Document:

Exhibit 4.1

 

FIRST SUPPLEMENTAL INDENTURE

 

This FIRST

SUPPLEMENTAL INDENTURE (this “Supplemental Indenture”), dated as of

March 5, 2003, between Penn Treaty American Corporation (the “Company”)

and Wells Fargo Bank Minnesota, N.A., as trustee under the Indenture referred

to below (the “Trustee”).

 

WITNESSETH

 

WHEREAS, the

Company has heretofore executed and delivered to the Trustee an indenture,

dated as of October 25, 2002 (the “Indenture”), providing for the issuance of

up to $74,750,000 of 6 1/4% Convertible Subordinated Notes due 2008 (the

“Notes”);

 

WHEREAS, the

Indenture provides that under certain circumstances the Company may lower the

Conversion Price and the Company and the Trustee may enter into indentures

supplemental to the Indenture to add provisions that are considered by the

Board of Directors of the Company and the Trustee to be for the benefit of the

holders of the Notes.

 

NOW THEREFORE,

in consideration of the foregoing and for other good and valuable

consideration, the receipt of which is hereby acknowledged, the Company and the

Trustee mutually covenant and agree for the equal and ratable benefit of the

holders of the Notes as follows:

 

1.                                       DEFINITIONS.  Capitalized terms used herein without

definition shall have the meanings assigned to them in the Indenture.

 

2.                                       REDEMPTION.  Section 3.1 is hereby amended and restated

in its entirety to read as follows:

 

“Section 3.1           REDEMPTION PRICES.  The Notes are not redeemable at the option

of the Company prior to October 15, 2005. 

At any time on or after that date, the Notes may be redeemed at the

Company’s option, upon notice as set forth in Section 3.2, in whole at any time

or in part from time to time, at the redemption price of 100% of principal

amount of Notes plus accrued and unpaid interest.”

 

3.                                       FORCED

REDEMPTION.  Existing Section 14.1(b) is

now 14.1(c), existing Section 14.1(c) is now 14.1(d) and a new Section 14.1(b)

is added to read in full as follows:

 

“(b)         In the event that the Company does not

amend its Articles of Incorporation on or before May 27, 2003 to increase the

number of authorized shares of Common Stock to an amount sufficient to cover

the conversion of the Notes and the existing notes due in 2008, the Company

will, at the request of any Noteholder providing notice to the Company in a

manner consistent with Section 16.4, purchase such Noteholder’s Notes in cash

at a price equal to 125% of the principal amount of such Noteholder Notes plus

accrued, but unpaid interest.  The right

of a Noteholder to request that the Company purchase such Noteholder’s Notes

pursuant to this Section 14.1(b) shall terminate upon the amendment of the

Company’s Articles of Incorporation to increase the number of authorized shares

 

 

of Common

Stock to an amount sufficient to cover the conversion of the Notes and the

existing notes due in 2008.”

 

4.                                       PREFERRED

INTEREST ON EARLY CONVERSION.  A new

Section 14.1(e) is added to read in full as follows:

 

“(e)         In the event that a Noteholder desires

to convert all or any portion of its Notes into shares of Common Stock prior to

October 15, 2005, the Company will pay such Noteholder an amount equal to the

interest that would have been otherwise earned on such Notes between the date

of such conversion and October 15, 2005 discounted to present value utilizing a

rate of 6.25% with simple interest over a 360 day year.  In the event that a Noteholder elects to

convert prior to October 15, 2005 and the Company is required to pay interest

pursuant to this Section 14.1(e), the Company may, in its sole discretion,

elect to make such interest payment in cash or in shares of Common Stock based

on 90% of the average Closing Prices of the Common Stock for the five Trading

Days immediately preceding the conversion date.  Prior to or concurrently with such payment, the Company will

provide the Trustee with an Officers’ Certificate setting forth the calculation

of the payment required by this Section 14.1(e).  The Trustee shall have no obligation or liability with respect to

the calculation of the payments required by this Section 14.1(e).”

 

5.                                       MANDATORY

CONVERSION.  Section 14.3 is hereby

amended and restated in its entirety to read as follows:

 

“Section 14.3         MANDATORY CONVERSION.   The Notes shall be automatically converted

into Common Stock on the first date (the “Mandatory Conversion Date”) on or

after the 15th Trading Day following October 15, 2005, on which: (i) the

average of the Closing Price (as defined in Section 14.6(g)) of the Common

Stock on 15 consecutive preceding Trading Days is equal to or greater than 110%

of the Conversion Price and (ii) the Company has sufficient shares of Common

Stock (or other securities into which the Notes are then convertible)

authorized to execute the Mandatory Conversion (as defined below).  The Notes shall be converted into that

number of fully paid and nonassessable shares of Common Stock (or other

securities into which the Notes are then convertible) obtained by dividing the

aggregate principal amount of the Notes by the Conversion Price in effect at

such time rounded to the nearest 1/100,000th of a share (with

0.000005 being rolled upward) (the “Mandatory Conversion”).”

 

6.                                       CONVERSION

PRICE.  Section 14.5 is hereby amended

and restated in its entirety to read as follows:

 

“Section 14.5         CONVERSION PRICE.  The conversion price of the Notes (the

“Conversion Price”) shall be $1.75 per share of Common Stock, subject to

adjustment as provided in this Article XIV.”

 

2

 

7.                                       CONFIRMATION

OF INDENTURE.  The Indenture and this

Supplemental Indenture shall be read, taken and construed as one and the same

instrument.  Except as amended and

restated hereby, the provisions of the Indenture shall remain in full force and

effect.

 

8.                                       GOVERNING

LAW.  This Supplemental Indenture shall

be deemed to be a contract made under the substantive laws of New York and for

all purposes shall be construed in accordance with the substantive laws of New

York without regard to conflicts of laws principles thereof.

 

9.                                       COUNTERPARTS.  The parties may sign any number of copies of

this Supplemental Indenture.  Each

signed copy shall be an original, but all of them together represent the same

agreement.

 

10.                                 EFFECT

OF HEADINGS.  The Section headings

herein are for convenience only and shall not affect the construction hereof.

 

11.                                 THE

TRUSTEE.  The Trustee shall not be

responsible in any manner whatsoever for or in respect of the validity or

sufficiency of this Supplemental Indenture or for or in respect of the recitals

contained herein, all of which recitals are made solely by the Company.

 

[remainder of page intentionally left blank]

 

3

 

IN WITNESS

WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly

executed and attested, all as of the date first above written.

 

Dated: May 12, 2003

 

	

   

  	

   

  	

  PENN TREATY AMERICAN CORPORATION

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

  By:

  	

  /s/ Cameron B. Waite

  	

   

  
	

   

  	

   

  	

  Name:

  	

  Cameron B. Waite

  
	

   

  	

   

  	

  Title:

  	

  EVP and CFO

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

  WELLS FARGO BANK

  MINNESOTA, N.A.

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

  By:

  	

  /s/ Michael G. Slade

  	

   

  
	

   

  	

   

  	

  Name:

  	

  Michael G. Slade

  
	

   

  	

   

  	

  Title:

  	

  Corporate Trust Officer

  

 

4Exhibit 4.2

 

 

PENN TREATY AMERICAN CORPORATION

 

Issuer

 

 

AND

 

 

WELLS FARGO BANK MINNESOTA, N.A.

 

Trustee

 

 

INDENTURE

 

Dated as of February 12, 2003

 

 

6-1/4% Convertible Subordinated Notes Due 2008

 

 

CROSS-REFERENCE TABLE*

 

	
  Trust Indenture Act Section

  	
   

  	
  Indenture
  Section

  
	
   

  	
   

  	
   

  
	
  310

  	
   

  	
  (a)(1)

  	
   

  	
  7.10

  
	
   

  	
   

  	
  (a)(2)

  	
   

  	
  7.10

  
	
   

  	
   

  	
  (a)(3)

  	
   

  	
  N.A.

  
	
   

  	
   

  	
  (a)(4)

  	
   

  	
  N.A.

  
	
   

  	
   

  	
  (a)(5)

  	
   

  	
  7.10

  
	
   

  	
   

  	
  (b)

  	
   

  	
  7.9

  
	
   

  	
   

  	
  (c)

  	
   

  	
  N.A.

  
	
  311

  	
   

  	
  (a)

  	
   

  	
  7.14

  
	
   

  	
   

  	
  (b)

  	
   

  	
  7.14

  
	
   

  	
   

  	
  (c)

  	
   

  	
  N.A.

  
	
  312

  	
   

  	
  (a)

  	
   

  	
  2.5(a); 5.1

  
	
   

  	
   

  	
  (b)

  	
   

  	
  16.5

  
	
   

  	
   

  	
  (c)

  	
   

  	
  16.5

  
	
  313

  	
   

  	
  (a)

  	
   

  	
  7.2

  
	
   

  	
   

  	
  (b)(1)

  	
   

  	
  N.A.

  
	
   

  	
   

  	
  (b)(2)

  	
   

  	
  7.2

  
	
   

  	
   

  	
  (c)

  	
   

  	
  7.2

  
	
   

  	
   

  	
  (d)

  	
   

  	
  7.2

  
	
  314

  	
   

  	
  (a)

  	
   

  	
  4.7(a); 5.2

  
	
   

  	
   

  	
  (b)

  	
   

  	
  N.A.

  
	
   

  	
   

  	
  (c)(1)

  	
   

  	
  16.7

  
	
   

  	
   

  	
  (c)(2)

  	
   

  	
  16.7

  
	
   

  	
   

  	
  (c)(3)

  	
   

  	
  N.A.

