Document:

Exhibit 10.16

 

COHERENT, INC.

 

2.75% CONVERTIBLE SUBORDINATED NOTES DUE 2011

 

INDENTURE

 

DATED AS OF MARCH 13, 2006

 

U.S. BANK NATIONAL ASSOCIATION

 

AS TRUSTEE

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
   

  	
   

  	
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  Article 1 DEFINITIONS AND INCORPORATION BY
  REFERENCE

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 1.01 Definitions

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 1.02 Other Definition

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 1.03 Trust Indenture Act Provisions

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 1.04 Rules of Construction

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 2 THE SECURITIES

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 2.01 Form and Dating

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 2.02 Execution and Authentication

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 2.03 Registrar, Paying Agent and
  Conversion Agent

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 2.04 Paying Agent to Hold Money in
  Trust

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 2.05 Lists of Holders of Securities

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 2.06 Transfer and Exchange

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 2.07 Replacement Securities

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 2.08 Outstanding Securities

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 2.09 Treasury Securities

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 2.10 Temporary Securities

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 2.11 Cancellation

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 2.12 Legend; Additional Transfer and
  Exchange Requirements

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 2.13 CUSIP Numbers

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 3 PURCHASE UPON FUNDAMENTAL CHANGE

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 3.01 Purchase at Holders’ Option upon a
  Fundamental Change

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 3.02 Effect of Fundamental Change
  Purchase Notice

  	
   

  	
  22

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 3.03 Deposit of Fundamental Change
  Purchase Price

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 3.04 Repayment to The Company

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 3.05 Securities Purchased in Part

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 3.06 Compliance with Securities Laws
  upon Purchase of Securities

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 3.07 Purchase of Securities in Open
  Market

  	
   

  	
  24

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 4 CONVERSION

  	
   

  	
  25

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 4.01 Conversion Privilege and
  Conversion Rate

  	
   

  	
  25

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 4.02 Conversion Procedure

  	
   

  	
  28

  

 

 

	
   

  	
   

  	
   

  	
   

  	
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  Section 4.03 Fractional Shares

  	
   

  	
  29

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 4.04 Taxes on Conversion

  	
   

  	
  30

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 4.05 Company to Provide Stock

  	
   

  	
  30

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 4.06 Adjustment of Conversion Rate

  	
   

  	
  30

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 4.07 No Adjustment

  	
   

  	
  36

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 4.08 Notice of Adjustment

  	
   

  	
  37

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 4.09 Notice of Certain Transactions

  	
   

  	
  37

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  37

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 4.11 Trustee’s Disclaimer

  	
   

  	
  38

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 4.12 Voluntary Increase

  	
   

  	
  38

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 4.13 Payment of Cash in Lieu of Common
  Stock

  	
   

  	
  38

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 5 COVENANTS

  	
   

  	
  40

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 5.01 Payment of Securities

  	
   

  	
  40

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 5.02 SEC and Other Reports

  	
   

  	
  40

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 5.03 Compliance Certificates

  	
   

  	
  41

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 5.04 Further Instruments and Acts

  	
   

  	
  41

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 5.05 Maintenance of Corporate Existence

  	
   

  	
  41

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 5.06 Rule 144A Information
  Requirement

  	
   

  	
  41

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 5.07 Stay, Extension and Usury Laws

  	
   

  	
  41

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 5.08 Payment of Additional Interest

  	
   

  	
  42

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 5.09 Maintenance of Office or Agency

  	
   

  	
  42

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 6 CONSOLIDATION; MERGER; CONVEYANCE;
  TRANSFER OR LEASE

  	
   

  	
  43

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  43

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 6.02 Successor Substituted

  	
   

  	
  43

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 7 DEFAULT AND REMEDIES

  	
   

  	
  44

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 7.01 Events of Default

  	
   

  	
  44

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 7.02 Acceleration

  	
   

  	
  45

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 7.03 Other Remedies

  	
   

  	
  46

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 7.04 Waiver of Defaults and Events of
  Default

  	
   

  	
  46

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 7.05 Control by Majority

  	
   

  	
  46

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 7.06
  Limitations on Suits

  	
   

  	
  47

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 7.07 Rights of Holders to Receive
  Payment and to Convert

  	
   

  	
  47

  

 

 

	
   

  	
   

  	
   

  	
   

  	
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  Section 7.08 Collection Suit by Trustee

  	
   

  	
  47

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 7.09 Trustee May File Proofs of
  Claim

  	
   

  	
  47

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 7.10 Priorities

  	
   

  	
  48

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 7.11 Undertaking for Costs

  	
   

  	
  48

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 8 TRUSTEE

  	
   

  	
  49

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 8.01 Obligations of Trustee

  	
   

  	
  49

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 8.02 Rights of Trustee

  	
   

  	
  50

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 8.03 Individual Rights of Trustee

  	
   

  	
  51

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 8.04 Trustee’s Disclaimer

  	
   

  	
  51

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 8.05 Notice of Default or Events of
  Default

  	
   

  	
  51

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 8.06 Reports by Trustee to Holders

  	
   

  	
  51

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 8.07 Compensation and Indemnity

  	
   

  	
  52

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 8.08 Replacement of Trustee

  	
   

  	
  53

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 8.09 Successor Trustee by Merger, Etc.

  	
   

  	
  53

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 8.10 Eligibility; Disqualification

  	
   

  	
  53

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 8.11 Preferential Collection of Claims
  Against Company

  	
   

  	
  54

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 9 SATISFACTION AND DISCHARGE OF
  INDENTURE

  	
   

  	
  54

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 9.01 Satisfaction and Discharge of
  Indenture

  	
   

  	
  54

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 9.02 Application of Trust Money

  	
   

  	
  55

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 9.03 Repayment to Company

  	
   

  	
  55

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 9.04 Reinstatement

  	
   

  	
  55

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 10 AMENDMENTS; SUPPLEMENTS AND WAIVERS

  	
   

  	
  55

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 10.01 Without Consent of Holders

  	
   

  	
  55

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 10.02 With Consent of Holders

  	
   

  	
  56

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 10.03 Compliance with Trust Indenture
  Act

  	
   

  	
  57

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 10.04 Revocation and Effect of Consents

  	
   

  	
  57

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 10.05 Notation on or Exchange of Securities

  	
   

  	
  57

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 10.06 Trustee to Sign Amendments, Etc.

  	
   

  	
  57

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 10.07 Effect of Supplemental Indentures

  	
   

  	
  57

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 11 SUBORDINATION

  	
   

  	
  57

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 11.01 Agreement to Subordinate

  	
   

  	
  57

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 11.02 Payment to Holders

  	
   

  	
  58

  

 

 

	
   

  	
   

  	
   

  	
   

  	
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  Section 11.03 Subrogation of Securities

  	
   

  	
  60

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 11.04 Authorization to Effect
  Subordination

  	
   

  	
  61

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 11.05 Notice to Trustee

  	
   

  	
  61

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 11.06 Trustee’s Relation to Senior
  Indebtedness

  	
   

  	
  62

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 11.07 No Impairment of Subordination

  	
   

  	
  62

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 11.08 Certain Conversions Deemed
  Payment

  	
   

  	
  62

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 11.09 Article Applicable to Paying
  Agents

  	
   

  	
  62

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 11.10 Senior Indebtedness Entitled to
  Rely

  	
   

  	
  63

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 11.11 Reinstatement

  	
   

  	
  63

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 11.12 Actions by Holders of Senior
  Indebtedness

  	
   

  	
  63

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 12 MISCELLANEOUS

  	
   

  	
  64

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 12.01 Trust Indenture Act Controls

  	
   

  	
  64

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 12.02 Notices

  	
   

  	
  64

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 12.03 Communications By Holders with
  Other Holder

  	
   

  	
  65

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 12.04 Certificate and Opinion as to
  Conditions Precedent

  	
   

  	
  65

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 12.05 Record Date for Vote or Consent
  of Holders of Securities

  	
   

  	
  66

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 12.06 Rules by Trustee, Paying
  Agent, Registrar and Conversion Agent

  	
   

  	
  66

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 12.07 Legal Holidays

  	
   

  	
  66

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 12.08 Governing Law

  	
   

  	
  66

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 12.09 No Adverse Interpretation of
  Other Agreements

  	
   

  	
  66

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 12.10 No Recourse Against Others

  	
   

  	
  66

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 12.11 No Security Interest Created

  	
   

  	
  66

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 12.12 Successors

  	
   

  	
  66

  
	
   

  	
   

  	
   

  	
   

  	
  66

  
	
   

  	
   

  	
  Section 12.13 Multiple Counterparts

  	
   

  	
  66

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 12.14 Separability

  	
   

  	
  66

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 12.15 Table of Contents, Headings, Etc.

  	
   

  	
  67

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit A

  	
   

  	
  A-1

  

 

 

CROSS REFERENCE TABLE*

 

	
  TIA

  SECTION

  	
   

  	
   

  	
   

  	
  INDENTURE

  SECTION

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section

  	
   

  	
  310

  	
   

  	
  12.01

  
	
   

  	
   

  	
  310(a)(1)

  	
   

  	
  8.10

  
	
   

  	
   

  	
  (a)(2)

  	
   

  	
  8.10

  
	
   

  	
   

  	
  (a) (3)

  	
   

  	
  N.A.**

  
	
   

  	
   

  	
  (a) (4)

  	
   

  	
  N.A.

  
	
   

  	
   

  	
  (a) (5)

  	
   

  	
  8.10

  
	
   

  	
   

  	
  (b)

  	
   

  	
  8.10

  
	
   

  	
   

  	
  (c)

  	
   

  	
  N.A.

  
	
  Section

  	
   

  	
  311

  	
   

  	
  12.01

  
	
   

  	
   

  	
  311 (a)

  	
   

  	
  8.11

  
	
   

  	
   

  	
  (b)

  	
   

  	
  8.11

  
	
   

  	
   

  	
  (c)

  	
   

  	
  N.A.

  
	
  Section

  	
   

  	
  312

  	
   

  	
  12.01

  
	
   

  	
   

  	
  312(a)

  	
   

  	
  2.05

  
	
   

  	
   

  	
  (b)

  	
   

  	
  12.03

  
	
   

  	
   

  	
  (c)

  	
   

  	
  12.03

  
	
  Section

  	
   

  	
  313

  	
   

  	
  12.01

  
	
   

  	
   

  	
  313(a)

  	
   

  	
  8.06(a)

  
	
   

  	
   

  	
  (b)(1)

  	
   

  	
  N.A.

  
	
   

  	
   

  	
  (b)(2)

  	
   

  	
  8.06(a)

  
	
   

  	
   

  	
  (c)

  	
   

  	
  8.06(a)

  
	
   

  	
   

  	
  (d)

  	
   

  	
  8.06(b)

  
	
  Section

  	
   

  	
  314

  	
   

  	
  12.01

  
	
   

  	
   

  	
  314(a)

  	
   

  	
  5.02(a); 5.03

  
	
   

  	
   

  	
  (b)

  	
   

  	
  N.A.

  
	
   

  	
   

  	
  (c)(1)

  	
   

  	
  2.02; 9.01; 12.04

  
	
   

  	
   

  	
  (c)(2)

  	
   

  	
  9.01; 12.04

  
	
   

  	
   

  	
  (c)(3)

  	
   

  	
  N.A.

  
	
   

  	
   

  	
  (d)

  	
   

  	
  N.A.

  
	
   

  	
   

  	
  (e)

  	
   

  	
  12.04

  
	
   

  	
   

  	
  (f)

  	
   

  	
  N.A.

  
	
  Section

  	
   

  	
  315

  	
   

  	
  12.01

  
	
   

  	
   

  	
  315(a)

  	
   

  	
  8.01(b)

  
	
   

  	
   

  	
  (b)

  	
   

  	
  8.05

  
	
   

  	
   

  	
  (d)

  	
   

  	
  8.01(c)

  
	
   

  	
   

  	
  (d)(2)

  	
   

  	
  8.01(c)

  
	
   

  	
   

  	
  (d)(3)

  	
   

  	
  8.01(c)

  
	
   

  	
   

  	
  (e)

  	
   

  	
  7.11

  
	
  Section

  	
   

  	
  316

  	
   

  	
  12.01

  
	
   

  	
   

  	
  316 (a)

  	
   

  	
  7.05; 10.02 (b)

  
	
   

  	
   

  	
  (b)

  	
   

  	
  7.07

  
	
   

  	
   

  	
  (c)

  	
   

  	
  12.05

  
	
  Section

  	
   

  	
  317

  	
   

  	
  7.08; 7.09; 12.01

  
	
  Section

  	
   

  	
  318

  	
   

  	
  12.01

  

 

 

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

**                                  N.A.
means Not Applicable.

 

 

THIS INDENTURE dated as
of March 13, 2006 is between Coherent, Inc., a corporation duly
organized under the laws of the State of Delaware (the “Company”), and U.S.
Bank National Association, a national banking association organized and
existing under the laws of the United States, as Trustee (the “Trustee”).

 

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

 

ARTICLE 1

DEFINITIONS AND INCORPORATION BY REFERENCE

 

Section 1.01  Definitions.

 

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

 

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

 

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

 

“Aggregate Share Cap”
means initially 30 shares of Common Stock per $1,000 principal amount of
Securities, subject to proportional adjustment in the same manner as the
Conversion Rate upon the occurrence of any of the events described in clauses (1) through
(4) under Section 4.06(a).

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

“Change of Control” means
the occurrence of any of the following after the date hereof: (i) the
acquisition by any Person of Beneficial Ownership (including any syndicate or
group which would be deemed to be a “person” under Section 13(d)(3) of
the Exchange Act), directly or indirectly, through a purchase, merger or other
acquisition transaction or series of transactions, of shares of the Company’s
Capital Stock entitling that Person to exercise 50% or more of the total voting
power of all shares of the Company’s Capital Stock entitled to vote generally
in elections of directors, other than any acquisition by the Company, any of
its subsidiaries or any of its employee benefit plans; or (ii) the
consolidation or merger of the Company with or into any other Person, any
merger of another Person into the Company, or any conveyance, transfer, sale,
lease or other disposition of all or substantially all of the Company’s
properties and assets to another Person other than to one or more of the
Company’s wholly-owned subsidiaries, provided that this clause (ii) shall
not apply to (A) any transaction (x) that does not result in any
reclassification, conversion, exchange or cancellation of outstanding shares of
the Company’s Capital Stock and (y) pursuant to which holders of the Company’s
Capital Stock immediately prior to the transaction have the entitlement to
exercise, directly or indirectly, 50% or more of the total voting power of all
shares of the Capital Stock entitled to vote generally in elections of
directors of the continuing or surviving Person immediately after the
transaction; or (B) any merger solely for the purpose of changing the
Company’s jurisdiction of incorporation and resulting in a reclassification,
conversion or exchange of outstanding shares of Common Stock solely into shares
of common stock of the surviving entity; or (iii) if, during any
consecutive two-year period, individuals who at the beginning of that two-year
period constituted the Company’s Board of Directors, together with any new
directors whose election to the Company’s Board of Directors, or whose
nomination for election by the Company’s stockholders, was approved by a vote
of a majority of the directors then still in office who were either directors
at the beginning of such period or whose election or nomination for election
was previously so approved, cease for any reason to constitute a majority of
the Company’s Board of Directors then in office.  Notwithstanding anything to the contrary set
forth herein, it will not constitute a Change of Control if 100% of the
consideration for the Common Stock (excluding cash payments for fractional
shares and cash payments made in respect of dissenters’ appraisal rights) in
the transaction or transactions otherwise constituting a Change of Control
consists of common stock or American Depositary Shares representing shares of
common stock, in each case which are traded on a U.S. national securities
exchange or quoted on the Nasdaq National Market, or which will be so traded or
quoted when issued or exchanged in connection with the Change of Control, and
as a result of such transaction or transactions the Securities become
convertible solely into cash in an amount equal to the lesser of $1,000 and the
Conversion Value and, if the Conversion Value is greater than $1,000, payment
of the excess value in the form of such common stock, subject to the right to
deliver cash in lieu of all or a portion of such remaining shares, in
substantially the same manner as described under Section 4.13; provided
that, with respect to an entity organized under the laws of a jurisdiction
outside the United States, such entity has a worldwide total market
capitalization of its equity securities of at least three times the market
capitalization of the Company before giving effect to the consolidation or
merger.

 

“Closing Price” means on
any Trading Day, the reported last sale price per share (or if no last sale
price is reported, the average of the bid and ask prices per share or, if more
than one in either case, the average of the average bid and the average ask
prices per share) on such date reported by the Nasdaq National Market or, if
the Common Stock (or the applicable security) is not quoted on the Nasdaq
National Market, as reported by the principal national or regional securities
exchange on which the Common Stock (or such other security) is listed.  If the Common Stock (or such other security)
is not listed for trading on a United States national or regional securities
exchange and not reported by the Nasdaq National Market on the relevant date,
the “Closing Price” shall be the last quoted bid price for the Common Stock (or
such other security) in the over-the-counter market on the relevant date as
reported by

 

2

 

the National
Quotation Bureau or similar organization. 
If the Common Stock (or such other security) is not so quoted, the “Closing
Price” shall be the average of the midpoint of the last bid and ask prices for
the Common Stock (or such other security) on the relevant date from each of at
least three independent nationally recognized investment banking firms selected
by the Company for this purpose.

 

“Common Stock” means the
common stock of the Company, par value $0.01 per share as it exists on the date
of this Indenture and any shares of any class or classes of Capital Stock of
the Company resulting from any reclassification or reclassifications thereof,
or, in the event of a merger, consolidation or other similar transaction
involving the Company that is otherwise permitted hereunder in which the
Company is not the surviving corporation the common stock, common equity
interests, ordinary shares or depositary shares or other certificates
representing common equity interests of such surviving corporation or its
direct or indirect parent corporation, and which have no preference in respect
of dividends or of amounts payable in the event of any voluntary or involuntary
liquidation, dissolution or winding-up of the Company and which are not subject
to redemption by the Company; provided, however, that if at any time there
shall be more than one such resulting class, the shares of each such class then
so issuable on conversion of Securities shall be substantially in the
proportion which the total number of shares of such class resulting from all
such reclassifications bears to the total number of shares of all such classes
resulting from all such reclassifications.

 

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

 

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

 

“Conversion Rate” means
the rate at which shares of Common Stock shall be delivered upon conversion,
which rate shall be initially 26.1288 shares of Common Stock for each $1,000
principal amount of Securities, as adjusted from time to time pursuant to the
provisions of this Indenture.

 

“Conversion Reference
Period” means:

 

(i)                                     for
Securities that are converted during the one month period prior to the Final
Maturity Date of the Securities, the ten consecutive Trading Days beginning on
the third Trading Day following the Final Maturity Date; and

 

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

 

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

 

“Corporate Trust Office”
means the office of the Trustee at which at any particular time the trust
created by this Indenture shall be administered, which initially will be the
office of U.S. Bank National Association located at 633 West Fifth Street, 24th
floor, Los Angeles, CA 90071, attention: Corporate Trust Services (Coherent, Inc.
2.75% Convertible Subordinated Notes due 2011). 

 

3

 

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

 

“Daily Share Amount”
means, for each Trading Day of the Conversion Reference Period and for each
$1,000 principal amount of Securities surrendered for conversion, a number of
shares (but in no event less than zero) equal to (i) the amount of (a) the
Volume Weighted Average Price for such Trading Day multiplied by the Conversion
Rate in effect on the Conversion Date, less (b) $1,000; divided by (ii) the
Volume Weighted Average Price for such Trading Day multiplied by 10.

 

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

 

“Designated Senior Indebtedness” means any Senior Indebtedness that
is specifically identified by the Company in the instrument governing or
evidencing the Indebtedness or the assumption or guarantee thereof (or related
agreements or documents to which the Company is a party) as “Designated Senior
Indebtedness” for purposes of this Indenture, provided that such instrument,
agreement or other document may place limitations and conditions on the right
of such Senior Indebtedness to exercise the rights of Designated Senior
Indebtedness.

 

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

 

“Final Maturity Date”
means March 1, 2011.

