agent hereunder
promptly upon request therefor, and to reimburse the Escrow Agent for all
reasonable and documented expenses of or disbursements incurred by the Escrow
Agent in the performance of its duties hereunder, including the reasonable
fees, expenses and disbursements of legal counsel to the Escrow Agent, all as
provided in the Fee Schedule attached as Annex A hereto.

 

10

 

(b)                                 The Escrow Agent shall have a lien upon
any investment income on deposit in the Escrow Account solely for any costs,
expenses and fees that may arise hereunder and may retain that portion of the
investment income in the Escrow Account equal to such unpaid amounts, until all
such costs, expenses and fees have been paid.

 

SECTION 10.                          Rights, Duties and Immunities of
Escrow Agent. Acceptance
by the Escrow Agent of its duties under this Agreement is subject to the
following terms and conditions, which all parties to this Agreement hereby
agree shall govern and control the rights, duties and immunities of the Escrow
Agent:

 

(a)                                  The duties and obligations of the Escrow Agent
shall be determined solely by the express provisions of this Agreement and the
Escrow Agent shall not be liable except for the performance of such duties and
obligations as are specifically set out in this Agreement. The Escrow Agent
shall not be required to inquire as to the performance or observation of any
obligation, term or condition under any agreement or arrangement between the
Company and the Trustee. The Escrow Agent is not a party to, and is not bound
by, any agreement or other document out of which this Agreement may arise. The
Escrow Agent shall be under no liability to any party hereto by reason of any
failure on the part of any party hereto (other than the Escrow Agent) or any
maker, guarantor, endorser or other signatory of any document or any other
person to perform such person’s obligations under any such document. The Escrow
Agent shall not be bound by any waiver, modification, termination or rescission
of this Agreement or any of the terms hereof, unless evidenced by a writing
delivered to the Escrow Agent signed by the proper party or parties and, if the
duties or rights of the Escrow Agent are affected, unless it shall give its
prior written consent thereto. This Agreement shall not be deemed to create a
fiduciary relationship between the parties hereto under state or federal law.

 

(b)                                 The Escrow Agent shall not be responsible
in any manner for the validity or sufficiency of this Agreement or of any
property delivered hereunder, or for the value or collectibility of any note,
check or other instrument, if any, so delivered, or for any representations
made or obligations assumed by any party other than the Escrow Agent. Nothing
herein contained shall be deemed to obligate the Escrow Agent to deliver any
cash, instruments, documents or any other property referred to herein, unless
the same shall have first been received by the Escrow Agent pursuant to this
Agreement.

 

(c)                                  The Company shall reimburse and indemnify
the Escrow Agent for, and hold it harmless against, any loss, liability or expense,
including but not limited to reasonable legal counsel fees, incurred without
bad faith, gross negligence or willful misconduct on the part of the Escrow
Agent, arising out of or in conjunction with its acceptance of, or the
performance of its duties and obligations under, this Agreement, as well as the
costs and expenses of defending against any claim or liability arising out of
or relating to this Agreement.

 

(d)                                 The Escrow Agent shall be fully protected
in acting on and relying upon any written notice, direction, request, waiver,
consent, receipt or other paper or document which the Escrow Agent in good
faith believes to have been signed and presented by the Company.

 

(e)                                  The Escrow Agent shall not be liable for
any error of judgment, or for any act done or step taken or omitted by it in
good faith or for any mistake in act or law, or for anything

 

11

 

which it may do or refrain from doing in connection herewith, except
its own gross negligence or willful misconduct.

 

(f)            The
Escrow Agent may seek the advice of legal counsel in the event of any dispute
or question as to the construction of any of the provisions of this Agreement
or its duties hereunder, and except for its own bad faith, gross negligence or
willful misconduct it shall incur no liability and shall be fully protected in
respect of any action taken, omitted or suffered by it in good faith in
accordance with the advice or opinion of such counsel.

 

(g)           The
agreements set forth in this Section 10 shall survive the resignation or
removal of the Escrow Agent, the termination of this Agreement and the payment
of all amounts hereunder.

 

SECTION 11.         Miscellaneous.

 

(a)           Waiver. No waiver of any provision of this
Agreement nor consent to any departure by any party therefrom shall in any
event be effective unless the same shall be in writing and signed by each of
the non-breaching parties and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given.

 

(b)           Severability. If, for any reason
whatsoever, any one or more of the provisions of this Agreement shall be held
or deemed to be inoperative, unenforceable or invalid in a particular case or
in all cases, such circumstances shall not have the effect of rendering any of
the other provisions of this Agreement inoperative, unenforceable or invalid,
and the inoperative, unenforceable or invalid provision shall be construed as
if it were written so as to effectuate, to the maximum extent possible, the
parties’ intent.