  
	
   

  	
   

  	
  (d)

  	
   

  	
  N.A.

  
	
   

  	
   

  	
  (e)

  	
   

  	
  16.7

  
	
   

  	
   

  	
  (f)

  	
   

  	
  N.A.

  
	
  315

  	
   

  	
  (a)

  	
   

  	
  7.1(b)

  
	
   

  	
   

  	
  (b)

  	
   

  	
  6.8

  
	
   

  	
   

  	
  (c)

  	
   

  	
  7.1(a)

  
	
   

  	
   

  	
  (d)

  	
   

  	
  7.1(c)

  
	
   

  	
   

  	
  (e)

  	
   

  	
  6.9

  
	
  316

  	
   

  	
  (a) (last sentence)

  	
   

  	
  8.4

  
	
   

  	
   

  	
  (a)(1)(A)

  	
   

  	
  6.7

  
	
   

  	
   

  	
  (a)(1)(B)

  	
   

  	
  6.7

  
	
   

  	
   

  	
  (a)(2)

  	
   

  	
  N.A.

  
	
   

  	
   

  	
  (b)

  	
   

  	
  6.4

  
	
   

  	
   

  	
  (c)

  	
   

  	
  9.2

  
	
  317

  	
   

  	
  (a)

  	
   

  	
  6.2

  
	
   

  	
   

  	
  (b)

  	
   

  	
  4.4

  
	
  318

  	
   

  	
  (a)

  	
   

  	
  16.10; 16.11

  

 

N.A. means “not applicable.”

 

*                                         This
Cross-Reference Table is not part of the Indenture.

 

i

 

Table of Contents

 

	
  ARTICLE I

  
	
   

  
	
  DEFINITIONS

  
	
   

  	
   

  
	
  Section 1.1

  	
  DEFINITIONS

  
	
  Section 1.2

  	
  INCORPORATION BY REFERENCE OF TRUST
  INDENTURE ACT

  
	
  Section 1.3

  	
  RULES OF CONSTRUCTION

  
	
   

  
	
  ARTICLE II

  
	
   

  
	
  ISSUE, DESCRIPTION, EXECUTION, REGISTRATION AND EXCHANGE OF NOTES

  
	
   

  
	
  Section 2.1

  	
  DESIGNATION, AMOUNT AND ISSUE OF NOTES

  
	
  Section 2.2

  	
  FORM OF NOTES

  
	
  Section 2.3

  	
  DATE AND DENOMINATION OF NOTES; PAYMENTS OF
  INTEREST

  
	
  Section 2.4

  	
  EXECUTION OF NOTES

  
	
  Section 2.5

  	
  EXCHANGE AND TRANSFER OF NOTES; RESTRICTIONS
  ON TRANSFER; DEPOSITORY

  
	
  Section 2.6

  	
  MUTILATED, DESTROYED, LOST OR STOLEN NOTES

  
	
  Section 2.7

  	
  TEMPORARY NOTES

  
	
  Section 2.8

  	
  CANCELLATION OF NOTES PAID, ETC

  
	
  Section 2.9

  	
  CUSIP NUMBERS

  
	
   

  
	
  ARTICLE III

  
	
   

  
	
  REDEMPTION AND REPURCHASE OF NOTES

  
	
   

  
	
  Section 3.1

  	
  REDEMPTION PRICES

  
	
  Section 3.2

  	
  NOTICE OF REDEMPTION; SELECTION OF NOTES

  
	
  Section 3.3

  	
  PAYMENT OF NOTES CALLED FOR REDEMPTION

  
	
  Section 3.4

  	
  CONVERSION ARRANGEMENT ON CALL FOR
  REDEMPTION

  
	
  Section 3.5

  	
  REPURCHASE OF NOTES UPON A CHANGE OF
  CONTROL

  
	
   

  
	
  ARTICLE IV

  
	
   

  
	
  PARTICULAR COVENANTS OF THE COMPANY

  
	
   

  
	
  Section 4.1

  	
  PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST

  

 

ii

 

	
  Section 4.2

  	
  MAINTENANCE OF OFFICE OR AGENCY

  
	
  Section 4.3

  	
  APPOINTMENTS TO FILL VACANCIES IN TRUSTEE’S
  OFFICE

  
	
  Section 4.4

  	
  PROVISIONS AS TO PAYING AGENT

  
	
  Section 4.5

  	
  CORPORATE EXISTENCE

  
	
  Section 4.6

  	
  STAY, EXTENSION AND USURY LAWS

  
	
  Section 4.7

  	
  COMPLIANCE STATEMENT; NOTICE OF DEFAULTS

  
	
  Section 4.8

  	
  LIMITATION ON DIVIDEND AND OTHER PAYMENT
  RESTRICTIONS AFFECTING SUBSIDIARIES

  
	
  Section 4.9

  	
  TAXES

  
	
  Section 4.10

  	
  INSURANCE

  
	
   

  
	
  ARTICLE V

  
	
   

  
	
  NOTEHOLDERS’ LISTS AND REPORTS BY THE
  COMPANY

  
	
   

  
	
  Section 5.1

  	
  NOTEHOLDERS’ LISTS

  
	
  Section 5.2

  	
  REPORTS BY COMPANY

  
	
   

  
	
  ARTICLE VI

  
	
   

  
	
  DEFAULTS AND REMEDIES

  
	
   

  
	
  Section 6.1

  	
  EVENTS OF DEFAULT

  
	
  Section 6.2

  	
  PAYMENTS OF NOTES ON DEFAULT; SUIT THEREFOR

  
	
  Section 6.3

  	
  APPLICATION OF MONIES COLLECTED BY TRUSTEE

  
	
  Section 6.4

  	
  PROCEEDINGS BY NOTEHOLDER

  
	
  Section 6.5

  	
  PROCEEDINGS BY TRUSTEE

  
	
  Section 6.6

  	
  REMEDIES CUMULATIVE AND CONTINUING

  
	
  Section 6.7

  	
  DIRECTION OF PROCEEDINGS AND WAIVER OF
  DEFAULTS BY MAJORITY OF NOTEHOLDERS

  
	
  Section 6.8

  	
  NOTICE OF DEFAULTS

  
	
  Section 6.9

  	
  UNDERTAKING TO PAY COSTS

  
	
   

  
	
  ARTICLE VII

  
	
   

  
	
  CONCERNING THE TRUSTEE

  
	
   

  
	
  Section 7.1

  	
  DUTIES AND RESPONSIBILITIES OF TRUSTEE

  
	
  Section 7.2

  	
  REPORTS BY TRUSTEE TO HOLDERS

  
	
  Section 7.3

  	
  RELIANCE ON DOCUMENTS, OPINIONS, ETC

  
	
  Section 7.4

  	
  NO RESPONSIBILITY FOR RECITALS, ETC

  
	
  Section 7.5

  	
  TRUSTEE, PAYING AGENTS, CONVERSION AGENTS
  OR REGISTRAR MAY OWN NOTES

  
	
  Section 7.6

  	
  MONIES TO BE HELD IN TRUST

  
	
  Section 7.7

  	
  COMPENSATION AND EXPENSES OF TRUSTEE

  
	
  Section 7.8

  	
  OFFICERS’ CERTIFICATE AS EVIDENCE

  

 

iii

 

	
  Section 7.9

  	
  CONFLICTING INTERESTS OF TRUSTEE

  
	
  Section 7.10

  	
  ELIGIBILITY OF TRUSTEE

  
	
  Section 7.11

  	
  RESIGNATION OR REMOVAL OF TRUSTEE

  
	
  Section 7.12

  	
  ACCEPTANCE BY SUCCESSOR TRUSTEE

  
	
  Section 7.13

  	
  SUCCESSOR, BY MERGER, ETC

  
	
  Section 7.14

  	
  LIMITATION ON RIGHTS OF TRUSTEE AS CREDITOR

  
	
   

  
	
  ARTICLE VIII

  
	
   

  
	
  CONCERNING THE NOTEHOLDERS

  
	
   

  
	
  Section 8.1

  	
  ACTION BY NOTEHOLDERS

  
	
  Section 8.2

  	
  PROOF OF EXECUTION BY NOTEHOLDERS

  
	
  Section 8.3

  	
  WHO ARE DEEMED ABSOLUTE OWNERS

  
	
  Section 8.4

  	
  COMPANY-OWNED NOTES DISREGARDED

  
	
  Section 8.5

  	
  REVOCATION OF CONSENTS, FUTURE HOLDERS
  BOUND

  
	
   

  
	
  ARTICLE IX

  
	
   

  
	
  NOTEHOLDERS’ MEETINGS

  
	
   

  
	
  Section 9.1

  	
  PURPOSES FOR WHICH MEETINGS MAY BE CALLED

  
	
  Section 9.2

  	
  MANNER OF CALLING MEETINGS; RECORD DATE

  
	
  Section 9.3

  	
  CALL OF MEETING BY COMPANY OR NOTEHOLDERS

  
	
  Section 9.4

  	
  WHO MAY ATTEND AND VOTE AT MEETINGS

  
	
  Section 9.5

  	
  MANNER OF VOTING AT MEETINGS AND RECORD TO
  BE KEPT

  
	
  Section 9.6

  	
  EXERCISE OF RIGHTS OF TRUSTEE AND
  NOTEHOLDERS NOT TO BE HINDERED OR DELAYED

  
	
   

  
	
  ARTICLE X

  
	
   

  
	
  SUPPLEMENTAL INDENTURES

  
	
   

  
	