 

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

 

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

 

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

 

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

 

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

 

4

 

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

 

“Indebtedness” means,
with respect to any Person on any date of determination, without duplication,
the principal or face amount of:

 

(1)                                  all
of such Person’s indebtedness, obligations and other liabilities, contingent or
otherwise, (A) for borrowed money, including overdrafts, foreign exchange
contracts, currency exchange agreements, interest rate protection agreements,
and any loans or advances from banks, whether or not evidenced by notes or
similar instruments, or (B) evidenced by credit or loan agreements, bonds,
debentures, notes or similar instruments, or incurred in connection with the
acquisition of any property, services or assets, whether or not the recourse of
the lender is to the whole of such Person’s assets or to only a portion
thereof, other than any account payable or other accrued current liability or
obligation to trade creditors representing the purchase price or cost of
materials or services obtained in the ordinary course of business;

 

(2)                                  all
of such Person’s reimbursement obligations and other liabilities, contingent or
otherwise, with respect to letters of credit, bank guarantees, bankers’
acceptances, surety bonds, performance bonds or other guaranty of contractual
performance;

 

(3)                                  all
of such Person’s obligations and other liabilities, contingent or otherwise, in
respect of leases required, in conformity with GAAP, to be accounted for as
capitalized lease obligations on such Person’s balance sheet or for a financing
purpose;

 

(4)                                  all
of such Person’s obligations and other liabilities, contingent or otherwise,
under any lease or related document, including a purchase agreement,
conditional sale or other title retention agreement, in connection with the
lease of real property or improvements thereon (or any personal property
included as part of any such lease) which provides that such Person is
contractually obligated to purchase or cause a third party to purchase the
leased property or pay an agreed upon residual value of the leased property,
including such Person’s payment obligations under such lease or related
document to purchase or cause a third party to purchase such leased property or
pay an agreed upon residual value of the leased property to the lessor;

 

(5)                                  all
of such Person’s obligations, contingent or otherwise, with respect to an
interest rate or other swap, cap, floor or collar agreement or hedge agreement,
forward contract or other similar instrument or agreement or foreign currency
hedge, exchange, purchase or similar instrument or agreement;

 

(6)                                  all
of such Person’s direct or indirect guarantees or similar agreements by such
Person in respect of, and all of such Person’s payment obligations or monetary
liabilities, contingent or otherwise, to purchase or otherwise acquire or
otherwise assure a creditor against loss in respect of, indebtedness,
obligations or liabilities of another Person of the kinds described in clauses (1) through
(5);

 

(7)                                  all
indebtedness or other obligations of the kind described in clauses (1) through
(5) secured by any mortgage, pledge, lien or other encumbrance existing on
property that is owned or held by such Person, regardless of whether the
indebtedness or other obligation secured thereby shall have been assumed by
such Person; and

 

5

 

(8)                                  any
and all deferrals, renewals, extensions, refinancings and refundings of, or
amendments, modifications or supplements to, any indebtedness, obligation or
liability of the kinds described in clauses (1) through (7).

 

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

 

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

 

“Interest Payment Date”
means March 1 and September 1 of each year, commencing September 1,
2006.

 

“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.

 

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

 

“Officers’ Certificate”
means a certificate signed on behalf of the Company by two Officers; provided,
however, that for purposes of Sections 4.10 and 5.03, “Officers’ Certificate”
means a certificate signed by (a) the principal executive officer,
principal financial officer or principal accounting officer of the Company and (b) one
other Officer.

 

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

 

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

 

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

 

“Registration Rights
Agreement” means the Registration Rights Agreement, dated as of March 13,
2006, between the Company and the Initial Purchaser, as amended from time to
time in accordance with its terms.

 

“Regular Record Date”
means, with respect to each Interest Payment Date, the February 15 or August 15,
as the case may be, next preceding such Interest Payment Date.

 

“Representative” means
the trustee, agent or representative (if any) for an issue of Senior
Indebtedness.

 

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

 

6

 

“Restricted Global
Security” means a Global Security that is a Restricted Security.

 

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

 

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

 

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

 

“SEC” means the
Securities and Exchange Commission.

 

“Securities” means the up
to $175,000,000 million aggregate principal amount ($200,000,000 aggregate
principal amount if the initial purchaser exercises its over-allotment option
to purchase up to an additional $25,000,000 aggregate principal amount of notes
in full) of 2.75 % Convertible Subordinated Notes due 2011, or any of them
(each a “Security”), as amended or supplemented from time to time, that are
issued under this Indenture.

 

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

 

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

 

“Senior Indebtedness” means the principal of, premium (if any) and
interest, including any interest accruing after the commencement of any
bankruptcy or similar proceeding, whether or not a claim for post-petition
interest is allowed as a claim in the proceeding, and rent payable on or
termination payment with respect to or in connection with, and all fees, costs,
expenses and other amounts accrued or due on or in connection with, the Company’s
Indebtedness, whether secured or unsecured, absolute or contingent, due or to
become due, outstanding on the date of this Indenture or thereafter created,
incurred, assumed, guaranteed or in effect guaranteed by the Company, including
all deferrals, renewals, extensions or refundings of, or amendments,
modifications or supplements to, the foregoing. 
“Senior Indebtedness” does not include: 
(i) Indebtedness that expressly provides that such Indebtedness
will not be senior in right of payment to the Securities or expressly provides
that such Indebtedness is on parity with or junior in right of payment to the
Securities; and (ii) any Indebtedness to any of the Company’s
Subsidiaries, other than Indebtedness to the Company’s Subsidiaries arising by
reason of guarantees of the Company of Indebtedness of any such Subsidiary to a
Person that is not the Company’s Subsidiary.

 

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

 

“Stock Price” means the
price paid, or deemed to be paid, per share of the Common Stock in connection
with a Fundamental Change as determined pursuant to Section 4.01(j).

 

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

 

7

 

“Termination of Trading”
means the termination (but not the temporary suspension) of trading of the
Common Stock, which will be deemed to have occurred if the Common Stock or
other common stock into which the Securities are convertible is neither listed
for trading on a United States national securities exchange nor approved for
listing on the Nasdaq National Market or any similar United States system of
automated dissemination of quotations of securities prices, or traded in
over-the-counter securities markets, and no American Depository Shares or
similar instruments for such common stock are so listed or approved for listing
in the United States.

 

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

 

“Trading Day” means any
day on which the Nasdaq National Market or, if the Common Stock is not quoted
on the Nasdaq National Market, the principal national or regional securities
exchange on which the Common Stock is listed, is open for trading or, if the
Common Stock is not so listed, admitted for trading or quoted, any Business
Day.  A Trading Day only includes those
days that have a scheduled closing time of 4:00 p.m. (New York City time)
or the then standard closing time for regular trading on the relevant exchange
or trading system.

 

“Trading Price” of the
Securities on any date of determination means the average of the secondary
market bid quotations obtained by the Trustee for $5 million principal amount
of Securities at approximately 3:30 p.m., New York City time, on such
determination date from three nationally recognized securities dealers the
Company selects; provided that if three such bids cannot reasonably be obtained
by the Trustee, but two such bids are obtained, then the average of the two
bids shall be used, and if only one such bid can reasonably be obtained by the
Trustee, that one bid shall be used.  If
the Trustee cannot reasonably obtain at least one bid for $5 million principal
amount of Securities from a nationally recognized securities dealer, then the
Trading Price per $1,000 principal amount of Securities will be deemed to be
less than 98% of the product of the Closing Price of the Common Stock and the
Conversion Rate per $1,000 principal amount of Securities.

 

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

 

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

 

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

 

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

 

“Voting Stock” of a
Person means all classes of Capital Stock or other interests (including
partnership interests) of such Person then outstanding and normally entitled
(without regard to the

 

8

 

occurrence of any
contingency within the control of such person to satisfy) to vote in the
election of directors, managers or trustees thereof.

 

Section 1.02  Other Definition.

 

	
  Term

  	
   

  	
  Defined in Section

  
	
  “Agent
  Members”

  	
   

  	
  2.01

  
	
  “Bankruptcy
  Law”

  	
   

  	
  7.01

  
	
  “Business Combination”

  	
   

  	
  4.10

  
	
  “Company
  Order”

  	
   

  	
  2.02

  
	
  “Conversion
  Trigger Price”

  	
   

  	
  4.01

  
	
  “Conversion Agent”

  	
   

  	
  2.03

  
	
  “Conversion Date”

  	
   

  	
  4.02

  
	
  “Current
  Market Price”

  	
   

  	
  4.06

  
	
  “DTC”

  	
   

  	
  2.01

  
	
  “Depositary”

  	
   

  	
  2.01

  
	
  “Determination
  Date”

  	
   

  	
  4.06

  
	
  “Distributed
  Securities”

  	
   

  	
  4.06

  
	
  “Distribution
  Notice”

  	
   

  	
  4.01

  
	
  “Event of
  Default”

  	
   

  	
  7.01

  
	
  “Expiration
  Date”

  	
   

  	
  4.06

  
	
  “Expiration
  Time”

  	
   

  	
  4.06

  
	
  “Fundamental
  Change Company Notice”

  	
   

  	
  3.01

  
	
  “Fundamental
  Change Purchase Date”

  	
   

  	
  3.01

  
	
  “Fundamental
  Change Purchase Notice”

  	
   

  	
  3.01

  
	
  “Junior
  Securities”

  	
   

  	
  11.08

  
	
  “Legal
  Holiday”

  	
   

  	
  12.07

  
	
  “Legend”

  	
   

  	
  2.12

  
	
  “Make Whole
  Premium”

  	
   

  	
  4.01

  
	
  “Notice of
  Default”

  	
   

  	
  7.01

  
	
  “Paying
  Agent”

  	
   

  	
  2.03

  
	
  “Payment
  Blockage Notice”

  	
   

  	
  11.02

  
	
  “Primary
  Registrar”

  	
   

  	
  2.03

  
	
  “Purchase
  Agreement”

  	
   

  	
  2.01

  
	
  “Purchased
  Shares”

  	
   

  	
  4.06

  
	
  “record date”

  	
   

  	
  4.06

  
	
  “QIB”

  	
   

  	
  2.01

  
	
  “Receiver”

  	
   

  	
  7.01

  
	
  “Registrar”

  	
   

  	
  2.03

  
	
  “Rights”

  	
   

  	
  4.06

  
	
  “Rights Plan”

  	
   

  	
  4.06

  
	
  “Spinoff
  Securities”

  	
   

  	
  4.06

  
	
  “Spinoff
  Valuation Period”

  	
   

  	
  4.06

  
	
  “tender
  offer”

  	
   

  	
  4.06

  
	
  “Triggering
  Distribution”

  	
   

  	
  4.06

  

 

9

 

Section 1.03  Trust Indenture Act Provisions.

 

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

 

“indenture securities”
means the Securities;

 

“indenture security
holder” means a Holder of a Security;

 

“indenture to be
qualified” means this Indenture;

 

“indenture trustee” or “institutional
trustee” means the Trustee; and

 

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

 

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

 

Section 1.04  Rules of Construction.

 

(a)                                  Unless
the context otherwise requires:

 

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

 

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

 

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

 

(4)                                  provisions
apply to successive events and transactions;

 

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

 

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

 

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

 

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

 

10

 

ARTICLE 2

THE SECURITIES

 

Section 2.01  Form and Dating.

 

The Securities and the
Trustee’s certificate of authentication shall be substantially in the
respective forms set forth in Exhibit A, which Exhibit is
incorporated in and made part of this Indenture.  The Securities may have notations, legends or
endorsements required by law, stock exchange or automated quotation system rule or
regulation or usage.  The Company shall
provide any such notations, legends or endorsements to the Trustee in
writing.  Each Security shall be dated
the date of its authentication.  The
Securities are being offered and sold by the Company pursuant to a Purchase
Agreement dated March 7, 2006 (the “Purchase Agreement”) between the
Company and the Initial Purchaser, in transactions exempt from, or not subject
to, the registration requirements of the Securities Act.

 

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

 

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

 

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

 

(c)                                  Book Entry
Provisions.  The Company shall
execute and the Trustee shall, in accordance with this Section 2.01(c),
authenticate and deliver initially one or more Global Securities that (1) shall
be

 

11

 

registered in the name of the Depositary or its nominee, (2) shall
be delivered by the Trustee to the Depositary or pursuant to the Depositary’s
instructions and (3) shall bear legends substantially to the following
effect:

 

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

 

Section 2.02  Execution and Authentication.

 

(a)                                  The aggregate principal
amount of Securities which may be authenticated and delivered under this
Indenture is limited to $175,000,000 aggregate principal amount ($200,000,000
aggregate principal amount if the Initial Purchaser exercises its
over-allotment option in full), except as provided in Sections 2.06 and 2.07.

 

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

 

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

 

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

 

(e)                                  The Trustee shall
authenticate and make available for delivery Securities for original issue in
the aggregate principal amount of up to $175,000,000 ($200,000,000 if the
Initial Purchaser exercises its over-allotment option in full) upon receipt of
a written order or orders of the Company signed by an Officer of the Company (a
“Company Order”).  The Company order
shall specify the

 

12

 

amount of Securities to be authenticated, shall provide that all such
securities will be represented by a Restricted Global Security and the date on
which each original issue of Securities is to be authenticated.

 

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

 

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

 

Section 2.03  Registrar, Paying Agent and Conversion
Agent.

 

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

 

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

 

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

 

Section 2.04  Paying Agent to Hold Money in Trust.

 

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

 

13

 

require such
Paying Agent to pay forthwith to the Trustee all sums so held in trust by such
Paying Agent.  Upon doing so, the Paying
Agent (other than the Company) shall have no further liability for the money.

 

Section 2.05  Lists of Holders of Securities.

 

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

 

Section 2.06  Transfer and Exchange.

 

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

 

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

 

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

 

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

 

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

 

14

 

when expressly required by the terms of, this Indenture, and to examine
the same to determine substantial compliance as to form with the express
requirements hereof.

 

Section 2.07  Replacement Securities.

 

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

 

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

 

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

 

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

 

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

 

Section 2.08  Outstanding Securities.

 

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

 

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

 

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

 

15

 

Fundamental Change Purchase Date or Final Maturity Date, as the case
may be, such Securities (or portions thereof, as the case may be) shall cease
to be outstanding and cash interest and Additional Interest, if any, on them
shall cease to accrue.

 

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

 

Section 2.09  Treasury Securities.

 

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

 

Section 2.10  Temporary Securities.

 

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

 

Section 2.11  Cancellation.

 

The Company at any time
may deliver Securities to the Trustee for cancellation.  The Registrar, the Paying Agent and the
Conversion Agent shall forward to the Trustee or its agent any Securities
surrendered to them for transfer, exchange, purchase, payment or
conversion.  The Trustee and no one else
shall cancel, in accordance with its standard procedures, all Securities
surrendered for transfer, exchange, purchase, payment, conversion or cancellation
and shall dispose of the cancelled Securities in accordance with its customary
procedures or deliver the canceled Securities to the Company.  All Securities which are purchased or
otherwise acquired by the Company or any of its Subsidiaries prior to the Final
Maturity Date pursuant to Article 3 shall be delivered to the Trustee for
cancellation, and the Company may not hold or resell such Securities or issue
any new Securities to replace any such Securities or any Securities that any
Holder has converted pursuant to Article 4.

 

Section 2.12  Legend; Additional Transfer and
Exchange Requirements.

 

(a)                                  If
Securities are issued upon the transfer, exchange or replacement of Securities
subject to restrictions on transfer and bearing the legends set forth on the
forms of Securities attached as Exhibit A (collectively, the “Legend”), or
if a request is made to remove the Legend on a Security, the Securities so
issued shall bear the Legend, or the Legend shall not be removed, as the case
may be, unless there is delivered to the Company and the Registrar such
satisfactory evidence, which shall include an Opinion of Counsel if requested
by the Company or such Registrar, as may be reasonably required by the Company
and the Registrar, that neither the Legend nor the restrictions on transfer set
forth therein are required to ensure that transfers thereof comply with the
provisions of Rule 144A or Rule 144 under the Securities

 

16

 

Act or that
such Securities are not “restricted” within the meaning of Rule 144 under
the Securities Act; provided that no such evidence need be supplied in
connection with the sale of such Security pursuant to a registration statement
that is effective at the time of such sale. 
Upon (1) provision of such satisfactory evidence if requested, or (2) notification
by the Company to the Trustee and Registrar of the sale of such Security
pursuant to a registration statement that is effective at the time of such
sale, the Trustee, at the written direction of the Company, shall authenticate
and deliver a Security that does not bear the Legend.  If the Legend is removed from the face of a
Security and the Security is subsequently held by an Affiliate of the Company,
the Legend shall be reinstated.

 

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

 

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

 

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

 

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

 

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

 

17

 

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

 

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

 

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

 

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

 

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

 

(6)                                  Neither
Agent Members nor any other Persons on whose behalf Agent Members may act shall
have any rights under this Indenture with respect to any Global Security
registered in the name of the Depositary or any nominee thereof, or under any
such Global Security, and the Depositary or such nominee, as the case may be,
may be treated by the Company, the Trustee and any agent of the Company or the
Trustee as the absolute owner and holder of such Global Security for all
purposes whatsoever.  Notwithstanding the
foregoing, nothing herein shall

 

18

 

prevent the
Company, the Trustee or any agent of the Company or the Trustee from giving
effect to any written certification, proxy or other authorization furnished by
the Depositary or such nominee, as the case may be, or impair, as between the
Depositary, its Agent Members and any other Person on whose behalf an Agent
Member may act, the operation of customary practices of such Persons governing
the exercise of the rights of a holder of any Security.

 

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

 

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

 

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

 

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

 

19

 

COMPLETED AND DELIVERED
BY THE TRANSFEROR TO THE TRANSFER AGENT. 
THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE
RESALE RESTRICTION TERMINATION DATE.

 

Any such Common Stock as
to which such restrictions on transfer shall have expired in accordance with
their terms or as to which the conditions for removal of the foregoing legend
set forth therein have been satisfied may, upon surrender of the certificates
representing such shares of Common Stock for exchange in accordance with the
procedures of the transfer agent for the Common Stock, be exchanged for a new
certificate or certificates for a like number of shares of Common Stock, which
shall not bear the restrictive legend required by this section.

 

Section 2.13  CUSIP Numbers.

 

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

 

ARTICLE 3

 

PURCHASE UPON FUNDAMENTAL CHANGE

 

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

 

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

 

(b)                                 On
or before the 30th day after the occurrence of a Fundamental Change, the
Company shall mail a written notice of the Fundamental Change and of the
resulting repurchase right to the Trustee, Paying Agent and to each Holder (and
to beneficial owners as required by applicable law) (the “Fundamental Change
Company Notice”).  The Fundamental Change
Company Notice shall include the form of a Fundamental Change Purchase Notice
to be completed by the Holder and shall state:

 

(1)                                  the
events causing such Fundamental Change;

 

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

 

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

 

(4)                                  the
Fundamental Change Purchase Date;

 

(5)                                  the
Fundamental Change Purchase Price;

 

20

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(13)                            the
CUSIP number of the Securities.

 

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

 

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

 

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

 

(2)                                  The
delivery of a Security for which a Fundamental Change Purchase Notice has been
timely delivered to any Paying Agent and not validly withdrawn prior to, on or
after the

 

21

 

Fundamental
Change Purchase Notice (together with all necessary endorsements) at the office
of such Paying Agent shall be a condition to the receipt by the Holder of the
Fundamental Change Purchase Price therefor.

 

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

 

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

 

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

 

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

 

Section 3.02  Effect of Fundamental Change
Purchase Notice.

 

(a)                                  Upon receipt by any
Paying Agent of a properly completed Fundamental Change Purchase Notice from a
Holder, the Holder of the Security in respect of which such Fundamental Change
Purchase Notice was given shall (unless such Fundamental Change Purchase Notice
is withdrawn as specified in Section 3.02(b)) thereafter be entitled to
receive the Fundamental Change Purchase Price with respect to such Security,
subject to the occurrence of the Fundamental Change Effective Date and an
absence of an Event of Default, or a continuation thereof (other than a Default
in the payment of the Fundamental Change Purchase Price).  Such Fundamental Change Purchase Price shall
be paid to such Holder promptly following the later of (1) the Fundamental
Change Purchase Date (provided that the conditions in Section 3.01 have
been satisfied) and (2) the time of delivery of such Security to a Paying
Agent by the Holder thereof in the manner required by Section 3.01(c).  Securities in respect of which a Fundamental
Change Purchase Notice has been given by the Holder thereof may not be
converted into shares of Common Stock pursuant to Article 4 on or after
the date of the delivery of such Fundamental Change Purchase Notice unless such
Fundamental Change Purchase Notice has first been validly withdrawn in
accordance with Section 3.02(b) with respect to the Securities to be
converted.