 

(c)           Binding Effect. This Agreement shall inure to and be binding upon the
parties and their respective successors and permitted assigns; provided, however, that the Company may
not assign its rights or obligations hereunder without the express prior
written consent of the Trustee.

 

(d)           Choice of Law. The existence, validity,
construction, operation and effect of any and all terms and provisions of this
Agreement shall be determined in accordance with and governed by the internal
laws of the State of New York, including without limitation the New York UCC,
without giving effect to the conflicts of law principles of such State. The
securities intermediary’s jurisdiction for purposes of Section 8-110 of
the New York UCC shall be the State of New York.

 

(e)           Entire Agreement. This Agreement, the
Purchase Agreement, the Notes and the Indenture contain the entire agreement
among the parties with respect to the subject matter hereof and supersede any
and all prior agreements, understandings and commitments with respect thereto,
whether oral or written; provided,
however, that this Agreement is
executed and accepted by the Trustee and the Escrow Agent subject to all terms
and conditions of its acceptance of the trust under the Indenture, as fully as
if said terms and conditions were set forth at length herein.

 

12

 

(f)            Amendments. This Agreement may be amended
only by a writing signed by duly authorized representatives of all parties. The
Trustee and the Escrow Agent may execute an amendment to this Agreement only if
the consent of each of the Holders of the Notes required by Section 9.02
of the Indenture has been obtained or is not required pursuant to the terms
thereof.

 

(g)           Notices. All notices, requests,
instructions, orders and other communications required or permitted to be given
or made under this Agreement to any party hereto shall be delivered in writing
by hand delivery or overnight delivery, or shall be delivered by facsimile with
machine confirmation of full delivery not more than 24 hours following such
facsimile notice. A notice given in accordance with the preceding sentence
shall be deemed to have been duly given upon the sending thereof Notices should
be addressed as follows:

 

To the Company:

 

Incyte Corporation

Route 141 and
Henry Clay Road

Building E336

Wilmington, DE
19880

Attention:  Chief Financial Officer

Facsimile number:
(302) 425-2707

 

To the Trustee or the Escrow Agent:

 

U.S. Bank National
Association

Corporate Trust
Services

633 West Fifth
Street, 24th Floor

Los Angeles, CA
90071

Attn: Bradley
Scarbrough (Incyte 2009 Escrow)

Fax: (213)
615-6197

 

or at such other address or facsimile number as the
specified entity most recently may have designated in writing in accordance
with this paragraph to the other parties. Notwithstanding the foregoing,
notices to the Escrow Agent shall be effective only upon receipt.

 

(h)           Counterparts. This Agreement may be
executed in one or more counterparts, each of which shall be deemed an original
but all of which together shall constitute one and the same instrument.
Delivery of an executed counterpart of a signature page to this Agreement
by facsimile shall be effective as delivery of a manually executed counterpart
of this Agreement.

 

(i)            Interpretation. The headings of the
sections contained in this Agreement are solely for convenience of reference
and shall not affect the meaning or interpretation of this Agreement.

 

(j)            Tax Matters.  The
parties acknowledge that, for tax reporting purposes, all interest attributable
to the Escrow Funds shall be allocable to the Company.  The Company agrees to provide the Escrow
Agent with certified tax identification numbers by furnishing appropriate Form W-9
(or Form W-8, in the case of non-U.S. persons) and other forms and
documents that 

 

13

 

the Escrow Agent may reasonably request.  The Company acknowledges that failure to
supply such information may obligate the Escrow Agent to withhold a portion of
any payments made to the Company pursuant to this Agreement under the
applicable provisions of the Internal Revenue Code of 1986, as amended from
time to time.

 

(k)           USA Patriot Act Information.   To help the government fight the funding of
terrorism and money laundering activities, federal law requires all financial
institutions to obtain, verify and record information that identifies each
person who opens an account.  For a
non-individual person such as a business entity, a charity, a trust or other
legal entity the Escrow Agent will ask for documentation to verify its
formation and existence as a legal entity. 
The Escrow Agent may also ask to see financial statements, licenses,
identification and authorization documents from individuals claiming authority
to represent the entity or other relevant documentation.  The Company agrees to provide all such
information and documentation as requested by Escrow Agent to ensure compliance
with United States federal law.

 

[Signature pages follow]

 

14

 

IN
WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement
as of the day first written above.