  Section 10.1

  	
  SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF
  NOTEHOLDERS

  
	
  Section 10.2

  	
  SUPPLEMENTAL INDENTURES WITH CONSENT OF
  NOTEHOLDERS

  
	
  Section 10.3

  	
  EFFECT OF SUPPLEMENTAL INDENTURES

  
	
  Section 10.4

  	
  NOTATION ON NOTES

  
	
  Section 10.5

  	
  EVIDENCE OF COMPLIANCE OF SUPPLEMENTAL
  INDENTURE TO BE FURNISHED TO THE TRUSTEE

  

 

iv

 

	
  ARTICLE XI

  
	
   

  
	
  CONSOLIDATION, MERGER, SALE, CONVEYANCE,
  TRANSFER AND LEASE

  
	
   

  
	
  Section 11.1

  	
  COMPANY MAY CONSOLIDATE, ETC. ON CERTAIN
  TERMS

  
	
  Section 11.2

  	
  SUCCESSOR COMPANY TO BE SUBSTITUTED

  
	
  Section 11.3

  	
  OPINION OF COUNSEL TO BE GIVEN TO TRUSTEE

  
	
   

  
	
  ARTICLE XII

  
	
   

  
	
  SATISFACTION AND DISCHARGE OF INDENTURE;
  UNCLAIMED MONEYS

  
	
   

  
	
  Section 12.1

  	
  LEGAL DEFEASANCE AND COVENANT DEFEASANCE OF
  THE NOTES

  
	
  Section 12.2

  	
  TERMINATION OF OBLIGATIONS UPON
  CANCELLATION OF THE NOTES

  
	
  Section 12.3

  	
  SURVIVAL OF CERTAIN OBLIGATIONS

  
	
  Section 12.4

  	
  ACKNOWLEDGMENT OF DISCHARGE BY TRUSTEE

  
	
  Section 12.5

  	
  APPLICATION OF TRUST ASSETS

  
	
  Section 12.6

  	
  REPAYMENT TO THE COMPANY; UNCLAIMED MONEY

  
	
  Section 12.7

  	
  REINSTATEMENT

  
	
   

  
	
  ARTICLE XIII

  
	
   

  
	
  IMMUNITY OF INCORPORATORS, SHAREHOLDERS, OFFICERS AND DIRECTORS

  
	
   

  
	
  Section 13.1

  	
  INDENTURE AND NOTES SOLELY CORPORATE
  OBLIGATIONS

  
	
   

  
	
  ARTICLE XIV

  
	
   

  
	
  CONVERSION OF NOTES

  
	
   

  
	
  Section 14.1

  	
  RIGHT TO CONVERT

  
	
  Section 14.2

  	
  EXERCISE OF CONVERSION PRIVILEGE; ISSUANCE
  OF COMMON STOCK ON CONVERSION; NO ADJUSTMENT FOR INTEREST OR DIVIDENDS

  
	
  Section 14.3

  	
  MANDATORY CONVERSION

  
	
  Section 14.4

  	
  CASH PAYMENTS IN LIEU OF FRACTIONAL SHARES

  
	
  Section 14.5

  	
  CONVERSION PRICE

  
	
  Section 14.6

  	
  ADJUSTMENT OF CONVERSION PRICE

  
	
  Section 14.7

  	
  EFFECT OF RECLASSIFICATION, CONSOLIDATION,
  MERGER OR SALE

  
	
  Section 14.8

  	
  TAXES ON SHARES ISSUED

  
	
  Section 14.9

  	
  RESERVATION OF SHARES; SHARES TO BE FULLY
  PAID; LISTING OF COMMON STOCK

  

 

v

 

	
  Section 14.10

  	
  RESPONSIBILITY OF TRUSTEE

  
	
  Section 14.11

  	
  NOTICE TO HOLDERS PRIOR TO CERTAIN ACTIONS

  
	
  Section 14.12

  	
  SUPPLEMENTAL INDENTURE PRIOR TO ISSUANCE OF
  NOTES IN DEFINITIVE FORM

  
	
   

  
	
  ARTICLE XV

  
	
   

  
	
  SUBORDINATION

  
	
   

  
	
  Section 15.1

  	
  AGREEMENT TO SUBORDINATE

  
	
  Section 15.2

  	
  CERTAIN DEFINITIONS

  
	
  Section 15.3

  	
  LIQUIDATION; DISSOLUTION; BANKRUPTCY

  
	
  Section 15.4

  	
  DEFAULT ON SENIOR INDEBTEDNESS

  
	
  Section 15.5

  	
  WHEN DISTRIBUTION MUST BE PAID OVER

  
	
  Section 15.6

  	
  NOTICE BY COMPANY

  
	
  Section 15.7

  	
  SUBROGATION

  
	
  Section 15.8

  	
  RELATIVE RIGHTS

  
	
  Section 15.9

  	
  SUBORDINATION MAY NOT BE IMPAIRED BY
  COMPANY

  
	
  Section 15.10

  	
  DISTRIBUTION OR NOTICE TO REPRESENTATIVE

  
	
  Section 15.11

  	
  RIGHTS OF TRUSTEE AND PAYING AGENT

  
	
  Section 15.12

  	
  AUTHORIZATION TO EFFECT SUBORDINATION

  
	
  Section 15.13

  	
  CONVERSIONS NOT DEEMED PAYMENT

  
	
  Section 15.14

  	
  AMENDMENTS

  
	
   

  
	
  ARTICLE XVI

  
	
   

  
	
  MISCELLANEOUS PROVISIONS

  
	
   

  
	
  Section 16.1

  	
  POOLING OF INTERESTS

  
	
  Section 16.2

  	
  PROVISIONS BINDING ON COMPANY’S SUCCESSORS

  
	
  Section 16.3

  	
  OFFICIAL ACTS BY SUCCESSOR COMPANY

  
	
  Section 16.4

  	
  ADDRESSES FOR NOTICES, ETC

  
	
  Section 16.5

  	
  COMMUNICATIONS BY HOLDERS WITH OTHER
  HOLDERS

  
	
  Section 16.6

  	
  GOVERNING LAW

  
	
  Section 16.7

  	
  EVIDENCE OF COMPLIANCE WITH CONDITIONS
  PRECEDENT; CERTIFICATES TO TRUSTEE

  
	
  Section 16.8

  	
  LEGAL HOLIDAYS

  
	
  Section 16.9

  	
  NO SECURITY INTEREST CREATED

  
	
  Section 16.10

  	
  TRUST INDENTURE ACT

  
	
  Section 16.11

  	
  TRUST INDENTURE ACT CONTROLS

  
	
  Section 16.12

  	
  BENEFITS OF INDENTURE

  
	
  Section 16.13

  	
  TABLE OF CONTENTS, HEADINGS ETC

  
	
  Section 16.14

  	
  AUTHENTICATING AGENT

  
	
  Section 16.15

  	
  EXECUTION IN COUNTERPARTS

  

 

vi

 

INDENTURE,
dated as of February 12, 2003, by and between PENN TREATY AMERICAN CORPORATION,
a Pennsylvania corporation (the “Company”), and WELLS FARGO BANK MINNESOTA,
N.A., a national banking corporation (the “Trustee”).

 

W I T N E S S E T H
:

 

WHEREAS, for
its lawful corporate purposes, the Company has duly authorized the issuance of
its 6-1/4% Convertible Subordinated Notes Due 2008 (the “Notes”), in an
aggregate principal amount not to exceed $45,000,000 and to provide the terms
and conditions upon which the Notes are to be authenticated, issued and
delivered, the Company has duly authorized the execution and delivery of this
Indenture; and

 

WHEREAS, the
Notes will be originally issued solely in global form, and in the event that
the Company issues Notes in definitive form, such issuance will be accompanied
by a supplement to this Indenture including the form of definitive Notes and
provisions for conversion of the Notes under Article XIV hereunder; and

 

WHEREAS, the
Notes, the certificate of authentication to be borne by the Notes, a form of
assignment, a form of option to require repurchase by the Company upon a Change
of Control (as hereinafter defined), and a certificate of transfer to be borne
by the Notes are to be substantially in the forms hereinafter provided for; and

 

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

 

NOW,
THEREFORE, THIS INDENTURE WITNESSETH:

 

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

 

1

 

ARTICLE I

 

DEFINITIONS

 

Section 1.1                                      DEFINITIONS.  The terms defined in this Section 1.1
(except as herein otherwise expressly provided or unless the context otherwise
requires) for all purposes of this Indenture and of any indenture supplemental
hereto shall have the respective meanings specified in this Section 1.1.  All other terms used in this Indenture that
are defined in the Trust Indenture Act (as hereinafter defined) or that are by
reference defined in the Securities Act (as hereinafter defined), except as
herein otherwise expressly provided for or unless the context otherwise
requires, shall have the meanings assigned to such terms in said Trust
Indenture Act and in said Securities Act as in force on the date of this
Indenture.  The words “herein,”
“hereof,” “hereunder” and words of similar import refer to this Indenture as a
whole and not to any particular Article or Section.

 

ACQUISITION PRICE: The term “Acquisition
Price” shall mean the weighted average price paid by the person or group in
acquiring the Voting Stock.

 

AFFILIATE: An “Affiliate” of any specified
person shall mean an “affiliate” as defined in Rule 144(a) as promulgated under
the Securities Act.

 

BOARD OF DIRECTORS: The term “Board of
Directors” shall mean the Board of Directors of the Company or a committee of
such Board of Directors duly authorized to act for it.