 

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

 

22

 

certificated, such written notice must comply with the Applicable
Procedures) and (3) the portion of the principal amount of the Security
that will remain subject to the Fundamental Change Purchase Notice, which
portion must be a principal amount of $1,000 or an integral multiple thereof.

 

Section 3.03  Deposit of Fundamental Change
Purchase Price.

 

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

 

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

 

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

 

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

 

Section 3.04  Repayment to The Company.

 

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

 

Section 3.05  Securities Purchased in Part.

 

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

 

Section 3.06  Compliance with Securities Laws
upon Purchase of Securities. In connection with any offer to purchase of
Securities under Section 3.01, the Company shall (a) comply with Rule 13e-4
and

 

23

 

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

 

Section 3.07  Purchase of Securities in Open
Market.  The Company (a) on or prior to the date that is two
years from the latest issuance of any Securities and in accordance with Section 2.11,
shall surrender any Security purchased by the Company pursuant to this Article 3
to the Trustee for cancellation, and (b) after such date and in accordance
with Section 2.11, may surrender such Security to the Trustee for
cancellation.  Any securities surrendered
to the Trustee for cancellation may not be reissued or resold by the Company
and will be canceled promptly in accordance with Section 2.11.  The Company may repurchase Securities in the
open market, by tender at any price or by negotiated transactions and such
Securities may be reissued or resold, to the extent permitted by applicable
law, or may be surrendered to the Trustee for cancellation.

 

24

 

ARTICLE 4

CONVERSION

 

Section 4.01  Conversion Privilege and Conversion
Rate.

 

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

 

(1)                                  during
any calendar quarter beginning after June 30, 2006, and only during such
calendar quarter, if, as of the last day of the immediately preceding calendar
quarter, the Closing Price per share of the Common Stock for at least 20
Trading Days in the period of the 30 consecutive Trading Days ending on the
last Trading Day of such preceding calendar quarter was more than 120% of the
Conversion Price (the “Conversion Trigger Price”);

 

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

 

(3)                                  if
the Company distributes to all holders of Common Stock, assets, debt securities
or rights to purchase the Company’s securities, which distribution has a per
share value exceeding 7.5% of the Closing Price of the Common Stock on the
Business Day preceding the declaration date for such distribution;

 

(4)                                  if
a Fundamental Change occurs;

 

(5)                                  at
any time during the period beginning on February 1, 2011 and ending at the
close of business on the Business Day immediately preceding the Final Maturity
Date; or

 

(6)                                  during
any five Business Day period after any five consecutive Trading Day period in
which the Trading Price per $1,000 principal amount of Securities, as
determined following a request by a Holder in accordance with the procedures
described below in Section 4.01(e)(ii), for each day of that period was
less than 98% of the product of the Closing Price of the Common Stock for each
day in that period and the Conversion Rate per $1,000 principal amount of
Securities.

 

(b)                                 In
the case of a distribution contemplated by clauses (2) and (3) of Section 4.01(a),
the Company shall notify Holders at least 20 days prior to the ex-dividend date
for such distribution (the “Distribution Notice”); provided that if the Company
distributes rights pursuant to a stockholder rights agreement, it will notify
the Holders of the Securities on the Business Day after the Company is required
to give notice generally to its stockholders pursuant to such stockholder
rights agreement if such date is less than 20 days prior to the date of such
distribution.  Once the Company has given
the Distribution Notice, Holders may surrender their Securities for conversion
at any time until the earlier of the close of

 

25

 

business on
the last Business Day preceding the ex-dividend date or the Company’s
announcement that such distribution will not take place.  In the event of a distribution contemplated
by clauses (2) and (3) of Section 4.01(a), Holders may not
convert the Securities if the Holders will otherwise participate in such
distribution without converting their Securities.  The Company will provide written notice to
the Conversion Agent as soon as reasonably practicable of any anticipated or
actual event or transaction that will cause or causes the Securities to become
convertible pursuant to clauses (2) or (3) of Section 4.01(a).

 

(c)                                  [Intentionally Omitted]

 

(d)                                 In
the case of a transaction contemplated by clause (4) of section 4.01(a),
the Company will notify the Holders and Trustee at least 10 Trading Days prior
to the anticipated Fundamental Change Effective Date of any Fundamental Change
that the Company knows or reasonably should know will occur.  If the Company does not know, and should not
reasonably know, that a Fundamental Change will occur until a date that is within
10 Trading Days before the anticipated Fundamental Change Effective Date, the
Company will notify the Holders and the Trustee promptly after the Company has
knowledge of such Fundamental Change. 
Holders may surrender Securities for conversion at any time beginning 10
Trading Days before the anticipated Fundamental Change Effective Date of a
Fundamental Change and until the last Trading Day preceding the Fundamental
Change Purchase Date.

 

(e)                                  (i) 
For each calendar quarter of the Company, beginning with the calendar quarter
ending June 30, 2006, the Conversion Agent, on behalf of the Company, will
determine, on the first Business Day following the last Trading Day of such
calendar quarter, whether the Securities are convertible pursuant to clause (1) of
Section 4.01(a), and, if so, will notify the Trustee and the Company in
writing.  Upon request of the Conversion
Agent, the Company shall provide, or cause to be provided to, the Conversion
Agent the Closing Price per share of Common Stock for the 30 consecutive
Trading Days ending on the last Trading Day of the preceding calendar quarter.

 

(ii)                                  The
Trustee shall have no obligation to determine the Trading Price of the
Securities and whether the Securities are convertible pursuant to clause (6) of
Section 4.01(a) unless the Company has requested such determination
in writing; and the Company shall have no obligation to make such request
unless a Holder of Securities provides the Company with reasonable evidence
that the Trading Price per $1,000 principal amount of Securities would be less
than 98% of the product of the Closing Price of the Common Stock and the
Conversion Rate per $1,000 principal amount of Securities.  At such time, the Company shall instruct the
Trustee to determine the Trading Price of the Securities beginning on the next
Trading Day and on each successive Trading Day until the Trading Price per
$1,000 principal amount of the Securities is greater than 98% of the product of
the Closing Price of the Common Stock and the Conversion Rate per $1,000
principal amount of the Securities.

 

(f)                                    The
conversion rights pursuant to this Article 4 shall commence on the initial
issuance date of the Securities and expire at the close of business on the
Business Day immediately preceding the Final Maturity Date, but shall be
exercisable only during the time periods specified with respect to each
circumstance pursuant to which the Securities become convertible, subject, in
the case of conversion of any Global Security, to any Applicable Procedures.  If a security is submitted or presented for
purchase upon a Fundamental Change pursuant to Article 3, such conversion
right shall terminate at the close of business on the Business Day immediately
preceding the Fundamental Change Purchase Date for such Security (unless the
Company shall fail to make the Fundamental Change Purchase Price payment when
due in accordance with Article 3, in which case the conversion right shall
terminate at the close of business on the date such failure is cured and such
Security is redeemed or purchased, as the case may be).  If a Security is convertible as a result of a
Fundamental Change, such conversion right shall commence and terminate as set
forth in Section 4.01(d). 
Securities in respect of which a Fundamental Change Purchase Notice has
been delivered may not be surrendered for conversion pursuant to this

 

26

 

Article 4
prior to a valid withdrawal of such Fundamental Change Notice in accordance
with the provisions of Article 3.

 

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

 

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

 

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

 

(j)                                     If
there shall have occurred a Fundamental Change, then the Conversion Rate per
$1,000 principal amount of Securities otherwise in effect in respect of
Securities that are converted during the period beginning 10 Trading Days
before the anticipated Fundamental Change Effective Date and ending at the
close of business on the Trading Day immediately preceding the Fundamental
Change Purchase Date shall be increased by the amount, if any,  determined by reference to the table below,
based on the Fundamental Change Effective Date and the Stock Price of such
Fundamental Change; provided that if the Stock Price or Fundamental Change
Effective Date are not set forth on the table: 
(i) if the actual Stock Price on the Fundamental Change Effective
Date is between two Stock Prices on the table or the actual Fundamental Change
Effective Date is between two Fundamental Change Effective Dates on the table,
the amount of the Conversion Rate adjustment will be determined by a
straight-line interpolation between the adjustment amounts set forth for the
two Stock Prices and the two Fundamental Change Effective Dates on the table
based on a 365-day year, as applicable, (ii) if the Stock Price on the
Fundamental Change Effective Date exceeds $120.00 per share, subject to adjustment
as set forth herein, no adjustment to the applicable Conversion Rate will be
made, and (iii) if the Stock Price on the Fundamental Change Effective
Date is less than $29.44 per
share, subject to adjustment as set forth herein, no adjustment to the applicable
Conversion Rate will be made.  If holders
of the Common Stock receive only cash in the Fundamental Change, the Stock
Price shall be the cash amount paid per share of the Common Stock in connection
with the Fundamental Change.  Otherwise,
the Stock Price shall be equal to the average Closing Prices of the Common
Stock for each of the 10 Trading Days immediately preceding, but not including,
the applicable Fundamental Change Effective Date.

 

The following table shows
the amount, if any, by which the applicable Conversion Rate will increase for
each hypothetical Stock Price and Fundamental Change Effective Date set forth
below:

 

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

 

	
  Stock Price on

  Effective Date

  	
   

  	
  3/13/

  2006

  	
   

  	
  3/1

  2007

  	
   

  	
  3/1

  2008

  	
   

  	
  3/1

  2009

  	
   

  	
  3/1

  2010

  	
   

  	
  3/1

  2011

  	
   

  
	
  $

  	
  29.44

  	
   

  	
  7.83

  	
   

  	
  7.83

  	
   

  	
  7.83

  	
   

  	
  7.83

  	
   

  	
  7.83

  	
   

  	
  0.00

  	
   

  
	
  35.00

  	
   

  	
  5.62

  	
   

  	
  5.31

  	
   

  	
  4.92

  	
   

  	
  4.43

  	
   

  	
  3.72

  	
   

  	
  0.00

  	
   

  
	
  40.00

  	
   

  	
  4.38

  	
   

  	
  3.99

  	
   

  	
  3.54

  	
   

  	
  2.95

  	
   

  	
  2.09

  	
   

  	
  0.00

  	
   

  
	
  45.00

  	
   

  	
  3.53

  	
   

  	
  3.15

  	
   

  	
  2.68

  	
   

  	
  2.08

  	
   

  	
  1.25

  	
   

  	
  0.00

  	
   

  
	
  50.00

  	
   

  	
  2.94

  	
   

  	
  2.57

  	
   

  	
  2.12

  	
   

  	
  1.56

  	
   

  	
  0.82

  	
   

  	
  0.00

  	
   

  
	
  60.00

  	
   

  	
  2.19

  	
   

  	
  1.86

  	
   

  	
  1.47

  	
   

  	
  1.02

  	
   

  	
  0.49

  	
   

  	
  0.00

  	
   

  
	
  80.00

  	
   

  	
  1.46

  	
   

  	
  1.22

  	
   

  	
  0.95

  	
   

  	
  0.64

  	
   

  	
  0.32

  	
   

  	
  0.00

  	
   

  
	
  100.00

  	
   

  	
  1.13

  	
   

  	
  0.94

  	
   

  	
  0.73

  	
   

  	
  0.50

  	
   

  	
  0.26

  	
   

  	
  0.00

  	
   

  
	
  120.00

  	
   

  	
  0.93

  	
   

  	
  0.77

  	
   

  	
  0.60

  	
   

  	
  0.41

  	
   

  	
  0.21

  	
   

  	
  0.00

  	
   

  
															

 

27

 

The Stock Prices set
forth in the first column of the table above will be adjusted as of any date on
which the Conversion Rate of the Securities is adjusted, other than as a result
of an adjustment of the Conversion Rate by virtue of the provisions of this Section 4.01(j).  The adjusted Stock Prices will equal the
Stock Prices applicable 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 Conversion Rate adjustment amounts set forth in the table above will
be adjusted in the same manner as the Conversion Rate as set forth in Section 4.06
hereof.

 

Notwithstanding the
foregoing paragraph, in no event will the Conversion Rate exceed 33.9673 per
$1,000 principal amount of Securities, subject to adjustment in the manner set
forth in clauses (1) through (4) of Section 4.06(a) hereof.

 

(k)                                  Except
as set forth in Section 4.02(c), by delivering the amount of cash and/or
the number of shares of Common Stock issuable on conversion to the Trustee, the
Company will be deemed to have satisfied its obligation to pay the principal
amount of the Securities so converted and its obligation to pay accrued and
unpaid interest, and Additional Interest if any, attributable to the period
from the most recent Interest Payment Date through the Conversion Date (which
amount will be deemed paid in full rather than cancelled, extinguished or
forfeited).

 

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

 

Section 4.02  Conversion Procedure.

 

(a)                                  To
convert a Security, a Holder must (1) complete and manually sign the
conversion notice on the back of the Security and deliver such notice to a
Conversion Agent, (2) surrender the Security to a Conversion Agent, (3) furnish
appropriate endorsements and transfer documents if required by a Registrar or a
Conversion Agent, and (4) pay all transfer or similar taxes, if required
pursuant to Section 4.04.  The date
on which the Holder satisfies all of those requirements is the “Conversion
Date.”  Upon the conversion of a
Security, the Company will pay the cash and deliver the shares of Common Stock,
as applicable, as promptly as practicable after the later of the Conversion
Date and the date that all calculations necessary to make such payment and
delivery have been made, but in no event later than five Business Days after
the later of those dates.  Anything
herein to the contrary notwithstanding, in the case of Global Securities,
conversion notices may be delivered and such Securities may be surrendered for
conversion in accordance with the Applicable Procedures as in effect from time
to time.

 

(b)                                 The
person in whose name the shares of Common Stock are issuable upon conversion
shall be deemed to be a holder of record of such Common Stock on the later of (i) the
Conversion Date, (ii) the expiration of the period in which the Company
may elect to deliver cash in lieu of shares of common stock, or (iii) if
the Company elects to deliver cash in lieu of some, but not all, of such shares
of Common Stock, the date on which the amount of cash issuable per Security has
been determined; provided, however, that no surrender of a Security on any
Conversion Date when the stock transfer books of the Company shall be closed
shall be effective to constitute the person or persons entitled to receive the
shares of Common Stock upon conversion as the record holder or holders of such
shares of Common Stock on such date, but such surrender shall be effective to
constitute the person or persons entitled to receive such shares of Common
Stock as the record holder or holders thereof for all purposes at the close of
business on the next succeeding day on which such stock transfer books are
open; provided further that

 

28

 

such
conversion shall be at the Conversion Rate in effect on the Conversion Date as
if the stock transfer books of the Company had not been closed.  Upon conversion of a Security, such person
shall no longer be a Holder of such Security. 
Except as set forth in this Indenture, no payment or adjustment will be
made for dividends or distributions declared or made on shares of Common Stock
issued upon conversion of a Security prior to the issuance of such shares.

 

(c)                                  Holders
of Securities surrendered for conversion (in whole or in part) during the
period from the close of business on any Regular Record Date to the opening of
business on the next succeeding Interest Payment Date will receive the
semi-annual interest payable on such Securities on the corresponding Interest
Payment Date notwithstanding the conversion. 
Upon surrender of any such Securities for conversion, unless such
Securities have been surrendered for conversion following the regular record
date immediately preceding the final interest payment date (March 1,
2011), such Securities shall also be accompanied by payment in funds acceptable
to the Company of an amount equal to the interest payable on such corresponding
Interest Payment Date.  Except as
otherwise provided in this Section 4.02(c), no payment or adjustment will
be made for accrued interest on a converted Security.

 

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

 

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

 

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

 

Section 4.03  Fractional Shares.

 

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

 

29

 

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

 

Section 4.05  Company to Provide Stock.

 

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

 

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

 

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

 

Section 4.06  Adjustment of Conversion Rate.

 

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

 

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

 

(2)                                  If
the Company shall subdivide its outstanding Common Stock into a greater number
of shares, or combine its outstanding Common Stock into a smaller number of
shares, the Conversion Rate in effect immediately prior to the day upon which
such subdivision or combination becomes effective shall be, in the case of a
subdivision of Common Stock,

 

30

 

proportionately increased and,
in the case of a combination of Common Stock, proportionately reduced.  Such adjustment shall be made successively
whenever any such subdivision or combination of the Common Stock occurs and
shall become effective immediately after the date upon which such subdivision
or combination becomes effective.

 

(3)                                  If
the Company shall issue rights or warrants to all holders of its outstanding
Common Stock entitling them (for a period expiring within 45 days after such
issuance) to subscribe for or purchase shares of Common Stock (or securities
convertible into Common Stock) at a price per share (or having a conversion price
per share) less than the Current Market Price per share of Common Stock (as
determined in accordance with clause (9) of this Section 4.06(a)) on
the record date for the determination of stockholders entitled to receive such
rights or warrants, the Conversion Rate in effect immediately prior thereto
shall be adjusted so that the same shall equal the rate determined by
multiplying the Conversion Rate in effect immediately prior to such record date
by a fraction of which the numerator shall be the number of shares of Common
Stock outstanding at the close of business on such record date plus the number
of additional shares of Common Stock that such rights or warrants entitle
holders thereof to subscribe for or purchase (or into which such convertible
securities are convertible) and of which the denominator shall be the number of
shares of Common Stock outstanding at the close of business on such record date
plus the number of shares which the aggregate offering price of the total
number of shares of Common Stock so offered for subscription or purchase (or
the aggregate conversion price of the convertible securities so offered for
subscription or purchase, which shall be determined by multiplying the number
of shares of Common Stock issuable upon conversion of such convertible
securities by the conversion price per share of Common Stock pursuant to the
terms of such convertible securities) would purchase at the Current Market
Price per share of Common Stock on such record date.  Such adjustment shall be made successively
whenever any such rights or warrants (or convertible securities) are issued,
and shall become effective immediately after such record date.  To the extent that shares of Common Stock (or
securities convertible into Common Stock) are not delivered after the
expiration of such rights or warrants, the Conversion Rate shall be readjusted
to the Conversion Rate that would then be in effect had the adjustments made
upon the issuance of such rights or warrants been made on the basis of delivery
of only the number of shares of Common Stock (or securities convertible into
Common Stock) actually delivered.  If
such rights or warrants are not so issued, the Conversion Rate shall again be
adjusted to be the Conversion Rate that would then be in effect if the record
date for the determination of stockholders entitled to receive such rights or
warrants had not been fixed.  In
determining whether any rights or warrants entitle the stockholders to
subscribe for or purchase shares of Common Stock at a price less than the
Current Market Price per share of Common Stock and in determining the aggregate
offering price of the total number of shares of Common Stock so offered, there
shall be taken into account any consideration received by the Company for such
rights or warrants and any amount payable on exercise or conversion thereof,
the value of such consideration, if other than cash, to be determined by the
Board of Directors.

 

(4)                                  If
the Company shall make a dividend or other distribution to all holders of its
Common Stock of Capital Stock, other than Common Stock, or evidences of
indebtedness or other assets of the Company (excluding (x) any issuance of
rights or warrants for which an adjustment was made pursuant to Section 4.06(a)(3), (y) dividends
or distributions in connection with a reclassification, change, consolidation,
merger, combination, liquidation, dissolution, winding up, sale or conveyance
resulting in a change in the conversion consideration, or pursuant to any
shareholder rights plan or (z) any dividend or distribution paid
exclusively in cash for which an adjustment was made pursuant to Section 4.06(a)(6))
(the “Distributed Securities”), then in each such case (unless the Company
distributes such Distributed Securities for distribution to the Holders of Securities
on such dividend or distribution date as if each Holder had converted

 

31

 

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

 

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

 

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

 

32

 

(5)                                  With
respect to any rights or warrants (the “Rights”) that may be issued or
distributed pursuant to any rights plan that the Company implements after the
date of this Indenture (a “Rights Plan”), or if the Company’s current Rights
Plan is still in effect, in lieu of any adjustment required by any other
provision of this Section 4.06 upon conversion of the Securities into
Common Stock, to the extent that such Rights Plan is in effect upon such
conversion, the Holders of Securities will receive, with respect to the shares
of Common Stock issued upon conversion, the Rights described therein (whether
or not the Rights have separated from the Common Stock at the time of
conversion), subject to the limitations set forth in and in accordance with any
such Rights Plan; provided that in the case of the Company’s current Rights
Plan or a future Rights Plan to the extent applicable, if, at the time of
conversion, however, the Rights have separated from the shares of Common Stock
in accordance with the provisions of the Rights Plan so that Holders would not
be entitled to receive any rights in respect of the shares of Common Stock
issuable upon conversion of the Securities as a result of the timing of the
Conversion Date, the Conversion Rate will be adjusted as if the Company
distributed to all holders of Common Stock Distributed Securities constituting
such rights as provided in the first paragraph of clause (4) of this Section 4.06(a),
subject to appropriate readjustment in the event of the expiration,
termination, repurchase or redemption of the Rights.  Any distribution of rights or warrants
pursuant to a Rights Plan complying with the requirements set forth in the
immediately preceding sentence of this paragraph shall not constitute a
distribution of rights or warrants pursuant to this Section 4.06(a).  Other than as specified in this clause (5) of
this Section 4.06(a), there will not be any adjustment to the Conversion
Rate as the result of the issuance of any Rights, the distribution of separate
certificates representing such Rights, the exercise or redemption of such
Rights in accordance with any Rights Plan or the termination or invalidation of
any Rights.