 

	
   

  	
   

  	
  INCYTE CORPORATION,

  as Pledgor

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  David C. Hastings

  
	
   

  	
   

  	
   

  	
  Name: David
  C. Hastings

  
	
   

  	
   

  	
   

  	
  Title:
  Executive Vice President and Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  U.S. BANK NATIONAL ASSOCIATION,

  as Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  Brad E. Scarbrough

  
	
   

  	
   

  	
   

  	
  Name: Brad
  E. Scarbrough

  
	
   

  	
   

  	
   

  	
  Title:
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  U.S. BANK NATIONAL ASSOCIATION,

  as Escrow Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  Brad E. Scarbrough

  
	
   

  	
   

  	
   

  	
  Name: Brad
  E. Scarbrough

  
	
   

  	
   

  	
   

  	
  Title:
  Vice President

  

 

 

EXHIBIT A

 

Description of Permitted Securities

 

	
  Bond Payment

  Dates

  	
   

  	
  Day Count

  	
   

  	
  Payment

  	
   

  	
  STRIP

  Maturity

  	
   

  	
  CUSIP

  	
   

  	
  Price

  	
   

  	
  Tenor

  	
   

  	
  Price ($)

  	
   

  
	
  1-Apr-10

  	
   

  	
  0.50278

  	
   

  	
  9,552,777.78

  	
   

  	
  2/15/2010

  	
   

  	
  912820EM5

  	
   

  	
  99.969

  	
   

  	
  0.38

  	
   

  	
  9,549,816.42

  	
   

  
	
  1-Oct-10

  	
   

  	
  0.50000

  	
   

  	
  9,500,000.00

  	
   

  	
  8/15/2010

  	
   

  	
  912820FT9

  	
   

  	
  99.750

  	
   

  	
  0.87

  	
   

  	
  9,476,250.00

  	
   

  
	
  1-Apr-11

  	
   

  	
  0.50000

  	
   

  	
  9,500,000.00

  	
   

  	
  2/15/2011

  	
   

  	
  912820GC5

  	
   

  	
  99.301

  	
   

  	
  1.38

  	
   

  	
  9,433,595.00

  	
   

  
	
  1-Oct-11

  	
   

  	
  0.50000

  	
   

  	
  9,500,000.00

  	
   

  	
  8/15/2011

  	
   

  	
  912820GL5

  	
   

  	
  98.625

  	
   

  	
  1.87

  	
   

  	
  9,369,375.00

  	
   

  
	
  1-Apr-12

  	
   

  	
  0.50000

  	
   

  	
  9,500,000.00

  	
   

  	
  2/15/2012

  	
   

  	
  912820GV3

  	
   

  	
  97.578

  	
   

  	
  2.38

  	
   

  	
  9,269,910.00

  	
   

  
	
  1-Oct-12

  	
   

  	
  0.50000

  	
   

  	
  9,500,000.00

  	
   

  	
  8/15/2012

  	
   

  	
  912820HF7

  	
   

  	
  96.523

  	
   

  	
  2.88

  	
   

  	
  9,169,685.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  57,052,777.78

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Total

  	
   

  	
  56,268,631.42

  	
   

  

 

 

EXHIBIT B

 

[Incyte
Letterhead]

 

	
   

  	
  [Date]

  

 

U.S. Bank National
Association

Corporate Trust Services

633 West Fifth Street,
24th Floor

Los Angeles, CA 90071

ATTENTION:  Bradley Scarbrough (Incyte 2009 Escrow)

 

RE:                              Pledge and Escrow Agreement dated September 30,
2009 among Incyte    Corporation, U.S.
Bank National Association as Trustee under the Indenture and U.S. Bank National
Association as Escrow Agent under the Pledge and Escrow Agreement

 

Ladies and Gentlemen:

 

Reference is made to Section 2
of the Pledge and Escrow Agreement.  The
Company hereby directs the Escrow Agent to make the following disbursements:

 

	
  Section 4(b)(i)

  	
  $

  
	
   

  	
   

  
	
  Section 4(b)(ii)

  	
  $

  
	
   

  	
   

  
	
  Section 4(c)

  	
  $

  

 

The Company hereby
certifies to the Escrow Agent (and for the benefit of the Trustee under the
Indenture), that such any disbursement made by the Escrow Agent in reliance on
this direction is permitted by and complies with the Pledge and Escrow
Agreement.

 

 

	
   

  	
  INCYTE CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name

  
	
   

  	
  Title

  

 

 

ANNEX A

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00163-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00163-of-00352.parquet"}]]