 

BOARD RESOLUTION: The term “Board Resolution”
shall mean a copy of a resolution certified by the Secretary or an Assistant
Secretary of the Company to have been duly adopted by the Board of Directors
and to be in full force and effect on the date of such certification.

 

BUSINESS DAY: The term “Business Day” shall
mean a day, other than a Saturday, a Sunday or a day on which the banking
institutions in the State and City of New York are authorized or obligated by
law or executive order to close or a day that is declared a national or New
York state holiday.

 

CAPITAL STOCK: The term “Capital Stock” of
any person shall mean any and all shares, interests, participations or other
equivalents (however designated) of such person’s corporate stock or any and
all equivalent ownership interests in a person (other than a corporation)
whether now outstanding or issued after the date hereof.

 

CASH EQUIVALENT NOTES: The term “Cash
Equivalent Notes” shall have the meaning specified in Section 14.1(b).

 

CEDE: The term “Cede” shall mean Cede &
Co., a nominee of the Depository.

 

CHANGE OF CONTROL: The term “Change of
Control” shall have the meaning specified in Section 3.5(d).

 

2

 

CHANGE OF CONTROL PURCHASE PRICE: The term
“Change of Control Purchase Price” shall have the meaning specified in Section
3.5(a).

 

CHANGE OF CONTROL PURCHASE DATE: The term
“Change of Control Purchase Date” shall have the meaning specified in Section
3.5(a).

 

CHANGE OF CONTROL OFFER: The term “Change of
Control Offer” shall have the meaning specified in Section 3.5(a).

 

COMMISSION: The term “Commission” shall mean
the United States Securities and Exchange Commission, as from time to time
constituted, created under the Exchange Act or, if at any time after the
execution of this instrument such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act, the body performing
such duties at such time.

 

COMMON STOCK: The term “Common Stock” shall
mean any stock of any class of the Company that does not have a 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 that is
not subject to redemption by the Company. 
Subject to the provisions of Section 14.6, however, shares issuable on
conversion of Notes shall include only shares of the class designated as common
stock of the Company at the date of this Indenture or shares of any class or
classes resulting from any reclassification or reclassifications thereof and that
do not have a 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 that are not subject to redemption by the Company; provided
that if at any time there shall be more than one such resulting class, the
shares of each such class then so issuable shall be substantially in the
proportion that the total number of shares of such class resulting from all
such reclassification bears to the total number of shares of all such classes
resulting from all such reclassifications.

 

COMPANY: The term “Company” shall mean Penn
Treaty American Corporation, a Pennsylvania corporation, and subject to the
provisions of Article XI, shall include its successors and assigns.

 

CONVERSION PRICE: The term “Conversion Price”
shall have the meaning specified in Section 14.5.

 

CORPORATE TRUST OFFICE OF THE TRUSTEE: The
term “Corporate Trust Office of the Trustee,” or other similar term, shall mean
the office of the Trustee at which at any particular time its corporate trust
business shall be principally administered, from its office which is, located
at 6th Street & Marquette Avenue, MAC N9303-110, Minneapolis,
Minnesota 55479.  The Trustee also
maintains an office at 45 Broadway, 12th Floor, MAC N2666-120, New
York, New York 10006, at which office it is authorized to receive notices
hereunder.

 

COVENANT DEFEASANCE: The term “covenant
defeasance” shall have the meaning specified in Section 12.1(c).

 

3

 

CUSTODIAN: The term “Custodian” shall mean
the Trustee, as custodian for Cede pursuant to Section 2.5 with respect to the
Notes in global form, or any successor entity thereto.

 

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

 

DEFAULTED INTEREST: The term “Defaulted
Interest” shall have the meaning specified in Section 2.3.

 

DEFINITIVE NOTES; IN DEFINITIVE FORM: The
term “definitive Notes” shall mean the Notes in definitive form.  Any reference to Notes “in definitive form”
shall mean definitive Notes, and any reference to securities “in definitive
form” shall mean definitive Notes or Common Stock as the context requires.

 

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

 

DWAC: The term “DWAC” shall mean Deposit and
Withdrawal at Custodian Service.

 

EVENT OF DEFAULT: The term “Event of Default”
shall mean any event specified in Section 6.1(a) through (g).

 

EXCHANGE ACT: The term “Exchange Act” shall
mean the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.

 

EXPIRATION TIME: The term “Expiration Time”
shall have the meaning specified in Section 14.6(f).

 

GLOBAL NOTE: The term “Global Note” shall
mean the note in global form as specified in Exhibit A.

 

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

 

INTEREST PAYMENT DATE: The term “Interest
Payment Date” shall mean each April 15 and October 15.

 

LEGAL DEFEASANCE: The term “legal defeasance”
shall have the meaning specified in Section 12.1(b).

 

MANDATORY CONVERSION DATE: The term
“Mandatory Conversion Date” shall have the meaning specified in Section 14.3.

 

4

 

MARKET CASH CONVERSION PRICE: The term
“Market Cash Conversion Price” means with respect to any exchange, the average
of the closing prices of the Common Stock (or other securities, as the case may
be) for the ten Trading Day period (appropriately adjusted to take into account
the occurrence during such period of certain events that would result in an adjustment
of the Conversion Price with respect to the Common Stock or other
consideration) commencing on the first Trading Day after delivery of written
notice by the Company to the Trustee and holders that the Company has elected
to pay cash in lieu of delivering shares of Common Stock or other
securities.  The period between the date
of delivery by a holder to an office or agency maintained by the Company of a
notice of conversion as required pursuant to Section 14.2 hereof, and the date
of determination of the Market Cash Conversion Price may not exceed fifteen
Trading Days.

 

NONPAYMENT DEFAULT: The term “Nonpayment
Default” shall have the meaning specified in Section 15.4(b).

 

NOTE OR NOTES: The terms “Note” or “Notes”
shall mean any one or more, as the case may be, of the 6-1/4% Convertible
Subordinated Notes Due 2008 authenticated and delivered under this Indenture.

 

NOTEHOLDER; HOLDER: The terms “Noteholder” or
“holder” as applied to any Note, or other similar terms (but excluding the term
“beneficial holder”), shall mean any person in whose name at the time a
particular Note is registered on the Note registrar’s books.

 

NOTE REGISTER: The term “Note register” shall
have the meaning specified in Section 2.5(a).

 

NOTE REGISTRAR: The term “Note registrar” shall
have the meaning specified in Section 2.5(a).

 

OFFICERS’ CERTIFICATE: The term “Officers’
Certificate,” when used with respect to the Company, shall mean a certificate
signed by two authorized officers which shall include (a) any of the
President, the Chief Executive Officer, the Chief Operating Officer or the
Chief Financial Officer and (b) any Treasurer or Secretary or any
Assistant Secretary of the Company, that is delivered to the Trustee.  Each such certificate shall include the
statements provided for in Section 16.7 if and to the extent required by the
provisions of such Section.

 

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

 

OUTSTANDING: The term “outstanding” with reference
to Notes as of any particular time shall mean, subject to the provisions of
Section 8.4, all Notes authenticated and delivered by the Trustee under this
Indenture, except

 

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

 

5

 

(b)                                 Notes, or portions
thereof, for which monies in the necessary amount shall have been deposited in
trust with the Trustee for payment, redemption or repurchase; provided that if
such Notes are to be redeemed prior to the maturity thereof, notice of such
redemption shall have been given pursuant to Article III or provision
satisfactory to the Trustee shall have been made for giving such notice;

 

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

 

(d)                                 Notes converted into
Common Stock or cash pursuant to Article XIV and Notes not deemed outstanding
pursuant to Section 3.2 and 3.5.

 

PAYMENT BLOCKAGE NOTICE: The term “Payment
Blockage Notice” shall have the meaning specified in Section 15.4(b).

 

PAYMENT DEFAULT: The term “Payment Default”
shall have the meaning specified in Section 6.1(d).

 

PERSON: The term “person” shall mean a
corporation, an association, a partnership, an individual, a joint venture, a
joint stock company, a trust, an unincorporated organization or a government or
an agency or a political subdivision thereof.

 

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

 

PURCHASED SHARES: The term “Purchased Shares”
shall have the meaning specified in Section 14.6(f).

 

RECORD DATE: The term “record date” with
respect to any interest payment date shall have the meaning set forth in
Section 2.3 hereof.

 

RESPONSIBLE OFFICER: The term “Responsible
Officer” with respect to the Trustee, shall mean an officer of the Trustee
assigned and duly authorized by the Trustee to administer its corporate trust
matters.

 

SECURITIES: The term “Securities” shall have
the meaning specified in Section 14.6(d).

 

SECURITIES ACT: The term “Securities Act”
shall mean the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.

 

SUBSIDIARY: The term “Subsidiary” of any
specified person shall mean (i) a corporation, a majority of whose Capital
Stock with voting power under ordinary circumstances

 

6

 

to elect directors is at the
time directly or indirectly owned by such person or (ii) any other person
(other than a corporation) in which such person or such person and a Subsidiary
or Subsidiaries of such person or a Subsidiary or Subsidiaries of such person
directly or indirectly, at the date of determination thereof, has at least
majority ownership.

 

SUCCESSOR COMPANY: The term “Successor
Company” shall have the meaning specified in Section 11.1.

 

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

 

TRIGGER EVENT: The term “Trigger Event” shall
have the meaning specified in Section 14.6(d).

 

TRUST INDENTURE ACT: The term “Trust
Indenture Act” shall mean the Trust Indenture Act of 1939, as amended, as it
was in force at the date of execution of this Indenture, except as provided in Sections
10.3 and 14.6; provided that in the event said Trust Indenture Act of 1939 is
amended after the date hereof, the term “Trust Indenture Act” shall mean, to
the extent required by such amendment, said Trust Indenture Act of 1939 as so
amended.