 

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

 

(7)                                  If
any tender offer made by the Company or any of its Subsidiaries for all or any
portion of Common Stock shall expire, then, if the tender offer shall require
the payment to shareholders of consideration per share of Common Stock having a
fair market value (determined as provided below) that exceeds the Closing Price
per share of Common Stock on the Trading

 

33

 

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

 

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

 

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

 

(A)                              the “ex”
date (as hereinafter defined) for any event (other than the issuance or
distribution requiring such computation) that requires an adjustment to the
Conversion Rate pursuant to Section 4.06(a) (1), (2), (3), (4), (5), (6) or
(7) occurs during such ten consecutive Trading Days, the Closing Price for
each Trading Day prior to the “ex” date for such other event shall be adjusted
by dividing such Closing Price by the same fraction by which the Conversion
Rate is so required to be adjusted as a result of such other event;

 

(B)                                the
“ex” date for any event (other than the issuance or distribution requiring such
computation) that requires an adjustment to the Conversion Rate pursuant to Section 4.06(a) (1),
(2), (3), (4), (5), (6) or (7) occurs on or after the “ex” date for
the issuance or distribution requiring such computation and prior to the day in
question, the

 

34

 

Closing Price for each Trading
Day on and after the “ex” date for such other event shall be adjusted by
dividing such Closing Price by the reciprocal of the fraction by which the
Conversion Rate is so required to be adjusted as a result of such other event;
and

 

(C)                                the
“ex” date for the issuance or distribution requiring such computation is prior
to the day in question, after taking into account any adjustment required
pursuant to the immediately preceding clause (A) or (B) of this Section 4.06(a)(9),
the Closing Price for each Trading Day on or after such “ex” date shall be
adjusted by adding thereto the amount of any cash and the fair market value (as
determined in good faith by the Board of Directors in a manner consistent with
any determination of such value for purposes of Section 4.06(a)(4) or
(7), whose determination shall be conclusive and set forth in a Board
Resolution) of the evidences of indebtedness, shares of capital stock or assets
being distributed applicable to one share of Common Stock as of the close of
business on the day before such “ex” date.

 

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

 

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

 

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

 

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

 

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

 

(b)                                 In
any case in which this Section 4.06 shall require that an adjustment be
made following a record date, a Determination Date or Expiration Date, as the
case may be, established for the purposes specified in this Section 4.06,
the Company may elect to defer (but only until five Business Days following the
filing by the Company with the Trustee of the certificate described in Section 4.08)
issuing to the Holder of any Security converted after such record date,
Determination Date or Expiration Date the shares of Common Stock and other
Capital Stock of the Company issuable upon such conversion over and above the
shares of Common Stock and other Capital Stock of the Company (or other cash,
property

 

35

 

or securities,
as applicable) issuable upon such conversion only on the basis of the
Conversion Rate prior to adjustment; and, in lieu of any cash, property or
securities the issuance of which is so deferred, the Company shall issue or
cause its transfer agents to issue due bills or other appropriate evidence
prepared by the Company of the right to receive such cash, property or
securities.  If any distribution in
respect of which an adjustment to the Conversion Rate is required to be made as
of the record date, Determination Date or Expiration Date therefore is not
thereafter made or paid by the Company for any reason, the Conversion Rate
shall be readjusted to the Conversion Rate which would then be in effect if
such record date had not been fixed or such record date, Determination Date or
Expiration Date had not occurred.

 

(c)                                  For
purposes of this Section 4.06, “record date” shall mean, with respect to
any dividend, distribution or other transaction or event in which the holders
of Common Stock have the right to receive any cash, securities or other
property or in which the Common Stock (or other applicable security) is
exchanged or converted into any combination of cash, securities or other
property, the date fixed for determination of shareholders entitled to receive
such cash, security or other property (whether or not such date is fixed by the
Board of Directors or by statute, contract or otherwise).

 

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

 

(e)                                  Notwithstanding
the provisions set forth in Section 4.06(a), in no event shall the
Conversion Rate exceed 33.9673 per $1,000 principal amount of Securities,
subject to adjustment in the manner set forth in clauses (1) through (4) of
Section 4.06(a).

 

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

 

(a)                                  No
adjustment in the Conversion Rate shall be required unless such adjustment
would require an increase or decrease of at least 1% in the Conversion Rate as
last adjusted; provided, however, that any adjustments which would be required
to be made but for this Section 4.07(b) shall be carried forward and
taken into account in any subsequent adjustment.  All calculations under this Article 4
shall be made to the nearest cent or to the nearest one-ten thousandth of a
share, as the case may be, with one half cent and 0.00005 of a share,
respectively, being rounded upward.

 

(b)                                 No
adjustment in the Conversion Rate shall be required for issuances of Common
Stock pursuant to a Company plan for reinvestment of dividends or interest or
for a change in the par value or a change to no par value of the Common Stock.

 

(c)                                  To
the extent that the Securities become convertible into the right to receive
cash, no adjustment need be made thereafter as to the cash.

 

36

 

Section 4.08  Notice of Adjustment.

 

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

 

Section 4.09  Notice of Certain Transactions.

 

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

 

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

 

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

 

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

 

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

 

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

 

(4)                                  any
statutory share exchange,

 

in each case as a result
of which holders of Common Stock are entitled to receive stock, other
securities, other property or assets (including cash or any combination
thereof) with respect to or in exchange for Common Stock, the Company or the
successor or purchasing corporation, as the case may be, shall execute with the
Trustee a supplemental indenture (which shall comply with the TIA as in force
at the date of execution of such supplemental indenture if such supplemental
indenture is then required to so comply) providing that the Holders of the
Securities then outstanding will be entitled thereafter to convert such
Securities into the kind and amount of shares of stock, other securities or
other property or assets (including cash or any combination thereof) which they
would have owned or been entitled to receive upon such Business Combination had
such Securities been converted into Common Stock (assuming for such purpose
such conversion were settled entirely in the Company’s Common Stock and without
giving effect to any adjustment to the conversion rate with respect to a
Business Combination constituting a Fundamental Change) immediately prior to
such Business Combination, except that such Holders will not receive the Make
Whole Premium if such Holder does not convert its Securities “in connection
with” the relevant Fundamental Change.  A
conversion of the Securities by a Holder will be deemed for these purposes to
be “in connection with” a Fundamental Change if the notice of such conversion
is provided in compliance with Section 4.02(a) to the Conversion
Agent on or subsequent to the date 10 Trading Days prior to the date announced
by the Company as the anticipated Fundamental Change Effective Date but before
the close of business on the Business Day immediately preceding the related
Fundamental Change Purchase Date.  In the
event holders of Common Stock have the opportunity to elect the form of
consideration to be received in such Business Combination, the Company shall
make adequate provision

 

37

 

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

 

Section 4.11  Trustee’s Disclaimer.

 

(a)                                  The
Trustee shall have no duty to determine when an adjustment under this Article 4
should be made, how it should be made or what such adjustment should be, but
may accept as conclusive evidence of that fact or the correctness of any such
adjustment, and shall be protected in relying upon, an Officers’ Certificate,
including the Officers’ Certificate with respect thereto which the Company is
obligated to file with the Trustee pursuant to Section 4.08.  The Trustee makes no representation as to the
validity or value of any securities or assets issued upon conversion of
Securities, and the Trustee shall not be responsible for the Company’s failure
to comply with any provisions of this Article 4.

 

(b)                                 The
Trustee shall not be under any responsibility to determine the correctness of
any provisions contained in any supplemental indenture executed pursuant to Section 4.10,
but may accept as conclusive evidence of the correctness thereof, and shall be
fully protected in relying upon, the Officers’ Certificate, with respect
thereto which the Company is obligated to file with the Trustee pursuant to Section 12.04.

 

Section 4.12  Voluntary Increase.  The
Company from time to time may increase the Conversion Rate, to the extent
permitted by law, by any amount for any period of time if the period is at
least 20 days, and the Company provides 15 days’ prior written notice to any
increase in the Conversion Rate to the Trustee and Holders.  The Company may also make such an increase to
the Conversion Rate as the Board of Directors determines would avoid or
diminish U.S. federal income tax to holders of shares of Common Stock in
connection with a dividend or distribution of stock (or rights to acquire
stock) or from any event treated as such for U.S. federal income tax purposes.

 

Notwithstanding the
foregoing paragraph, in no event will the Conversion Rate exceed 33.9673 per
$1,000 principal amount of Securities, subject to adjustment in the manner as
set forth in clauses (1) through (4) of Section 4.06(a) hereof.

 

Section 4.13  Payment of Cash in Lieu of Common
Stock.

 

(a)                                  In
lieu of delivery of some or all of the shares of Common Stock otherwise
issuable upon notice of conversion of any Securities, Holders surrendering
Securities for conversion shall receive for each $1,000 principal amount of
Securities surrendered for conversion:  (A) cash
in an amount equal to

 

38

 

the lesser of (1) $1,000
and (2) the Conversion Value; and (B) if the Conversion Value is
greater than $1,000, a number of shares of Common Stock equal to the sum of the
Daily Share Amounts for each of the ten consecutive Trading Days in the
Conversion Reference Period, appropriately adjusted to reflect stock splits,
stock dividends, combinations or similar events occurring during the Conversion
Reference Period, subject to the Company’s right to deliver cash in lieu of all
or a portion of such shares as set forth in Section 4.13(b); provided that
in no event shall the aggregate number of shares of Common Stock to be issued
pursuant to the foregoing clause (B), per $1,000 principal amount of
Securities, exceed the Aggregate Share Cap, without taking into account any
election by the Company to deliver cash in lieu of all or a portion of the
shares of Common Stock otherwise deliverable as set forth in Section 4.13(b).  The Company will deliver such cash and any
shares of Common Stock, together with any cash payable for fractional shares,
to such Holder in accordance with Section 4.02(a).

 

(b)                                 The
Company may elect to pay cash to the Holders of Securities surrendered for
conversion in lieu of all or a portion of the Common Stock otherwise issuable
pursuant to Section 4.13(a).  In such
event, on any day prior to the first Trading Day of the applicable Conversion
Reference Period, the Company will specify a percentage of the Daily Share
Amount that will be settled in cash (the “Cash Percentage”) and the amount of
cash that the Company will pay in respect of each Trading Day in the applicable
Conversion Reference Period will equal the product of:  (1) the Cash Percentage, (2) the
Daily Share Amount for such Trading Day and (3) the Volume Weighted
Average Price of the Common Stock for such Trading Day (provided that after the
consummation of a Fundamental Change in which the consideration is comprised
entirely of cash, the amount used in this clause (3) will be the cash
price per share received by holders of the Common Stock in such Fundamental
Change).  The number of shares that the
Company shall deliver in respect of each Trading Day in the applicable
Conversion Reference Period will be a percentage of the Daily Share Amount
equal to 100% minus the Cash Percentage. 
Upon making a determination that a percentage of the Daily Share Amount
will be settled in cash, the Company shall promptly issue a press release and
disclose such information on its website prior to the first Trading Day of the
applicable Conversion Reference Period. 
If the Company does not specify a Cash Percentage by the start of the
applicable Conversion Reference Period, the Company shall settle 100% of the
Daily Share Amount for each Trading Day in the applicable Conversion Reference
Period with shares of Common Stock; provided, however, that the Company shall
pay cash in lieu of fractional shares otherwise issuable upon conversion of
Securities.

 

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

 

39

 

ARTICLE 5

COVENANTS

 

Section 5.01  Payment of Securities.

 

(a)                                  The
Company shall promptly make all payments in respect of the Securities on the
dates and in the manner provided in the Securities and this Indenture.  A payment of principal or interest or
Additional Interest, if any, shall be considered paid on the date it is due if
the Paying Agent (other than the Company) holds by 12:00 p.m. (noon), New
York City time, on that date money, deposited by or on behalf of the Company
sufficient to make the payment.  Subject
to Section 4.02, accrued and unpaid interest on any Security that is
payable, and is punctually paid or duly provided for, on any Interest Payment
Date shall be paid to the Person in whose name that Security is registered at
the close of business on the Regular Record Date for such interest at the
office or agency of the Company maintained for such purpose.  Principal, interest, Fundamental Change
Purchase Price and Additional Interest, if any, in each case if payable, shall
be considered paid on the applicable date due if on such date the Trustee or
the Paying Agent holds, in accordance with this Indenture, money sufficient to
pay all such amounts then due.  The Company
shall, to the fullest extent permitted by law, pay interest in immediately
available funds on overdue principal amount and interest at the annual rate
borne by the Securities compounded semiannually, which interest shall accrue
from the date such overdue amount was originally due to the date payment of
such amount, including interest thereon, has been made or duly provided
for.  All such interest shall be payable
on demand.

 

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

 

Section 5.02  SEC and Other Reports.

 

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

 

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

 

40

 

Section 5.03  Compliance Certificates.

 

The Company shall deliver
to the Trustee, within 120 days after the end of each fiscal year of the
Company (beginning with the fiscal year ending October 1, 2006), an
Officers’ Certificate as to the signer’s knowledge of the Company’s compliance
with all conditions and covenants on its part contained in this Indenture and
stating whether or not the signer knows of any Default or Event of
Default.  If such signer knows of such a
Default or Event of Default, the Officers’ Certificate shall describe the
Default or Event of Default and the efforts to remedy the same.  For the purposes of this Section 5.03,
compliance shall be determined without regard to any grace period or
requirement of notice provided pursuant to the terms of this Indenture.

 

Section 5.04  Further Instruments and Acts.

 

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

 

Section 5.05  Maintenance of Corporate Existence.

 

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

 

Section 5.06  Rule 144A Information
Requirement.

 

During the period prior
to the expiration of the holding period applicable to sales thereof under Rule 144(k)
under the Securities Act (or any successor provision), the Company covenants
and agrees that it shall, during any period in which it is not subject to Section 13
or 15(d) under the Exchange Act, upon the request of any Holder or
beneficial holder of the Securities make available to such Holder or beneficial
holder of Securities or any Common Stock issued upon conversion thereof which
continue to be Restricted Securities in connection with any sale thereof and
any prospective purchaser of Securities or such Common Stock designated by such
Holder or beneficial holder, the information required pursuant to Rule 144A(d)(4) under
the Securities Act and it will take such further action as any Holder or
beneficial holder of such Securities or such Common Stock may reasonably
request, all to the extent required from time to time to enable such Holder or
beneficial holder to sell its Securities or Common Stock without registration
under the Securities Act within the limitation of the exemption provided by Rule 144A,
as such Rule may be amended from time to time.  Whether a person is a beneficial holder shall
be determined by the Company.

 

Section 5.07  Stay, Extension and Usury Laws.

 

The Company covenants (to
the extent that it may lawfully do so) that it shall not at any time insist
upon, plead, or in any manner whatsoever claim or take the benefit or advantage
of, any stay, extension or usury law or other law which would prohibit or
forgive the Company from paying all or any portion of the principal of or
accrued but unpaid interest or Additional Interest, if any, on the Securities
as contemplated herein, wherever enacted, now or at any time hereafter in
force, or which may affect the covenants or the performance of this Indenture,
and the 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.

 

41

 

Section 5.08  Payment of Additional Interest.

 

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

 

Section 5.09  Maintenance of Office or Agency.

 

The Company will maintain
an office or agency of the Trustee, Registrar and Paying Agent where securities
may be presented or surrendered for payment, where Securities may be
surrendered for registration of transfer, purchase or redemption and where
notices and demands to or upon the Company in respect of the Securities and
this Indenture may be served.  The
Corporate Trust Office shall initially be one such office or agency for all of
the aforesaid purposes.  The Company
shall give prompt written notice to the Trustee of the location, and of any
change in the location, of any such office or agency (other than a change in
the location of the office of the Trustee). 
If at any time the Company shall fail to maintain any such required
office or agency or shall fail to furnish the Trustee with the address thereof,
such presentations, surrenders, notices and demands may be made or served at
the address of the Trustee set forth in Section 12.02.

 

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

 

42

 

ARTICLE 6

CONSOLIDATION; MERGER; CONVEYANCE; TRANSFER OR LEASE

 

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

 

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

 

(1)                                  the
Person (if other than the Company) formed by such consolidation or into which
the Company is merged, or the Person which acquires by conveyance, transfer or
lease all or substantially all of the properties and assets of the Company,
shall (i) be a corporation, limited liability company, partnership, trust
or other business entity organized and existing under the laws of the United
States of America or any State thereof or the District of Columbia and (ii) such
Person (if other than the Company) expressly assumes, by an indenture
supplemental hereto, executed and delivered to the Trustee, in form
satisfactory to the Trustee, the obligations of the Company under the
Securities and this Indenture and the performance or observance of every
covenant and provision of this Indenture and the Securities required on the
part of the Company to be performed or observed and the conversion rights shall
be provided for in accordance with Article 4, by supplemental indenture
satisfactory in form to the Trustee, executed and delivered to the Trustee, by
the Person (if other than the Company) formed by such consolidation or into
which the Company shall have been merged or by the Person which shall have
acquired the Company’s assets;

 

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

 

(3)                                  if
the Company will not be the resulting or surviving corporation, the Company
shall have, at or prior to the effective date of such consolidation, merger or
transfer, delivered to the Trustee an Officers’ Certificate and an Opinion of
Counsel, each stating that such consolidation, merger or transfer complies with
this Article 6.01 and, if a supplemental indenture is required in
connection with such transaction, such supplemental indenture complies with
this Article, and that all conditions precedent herein provided for relating to
such transaction have been complied with.

 

Section 6.02  Successor Substituted.

 

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

 

43

 

ARTICLE 7

DEFAULT AND REMEDIES

 

Section 7.01  Events of Default.

 

(a)                                  An
“Event of Default” shall occur if:

 

(1)                                  the
Company shall fail to pay when due the Principal or Fundamental Change Purchase
Price of any Security, when the same becomes due and payable whether at the
Final Maturity Date, upon repurchase, acceleration or otherwise, and regardless
of whether such payment is permitted pursuant to the subordination provisions
under Article 11; or

 

(2)                                  the
Company shall fail to pay an installment of cash interest or Additional
Interest, if any, on any of the Securities, which failure continues for 30 days
after the date when due, regardless of whether such payment is permitted
pursuant to the subordination provisions under Article 11; or

 

(3)                                  the
Company shall fail to deliver when due all cash and shares of Common Stock, if
any, deliverable upon conversion of the Securities, which failure continues for
15 days, regardless of whether such payment is permitted pursuant to the
subordination provisions under Article 11; or

 

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

 

(5)                                  default
in the payment of principal by the end of any applicable grace period or
resulting in acceleration of other Indebtedness of the Company for borrowed
money where the aggregate principal amount with respect to which the default or
acceleration has occurred exceeds $25 million and such acceleration has not
been rescinded or annulled or such Indebtedness repaid within a period of 30
days after receipt of a Notice of Default, provided that if any such default is
cured, waived, rescinded or annulled, then the Event of Default by reason
thereof would not be deemed to have occurred; or

 

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

 

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

 

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

 

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

 

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

 

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

 

44

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(b)                                 Notwithstanding
Section 7.01(a), no Event of Default under clauses (4) or (5) of
Section 7.01(a) shall occur until the Trustee notifies the Company in
writing, or the Holders of at least 25% in aggregate principal amount of the
Securities then outstanding notify the Company and the Trustee in writing, of
the Default (a “Notice of Default”), and the Company does not cure the Default
within the time specified in clause (4) or (5) of Section 7.01(a),
as applicable, after receipt of such notice. 
A notice given pursuant to this Section 7.01 shall be given by
registered or certified mail, must specify the Default, demand that it be
remedied and state that the notice is a Notice of Default.  When any Default under this Section 7.01
is cured, it ceases.

 

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

 

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

 

Section 7.02  Acceleration.

 

If an Event of Default
(other than an Event of Default specified in clause (6) or (7) of Section 7.01(a))
occurs and is continuing with respect to the Company, the Trustee may, by
notice to the Company, or the Holders of at least 25% in aggregate principal
amount of the Securities then outstanding may, by notice to the Company and the
Trustee, declare the principal amount and accrued and unpaid interest, if any,
and accrued and unpaid Additional Interest, if any, through the date of
declaration on all the Securities to be immediately due and payable.  Upon such a declaration, such principal
amount and such accrued and unpaid interest, if any, and such accrued and
unpaid Additional Interest, if any, shall be due and payable immediately.  If an Event of Default specified in Section 7.01(a)(6) or
(7) occurs in

 

45

 

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

 

Section 7.03  Other Remedies.

 

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

 

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

 

Section 7.04  Waiver of Defaults and Events of
Default.

 

Subject to Sections 7.07
and 10.02, the Holders of a majority in aggregate principal amount of the
Securities then outstanding by notice to the Trustee may waive an existing
Default or Event of Default and its consequences, except an uncured Default or
Event of Default in the payment of the principal of, premium, if any, or any
accrued but unpaid interest on any Security, an uncured failure by the Company
to convert any Securities into Common Stock and cash, as applicable, or any
Default or Event of Default in respect of any provision of this Indenture or
the Securities which, under Section 10.02, cannot be modified or amended
without the consent of the Holder of each Security affected.  When a Default or Event of Default is waived,
it is cured and ceases to exist.

 

Section 7.05  Control by Majority.

 

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

 

46

 

Section 7.06  Limitations on Suits.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Notwithstanding any other
provision of this Indenture but subject to the provisions of Article 11
hereof, the right of any Holder of a Security to receive payment of the
principal amount, interest, Fundamental Change Purchase Price, if any, or
Additional Interest, if any, in respect of the Securities held by such Holder,
on or after the respective due dates expressed in the Securities and this
Indenture (whether upon repurchase or otherwise), and to convert such Security
in accordance with Article 4, and to bring suit for the enforcement of any
such payment on or after such respective due dates or for the right to convert
in accordance with Article 4, is absolute and unconditional and shall not
be impaired or affected without the consent of the Holder.

 

Section 7.08  Collection Suit by Trustee.

 

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

 

Section 7.09  Trustee May File Proofs of
Claim.

 

The Trustee may file such
proofs of claim and other papers or documents as may be necessary or advisable
in order to have the claims of the Trustee (including any claim for the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel) and the Holders allowed in any judicial proceedings
relative to the Company (or any other obligor on the Securities), its creditors
or its property and shall be entitled and empowered to collect and receive any money
or other property payable or deliverable on any such claims and to distribute
the same, and any Receiver in any such judicial proceeding is hereby authorized
by each Holder to make such payments to the Trustee and, in the

 

47

 

event that the
Trustee shall consent to the making of such payments directly to the Holders,
to pay to the Trustee any amount due to it for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel,
and any other amounts due the Trustee under Section 8.07, and to the
extent that such payment of the reasonable compensation, expenses,
disbursements and advances in any such proceedings shall be denied for any
reason, payment of the same shall be secured by a lien on, and shall be paid
out of, any and all distributions, dividends, money, securities and other
property which the Holders may be entitled to receive in such proceedings,
whether in liquidation or under any plan of reorganization or arrangement or
otherwise.  Nothing herein contained
shall be deemed to authorize the Trustee to authorize or consent to, or, on
behalf of any Holder, to authorize, accept or adopt any plan of reorganization,
arrangement, adjustment or composition affecting the Securities or the rights
of any Holder thereof, or to authorize the Trustee to vote in respect of the
claim of any Holder in any such proceeding.

 

Section 7.10  Priorities.

 

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

 

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

 

(2)                                  Second,
to the Holders of Senior Indebtedness to the extent required by Article 11;

 

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

 

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

 

(5)                                  Fifth,
the balance, if any, to the Company.

 

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

 

Section 7.11  Undertaking for Costs.

 

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

 

48

 

ARTICLE 8

TRUSTEE

 

Section 8.01  Obligations of Trustee.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

49

 

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

 

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

 

Section 8.02  Rights of Trustee.

 

(a)                                  Subject
to Section 8.01:

 

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

 

(2)                                  Before
the Trustee acts or refrains from acting, it may require an Officers’
Certificate or an Opinion of Counsel, which shall conform to Section 12.04(b).  The Trustee shall not be liable for any
action it takes or omits to take in good faith in reliance on such Officers’
Certificate or Opinion of Counsel.

 

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

 

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

 

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

 

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

 

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

 

50

 

reasonable expense of every
such examination shall be paid by the Company or, if paid by the Trustee, shall
be repaid by the Company upon demand from the Company’s own funds.

 

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

 

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

 

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

 

Section 8.03  Individual Rights of Trustee.

 

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

 

Section 8.04  Trustee’s Disclaimer.

 

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

 

Section 8.05  Notice of Default or Events of Default.

 

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

 

Section 8.06  Reports by Trustee to Holders.

 

(a)                                  If
a report is required by TIA Section 313, within 60 days after each May 15,
beginning with the May 15 following the date of this Indenture, the
Trustee shall mail to each Holder of Securities a

 

51

 

brief report
dated as of such May 15 that complies with TIA Section 313(a).  If required by TIA Section 313, the
Trustee also shall comply with TIA Sections 313(b)(2) and (c).

 

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

 

Section 8.07  Compensation and Indemnity.

 

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

 

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

 

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

 

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

 

(e)                                  When
the Trustee incurs expenses or renders services after an Event of Default
specified in clause (6) or (7) of Section 7.01(a) occurs,
the expenses and the compensation for the services are intended to constitute
expenses of administration under any Bankruptcy Law.  The provisions of this Section shall
survive the termination of this Indenture.

 

52

 

Section 8.08  Replacement of Trustee.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Section 8.09  Successor Trustee by Merger, Etc.

 

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

 

Section 8.10  Eligibility; Disqualification.

 

The Trustee shall always
satisfy the requirements of paragraphs (1), (2) and (5) of TIA Section 310(a).  The Trustee (or its parent holding company)
shall have a combined capital and surplus of at least $50,000,000 as set forth
in its most recent published annual report of condition.  If at any time the Trustee shall cease to
satisfy any such requirements, it shall resign immediately in the manner and
with the effect

 

53

 

specified in this Article 8.  The Trustee shall be subject to the
provisions of TIA Section 310(b). 
Nothing herein shall prevent the Trustee from filing with the SEC the
application referred to in the penultimate paragraph of TIA Section 310(b).

 

Section 8.11  Preferential Collection of Claims
Against Company.

 

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

 

ARTICLE 9

SATISFACTION AND DISCHARGE OF INDENTURE

 

Section 9.01  Satisfaction and Discharge of
Indenture.

 

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

 

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

 

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

 

provided, that

 

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

 

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

 

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

 

(b)                                 Notwithstanding
the satisfaction and discharge of this Indenture, the obligations of the
Company with respect to the conversion privilege and the Conversion Rate of the
Securities pursuant to Article 4, the obligations of the Company to the
Trustee under Section 8.07 and, if money shall have been deposited with
the Trustee pursuant to clause (2) of Section 9.01(a), the provisions
of Sections 2.03, 2.04, 2.05, 2.06, 2.07, 2.12, 5.01 and 12.05, Article 4,
and this Article 9, shall survive until the Securities have been paid in
full.

 

54

 

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

 

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

 

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

 

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

 

ARTICLE 10

AMENDMENTS; SUPPLEMENTS AND WAIVERS

 

Section 10.01  Without Consent of Holders.  

 

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

 

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

 

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

 

(3)                                  securing
the Company’s obligations in respect of the Securities;

 

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

 

55

 

(5)                                  complying
with the requirements of the SEC in order to effect or maintain the
qualification of this Indenture under the TIA, as contemplated by this
Indenture or otherwise;

 

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

 

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

 

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

 

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

 

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

 

(3)                                  change
the stated maturity of any Security;

 

(4)                                  reduce
the principal amount or Fundamental Change Purchase Price (including any Make
Whole Premium payable) (as applicable) with respect to any of the Securities,
or any Additional Interest, or purchase pursuant to Article 3, with
respect to any Security;

 

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

 

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

 

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

 

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

 

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

 

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

 

(b)                                 Without
limiting the provisions of Section 10.02(a) hereof, the Holders of a
majority in principal amount of the Securities then outstanding may, on behalf
of all the Holders of all Securities, (i) waive compliance by the Company
with the restrictive provisions of this Indenture, and (ii) waive any past
Default of Event of Default under this Indenture and its consequences, except
an uncured failure to pay when due the principal amount, accrued and unpaid
interest, accrued and unpaid Additional Interest 

 

56

 

or Fundamental
Change Purchase Price, or in the obligation to deliver Common Stock or cash, if
any and as applicable, or in respect of any provision which under this
Indenture cannot be modified or amended without the consent of the Holder of
each outstanding Security affected.

 

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

 

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

 

Section 10.04  Revocation and Effect of Consents.  Until
an amendment, supplement or waiver becomes effective, a consent to it by a
Holder is a continuing consent by the Holder and every subsequent Holder of a
Security or portion of a Security that evidences the same debt as the
consenting Holder’s Security, even if notation of the consent is not made on
any Security.  However, any such Holder
or subsequent Holder may revoke the consent as to its Security or portion of a
Security if the Trustee receives the notice of revocation before the date the
amendment, supplement or waiver becomes effective.

 

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

 

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

 

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

 

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

 

ARTICLE 11

SUBORDINATION

 

Section 11.01  Agreement to Subordinate.   The
Company covenants and agrees, and each Holder by accepting a Security likewise
covenants and agrees, that all Securities shall be issued subject to the

 

57

 

provisions of
this Article 11; and each Person holding any Security, whether upon
original issue or upon transfer, assignment or exchange thereof, accepts and
agrees to be bound by such provisions.

 

The payment of the
principal of, premium, if any, interest, and Additional Interest, if any, on
all Securities (including, but not limited to, the Fundamental Change Purchase
Price with respect to the Securities subject to repurchase in accordance with Article 3
as provided in this Indenture) issued hereunder shall, to the extent and in the
manner hereinafter set forth, be subordinated and subject in right of payment
to the prior payment of all Senior Indebtedness, whether outstanding at the
date of this Indenture or thereafter incurred, in full in cash or payment
satisfactory to the holders of Senior Indebtedness.

 

No provision of this Article 11
shall prevent the occurrence of any Default or Event of Default hereunder.

 

Section 11.02  Payment to Holders.   No
payment shall be made with respect to the principal of, or premium, if any,
interest and Additional Interest, if any, on the Securities (including, but not
limited to, the Fundamental Change Purchase Price with respect to the
Securities subject to repurchase in accordance with Article 3 as provided
in this Indenture), and no repurchase or retirement of the Securities shall
occur and no deposit shall be made pursuant to Article 9 at a time when
such deposited amounts would not otherwise be permitted under this Article 11,
other than through the delivery of Common Stock (but not the cash portion of
the Company’s conversion obligation) in respect of the conversion of Securities
if:

 

(a)                                  a
default in the payment of principal, premium, interest, rent or other
obligations due on any Senior Indebtedness occurs and is continuing and the
Trustee receives notice of such default (or, in the case of Senior Indebtedness
for which there is a period of grace, in the event of such a default that
continues beyond the period of grace, if any, specified in the instrument or
lease evidencing such Senior Indebtedness), unless and until such default shall
have been cured or waived by the appropriate holders of the Senior Indebtedness
or shall have ceased to exist; or

 

(b)                                 a
default, other than a payment default, on any Designated Senior Indebtedness
occurs and is continuing that then permits holders of such Designated Senior
Indebtedness to accelerate the maturity of all or any portion of such
Designated Senior Indebtedness (or would permit such holders to so accelerate
with the giving of notice or the passage of time or both) and the Trustee
receives a notice of the default (a “Payment Blockage Notice”) from a
Representative or holder of such Designated Senior Indebtedness or the Company.

 

Subject to the provisions
of Section 11.05, if the Trustee receives any Payment Blockage Notice
pursuant to clause (b) above, no subsequent Payment Blockage Notice
shall be effective for purposes of this Section unless and until at least
365 days shall have elapsed since the initial effectiveness of the immediately
prior Payment Blockage Notice.  No
nonpayment default that existed or was continuing on the date of delivery of
any Payment Blockage Notice to the Trustee (unless such default was waived,
cured or otherwise ceased to exist and thereafter subsequently reoccurred)
shall be, or be made, the basis for a subsequent Payment Blockage Notice,
whether or not within a period of 365 consecutive days.

 

Unless this Article 11
otherwise prohibits payments on or distributions in respect of the Securities
at the time of such payments or distributions, the Company may and shall resume
such payments on and distributions:

 

(A)                              in
the case of a default referred to in clause (a) above, the date upon
which the default is cured or waived by the requisite holders of Senior
Indebtedness or otherwise ceases to exist, or

 

58

 

(B)                                in
the case of a default referred to in clause (b) above, the earliest
to occur of (i) the date on which such default is cured or waived or
otherwise ceases to exist or such Designated Senior Indebtedness is discharged
or paid in full, (ii) 179 days pass after the date on which the applicable
Payment Blockage Notice is received, and (iii) the date such payment
blockage period shall have been terminated by written notice to the Company or
the Trustee from the Person initiating such payment blockage period provided
that, if the maturity of such Designated Senior Indebtedness has been
accelerated no payment may be made on the Securities until such default is
cured or waived or otherwise ceases to exist or such Designated Senior
Indebtedness is discharged or paid in full.

 

Upon any payment by the
Company, or distribution of assets of the Company of any kind or character,
whether in cash, property or securities, to creditors upon any dissolution or
winding-up or liquidation or reorganization of the Company (whether voluntary or
involuntary) or in bankruptcy, insolvency, receivership or similar proceedings,
all amounts due or to become due upon all Senior Indebtedness shall first be
paid in full in cash, or other payment satisfactory to the holders of Senior
Indebtedness, before any payment is made on account of the principal of,
premium, if any, interest or Additional Interest, if any, on the Securities
(including, but not limited to, the Fundamental Change Purchase Price with
respect to the Securities subject to repurchase in accordance with Article 3
as provided in this Indenture); and upon any such dissolution or winding-up or
liquidation or reorganization of the Company or bankruptcy, insolvency,
receivership or other proceeding, any payment by the Company, or distribution
of assets of the Company of any kind or character, whether in cash, property or
securities, to which the Holders or the Trustee would be entitled, except for
the provision of this Article 11, shall (except as aforesaid) be paid by
the Company or by any receiver, trustee in bankruptcy, liquidating trustee,
agent or other Person making such payment or distribution, or by the Holders or
by the Trustee under this Indenture if received by them or it, directly to the
holders of Senior Indebtedness (pro rata to such holders on the basis of the
respective amounts of Senior Indebtedness held by such holders, or as otherwise
required by law or a court order) or their Representative or Representatives,
as their respective interests may appear, to the extent necessary to pay all
Senior Indebtedness in full in cash, or other payment satisfactory to the
holders of Senior Indebtedness, after giving effect to any concurrent payment
or distribution to or for the holders of Senior Indebtedness, before any
payment or distribution is made to the Holders or to the Trustee.

 

For purposes of this Article 11,
the words, “cash, property or securities” shall not be deemed to include shares
of stock of the Company as reorganized or readjusted, or securities of the
Company or any other corporation provided for by a plan of reorganization or
readjustment, the payment of which is subordinated at least to the extent
provided in this Article 11 with respect to the Securities to the payment
of all Senior Indebtedness which may at the time be outstanding; provided that (i) the
Senior Indebtedness is assumed by the new corporation, if any, resulting from
any reorganization or readjustment, and (ii) the rights of the holders of
Senior Indebtedness (other than leases which are not assumed by the Company or
the new corporation, as the case may be) are not, without the consent of such
holders, altered by such reorganization or readjustment.  The consolidation of the Company with, or the
merger of the Company into, another corporation or the liquidation or
dissolution of the Company following the conveyance, transfer, sale, lease or
other disposition of its property as an entirety, or substantially as an
entirety, to another corporation upon the terms and conditions provided for in Article 6
shall not be deemed a dissolution, winding-up, liquidation or reorganization
for the purposes of this Section 11.02 if such other corporation shall, as
a part of such consolidation, merger, conveyance, transfer, sale, lease or
other disposition, comply with the conditions stated in Article 6.

 

In the event of the
acceleration of the Securities because of an Event of Default, no payment or
distribution shall be made to the Trustee or any Holders in respect of the
principal of, premium, if any, interest or Additional Interest, if any, on the
Securities by the Company (including, but not limited to, the

 

59

 

Fundamental Change
Purchase Price with respect to the Securities subject to repurchase in
accordance with Article 3 as provided in this Indenture), except payments
and distributions made by the Trustee as permitted by Section 11.05, until
all Senior Indebtedness has been paid in full in cash or other payment
satisfactory to the holders of Senior Indebtedness or such acceleration is
rescinded in accordance with the terms of this Indenture.  If payment of the Securities is accelerated
because of an Event of Default, the Company shall promptly notify holders of
Senior Indebtedness of such acceleration.

 

In the event that,
notwithstanding the foregoing provisions, any payment or distribution of assets
of the Company of any kind or character, whether in cash, property or
securities (including, without limitation, by way of setoff or otherwise),
prohibited by the provisions of this Article 11, shall be received by the
Trustee or any of the Holders before all Senior Indebtedness is paid in full,
in cash or other payment satisfactory to the holders of Senior Indebtedness, or
provision is made for such payment thereof in accordance with its terms in cash
or other payment satisfactory to the holders of Senior Indebtedness, such
payment or distribution shall be held in trust for the benefit of and shall be
paid over or delivered to the holders of Senior Indebtedness or their
Representative or Representatives, as their respective interests may appear, as
calculated by the Company.

 

Nothing in this Section 11.02
shall apply to claims of, or payments to, the Trustee under or pursuant to Section 8.07.  This Section 11.02 shall be subject to
the further provisions of Section 11.05.

 

Section 11.03  Subrogation of Securities.  After
the payment in full, in cash or other payment satisfactory to the holders of
Senior Indebtedness, of all Senior Indebtedness (and all commitments with
respect to such Senior Indebtedness have terminated or expired), the rights of
the Holders shall be subrogated to the extent of the payments or distributions
made to the holders of such Senior Indebtedness pursuant to the provisions of
this Article 11 (equally and ratably with the holders of all indebtedness
of the Company which by its express terms is subordinated to other indebtedness
of the Company to substantially the same extent as the Securities are
subordinated and is entitled to like rights of subrogation) to the rights of
the holders of Senior Indebtedness to receive payments or distributions of
cash, property or securities of the Company applicable to the Senior
Indebtedness until the principal, premium, if any, interest or Additional
Interest, if any, on the Securities shall be paid in full in cash or other
payment satisfactory to the holders of Senior Indebtedness; and, for the
purposes of such subrogation, no payments or distributions to the holders of
the Senior Indebtedness of any cash, property or securities to which the
Holders or the Trustee would be entitled except for the provisions of this Article 11,
and no payment over pursuant to the provisions of this Article 11, to or
for the benefit of the holders of Senior Indebtedness by Holders or the
Trustee, shall, as between the Company, its creditors other than holders of
Senior Indebtedness, and the Holders, be deemed to be a payment by the Company
to or on account of the Senior Indebtedness; and no payments or distributions
of cash, property or securities to or for the benefit of the Holders pursuant
to the subrogation provisions of this Article 11, which would otherwise
have been paid to the holders of Senior Indebtedness, shall be deemed to be a
payment by the Company to or for the account of the Securities.  It is understood that the provisions of this Article 11
are and are intended solely for the purposes of defining the relative rights of
the Holders, on the one hand, and the holders of the Senior Indebtedness, on
the other hand.