 

TRUSTEE: The term “Trustee” shall mean Wells
Fargo Bank Minnesota, N.A., its successors and any corporation resulting from
or surviving any consolidation or merger to which it or its successors may be a
party and any successor trustee at the time serving as successor trustee
hereunder.

 

U.S. GOVERNMENT OBLIGATIONS: The term “U.S.
Government Obligations” shall mean securities that are (i) direct obligations
of the United States of America for the payment of which its full faith and
credit is pledged or (ii) obligations of a person controlled or supervised by,
and acting as an agency or instrumentality of, the United States of America the
timely payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case, are
not callable or redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank (as defined in Section 3(a)(2) of
the Securities Act) as custodian with respect to any such U.S. Government
Obligation or a specific payment of principal or interest on any such U.S.
Government Obligation held by such custodian for the account of the holder of
such depository receipt; provided that (except as required by law) such
custodian is not authorized to make any deduction from the amount payable to
the holder of such depository receipt from any amount received by such
custodian in respect of the U.S. Government Obligation or the specific payment
of principal of or interest on the U.S. Government Obligation evidenced by such
depository receipt.

 

7

 

VOTING STOCK: The term “Voting Stock” shall
have the meaning set forth in Section 3.5(e) hereof.

 

Section 1.2                                      INCORPORATION
BY REFERENCE OF TRUST INDENTURE ACT.

 

Whenever this Indenture refers to a provision
of the Trust Indenture Act, the provision is incorporated by reference in and
made a part of this Indenture.

 

The following Trust Indenture Act terms used
in this Indenture have the following meanings:

 

“INDENTURE SECURITIES” means the Notes;

 

“INDENTURE SECURITY HOLDER” means a holder of
Notes;

 

“INDENTURE TO BE QUALIFIED” means this
Indenture;

 

“INDENTURE TRUSTEE” or “INSTITUTIONAL
TRUSTEE” means the Trustee;

 

“OBLIGOR” on the Notes means the Company and
any successor obligor under the Trust Indenture Act.

 

All other terms used in this Indenture that
are defined by the Trust Indenture Act, defined by Trust Indenture Act
reference to another statute or defined by Commission rule under the Trust
Indenture Act have the meanings so assigned to them.

 

Section 1.3                                      RULES
OF CONSTRUCTION.

 

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 generally accepted accounting principles;

 

(3)                                  “or”
is not exclusive;

 

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

 

(5)                                  provisions
apply to successive events and transactions.

 

8

 

ARTICLE II

 

ISSUE,
DESCRIPTION, EXECUTION, REGISTRATION

AND EXCHANGE OF NOTES

 

Section 2.1                                      DESIGNATION,
AMOUNT AND ISSUE OF NOTES.  The Notes
shall be designated as “6-1/4% Convertible Subordinated Notes Due 2008.”  Notes not to exceed the aggregate principal
amount of $45,000,000 upon the execution of this Indenture, or from time to
time thereafter, may be executed by the Company and delivered to the Trustee
for authentication, and the Trustee shall thereupon authenticate and make
available for delivery said Notes upon the written order of the Company, signed
by its (a) Chief Executive Officer, President, Chief Operating Officer or
Chief Financial Officer, and (b) any Treasurer or Secretary or any
Assistant Secretary, without any further action by the Company hereunder.

 

Section 2.2                                      FORM
OF NOTES.

 

The Global Note shall represent all of the
outstanding Notes.  Payment of principal
of and interest and premium, if any, on the Global Note shall be made in
accordance with the provisions of Section 2.3 hereof.

 

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

 

Section 2.3                                      DATE
AND DENOMINATION OF NOTES; PAYMENTS OF INTEREST.  The Notes shall be issuable in registered form only without
coupons in denominations of $1,000 principal amount and integral multiples
thereof.  Every Note shall be dated the
date of its authentication, shall bear interest from January 30, 2003 and shall
be payable semiannually on each April 15 and October 15, commencing
April 15, 2003, as specified on the face of the form of Global Note,
attached as Exhibit A hereto.

 

The person in whose name any Note (or its
Predecessor Note) is registered at the close of business on any record date
with respect to any interest payment date (including any Note that is converted
after the record date and on or before the interest payment date) shall be
entitled to receive the interest payable on such interest payment date
notwithstanding the cancellation of such Note upon any transfer, exchange or
conversion subsequent to the record date and prior to such interest payment
date.  Interest may, at the option of
the Company, be paid by check mailed to the address of such person as it
appears on the Note register; provided that, with respect to any holder of Notes
with an aggregate principal amount equal to or in excess of $5,000,000, at the
request (such request to include appropriate wire instructions) of such holder
in writing to the Trustee on or before the record date preceding any interest
payment date, interest on such holder’s Notes shall be paid by wire transfer in
immediately available funds.  The term
“record date” with respect to any interest payment date shall mean the
April 1 or October 1 preceding said April 15, or October 15.

 

9

 

None of the Company, the Trustee or any
paying agent shall have any responsibility or liability for any aspect of the
records relating to or payment made on account of beneficial ownership
interests in the Global Note or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.

 

Interest on the Notes shall be computed on
the basis of a 360-day year composed of twelve 30-day months.

 

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

 

(1)                                  The
Company may elect to make payment of any Defaulted Interest to the persons in
whose names the Notes (or their respective Predecessor Notes) are registered at
the close of business on a special record date for the payment of such
Defaulted Interest, which shall be fixed in the following manner.  The Company shall notify the Trustee in
writing of the amount of Defaulted Interest to be paid on each Note and the
date of the payment (which shall be not less than 25 days after the receipt by
the Trustee of such notice, unless the Trustee shall consent to an earlier
date), and at the same time, the Company shall deposit with the Trustee an amount
of money equal to the aggregate amount to be paid in respect of such Defaulted
Interest or shall make arrangements satisfactory to the Trustee for such
deposit prior to the date of the proposed payment, such money when deposited to
be held in trust for the benefit of the persons entitled to such Defaulted
Interest as in this clause provided. 
Thereupon, the Trustee shall fix a special record date for the payment
of such Defaulted Interest, which shall be not more than 15 days and not less
than 10 days prior to the date of the payment and not less than 10 days after
the receipt by the Trustee of the notice of the proposed payment.  The Trustee shall promptly notify the
Company of such special record date and, in the name and at the expense of the
Company, shall cause notice of the payment of such Defaulted Interest and the
special record date therefor to be mailed, first-class postage prepaid, to each
Noteholder at his address as it appears in the Note register, not less than 10
days prior to such special record date. 
Notice of the proposed payment of such Defaulted Interest and the
special record date therefor having been so mailed, such Defaulted Interest
shall be paid to the persons in whose names the Notes (or their respective
Predecessor Notes) were registered at the close of business on such special
record date and shall no longer be payable pursuant to the following clause
(2).

 

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

 

10

 

Section 2.4                                      EXECUTION
OF NOTES.  The Notes shall be signed in
the name and on behalf of the Company by the signature of its Chief Executive
Officer, President, Chief Operating Officer or Chief Financial Officer and
attested by the signature of its Treasurer, Secretary or any of its Assistant
Secretaries (any of which signatures may be printed, engraved or otherwise
reproduced thereon, by facsimile or otherwise).  Only such Notes as shall bear thereon a certificate of
authentication substantially in the form set forth on the form of Note attached
as Exhibit A hereto, manually executed by the Trustee (or an authenticating
agent appointed by the Trustee as provided by Section 16.14), shall be entitled
to the benefits of this Indenture or be valid or obligatory for any
purpose.  Such certificate by the
Trustee (or such an authenticating agent) upon any Note executed by the Company
shall be conclusive evidence that the Note so authenticated has been duly
authenticated and delivered hereunder and that the holder is entitled to the
benefits of this Indenture.

 

In case any officer of the Company who shall
have signed any of the Notes shall cease to be such officer before the Notes so
signed shall have been authenticated and delivered by the Trustee, or disposed
of by the Company, such Notes nevertheless may be authenticated and delivered
or disposed of as though the person who signed such Notes had not ceased to be
such officer of the Company; and any Note may be signed on behalf of the
Company by such persons as, at the actual date of the execution of such Note,
shall be the proper officers of the Company, although at the date of the
execution of this Indenture any such person was not such an officer.

 

Section 2.5                                      EXCHANGE
AND TRANSFER OF NOTES; RESTRICTIONS ON TRANSFER; DEPOSITORY.

 

Any exchange or transfer of all or a part of
the Global Note for definitive Notes pursuant to this Section 2.5 will be
accompanied by a supplemental indenture that will include the form of such
definitive Notes and provisions for conversion of the Notes under Article XIV.

 

(a)                                  The Company shall
cause to be kept at the Corporate Trust Office of the Trustee a register (the
register maintained in such office and in any other office or agency of the
Company designated pursuant to Section 4.2 being herein sometimes collectively
referred to as the “Note register”) in which, subject to such reasonable
regulations as it may prescribe, the Company shall provide for the transfers of
Notes.  Such Note register shall be in
written form or in any form capable of being converted into written form within
a reasonable period of time.  The Trustee
is hereby appointed “Note registrar” for the purpose of transfers of Notes as
herein provided.  The Company may
appoint one or more co-registrars.