 

Nothing contained in this
Article 11 or elsewhere in this Indenture or in the Securities is intended
to or shall impair, as among the Company, its creditors other than the holders
of Senior Indebtedness, and the Holders, the obligation of the Company, which
is absolute and unconditional, to pay to the Holders the principal of (and
premium, if any), interest or Additional Interest, if any, on the Securities as
and when the same shall become due and payable in accordance with their terms,
or is intended to or shall affect the relative rights of the Holders and
creditors of the Company other than the holders of the Senior Indebtedness, nor
shall anything herein or therein prevent the Trustee or the Holders from
exercising all remedies otherwise permitted by applicable law during the continuance
of an Event of Default under this

 

60

 

Indenture, subject
to the rights, if any, under this Article 11 of the holders of Senior
Indebtedness in respect of cash, property or securities of the Company received
upon the exercise of any such remedy.

 

Upon any payment or
distribution of assets of the Company referred to in this Article 11, the
Trustee, subject to the provisions of Section 8.01, and the Holders shall
be entitled to conclusively rely upon any order or decree made by any court of
competent jurisdiction in which such bankruptcy, dissolution, winding-up,
liquidation or reorganization proceedings are pending, or a certificate of the
receiver, trustee in bankruptcy, liquidating trustee, agent or other Person
making such payment or distribution, delivered to the Trustee or to the
Holders, for the purpose of ascertaining the Persons entitled to participate in
such distribution, the holders of the Senior Indebtedness and other
indebtedness of the Company, the amount thereof or payable thereon and all
other facts pertinent thereto or to this Article 11.

 

Section 11.04  Authorization to Effect
Subordination.  Each Holder by accepting a Security authorizes
and directs the Trustee on such Holder’s behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in this Article 11
and as may be requested in writing and as prepared by the holders of Senior
Indebtedness at their expense, and each Holder appoints the Trustee to act as
such Holder’s attorney-in-fact for any and all such purposes.  If the Trustee does not file a proper proof
of claim or proof of debt in the form required in any proceeding referred to in
Section 11.03 hereof at least 30 days before the expiration of the time to
file such claim, the holders of any Senior Indebtedness or their
Representatives are hereby authorized to file an appropriate claim for and on
behalf of the Holders and each Holder hereby appoints the holders of Senior
Indebtedness or their respective Representatives to act as its attorney-in-fact
for any and all such purposes.

 

Section 11.05  Notice to Trustee.  The
Company shall give prompt written notice in the form of an Officers’
Certificate to a Responsible Officer of the Trustee and to any Paying Agent of
any fact known to the Company which would prohibit the making of any payment of
monies to or by the Trustee or any Paying Agent in respect of the Securities
pursuant to the provisions of this Article 11.  Notwithstanding the provisions of this Article 11
or any other provision of this Indenture, the Trustee shall not be charged with
knowledge of the existence of any facts which would prohibit the making of any
payment of monies to or by the Trustee in respect of the Securities pursuant to
the provisions of this Article 11, unless and until a Responsible Officer
of the Trustee shall have received written notice thereof at the office of the
Trustee specified in Section 12.02 hereof from the Company (in the form of
an Officers’ Certificate) or a Representative or a holder or holders of Senior
Indebtedness; and before the receipt of any such written notice, the Trustee,
subject to the provisions of Section 8.01, shall be entitled in all
respects to assume that no such facts exist; provided that with respect to any
such monies that may become payable for any purpose (including, without
limitation, the payment of the principal of, or premium, if any, or interest on
any Security) unless the Trustee shall have received, on a date not less than
one Business Day immediately prior to the date upon which by the terms hereof
such monies shall become payable, the notice provided for in this Section 11.05,
then, anything in the first two paragraphs of Section 11.02 contained to
the contrary notwithstanding, the Trustee shall have full power and authority
to receive such monies and to apply the same to the purpose for which they were
received, and shall not be affected by any notice to the contrary which may be
received by it on or after such prior date; provided further that if the
Trustee shall receive any such notice on the date upon which by the terms
hereof such monies shall become payable, the Trustee may, in its reasonable
discretion, waive the time for notice provided in the foregoing proviso.  Nothing shall prevent any payment by the
Trustee to the holders of monies deposited with it pursuant to Article 9,
and any such payment shall not be subject to the provisions of Article 11;
provided that, at the time of any such deposit, such deposit and payment were
permitted under this Article 11 without giving effect to the first clause
of this sentence.

 

The Trustee, subject to
the provisions of Section 8.01, shall be entitled to conclusively rely on
the delivery to it of a written notice by a Representative or a Person
representing himself to be a holder of

 

61

 

Senior
Indebtedness to establish that such notice has been given by a Representative
or a holder of Senior Indebtedness.  In
the event that the Trustee determines in good faith that further evidence is
required with respect to the right of any Person as a holder of Senior
Indebtedness to participate in any payment or distribution pursuant to this Article 11,
the Trustee may request such Person to furnish evidence to the reasonable
satisfaction of the Trustee as to the amount of Senior Indebtedness held by
such Person, the extent to which such Person is entitled to participate in such
payment or distribution and any other facts pertinent to the rights of such
Person under this Article 11, and if such evidence is not furnished the
Trustee may defer any payment to such Person pending judicial determination as
to the right of such Person to receive such payment.

 

Section 11.06  Trustee’s Relation to Senior
Indebtedness.   The Trustee in its individual capacity shall be
entitled to all the rights set forth in this Article 11 in respect of any
Senior Indebtedness at any time held by it, to the same extent as any other
holder of Senior Indebtedness, and nothing in Section 8.11 or elsewhere in
this Indenture shall deprive the Trustee of any of its rights as such
holder.  Nothing in this Article 11
shall apply to the claims of, or payment to, the Trustee under or pursuant to Section 8.07.

 

With respect to the holders
of Senior Indebtedness, the Trustee undertakes to perform or to observe only
such of its covenants and obligations as are specifically set forth in this Article 11,
and no implied covenants or obligations with respect to the holders of Senior
Indebtedness shall be read into this Indenture against the Trustee.  The Trustee shall not be deemed to owe any
fiduciary duty to the holders of Senior Indebtedness and, subject to the
provisions of Section 8.01, the Trustee shall not be liable to any holder
of Senior Indebtedness if it shall pay over or deliver to Holders, the Company
or any other Person money or assets to which any holder of Senior Indebtedness
shall be entitled by virtue of this Article 11 or otherwise.

 

Section 11.07  No Impairment of Subordination.  No
right of any present or future holder of any Senior Indebtedness to enforce
subordination as herein provided shall at any time in any way be prejudiced or
impaired by any act or failure to act on the part of the Company or by any act
or failure to act, in good faith, by any such holder, or by any noncompliance
by the Company with the terms, provisions and covenants of this Indenture,
regardless of any knowledge thereof which any such holder may have or otherwise
be charged with.

 

Section 11.08
 Certain Conversions Deemed
Payment.  For the purposes of this Article 11 only, (a) the
issuance and delivery of Junior Securities upon conversion of Securities in
accordance with Article 4 shall not be deemed to constitute a payment or
distribution on account of the principal of (or premium, if any), interest or
Additional Interest, if any, on the Securities or on account of the purchase or
other acquisition of Securities, and (b) the payment, issuance or delivery
of cash (except in satisfaction of fractional shares), securities (other than
Junior Securities) or other property upon conversion of a Security shall be
deemed to constitute payment on account of the principal of such Security, the
payment, issuance and delivery of such cash being made subject to the
subordination provisions of this Article 11.  For the purposes of this Section 11.08,
the term “Junior Securities” means (1) shares of any stock of any class of
the Company or (2) securities of the Company which are subordinated in
right of payment to all Senior Indebtedness which may be outstanding at the
time of issuance or delivery of such securities to substantially the same
extent as, or to a greater extent than, the Securities are so subordinated as
provided in this Article 11. 
Nothing contained in this Article 11 or elsewhere in this Indenture
or in the Securities is intended to or shall impair, as among the Company, its
creditors other than holders of Senior Indebtedness and the Holders, the right,
which is absolute and unconditional, of the Holders to convert such Securities
in accordance with Article 4.

 

Section 11.09  Article Applicable to Paying
Agents.  If at any time any Paying Agent other than the Trustee
shall have been appointed by the Company and be then acting hereunder, the term
“Trustee”

 

62

 

as used in
this Article shall (unless the context otherwise requires) be construed as
extending to and including such Paying Agent within its meaning as fully for
all intents and purposes as if such Paying Agent were named in this Article in
addition to or in place of the Trustee; provided, however, that the first
paragraph of Section 11.05 shall not apply to the Company or any Affiliate
of the Company if it or such Affiliate acts as Paying Agent.

 

Section 11.10  Senior Indebtedness Entitled to
Rely.  The holders of Senior Indebtedness shall have the right to
rely upon this Article 11, and no amendment or modification of the
provisions of this Article 11 that adversely affect the rights and
interests of such holders shall be effective as to such holders unless such
holders shall have agreed in writing thereto. 
Each Holder by accepting a Security acknowledges and agrees that the
provisions of Article 11 are, and are intended to be, an inducement and consideration
to each holder of Senior Indebtedness (whether such Senior Indebtedness was
acquired or created before or after the issuance of the Securities) to acquire
and hold, or to continue to hold, such Senior Indebtedness, and such holder of
Senior Indebtedness shall be deemed conclusively to have relied on the
provisions of this Article 11 in acquiring and continuing to hold such
Senior Indebtedness.

 

Section 11.11  Reinstatement.  To
the extent the payment of or distribution in respect of any Senior Indebtedness
(whether by or on behalf of the Company as proceeds of security or enforcement
of any right of setoff or otherwise) is declared to be fraudulent or
preferential, set aside or required to be paid to any receiver, trustee in
bankruptcy, liquidating trustee, agent or similar Person under any bankruptcy,
insolvency, receivership, fraudulent conveyance or similar law, then if such
payment or distribution is recovered by, or paid over to, such receiver,
trustee in bankruptcy, liquidating trustee, agent or similar Person, the Senior
Indebtedness or part thereof originally intended to be satisfied shall be
deemed to be reinstated and outstanding as if such payment had not occurred.

 

Section 11.12  Actions by Holders of Senior
Indebtedness.  The holders of the Senior Indebtedness may, at any
time and from time to time, without the consent of or notice to the Trustee or
the Holders, without incurring responsibility to the Holders and without
impairing or releasing the subordination provided in this Indenture or the
obligations of the Holders hereunder to the holders of the Senior Indebtedness,
do any one or more of the following:

 

(a)                                  change
the manner, place or terms of payment or extend the time of payment of, or
renew or alter, the Senior Indebtedness or any instrument evidencing the same
or any agreement under which any Senior Indebtedness is outstanding or secured;

 

(b)                                 sell,
exchange, release or otherwise deal with any property pledged, mortgaged or
otherwise secured;

 

(c)                                  release
any Person liable in any manner for the collection of Senior Indebtedness;

 

(d)                                 exercise
or refrain from exercising any rights against the Company or any other Person;
and

 

(e)                                  take
any other action in the reasonable business judgment of the holders of Senior
Indebtedness.

 

63

 

ARTICLE 12

MISCELLANEOUS

 

Section 12.01  Trust
Indenture Act Controls.  If any
provision of this Indenture limits, qualifies or conflicts with the duties
imposed by any of Sections 310 to 317, inclusive, of the TIA through operation
of Section 318(c) thereof, such imposed duties shall control.

 

Section 12.02  Notices.  Any demand, authorization
notice, request, consent or communication shall be given in writing and
delivered in person or mailed by first-class mail, postage prepaid, addressed
as follows or transmitted by facsimile transmission (confirmed by delivery in
person or mail by first-class mail, postage prepaid, or by guaranteed overnight
courier) to the following facsimile numbers:

 

If to the Company, to:

 

Coherent, Inc.

5100 Patrick Henry Drive

Santa Clara, California 95054

Attention:  General Counsel

Tel: (408) 764-4000

Fax: (408) 970-9998

 

with a copy to:

 

Wilson Sonsini Goodrich & Rosati

Professional Corporation

Attention: John A. Fore

650 Page Mill Road

Palo Alto, CA 94304

Tel: (650) 493-9300

Fax: (650) 493-6811

 

if to the Trustee, to:

 

U.S. Bank National Association

633 West Fifth Street, 24th floor

Los Angeles, CA 90071

Attention: Corporate Trust Services (Coherent, Inc. 2.75% Convertible

Subordinated Notes due 2011)

Tel: (213) 615-6043

Fax: (213) 615-6197

 

with a copy to:

 

Shipman & Goodwin LLP

One Constitution Plaza

Hartford, CT 06103

Attention: Daniel P. Brown Jr., Esq.

Tel : (860) 251-5919

Fax : (860) 251-5212

 

 

64

 

Such notices or communications
shall be effective when received.

 

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

 

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

 

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

 

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

 

Section 12.03  Communications By Holders with
Other Holder.  Holders
of Securities may communicate pursuant to TIA Section 312(b) with
other Holders of Securities with respect to their rights under this Indenture
or the Securities.  The Company, the
Trustee, the Registrar and any other person shall have the protection of TIA Section 312(c).

 

Section 12.04  Certificate and Opinion as to
Conditions Precedent.  Upon
any request or application by the Company to the Trustee to take any action
under this Indenture, the Company shall furnish to the Trustee at the request
of the Trustee:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

65

 

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

 

Section 12.05  Record Date for Vote or Consent of
Holders of Securities.  The
Company (or, in the event deposits have been made pursuant to Section 9.01,
the Trustee) may set a record date for purposes of determining the identity of
Holders entitled to vote or consent to any action by vote or consent authorized
or permitted under this Indenture, which record date shall not be more than 30
days prior to the date of the commencement of solicitation of such action.  Notwithstanding the provisions of Section 10.04,
if a record date is fixed, those persons who were Holders of Securities at the
close of business on such record date (or their duly designated proxies), and
only those persons, shall be entitled to take such action by vote or consent or
to revoke any vote or consent previously given, whether or not such persons
continue to be Holders after such record date.

 

Section 12.06  Rules by Trustee, Paying
Agent, Registrar and Conversion Agent.  The Trustee may make reasonable rules (not
inconsistent with the terms of this Indenture) for action by or at a meeting of
Holders.  Any Registrar, Paying Agent or Conversion
Agent may make reasonable rules for its functions.

 

Section 12.07  Legal Holidays.  A “Legal Holiday” is a
Saturday, Sunday or a day on which state or federally chartered banking
institutions in New York, New York are authorized or obligated to close.  If a payment date is a Legal Holiday, payment
shall be made on the next succeeding day that is not a Legal Holiday, and no
interest shall accrue for the intervening period.  If a Regular Record Date is a Legal Holiday,
the record date shall not be affected.

 

Section 12.08  Governing Law.  This Indenture and the
Securities shall be governed by, and construed in accordance with, the laws of
the State of New York.

 

Section 12.09  No Adverse Interpretation of Other
Agreements.  This
Indenture may not be used to interpret another indenture, loan or debt
agreement of the Company or a Subsidiary of the Company.  Any such indenture, loan or debt agreement
may not be used to interpret this Indenture.

 

Section 12.10  No Recourse Against Others.  All liability described in
paragraph 15 of the Securities of any director, officer, employee or
shareholder, as such, of the Company hereby is waived and released by each of
the Holders.

 

Section 12.11  No Security Interest Created.  Nothing in this Indenture
or in the Securities, express or implied, shall be construed to constitute a
security interest under the Uniform Commercial Code or similar legislation, now
in effect or hereafter enacted and made effective, in any jurisdiction.

 

Section 12.12  Successors.  All agreements of the
Company in this Indenture and the Securities shall bind its successor.  All agreements of the Trustee in this
Indenture shall bind its successor.

 

Section 12.13  Multiple Counterparts.  The parties may sign
multiple counterparts of this Indenture. 
Each signed counterpart shall be deemed an original, but all of them
together represent the same agreement.

 

Section 12.14  Separability.  If any provisions in this
Indenture or in the Securities shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.

 

66

 

Section 12.15  Table of Contents, Headings, Etc.  The table of contents,
cross-reference sheet and headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not to be
considered a part hereof, and shall in no way modify or restrict any of the
terms or provisions hereof.

 

[SIGNATURE
PAGE FOLLOWS]

 

67

 

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

 

	
   

  	
  COHERENT, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ John R. Ambroseo

  	
   

  
	
   

  	
   

  	
  Name: John R. Ambroseo

  	
   

  
	
   

  	
   

  	
  Title: President and Chief Executive Officer

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  U.S. BANK NATIONAL ASSOCIATION

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Brad E. Scarbrough

  	
   

  
	
   

  	
   

  	
  Name: Brad E. Scarbrough

  	
   

  
	
   

  	
   

  	
  Title: Vice President

  	
   

  

 

 

EXHIBIT A

 

[FORM OF FACE OF SECURITY]

 

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

 

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

 

BY ITS ACQUISITION
HEREOF, THE HOLDER AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY
PRIOR TO THE DATE THAT IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE
HEREOF AND THE LAST DATE ON WHICH COHERENT, INC. (THE “COMPANY”) OR ANY
AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF
SUCH SECURITY) (THE “RESALE RESTRICTION TERMINATION DATE”) ONLY (A) TO THE
COMPANY OR ANY SUBSIDIARY THEREOF, (B) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR
SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A
PERSON IT REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER AS DEFINED IN
RULE

 

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

 

(2)   These paragraphs to be included only if the
Security is a Restricted Security.

 

 

A-1

 

144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, OR (D) PURSUANT TO ANY
OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT, SUBJECT TO THE COMPANY’S AND THE TRUSTEE’S RIGHT PRIOR TO ANY SUCH OFFER,
SALE OR TRANSFER PURSUANT TO CLAUSE (D) PRIOR TO THE RESALE RESTRICTION
TERMINATION DATE TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATIONS AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND IN
EACH OF THE FOREGOING CASES, TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM APPEARING
ON THE OTHER SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR
TO THE TRUSTEE.  THIS LEGEND WILL BE
REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION
DATE.(2)

 

THE HOLDER OF THIS
SECURITY IS ENTITLED TO THE BENEFITS OF A REGISTRATION RIGHTS AGREEMENT (AS
SUCH TERM IS DEFINED IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF) AND,
BY ITS ACCEPTANCE HEREOF, AGREES TO BE BOUND BY AND TO COMPLY WITH THE
PROVISIONS OF SUCH REGISTRATION RIGHTS AGREEMENT.(2)

 

 

A-2

 

COHERENT, INC.

2.75% Convertible Subordinated Notes due 2011

 

	
   

  	
  No. [           ]

  	
   

  	
  CUSIP: [Insert]

  

 

Coherent, Inc., a
Delaware corporation, promises to pay to Cede & Co. or registered
assigns the principal amount of one hundred seventy five million dollars
($175,000,000) on March 1, 2011.

 

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

 

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

 

Dated:  March 13, 2006

 

SIGNATURE PAGE
FOLLOWS

 

A-3

 

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

 

 

	
   

  	
  COHERENT, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

Dated:  March 13, 2006

 

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

 

	
  U.S. BANK NATIONAL ASSOCIATION

  as Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Authorized Signatory

  	
   

  

 

A-4

 

[FORM OF REVERSE SIDE OF SECURITY)

 

COHERENT, INC.

CONVERTIBLE SUBORDINATED NOTES DUE 2011

 

1.                                       INTEREST

 

Coherent, Inc., a
Delaware corporation (the “Company”, which term shall include any successor
corporation under the Indenture hereinafter referred to), promises to pay
interest on the principal amount of this Security at the rate of 2.75% per
annum.  The Company shall pay interest
semiannually on March 1 and September 1 of each year (each, an “Interest
Payment Date”), commencing September 1, 2006.  Each payment of interest will include
interest accrued through the day before the relevant Interest Payment Date (or
purchase date).  Cash interest will be
computed on the basis of a 360-day year comprised of twelve 30-day months.  Any payment required to be made on a day that
is not a Business Day shall be made on the next succeeding Business Day.  Any reference herein to interest accrued or payable
as of any date shall include any Additional Interest accrued or payable on such
date as provided in the Registration Rights Agreement.

 

No sinking fund is
provided for the Securities.

 

2.                                       METHOD
OF PAYMENT

 

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

 

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

 

3.                                       PAYING
AGENT, REGISTRAR AND CONVERSION AGENT

 

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

 

4.                                       INDENTURE,
LIMITATIONS

 

This Security is one of a
duly authorized issue of Securities of the Company designated as its 2.75%
Convertible Subordinated Notes Due 2011 (the “Securities”), issued under an
Indenture dated as of

 

A-5

 

March 13, 2006 (together with any supplemental
indentures thereto, the “Indenture”), between the Company and the Trustee.  The terms of this Security include those
stated in the Indenture and those required by or made part of the Indenture by
reference to the Trust Indenture Act of 1939, as amended, as in effect on the
date of the Indenture.  This Security is
subject to all such terms, and the Holder of this security is referred to the
Indenture and said Act for a statement of them. 
Capitalized terms not otherwise defined herein have the meaning ascribed
to such terms in the Indenture.

 

The Securities are
unsecured, subordinated obligations of the Company limited to $175,000,000
aggregate principal amount ($200,000,000 aggregate principal amount if the
Initial Purchaser exercises its over-allotment option in full).  The Indenture does not limit other debt of
the Company, secured or unsecured.

 

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

 

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

 

6.                                       CONVERSION

 

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

 

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

 

•                  if
the Conversion Value is greater than $1,000, a number of shares of Common Stock
equal to the sum of the Daily Share Amounts, for each of the ten consecutive
Trading Days in the Conversion Reference Period, appropriately adjusted to
reflect stock splits, stock dividends, combinations or similar events occurring
during the Conversion Reference Period, subject to the Company’s right to
deliver cash in lieu of all or a portion of such shares as described in the
Indenture;

 

provided that in no event
shall the aggregate number of shares of Common Stock to be issued pursuant to
the foregoing clause, per $1,000 principal amount of Securities, exceed the
Aggregate Share Cap, as defined in the Indenture, without taking into account
any election by the Company to deliver cash in lieu of all or a portion of the
shares of Common Stock otherwise deliverable as set forth in the Indenture.

 

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

 

A-6

 

7.                                       SUBORDINATION

 

To the extent provided in
the Indenture, the Securities are subordinated to Senior Indebtedness, as
defined in the Indenture, of the Company. 
To the extent provided in the Indenture, Senior Indebtedness must be
paid in full before the Securities may be paid. 
The Company agrees, and each Securityholder by accepting a Security
agrees, to the subordination provisions contained in the Indenture and
authorizes the Trustee to give it effect and appoints the Trustee as attorney-in-fact
for such purpose.

 

8.                                       DENOMINATIONS,
TRANSFER, EXCHANGE

 

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

 

9.                                       PERSONS
DEEMED OWNERS

 

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

 

10.                                 UNCLAIMED
MONEY

 

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

 

11.                                 AMENDMENT,
SUPPLEMENT AND WAIVER

 

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

 

12.                                 SUCCESSOR
ENTITY

 

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

 

13.                                 DEFAULTS
AND REMEDIES

 

Under the Indenture, an
Event of Default shall occur if:

 

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

 

A-7

 

Maturity Date, upon repurchase, acceleration
or otherwise and regardless of whether such payment is permitted pursuant to
the subordination provisions under Article 11 of the Indenture; or

 

(2)           the Company shall fail to pay an
installment of cash interest or Additional Interest, if any, on any of the
Securities, which failure continues for 30 days after the date when due,
regardless of whether such payment is permitted pursuant to the subordination
provisions under Article 11 of the Indenture; or

 

(3)           the Company shall fail to deliver
when due all cash and shares of Common Stock, if any, deliverable upon
conversion of the Securities, which failure continues for 15 days, regardless
of whether such payment is permitted pursuant to the subordination provisions
under Article 11 of the Indenture; or

 

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

 

(5)           default in the payment of principal
by the end of any applicable grace period or resulting in acceleration of other
Indebtedness of the Company for borrowed money where the aggregate principal
amount with respect to which the default or acceleration has occurred exceeds
$25 million and such acceleration has not been rescinded or annulled or such
Indebtedness repaid within a period of 30 days after receipt of a Notice of
Default, provided that if any such default is cured, waived, rescinded or
annulled, then the Event of Default by reason thereof would be deemed not to
have occurred; or

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

A-8

 

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

 

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

 

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

 

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

 

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

 

Notwithstanding the
above, no Event of Default under clauses (4) or (5) above shall occur
until the Trustee notifies the Company in writing, or the Holders of at least
25% in aggregate principal amount of the Securities then outstanding notify the
Company and the Trustee in writing, of the Default (a “Notice of Default”), and
the Company does not cure the Default within the time specified in clause (4) or
(5), as applicable, after receipt of such notice.

 

If an Event of Default
(other than an Event of Default specified in clause (6) or (7) above)
occurs and is continuing with respect to the Company, the Trustee may, by
notice to the Company, or the Holders of at least 25% in aggregate principal
amount of the Securities then outstanding may, by notice to the Company and the
Trustee, declare the principal amount and accrued and unpaid interest, if any,
and accrued and unpaid Additional Interest, if any, through the date of
declaration on all the Securities to be immediately due and payable.  Upon such a declaration, such principal amount
and such accrued and unpaid interest, if any, and such accrued and unpaid
Additional Interest, if any, shall be due and payable immediately.  If an Event of Default specified in clauses (6) or
(7) above occurs in respect of the Company and is continuing, the
principal amount and accrued but unpaid interest, if any, and accrued and
unpaid Additional Interest, if any, on all the Securities shall become and be
immediately due and payable without any declaration or other act on the part of
the Trustee or any Holders of Securities. 
The Holders of a majority in aggregate principal amount of the
Securities then outstanding by notice to the Trustee may rescind an
acceleration and its consequences if (a) all existing Events of Default,
other than the nonpayment of the principal of the Securities which have become
due solely by such declaration of acceleration, have been cured or waived; (b) to
the extent the payment of such interest is lawful, interest (calculated at the
rate per annum borne by the Securities) on overdue installments of interest and
overdue principal, which has become due otherwise than by such declaration of
acceleration, has been paid; (c) the rescission would not conflict with
any judgment or decree of a court of competent jurisdiction; and (d) all
payments due to the Trustee and any predecessor Trustee under the Indenture
have been made.  No such rescission shall
affect any subsequent Default or impair any right consequent thereto.

 

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

 

A-9

 

certificates with the Trustee as to the Company’s
compliance with the Indenture and knowledge or status of any Default.

 

14.                                 TRUSTEE
DEALINGS WITH THE COMPANY

 

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

 

15.                                 NO
RECOURSE AGAINST OTHERS

 

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

 

16.                                 AUTHENTICATION

 

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

 

17.                                 ABBREVIATIONS
AND DEFINITIONS

 

Customary abbreviations
may be used in the name of the Holder or an assignee, such as: TEN COM (=
tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint
tenants with right of survivorship and not as tenants in common), CUST (=
Custodian) and UGMA (= Uniform Gifts to Minors Act).

 

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

 

18.                                 INDENTURE
TO CONTROL; GOVERNING LAW

 

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

 

The Company will furnish
to any Holder, upon written request and without charge, a copy of the
Indenture.  Requests may be made to:  Coherent, Inc., 5100 Patrick Henry
Drive, Santa Clara, California, 95054, Attention: General Counsel (408) 970-9998.

 

A-10

 

ASSIGNMENT FORM

 

	
  To assign this Security, fill in the form below:

  
	
   

  
	
  I or we assign and transfer this Security to

  
	
   

  
	
   

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

  
	
   

  
	
   

  
	
   

  
	
   

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

  
	
   

  
	
  and irrevocably appoint

  
	
   

  
	
   

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

  
	
   

  
	
   

  	
  Your Signature

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
   

  
	
   

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

  
	
   

  	
  Security)

  
	
   

  	
   

  
	
  * Signature guaranteed by:

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
						

 

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

 

A-11

 

CONVERSION NOTICE

 

	
   

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

  
	
   

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

  
	
   

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

  
	
   

  
	
   

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

  
	
   

  
	
   

  
	
   

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

  
	
   

  
	
   

  	
  Your Signature

  
	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

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

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  * Signature guaranteed by:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
						

 

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

 

A-12

 

FUNDAMENTAL CHANGE REPURCHASE NOTICE

 

To:  Coherent, Inc.

 

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

 

	
  Date:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Signature (s)

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Signature(s) must be guaranteed by a qualified
  guarantor institution with membership in an approved signature guarantee
  program pursuant to Rule

  
	
   

  	
   

  	
   

  	
  17Ad-15 under the Securities Exchange Act of 1934.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Signature Guaranty

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
   

  
					

 

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

 

A-13

 

SCHEDULE OF
EXCHANGES OF SECURITIES(1)

 

The following exchanges, purchase, redemptions, purchases or
conversions of a part of this Global Security have been made:

 

	
  Principal
  Amount of

  this Global Note

  Following Such

  Decrease Date of

  Exchange (or

  Increase)

  	
   

  	
  Authorized
  Signatory

  of Securities

  Custodian

  	
   

  	
  Amount
  of Decrease

  in Principal Amount

  of this Global Note

  	
   

  	
  Amount
  of Increase in

  Principal Amount of

  this Global Note

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

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

 

A-14

 

CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR
REGISTRATION

OF TRANSFER OF RESTRICTED SECURITIES

 

Re:          2.75% Convertible Subordinated Notes
Due 2011 (the “Securities”) of Coherent, Inc.

 

This certificate relates
to $            principal
amount of Securities owned in (check applicable box)
            book-entry
or              definitive
form by                                     (the
“Transferor”).

 

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

 

In connection with such
request and in respect of each such Security, the Transferor does hereby
certify that the Transferor is familiar with transfer restrictions relating to
the Securities as provided in Section 2.12 of the Indenture dated as of March 13,
2006 between Coherent, Inc. and U.S. Bank National Association, as trustee
(the “Indenture”), and the transfer of such Security is being made pursuant to
an effective registration statement under the Securities Act of 1933, as
amended (the “Securities Act”) (check applicable box), or the transfer or
exchange, as the case may be, of such Security does not require registration
under the Securities Act because (check applicable box):

 

	
   

  	
   

  	
   

  	
  Such Security is being
  transferred pursuant to an effective registration statement under the
  Securities Act.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

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

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

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

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

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

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

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

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

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

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

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

  

 

A-15

 

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

 

	
  Date:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (Insert Name of
  Transferor)

  
					

 

 

A-16Exhibit
10.17

 

EXECUTION
VERSION

 

Registration
Rights Agreement

 

Dated As of
March 13, 2006

 

between

 

Coherent, Inc.

 

and

 

Merrill
Lynch, Pierce, Fenner & Smith

Incorporated

 

 

REGISTRATION
RIGHTS AGREEMENT

 

This Registration Rights
Agreement is made and entered into this 13th day of March, 2006
between Coherent, Inc., a Delaware corporation (the “Company”) and
Merrill Lynch, Pierce, Fenner & Smith Incorporated (the “Initial
Purchaser”).

 

This Agreement is made
pursuant to the Purchase Agreement, dated as of March 7, 2006, between the
Company and the Initial Purchaser (the “Purchase Agreement”), which
provides for the sale by the Company to the Initial Purchaser of an aggregate
of $175,000,000 aggregate principal amount ($200,000,000 principal amount if
the Initial Purchaser exercises its overallotment option in full) of the
Company’s 2.75% Convertible Subordinated Notes due 2011 (the “Notes” and
together with the shares of common stock of the Company into which the Notes
are convertible, the “Securities”).  In order to induce the Initial Purchaser to
enter into the Purchase Agreement, the Company has agreed to provide the
registration rights set forth in this Agreement.  The execution of this Agreement is a
condition to the closing under the Purchase Agreement.

 

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

 

1.                                       Definitions.  

 

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

 

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

 

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

 

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

 

“Additional Interest”
shall have the meaning set forth in Section 2.4(d) herein.

 

“Agreement” shall
mean this Registration Rights Agreement as it may be amended, modified or
supplemented from time to time in accordance with the terms thereof.

 

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

 

“Common Stock” shall
mean any shares of common stock, $0.01 par value, of the Company and any other
shares of common stock as may constitute “Common Stock” for purposes of the
Indenture.

 

“Company” shall have
the meaning set forth in the preamble and shall also include the Company’s
successors.

 

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

 

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

 

“Holder” shall mean
the Initial Purchaser, for so long as it owns any Registrable Securities, and
each of its successors, assigns and direct and indirect transferees who become
owners, beneficial or otherwise, of Registrable Securities under the Indenture.

 

2

 

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

 

“Initial Purchaser”
shall have the meaning set forth in the preamble.

 

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

 

“Majority Holders”
shall mean the Holders of a majority of the aggregate principal amount of
outstanding Registrable Securities; provided,
that whenever the consent or approval of Holders of a specified percentage
of Registrable Securities is required hereunder, Registrable Securities held by
the Company or any Affiliate (as defined in the Indenture) of the Company shall
be disregarded in determining whether such consent or approval was given by the
Holders of such required percentage amount.

 

“Offering Memorandum”
means that certain offering memorandum dated March 7, 2006 relating to the
issuance of the Notes.

 

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

 

“Prospectus” shall
mean the prospectus included in a Shelf Registration Statement, including any
preliminary prospectus, and any such prospectus as amended or supplemented by
any prospectus supplement, including any such prospectus supplement with
respect to the terms of the offering of any portion of the Registrable
Securities covered by a Shelf Registration Statement, and by all other
amendments and supplements to a prospectus, including post-effective
amendments, and in each case including all materials incorporated by reference
therein.

 

“Purchase Agreement”
shall have the meaning set forth in the preamble.

 

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

 

“Registrable Securities”
shall mean all or any of the Securities issued from time to time under the
Indenture in registered form, and the shares of Common Stock issuable upon
conversion of such Securities; provided,
however, that any such Securities shall cease to be Registrable
Securities upon the earliest to occur of (i) a Shelf Registration
Statement with respect to such Securities shall have been declared effective under
the 1933 Act and such Securities shall have been disposed of pursuant to such
Shelf Registration Statement, (ii) such Securities have been sold to the
public pursuant to Rule 144 or may be sold or transferred pursuant to Rule l44(k)
(or any similar provision then in force, but not Rule 144A) under the 1933
Act, or (iii) such Securities shall have ceased to be outstanding.

 

“Registration Expenses”
shall mean any and all expenses incident to performance of or compliance by the
Company with this Agreement, including without limitation: (i) all SEC,
stock exchange or National Association of Securities Dealers, Inc.  (the “NASD”) registration and filing fees,
including, if applicable, the fees and expenses of any “qualified independent
underwriter” (and its counsel) that is required to be retained by any holder of
Registrable Securities in accordance with the rules and regulations of the
NASD, (ii) all fees and expenses incurred in connection with compliance
with state securities or blue sky laws and compliance with the rules of
the NASD (including reasonable fees and disbursements of a single counsel for
any underwriters in connection with blue sky qualification of any of the
Registrable Securities and any filings with the NASD), (iii) all expenses
of the Company in 

 

3

 

preparing or assisting in
preparing, word processing, printing and distributing any Shelf Registration
Statement, any Prospectus, any amendments or supplements thereto, any
securities sales agreements and other documents relating to the performance of
and compliance with this Agreement, (iv) all fees and expenses incurred in
connection with the listing, if any, of any of the Registrable Securities on
any securities exchange or exchanges, (v) all rating agency fees, if any, (vi) the
fees and disbursements of counsel for the Company and of the independent public
accountants of the Company, including the expenses of any special audits or “comfort”
letters required by or incident to such performance and compliance, (vii) the
reasonable fees and expenses of the Trustee, and any escrow agent or custodian,
(viii) the reasonable fees and expenses of a single counsel to the Holders
in connection with the Shelf Registration Statement, which counsel shall be selected
by the Majority Holders, and (ix) any fees and expenses of any special
experts retained by the Company in connection with any Shelf Registration
Statement, but excluding any underwriting discounts and commissions and
transfer taxes, if any, relating to the sale or disposition of Registrable
Securities by a Holder.

 

“Rule 430B
Information” means any information included in a Prospectus that was
omitted from the Shelf Registration Statement at the time it became effective
but that is deemed to be part of and included in such Shelf Registration
Statement pursuant to Rule 430B under the 1933 Act.

 

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

 

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

 

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

 

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

 

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

 

2.                                       Registration
Under the 1933 Act.  

 

2.1.                              Shelf
Registration.

 

(a)  The Company shall, at its
cost, no later than 120 days after the Closing Date, file with the SEC,
and thereafter shall use its commercially reasonable efforts to cause to be
declared effective as promptly as practicable but no later than 210 days after
the Closing Date, a Shelf Registration Statement relating to the offer and sale
of the Registrable Securities by the Holders that have provided the information
pursuant to Section 2.1(d) provided, however, that in the event the Company is eligible for, and
elects to file, an automatic Shelf Registration Statement, the only obligation
of the Company under this Section 2.1(a) shall be to file (and have
become automatically effective) a Shelf Registration Statement with the SEC no
later than 150 days after the Closing Date.

 

4

 

(b)  The Company shall, at its
cost, use its commercially reasonable efforts, subject to Section 2.5, to
keep the Shelf Registration Statement continuously effective in order to permit
the Prospectus forming part thereof to be usable by Holders for a period of two
years from the Closing Date,
or for such shorter period that will terminate when all Registrable Securities
covered by the Shelf Registration Statement have been sold pursuant to the
Shelf Registration Statement, when the Holders, other than Affiliates (as
defined in the Indenture) of the Company, are able to sell or transfer to the
public all Registrable Securities immediately without restriction pursuant to Rule 144
(or any similar provision then in force, including Rule 144(k) but not Rule 144A)
under the 1933 Act or when all Registrable Securities cease to be outstanding
or otherwise to be Registrable Securities (the “Effectiveness Period”).

 

(c)  Notwithstanding any other provisions
hereof, the Company shall use its commercially reasonable efforts to ensure
that (i) any Shelf Registration Statement and any amendment thereto and
any Prospectus forming part thereof and any supplement thereto complies in all
material respects with the 1933 Act and the rules and regulations
thereunder, (ii) any Shelf Registration Statement and any amendment
thereto does not, when it becomes effective, contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading and (iii) any
Prospectus forming part of any Shelf Registration Statement, and any supplement
to such Prospectus (as amended or supplemented from time to time), does not
include an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.

 

(d)  Notwithstanding any other provision hereof,
no Holder of Registrable Securities may include any of its Registrable
Securities in the Shelf Registration Statement pursuant to this Agreement
unless the Holder furnishes to the Company a fully completed notice and
questionnaire in the form attached as Annex A to the Offering Memorandum (the “Questionnaire”)
and such other information in writing as the Company may reasonably request in
writing for use in connection with the Shelf Registration Statement or
Prospectus included therein and in any application to be filed with or under
state securities laws.  In order to be
named as a selling securityholder in the Prospectus at the time of
effectiveness of the Shelf Registration Statement (other than an automatic
Shelf Registration Statement), each Holder must, before the effectiveness of
the Shelf Registration Statement and no later than the 20th day after the
issuance of a press release by the Company announcing the initial filing of the
Shelf Registration Statement, furnish the completed Questionnaire and such
other information that the Company may reasonably request in writing (it being
understood, without limitation, that any requests by the Company made at the
behest or request of the SEC shall be deemed to meet this standard), if any, to
the Company in writing and the Company will include the information from the
completed Questionnaire and such other information, if any, in the Shelf
Registration Statement and the Prospectus in a manner so that upon
effectiveness of the Shelf Registration Statement the Holder will be permitted
to deliver the Prospectus to purchasers of the Holder’s Registrable
Securities.  In the case of an automatic
Shelf Registration Statement, the Company will issue a press release soliciting
completed Questionnaires in advance of the filing and effectiveness of the
registration statement, or promptly after the filing and effectiveness of the
registration statement, so long as Holders have at least 20 days following the
issuance of such press release to furnish their written Questionnaires to the
Company.  From and after the date that
the Shelf Registration Statement becomes effective or is first declared
effective by the SEC, upon receipt of a completed Questionnaire and such other
information that the Company may reasonably request in writing, if any, the
Company will use its commercially reasonable efforts to file within 20 business
days any amendments or supplements to the Shelf Registration Statement
necessary for such Holder to be named as a selling securityholder in the
Prospectus contained therein to permit such Holder to 

 

5

 

deliver the
Prospectus to purchasers of the Holder’s Securities (subject to the Company’s
right to suspend the Shelf Registration Statement as described in Section 2.5
below); provided, however, that the Shelf Registration Statement shall include
the disclosure required by Rule 430B under the 1933 Act in order to enable
the Company to add selling securityholders on to the Shelf Registration
Statement pursuant to the filing of prospectus supplements.  The Company shall not be required to file
more than one such amendment to the Shelf Registration Statement in any
calendar quarter for all such Holders.  Holders
that do not deliver a completed written Questionnaire and such other information,
as provided for in this Section 2.1(d), will not be named as selling
securityholders in the Prospectus.  Each
Holder named as a selling securityholder in the Prospectus agrees to promptly
furnish to the Company all information required to be disclosed in order to
make information previously furnished to the Company by the Holder not
materially misleading and any other information regarding such Holder and the
distribution of such Holder’s Registrable Securities as the Company may from
time to time reasonably request in writing.