 

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

 

Notes may be exchanged for other Notes of any
authorized denominations and of a like aggregate principal amount, upon
surrender of the Notes to be exchanged at any such office or agency.  Whenever any Notes are so surrendered for
exchange, the Company shall

 

11

 

execute, and the Trustee shall
authenticate and make available for delivery, the Notes that the Noteholder
making the exchange is entitled to receive bearing certificate numbers not
contemporaneously outstanding.

 

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

 

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

 

None of the Company, the Trustee, the Note
registrar or any co-registrar shall be required to exchange or register a
transfer of (a) any Notes for a period of 15 days next preceding the
mailing of a notice of redemption, (b) any Notes called for redemption or,
if a portion of any Note is selected or called for redemption, such portion
thereof selected or called for redemption, (c) any Notes surrendered for
conversion or, if a portion of any Note is surrendered for conversion, such
portion thereof surrendered for conversion or (d) any Notes surrendered
for repurchase pursuant to Section 3.5 or, if a portion of any Note is
surrendered for repurchase pursuant to Section 3.5, such portion thereof
surrendered for repurchase pursuant to Section 3.5.

 

All Notes issued upon any transfer or
exchange of Notes shall be the valid obligations of the Company, evidencing the
same debt and entitled to the same benefits under this Indenture as the Notes
surrendered upon such registration of transfer or exchange.  All Notes, the transfer and/or exchange of
which is effectuated by the Trustee pursuant to this Section 2.5, shall be
accompanied by an Officers’ Certificate of the Company, certifying that such
transfer, exchange and/or registration is authorized by the Company and
permitted hereunder.

 

Any transfer of a beneficial interest in the
Global Note that cannot be effected through book-entry settlement must be
effected by the delivery to the transferee (or its nominee) of a definitive
Note or Notes registered in the name of the transferee (or its nominee) on the
books maintained by the Trustee, in accordance with the transfer instructions
set forth herein.  With respect to any
such transfer, the Trustee or the Custodian, at the direction of the Trustee,
shall cause, in accordance with the standing instructions and procedures existing
between the Depository and the Custodian, the aggregate principal amount of the
Global Note to be reduced by the principal amount of the beneficial interest in
the Note being transferred and, following such reduction, the Company shall
execute and the Trustee shall authenticate and make available for delivery to
the transferee (or such transferee’s nominee, as the case may be), a definitive
Note or Notes in the appropriate aggregate principal amount in the name of such
transferee (or its nominee).

 

Any transfer of a definitive Note or Notes must
be effected by the delivery to the transferee (or its nominee) of a definitive
Note or Notes registered in the name of the transferee (or its nominee) on the
books maintained by the Trustee.  With
respect to any such transfer, the

 

12

 

Company shall execute and the
Trustee shall authenticate and make available for delivery to the transferee
(or such transferee’s nominee, as the case may be), a definitive Note or Notes
in the appropriate aggregate principal amount in the name of such transferee
(or its nominee) and bearing such restrictive legends as may be required by
this Indenture.

 

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

 

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

 

Neither the Company nor the Trustee (or any
registrar, paying agent or conversion agent under this Indenture) shall have
responsibility for the performance by the Depository or its participants or
indirect participants of its respective obligations under the rules and
procedures governing its operations. 
The Depository will take any action permitted to be taken by a holder of
Notes (including, without limitation, the presentation of Notes for exchange as
described below) only at the direction of one or more participants to whose
account with the Depository interests in the Global Note are credited, and only
in respect of the principal amount of the Notes represented by the Global Note
as to which such participant or participants has or have given such direction.

 

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

 

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

 

At such time as all interest in the Global
Note has been redeemed, converted, repurchased or canceled, the Global Note
shall be, upon receipt thereof, canceled by the Trustee in accordance with
standing procedures and instructions existing between the Depository and the
Custodian.  At any time prior to such
cancellation, if any interest in the Global Note is

 

13

 

exchanged for definitive Notes,
redeemed, repurchased, converted, canceled or transferred to a transferee who
receives definitive Notes therefor or any definitive Note is exchanged or
transferred for part of the Global Note, the principal amount of the Global
Note shall, in accordance with the standing procedures and instructions
existing between the Depository and the Custodian, be reduced or increased, as
the case may be, and an endorsement shall be made on the Global Note by the
Trustee or the Custodian, at the direction of the Trustee, to reflect such reduction
or increase.

 

The Company and the Trustee may for all
purposes, including the making of payments due on the Notes, deal with the
Depository as the authorized representative of the Noteholders for the purposes
of exercising the rights of Noteholders hereunder.  The rights of the owner of any beneficial interest in the Global
Note shall be limited to those established by law and agreements between such
owners and depository participants; provided that no such agreement shall give
any rights to any person against the Company or the Trustee without the written
consent of the parties so affected. 
Multiple requests, and directions from and votes of the Depository, as
holder of notes in book-entry form with respect to any particular matter, shall
not be deemed inconsistent to the extent they do not represent an amount of
notes in excess of those held in the name of the Depository or its nominee.

 

(c)                                  Each holder or former
holder of a Note agrees to indemnify the Company and the Trustee against any
liability that may result from the transfer, exchange or assignment of such
holder’s or former holder’s Note in violation of any provision of this
Indenture and/or applicable U.S. federal or state securities law.

 

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

 

The Trustee or such authenticating agent may
authenticate any such substituted Note and deliver the same upon the receipt of
such security or indemnity as the Trustee, the Company and, if applicable, such
authenticating agent may require.  Upon
the issuance of any substituted Note, the Company may require the payment of a
sum sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto and any other expenses connected therewith.  In case any Note that has matured or is
about to mature or has been called for redemption or is about to be repurchased
or converted into Common Stock or cash shall become mutilated or be destroyed,
lost or stolen, the Company may, instead of issuing a substitute Note, pay or
authorize the payment of or convert or authorize the conversion of the

 

14

 

same (without surrender
thereof, except in the case of a mutilated Note), as the case may be, if the
applicant for such payment or conversion shall furnish to the Company, to the
Trustee and, if applicable, to such authenticating agent such security or
indemnity as may be required by them to save each of them harmless from any
loss, liability, cost or expense caused by or connected with such substitution,
and in case of destruction, loss or theft, evidence satisfactory to the
Company, the Trustee and, if applicable, any paying agent or conversion agent
of the destruction, loss or theft of such Note and of the ownership thereof.

 

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

 

Section 2.7                                      TEMPORARY
NOTES.  Pending the preparation of
definitive Notes, the Company may execute and the Trustee or an authenticating
agent appointed by the Trustee shall, upon written request of the Company, authenticate
and make available for delivery temporary Notes (printed or lithographed).  Temporary Notes shall be issuable in any
authorized denomination and shall be substantially in the form of the
definitive Notes but with such omissions, insertions and variations as may be
appropriate for temporary Notes, all as may be determined by the Company.  Every such temporary Note shall be executed
by the Company and authenticated by the Trustee or such authenticating agent
upon the same conditions and in substantially the same manner, and with the
same effect, as the definitive Notes. 
Without unreasonable delay the Company shall execute and deliver to the
Trustee or such authenticating agent definitive Notes (other than in the case
of Notes in global form) and thereupon any or all temporary Notes (other than
the Global Note) may be surrendered in exchange therefor, at each office or
agency maintained by the Company pursuant to Section 4.2 and the Trustee or
such authenticating agent shall authenticate and make available for delivery in
exchange for such temporary Notes an equal aggregate principal amount of
definitive Notes.  Such exchange shall
be made by the Company at its own expense and without any charge therefor.  Until so exchanged, the temporary Notes shall
in all respects be entitled to the same benefits and subject to the same
limitations under this Indenture as definitive Notes authenticated and
delivered hereunder.

 

Section 2.8                                      CANCELLATION
OF NOTES PAID, ETC.  All Notes
surrendered for the purpose of payment, redemption, repurchase, conversion,
exchange or registration of transfer shall, if surrendered to the Company or
any paying agent or any Note registrar or any conversion agent, be surrendered
to the Trustee and promptly canceled by it or, if surrendered to the Trustee,
shall be promptly canceled by it and no Notes shall be issued in lieu thereof
except as expressly permitted by any of the provisions of this Indenture.  If required by the Company, the Trustee
shall return canceled Notes to the Company. 
If the Company shall

 

15

 

acquire any of the Notes, such
acquisition shall not operate as a redemption or satisfaction of the
indebtedness represented by such Notes unless and until the same are delivered
to the Trustee for cancellation.

 

Section 2.9                                      CUSIP
NUMBERS.  The Company in issuing the
Notes may use “CUSIP” numbers (if then generally in use), and, if so, the
Trustee shall use CUSIP numbers in notices of redemption 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 Notes or as
contained in any notice of a redemption and that reliance may be placed only on
the other identification numbers printed on the Notes, and any such redemption
shall not be affected by any defect in or omission of such numbers.  The Company shall promptly notify the
Trustee of any change in the CUSIP numbers.

 

ARTICLE III

 

REDEMPTION AND REPURCHASE OF NOTES

 

Section 3.1                                      REDEMPTION
PRICES.  The Notes are not redeemable at
the option of the Company prior to October 15, 2005.  At any time on or after that date, the Notes
may be redeemed at the Company’s option, upon notice as set forth in Section
3.2, in whole at any time or in part from time to time, at the redemption price
of 100% of principal amount of Notes plus accrued and unpaid interest.

 

Section 3.2                                      NOTICE
OF REDEMPTION; SELECTION OF NOTES.  In
case the Company shall desire to exercise the right to redeem all or, as the
case may be, any part of the Notes pursuant to Section 3.1, it shall fix a date
for redemption and, in the case of any redemption pursuant to Section 3.1, it
or, at its written request accompanied by the proposed form of notice of
redemption (which must be received by the Trustee at least 45 days prior to the
date fixed for redemption unless a shorter period is agreed to by the Trustee),
the Trustee in the name of and at the expense of the Company, shall mail or
cause to be mailed a notice of such redemption at least 30 and not more than 60
days prior to the date fixed for redemption to the holders of Notes so to be
redeemed as a whole or in part at their last addresses as the same appear on
the Note register, provided that subject to the approval of the form of notice
by the Trustee if the Company shall give such notice, it shall also give such
notice, and notice of the Notes to be redeemed, to the Trustee.  Such mailing shall be by first class mail.  The notice, if mailed in the manner herein
provided, shall be conclusively presumed to have been duly given, whether or
not the holder receives such notice.  In
any case, failure to give such notice by mail or any defect in the notice to
the holder of any Note designated for redemption as a whole or in part shall
not affect the validity of the proceedings for the redemption of any other
Note.

 

Each such notice of redemption shall identify
the Notes to be redeemed (including CUSIP numbers), specify the aggregate
principal amount of Notes to be redeemed, the date fixed for redemption, the
redemption price at which Notes are to be redeemed, the place or places of
payment, that payment shall be made upon presentation and surrender of such
Notes, that interest accrued to the date fixed for redemption shall be paid as
specified in said notice and that on and after said date, interest thereon or
on the portion thereof to be redeemed shall cease to accrue.  Such notice shall also state the current
Conversion Price and the date on which the right to

 

16

 

convert such Notes or portions
thereof into Common Stock shall expire. 
If fewer than all the Notes are to be redeemed, the notice of redemption
shall identify the Notes to be redeemed. 
In case any Note is to be redeemed in part only, the notice of
redemption shall state the portion of the principal amount thereof to be
redeemed and shall state that on and after the date fixed for redemption, upon
surrender of such Note, a new Note or Notes in principal amount equal to the
unredeemed portion thereof shall be issued.

 

On or prior to the Business Day prior to the
redemption date specified in the notice of redemption given as provided in this
Section 3.2, the Company shall deposit by 11:00 a.m. Eastern Time with the
Trustee or with one or more paying agents (or, if the Company is acting as its
own paying agent, set aside, segregate and hold in trust as provided in Section
4.4) an amount of money sufficient to redeem on the redemption date all the
Notes so called for redemption (other than those theretofore surrendered for
conversion into Common Stock or cash) at the appropriate redemption price,
together with accrued interest to the date fixed for redemption.  If any Note called for redemption is
converted pursuant hereto, any money deposited with the Trustee or any paying
agent or so segregated and held in trust for the redemption of such Note shall
be paid to the Company upon its written request or, if then held by the
Company, shall be discharged from such trust. 
If fewer than all the Notes are to be redeemed, the Company shall give
the Trustee written notice in the form of an Officers’ Certificate not fewer
than 45 days (or such shorter period of time as may be acceptable to the
Trustee) prior to the redemption date as to the aggregate principal amount of
Notes to be redeemed.

 

If fewer than all the Notes are to be
redeemed, the Trustee shall select the Notes or portions thereof to be redeemed
(in principal amounts of $1,000 or integral multiples thereof), by lot or, in
its discretion, on a PRO RATA basis.  If
any Note selected for partial redemption is converted in part after such
selection, the converted portion of such Note shall be deemed (so far as may
be) to be the portion to be selected for redemption.  The Notes (or portions thereof) so selected shall be deemed duly
selected for redemption for all purposes hereof, notwithstanding that any such
Note is converted as a whole or in part before the mailing of the notice of
redemption.

 

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

 

Section 3.3                                      PAYMENT
OF NOTES CALLED FOR REDEMPTION.  If
notice of redemption has been given as above provided, the Notes or portion of
Notes with respect to which such notice has been given shall, unless converted
into Common Stock pursuant to the terms hereof, become due and payable on the
date and at the place or places stated in such notice at the applicable
redemption price, together with interest thereon accrued to the date fixed for
redemption, and on and after said date (unless the Company shall default in the
payment of such Notes at the redemption price, together with interest thereon
accrued to said date), interest on the Notes or portion of Notes so called for
redemption shall cease to accrue, and such Notes shall cease after the close of
business on the Business Day next preceding the date fixed for

 

17

 

redemption to be convertible
into Common Stock or cash and, except as provided in Sections 7.6 and 12.4, to
be entitled to any benefit or security under this Indenture, and the holders
thereof shall have no right in respect of such Notes except the right to
receive the redemption price thereof and unpaid interest thereon to the date
fixed for redemption.  On presentation
and surrender of such Notes at a place of payment in said notice specified, the
said Notes or the specified portions thereof shall be paid and redeemed by the
Company at the applicable redemption price, together with interest accrued
thereon to the date fixed for redemption; provided that any semi-annual payment
of interest becoming due on the date fixed for redemption shall be payable to
the holders of such Notes registered as such on the relevant record date
subject to the terms and provisions of Section 2.3 hereof.

 

Upon presentation of any Note redeemed in
part only, the Company shall execute and the Trustee shall authenticate and
make available for delivery to the holder thereof, at the expense of the
Company, a new Note or Notes, of authorized denominations, in principal amount
equal to the unredeemed portion of the Notes so presented.

 

If any Note called for redemption shall not
be so paid upon surrender thereof for redemption, the principal and premium, if
any, shall, until paid or duly provided for, bear interest from the date fixed
for redemption at the rate borne by the Note and such Note shall remain
convertible into Common Stock until the principal and premium, if any, shall have
been paid or duly provided for.

 

Section 3.4                                      CONVERSION
ARRANGEMENT ON CALL FOR REDEMPTION.  In
connection with any redemption of Notes, with notice to the Trustee, the
Company may arrange for the purchase and conversion of any Notes by an
agreement with one or more investment bankers or other purchasers to purchase
such Notes by paying to the Trustee in trust for the Noteholders, on or prior
to the close of business one Business Day prior to the date fixed for
redemption, an amount not less than the applicable redemption price, together
with interest accrued to the date fixed for redemption, of such Notes.  Notwithstanding anything to the contrary
contained in this Article III, the obligation of the Company to pay the
redemption price of such Notes, together with interest accrued to the date
fixed for redemption, shall be deemed to be satisfied and discharged to the
extent such amount is so paid by such purchasers.  If such an agreement is entered into, a copy of which shall be
filed with the Trustee prior to the date fixed for redemption, any Notes not
duly surrendered for conversion by the holders thereof may, at the option of
the Company, be deemed, to the fullest extent permitted by law, acquired by
such purchasers from such holders and (notwithstanding anything to the contrary
contained in Article XIV) surrendered by such purchasers for conversion, prior
to the close of business on the date fixed for redemption (and the right to
convert any such Notes shall be deemed to have been extended through such
time), subject to payment of the above amount as aforesaid.  At the direction of the Company, the Trustee
shall hold and dispose of any such amount paid to it in the same manner as it
would monies deposited with it by the Company for the redemption of Notes.  Without the Trustee’s prior written consent,
no arrangement between the Company and such purchasers for the purchase and
conversion of any Notes shall increase or otherwise affect any of the powers,
duties, responsibilities or obligations of the Trustee as set forth in this
Indenture, and the Company agrees to indemnify the Trustee from, and hold it
harmless against, any loss, liability or expense arising out of or in
connection with any such arrangement for the purchase and conversion of any
Notes between the Company and such purchasers including the costs and

 

18

 

expenses incurred by the
Trustee in the defense of any claim or liability arising out of or in
connection with the exercise or performance of any of its powers, duties,
responsibilities or obligations under this Indenture.

 

Section 3.5                                      REPURCHASE
OF NOTES UPON A CHANGE OF CONTROL.

 

(a)                                  If a Change of
Control shall occur at any time, then each holder of Notes shall have the right
to require that the Company repurchase such holder’s Notes in whole or in part
in integral multiples of $1,000 at a purchase price (the “Change of Control
Purchase Price”) in cash in an amount equal to 101% of the principal amount of
such Notes, plus accrued and unpaid interest thereon, if any, to the purchase
date (the “Change of Control Purchase Date”) pursuant to the offer described
below (the “Change of Control Offer”) and in accordance with the other
procedures set forth in this Indenture.

 

(b)                                 Within 30 days following
any Change of Control, the Company shall publish a notice in the Wall Street
Journal, notify the Trustee thereof and give written notice of such Change of
Control to each holder of Notes, by first-class mail, postage prepaid, at the
Noteholder’s address appearing in the Note register, stating, among other
things, (i) that a Change of Control has occurred, (ii) the Change of Control
Purchase Price, (iii) the Change of Control Purchase Date (which shall be a
Business Day no earlier than 30 days nor later than 60 days from the date such
notice is mailed, or such later date as is necessary to comply with
requirements under the Exchange Act), (iv) that any Note not tendered shall
continue to accrue interest and to have all of the benefits of this Indenture,
(v) that, unless the Company defaults in the payment of the Change of Control
Purchase Price, any Notes accepted for payment pursuant to the Change of
Control Offer shall cease to accrue interest after the Change of Control
Purchase Date, (vi) that Noteholders electing to have any Notes purchased
pursuant to a Change of Control Offer shall be required to surrender the Notes,
with the form entitled “Option of Noteholder to Elect Purchase” on the reverse
of the Notes completed, to the Company at the address specified in the notice
prior to the close of business on the third Business Day preceding the Change
of Control Purchase Date, (vii) that Noteholders shall be entitled to withdraw
their election if the Company receives, not later than the close of business on
the second Business Day preceding the Change of Control Purchase Date, a
telegram, telex, facsimile transmission or letter setting forth the name of the
Noteholder, the principal amount of Notes delivered for purchase, and a
statement that such Noteholder is withdrawing his election to have such Notes
purchased, and (viii) that Noteholders whose Notes are being purchased only in
part shall be issued new Notes equal in principal amount to the unpurchased
portion of the Notes surrendered, which unpurchased portion must be equal to
$1,000 in principal amount or an integral multiple thereof.  The Company shall comply with the
requirements of Rule 13e-4 and 14e-1 under the Exchange Act and any other
securities laws and regulations thereunder to the extent such laws and
regulations are applicable in connection with the repurchase of the Notes in
connection with a Change of Control.