 

(e)  Each Holder agrees not to
sell any Registrable Securities pursuant to the Shelf Registration Statement
without delivering, or causing to be delivered, a Prospectus to the purchaser
thereof and, following termination of the Effectiveness Period, to notify the
Company, within ten days of a written request by the Company, of the amount of
Registrable Securities sold pursuant to the Shelf Registration Statement and,
in the absence of a response, the Company may assume that all of such Holder’s
Registrable Securities have been so sold; provided,
that the Company shall use reasonable efforts to confirm that all of
such Holder’s Registrable Securities have been so sold prior to making such
assumption.

 

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

 

The Company shall not permit
any securities other than Registrable Securities to be included in the Shelf
Registration Statement.

 

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

 

6

 

2.3.                              Effectiveness.

 

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

 

(b)  A Shelf Registration
Statement pursuant to Section 2.1 hereof will not be deemed to have become
effective unless it has been declared effective by the SEC or has become
automatically effective under the 1933 Act pursuant to Rule 462(e) thereunder;
provided, however, that if, after
it has been declared effective, the offering of Registrable Securities pursuant
to a Shelf Registration Statement is interfered with by any stop order,
injunction or other order or requirement of the SEC or any other governmental
agency or court, such Shelf Registration Statement will be deemed not to have
become effective during the period of such interference, until the offering of
Registrable Securities pursuant to such Shelf Registration Statement may
legally resume.

 

2.4.                              Interest.  In the event that (a) a
Shelf Registration Statement is not filed with the SEC, in violation of Section 2.1(a),
(b) a Shelf Registration Statement is not declared effective or does not
become effective, in violation of Section 2.1(a), (c) after
effectiveness, subject to Section 2.5, the Shelf Registration Statement
fails to be effective or usable by the Holders without being succeeded within
seven business days by a post-effective amendment or a report filed with the
SEC pursuant to the 1934 Act that cures the failure to be effective or usable,
or (d) the Shelf Registration Statement is unusable by the Holders for any
reason, and the number of days for which the Shelf Registration Statement shall
not be usable exceeds the Suspension Period (as defined in Section 2.5
hereof) (each such event being a “Registration Default”), additional
interest (“Additional Interest”), will accrue at a rate per annum of
one-quarter of one percent (0.25%) of the principal amount of the Securities
for the first 90-day period from the day following the Registration Default,
and thereafter at a rate per annum of one-half of one percent (0.50%) of the
principal amount of the Securities; provided
that, in no event shall Additional Interest accrue at a rate per
annum exceeding one half of one percent (0.50%) of the principal amount of the
Securities;  provided
further that no Additional Interest
shall accrue after the second anniversary of the date of this Agreement.  Upon the cure of all Registration Defaults
then continuing, the accrual of Additional Interest will automatically cease
and the interest rate borne by the Securities will revert to the original
interest rate at such time.  Additional
Interest shall be computed based on the actual number of days elapsed in each 90-day
period in which the
Shelf Registration Statement is not effective or is unusable.  Holders who have converted Securities into
Common Stock will not be entitled to receive any Additional Interest with
respect to such Common Stock or the issue price of the Securities converted.

 

The Company shall notify the
Trustee within five business days after each and every date on which an event
occurs in respect of which Additional Interest is required to be paid.  Additional Interest shall be paid by
depositing with the Trustee, in trust, for the benefit of the Holders of
Registrable Securities, on or before the applicable semiannual interest payment
date, in immediately available funds in sums sufficient to pay the Additional
Interest then due.  The Additional
Interest due shall be payable in arrears on each interest payment date to the
record Holder of Registrable Securities entitled to receive the 

 

7

 

interest payment to be paid on
such date as set forth in the Indenture. 
Each obligation to pay Additional Interest shall be deemed to accrue
from and including the day following the Registration Default to but excluding
the day on which the Registration Default is cured.

 

A Registration Default under
clause (a) above shall be cured on the date that the Registration
Statement is filed with the SEC.  A
Registration Default under clause (b) above shall be cured on the date
that the Shelf Registration Statement is declared effective by the SEC or
deemed to become automatically effective under the 1933 Act pursuant to Rule 462(e) thereunder.  A Registration Default under clauses (c) or
(d) above shall be cured on the date an amended Shelf Registration
Statement is declared effective by the SEC or deemed to become automatically
effective under the 1933 Act pursuant to Rule 462(e) thereunder or
the Company otherwise declares the Shelf Registration Statement and the
Prospectus useable, as applicable.  The
Company will have no liabilities for monetary damages other than the Additional
Interest with respect to any Registration Default.

 

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

 

3.                                       Registration
Procedures.  

 

In connection with the
obligations of the Company with respect to the Shelf Registration, the Company
shall:

 

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

 

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

 

8

 

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

 

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

 

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

 

(e)  notify promptly each Holder
of Registrable Securities under a Shelf Registration that has provided the
information required by Section 2.1(d) and, if requested by such
Holder, confirm such advice in writing promptly (i) when a Shelf
Registration Statement has become effective and when any post-effective
amendments (other than supplements that do nothing more than name Holders and
provide information with respect thereto or that are required to be filed by
the Company under the 1934 Act) thereto become effective, (ii) of any
request by the SEC or any state securities authority for post-effective
amendments and supplements to a Shelf Registration Statement and Prospectus or
for additional information after the Shelf Registration Statement has become
effective, (iii) of the issuance by the SEC or any state securities
authority of any stop order suspending the effectiveness of a Shelf
Registration Statement or the initiation of any proceedings for that purpose, (iv) of
the happening of any event or the discovery of any facts during the period a
Shelf Registration Statement is effective which makes any statement made in
such Shelf Registration Statement or the related Prospectus untrue in any
material respect or which requires the making of any changes in such Shelf
Registration Statement or Prospectus in order to make the statements therein
not misleading, (v) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Registrable Securities
for sale in any jurisdiction or the initiation or threatening of any proceeding
for such purpose and (vi) of any determination by the Company that a
post-effective amendment (other than supplements that do nothing more than name
Holders and provide information with respect thereto or that are required to be
filed by the Company under the 1934 Act) to such Shelf Registration Statement
would be appropriate;

 

9

 

(f)  furnish to the Initial
Purchaser on behalf of the Holders and to special counsel to the Initial
Purchaser (i) copies of any comment letters received from the SEC with
respect to a Shelf Registration Statement or, after the initial filing of a
Shelf Registration Statement and prior to its effectiveness, any documents incorporated
therein and (ii) any other request by the SEC or any state securities
authority for amendments or supplements to a Shelf Registration Statement and
Prospectus or for additional information with respect to the Shelf Registration
Statement and Prospectus;

 

(g)  use commercially reasonable
efforts to obtain the withdrawal of any order suspending the effectiveness of a
Shelf Registration Statement as soon as practicable;

 

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

 

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

 

(j)  upon the occurrence of any
event or the discovery of any facts, each as contemplated by
Sections 3(e)(ii), (iii), (iv), (v) and (vi) hereof, as promptly
as practicable after the occurrence of such an event, use commercially
reasonable efforts to prepare a supplement or post-effective amendment to the
Shelf Registration Statement or the related Prospectus or any document
incorporated therein by reference or file any other required document so that,
as thereafter delivered to the purchasers of the Registrable Securities, such
Prospectus will not contain at the time of such delivery any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading or will remain so qualified. 
At such time as such public disclosure is otherwise made or the Company
determines that such disclosure is not necessary, in each case to correct any
misstatement of a material fact or to include any omitted material fact, the
Company agrees promptly to notify each Holder that has provided the information
required by Section 2.1(d) of such determination and to furnish each
Holder such number of copies of the Prospectus as amended or supplemented, as
such Holder may reasonably request;

 

(k)  no less than three business
days prior to the filing of any Shelf Registration Statement, any Prospectus,
any amendment to a Shelf Registration Statement or amendment or supplement to a
Prospectus (other than amendments and supplements that do nothing more than
name Holders and provide information with respect thereto or that are required
to be filed by the Company under the 1934 Act), provide copies of such document
to the Initial Purchaser on behalf of such Holders, and make representatives of the Company,
as shall be reasonably requested by the Holders of Registrable Securities or
the Initial Purchaser on behalf of such Holders, available for discussion of
such document;

 

(l)  provide the Trustee with
printed certificates for the Registrable Securities in a form eligible for
deposit with the Depositary;

 

10

 

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

 

(n)  enter into such customary
agreements and take all other customary and appropriate actions in order to
expedite or facilitate the disposition of such Registrable Securities,
including, but not limited to:

 

(i)            obtain
opinions of counsel to the Company and updates thereof addressed to each
selling Holder and the underwriters, if any, covering the matters set forth in
the opinion of such counsel delivered at the Closing Date;

 

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

 

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

 

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

 

The above shall be done only in connection with any
underwritten offering of Registrable Securities using such Shelf Registration
Statement pursuant to an underwriting or similar agreement as and to the extent
required thereunder, and as reasonably requested by any of the parties thereto;
provided, however, that in no event will an
underwritten offering of Registrable Securities be made without the prior
written agreement of the Company;

 

(o)  if reasonably requested in
connection with a disposition of Registrable Securities, make available for
inspection during business hours by representatives of the Holders of the
Registrable Securities, any underwriters participating in any disposition
pursuant to a Shelf Registration Statement and any counsel or accountant
retained by any of the foregoing, all financial and other records, pertinent
corporate documents and properties of the Company reasonably requested by any
such persons, and cause the respective officers, directors, employees, 

 

11

 

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

 

The above
shall be done only in connection with any underwritten offering of Registrable
Securities using such Shelf Registration Statement pursuant to an underwriting
or similar agreement as and to the extent required thereunder, and as
reasonably requested by any of the parties thereto; provided, however,
that in no event will an underwritten offering of Registrable Securities be
made without the prior written agreement of the Company;

 

(p)  at reasonable time prior to
filing the Shelf Registration Statement, any Prospectus forming a part thereof,
any amendment to the Shelf Registration Statement or amendment or supplement to
such Prospectus (other than amendments and supplements that do nothing more
than name Holders and provide information with respect thereto), furnish to the
Initial Purchaser and one special counsel to the Initial Purchaser copies of
all such documents proposed to be filed and use its commercially reasonable
efforts to reflect in each such document when so filed with the SEC such
comments as the Initial Purchaser and such special counsel to the Initial
Purchaser reasonably shall propose within three (3) Business Days of the
delivery of such copies to the Initial Purchaser and counsel to the Initial
Purchaser.  In addition, if any Holder
that has provided the information required by Section 2.1(d) shall so
request in writing, a reasonable time prior to filing any such documents, the
Company shall furnish to such Holder copies of all such documents proposed to
be filed and use its reasonable efforts to reflect in each such document when
so filed with the SEC such comments as such Holder reasonably shall propose
within three (3) Business Days of the delivery of such copies to such
Holder;

 

(q)  if requested by any selling
Holder or the underwriters, if any, incorporate in the Shelf Registration
Statement or Prospectus, pursuant to a supplement or post-effective amendment
if necessary, such information as such selling Holder or underwriter, if any,
may reasonably request to have included therein with respect to the name or
names of such selling Holder, the number of shares of Common Stock or principal
amount of Notes owned by such Holder, the plan of distribution of the
Registrable Securities (as required by Item 508 of Regulation S-K), the 

 

12

 

principal
amount of Notes or number of shares of Common Stock being sold, the purchase
price being paid therefor, and any other terms of the offering of the
Registrable Securities to be sold in such offering;

 

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

 

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

 

(t)  use its commercially
reasonable efforts to cooperate and assist in any filings required to be made
with the NASD by any underwriter and its counsel (including any “qualified independent
underwriter” that is required to be retained in accordance with the rules and
regulations of the NASD).

 

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

 

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

 

In the event that a
Registration Default occurs and is continuing under Section 2.4(a) hereof,
the Company shall not file any Registration Statement with respect to any
securities (within the meaning of Section 2(l) of the 1933 Act) of the
Company other than Registrable Securities. 
In addition, in the event that a Registration Default occurs and is
continuing under Section 2.4(b), (c) or (d) hereof, subject to
other contractual obligations of the Company to third parties, the Company will
not take any action (including requesting acceleration of effectiveness) which
would cause another registration statement with respect to any other securities
(within the meaning of Section 2(l) of the 1933 Act) of the Company to
become or be declared effective.

 

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

 

13

 

attorney, indemnities,
underwriting agreements and other documents required under the terms of such
underwriting arrangements.

 

4.                                       Indemnification;
Contribution.  

 

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

 

(i)            against
any and all loss, liability, claim, damage and expense whatsoever, as incurred,
arising out of any untrue statement or alleged untrue statement of a material
fact contained in any Shelf Registration Statement (or any amendment or
supplement thereto), including the Rule 430B information, pursuant to
which Registrable Securities were registered under the 1933 Act, including all
documents incorporated therein by reference, or the omission or alleged
omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading, or arising out of any
untrue statement or alleged untrue statement of a material fact contained in
any Prospectus (or any amendment or supplement thereto) or any Issuer Free
Writing Prospectus (or any amendment or supplement thereto) or the omission or
alleged omission therefrom of a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading;

 

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

 

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

 

provided, however, that this indemnity agreement shall not apply to
any loss, liability, claim, damage or expense to the extent arising out of any
untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of any Holder or Underwriter expressly for use in a
Shelf Registration Statement (or any amendment thereto), including the Rule 430B
information, any Prospectus (or any amendment or supplement thereto) or any
Issuer Free Writing Prospectus (or any amendment or supplement thereto).

 

(b)  Each Holder, severally, but
not jointly, agrees to indemnify and hold harmless the Company, the Initial
Purchaser, each Underwriter and the other selling Holders, and each of their
respective directors and officers, and each Person, if any, who controls the
Company, the Initial 

 

14

 

Purchaser, any
Underwriter or any other selling Holder within the meaning of Section 15
of the 1933 Act or Section 20 of the 1934 Act, against any and all loss,
liability, claim, damage and expense described in the indemnity contained in Section 4(a) hereof,
as incurred (including the fees and disbursements of counsel chosen by the
Company), but only with respect to untrue statements or omissions, or alleged
untrue statements or omissions, made in the Shelf Registration Statement (or
any amendment thereto), including the Rule 430B Information,  or any Prospectus included therein (or any
amendment or supplement thereto) or any Issuer Free Writing Prospectus in
reliance upon and in conformity with written information with respect to such
Holder furnished to the Company by or on behalf of such Holder expressly for
use in the Shelf Registration Statement (or any amendment thereto) or such
Prospectus (or any amendment or supplement thereto) or any Issuer Free Writing
Prospectus; provided, however,
that no such Holder shall be liable for any claims hereunder in excess of the
amount of net proceeds received by such Holder from the sale of Registrable
Securities pursuant to such Shelf Registration Statement.

 

(c)  Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action or proceeding commenced against it in respect of which indemnity may
be sought hereunder, but failure to so notify an indemnifying party shall not
relieve such indemnifying party from any liability hereunder to the extent it
is not materially prejudiced as a result thereof and in any event shall not
relieve it from any liability which it may have otherwise than on account of
this indemnity agreement.  An
indemnifying party may participate at its own expense in the defense of such
action; provided, however, that
counsel to the indemnifying party shall not (except with the consent of the
indemnified party) also be counsel to the indemnified party.  In no event shall the indemnifying party or
parties be liable for the fees and expenses of more than one counsel (in
addition to any local counsel) separate from their own counsel for all
indemnified parties in connection with any one action or separate but similar
or related actions in the same jurisdiction arising out of the same general
allegations or circumstances.  No
indemnifying party shall, without the prior written consent of the indemnified
parties, settle or compromise or consent to the entry of any judgment with
respect to any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever
in respect of which indemnification or contribution could be sought under this Section 4
(whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not include a
statement as to or an admission of fault, culpability or a failure to act by or
on behalf of any indemnified party.

 

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

 

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

 

15

 

the Company on
the one hand and the Holders and the Initial Purchaser on the other hand in
connection with the statements or omissions which resulted in such losses,
liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations.

 

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

 

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

 

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

 

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

 

For purposes of this Section 4,
each Person, if any, who controls the Initial Purchaser or Holder within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act
shall have the same rights to contribution as such Initial Purchaser or Holder,
and each director of the Company, and each Person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act or Section 20
of the 1934 Act shall have the same rights to contribution as the Company.

 

5.                                       Miscellaneous.

 

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

 

5.2.                              Adjustments
Affecting Registrable Securities.  The Company shall not, directly or
indirectly, intentionally take any action with respect to the Registrable
Securities as a class that would adversely affect the ability of the Holders of
Registrable Securities to include such Registrable Securities in a registration
undertaken pursuant to this Agreement.

 

16

 

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

 

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

 

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

 

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

 

5.5.                              Successor and
Assigns.  This Agreement shall inure to
the benefit of and be binding upon the successors, assigns and transferees of
each of the parties, including, without limitation and without the need for an
express assignment, subsequent Holders; provided
that, nothing herein shall be deemed to permit any assignment,
transfer or other disposition of Registrable Securities in violation of the
terms of the Purchase Agreement or the Indenture.  If any transferee of any Holder shall acquire
Registrable Securities, in any manner, whether by operation of law or
otherwise, such Registrable Securities shall be held subject to all of the
terms of this Agreement, and by taking and holding such Registrable Securities
such person shall be conclusively deemed to have agreed to be bound by and to
perform all of the terms and provisions of this Agreement, including the
restrictions on resale set forth in this Agreement and, if applicable, the
Purchase Agreement, and such person shall be entitled to receive the benefits
hereof.  The Initial Purchaser (in
its capacity as Initial Purchaser) shall have no liability or obligation to the
Company with respect to any failure by a Holder, other than such Initial
Purchaser, to comply with, or breach by any Holder, other than such Initial
Purchaser, of, any of the obligations of such Holder under this Agreement.

 

17

 

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

 

5.7.                              Specific
Enforcement.  Without
limiting the remedies available to the Initial Purchaser and the Holders, the
Company acknowledges that any failure by the Company to comply with its
obligations under Section 2.1 hereof may result in material irreparable
injury to the Initial Purchaser or the Holders for which there is no adequate
remedy at law, that it may not be possible to measure damages for such injuries
precisely and that, in the event of any such failure, the Initial Purchaser or
any Holder may seek such relief as may be required to specifically enforce the
Company’s obligations under Sections 2.1 hereof.

 

5.8.                              Restriction on
Resales.  Until the expiration of two
years after the original issuance of the Securities, the Company will not, and
will cause its controlled Affiliates not to, resell any Securities that are “restricted
securities” (as such term is defined under Rule 144(a)(3) under the
1933 Act) that have been reacquired by any of them and shall immediately upon
any purchase of any such Securities submit such Securities to the Trustee for
cancellation.

 

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

 

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

 

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

 

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

 

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

 

18

 

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

 

 

	
   

  	
  Coherent, Inc.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John R. Ambroseo

  	
   

  
	
   

  	
  Name:
  John R. Ambroseo

  
	
   

  	
  Title:
    President and Chief

    Executive Officer

  

 

 

Confirmed and accepted

as of the date first above written:

 

MERRILL LYNCH, PIERCE, FENNER & SMITH

INCORPORATED

 

	
  By:

  	
  /s/ Stephen Miller

  	
   

  
	
  Name:
  Stephen Miller

  
	
  Title:
  Managing Director

  

 

19

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