 

(c)                                  On the Change of
Control Purchase Date, the Company shall, to the extent lawful, (i) accept for payment
Notes or portions thereof tendered pursuant to the Change of Control Offer,
(ii) deposit
with the Trustee in immediately available funds by 11:00 a.m. Eastern Time an
amount equal to the Change of Control Purchase Price in respect of all Notes or
portions thereof so tendered and (iii) deliver
or cause to be delivered to the Trustee the Notes so accepted

 

19

 

together with an Officers’
Certificate stating the Notes or portions thereof tendered to the Company.  The Trustee shall promptly mail to each
Noteholder of Notes so accepted payment in an amount equal to the purchase
price of such Notes, and the Trustee shall promptly authenticate and mail to
each Noteholder a new Note equal in principal amount to any unpurchased portion
of the Notes surrendered, if any; provided that each such new Note shall be in
a principal amount of $1,000 or an integral multiple thereof.  The Company shall publicly announce the
results of the Change of Control Offer on or as soon as practicable after the
Change of Control Payment Date.

 

(d)                                 The term “Change in
Control” shall mean an event or series of events in which (i) any “person” or
“group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange
Act) acquires “beneficial ownership” (as determined in accordance with Rule
13d-3 under the Exchange Act), directly or indirectly, of more than 50% of the
total Voting Stock of the Company at an Acquisition Price less than the
conversion price then in effect with respect to the Notes and (ii) the holders
of the Common Stock receive consideration which is not all or substantially all
common stock that is (or upon consummation of or immediately following such
event or events will be) listed on a United States national securities exchange
or approved for quotation on the Nasdaq Stock Market or any similar United
States system of automated dissemination of quotations of securities’ prices;
provided, however, that any such person or group shall not be deemed to be the
beneficial owner of, or to beneficially own, any Voting Stock tendered in a
tender offer until such tendered Voting Stock is accepted for purchase under
the tender offer.

 

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

 

ARTICLE IV

 

PARTICULAR COVENANTS OF THE COMPANY

 

Section 4.1                                      PAYMENT
OF PRINCIPAL, PREMIUM AND INTEREST.  The
Company covenants and agrees that it shall duly and punctually pay or cause to
be paid the principal of and premium, if any, and interest on each of the Notes
at the places, at the respective times and in the manner provided herein and in
the Notes.  Any amounts of cash to be
given to the Trustee or paying agent shall be deposited with the Trustee or
paying agent in immediately available funds by 11:00 a.m. Eastern Time on or
before the date such payment is to be made. 
Each installment of interest on the Notes due on any semi-annual
interest payment date may be paid by mailing checks for the interest payable to
or upon the written order of the holders of Notes entitled thereto as they
shall appear on the Note register; provided that, with respect to any holder of
Notes with an aggregate principal amount equal to or in excess of $5,000,000,
at the request (such request to include appropriate wire instructions) of such
holder in writing to the Trustee, interest on such holder’s Notes shall be paid
by wire transfer in immediately available funds.  An installment of principal or interest shall be considered paid
on the date due if the Trustee or paying agent (other than the Company, a
Subsidiary of the Company or any Affiliate of any of them) holds on that date
money designated for and sufficient to pay the installment of

 

20

 

principal or interest and is
not prohibited from paying such money to the holders of the Notes pursuant to
the terms of this Indenture.

 

Section 4.2                                      MAINTENANCE
OF OFFICE OR AGENCY.  The Company shall
maintain in the Borough of Manhattan, The City of New York, an office or agency
where the Notes may be surrendered for registration of transfer or exchange or
for presentation for payment or for conversion, redemption or repurchase and
where notices and demands to or upon the Company in respect of the Notes and this
Indenture may be served.  The Company
shall give prompt written notice to the Trustee of the location, and any change
in the location, of such office or agency. 
If at any time the Company shall fail to maintain any such office or
agency or shall fail to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee.

 

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

 

The Company hereby initially designates the
Trustee as paying agent, Note registrar and conversion agent and the Corporate
Trust Office of the Trustee, as offices or agencies of the Company for the
purposes set forth in the first paragraph of this Section 4.2.

 

So long as the Trustee is the Note registrar,
the Trustee agrees to mail, or cause to be mailed, the notices set forth in
Section 7.11(a).

 

Section 4.3                                      APPOINTMENTS
TO FILL VACANCIES IN TRUSTEE’S OFFICE. 
The Company, whenever necessary to avoid or fill a vacancy in the office
of Trustee, shall appoint, in the manner provided in Section 7.11, a Trustee,
so that there shall at all times be a Trustee hereunder.

 

Section 4.4                                      PROVISIONS
AS TO PAYING AGENT.

 

(a)                                  If the Company shall
appoint a paying agent other than the Trustee, or if the Trustee shall appoint
such a paying agent, the Company or the Trustee, as the case may be, shall
cause such paying agent to execute and deliver to the Trustee an instrument in
which such agent shall agree with the Trustee, subject to the provisions of
this Section 4.4:

 

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

 

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

 

21

 

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

 

The Company shall, before each due date of
the principal of, premium, if any, or interest on the Notes, deposit with the
paying agent a sum sufficient to pay such principal, premium, if any, or
interest, and (unless such paying agent is the Trustee) the Company shall
promptly notify the Trustee of any failure to take such action.

 

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

 

(c)                                  Anything in this
Section 4.4 to the contrary notwithstanding, the Company may, at any time, for
the purpose of obtaining a satisfaction and discharge of this Indenture, or for
any other reason, pay or cause to be paid to the Trustee all sums held in trust
by the Company or any paying agent hereunder as required by this Section 4.4,
such sums to be held by the Trustee upon the trusts herein contained and upon
such payment by the Company or any paying agent to the Trustee, the Company or
such paying agent shall be released from all further liability with respect to
such sums.

 

(d)                                 Anything in this
Section 4.4 to the contrary notwithstanding, the agreement to hold sums in
trust as provided in this Section 4.4 is subject to Sections 12.3 and 12.4.

 

Section 4.5                                      CORPORATE
EXISTENCE.  Subject to Article XI, the
Company shall do or cause to be done all things necessary to preserve and keep
in full force and effect (i) its corporate existence, and the corporate,
partnership or other existence of any Subsidiary of the Company, in accordance
with the respective organizational documents (as the same may be amended from
time to time) of the Company or any such Subsidiary and (ii) the rights
(charter and statutory), licenses and franchises of the Company and its
Subsidiaries; provided that the Company shall not be required to preserve any
such right, license or franchise, or the corporate, partnership or other
existence of any of its Subsidiaries if the Board of Directors shall determine
that the preservation thereof is no longer desirable in the conduct of the
business of the Company and its Subsidiaries, taken as a whole, and that the
loss thereof is not materially adverse to the holders of the Notes.

 

Section 4.6                                      STAY,
EXTENSION AND USURY LAWS.  The Company
covenants (to the extent that it may lawfully do so) that it shall not at any
time insist upon, plead or in any manner whatsoever claim or take the benefit
or advantage of, any stay, extension or usury law or other law that would
prohibit or forgive the Company from paying all or any portion of the principal
of or interest on the Notes as contemplated herein, wherever enacted, now or at
any time hereafter in force, or that 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

 

22

 

benefit or advantage of any
such law, and covenants that it shall not, by resort to any such law, hinder,
delay or impede the execution of any power herein granted to the Trustee, but
shall suffer and permit the execution of every such power as though no such law
has been enacted.

 

Section 4.7                                      COMPLIANCE
STATEMENT; NOTICE OF DEFAULTS

 

(a)                                  The Company shall
deliver to the Trustee within 120 days after the end of each fiscal year of the
Company an Officers’ Certificate stating whether or not to the best knowledge
of the signers thereof the Company is in compliance (without regard to periods
of grace or notice requirements) with all conditions and covenants under this
Indenture, and if the Company shall not be in compliance, specifying such
non-compliance and the nature and status thereof of which such signer may have
knowledge.

 

(b)                                 The Company shall file
with the Trustee written notice of the occurrence of any default or Event of
Default within ten days of its becoming aware of any such default or Event of
Default.

 

Section 4.8                                      LIMITATION
ON DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES.  The Company shall not, and shall not permit
any of its Subsidiaries to, directly or indirectly, create or otherwise cause
or suffer to exist or become effective any consensual encumbrance or
restriction on the ability of any Subsidiary to (i) pay dividends or make
any other distribution on its Capital Stock or with respect to any other
interest or participation in, or measured by, its profits, or pay any
indebtedness owed to, the Company or a Subsidiary of the Company,
(ii) make loans or advances to the Company or any Subsidiary of the
Company, or (iii) transfer any of its properties or assets to the Company.

 

Section 4.9                                      TAXES.  The Company shall pay or discharge or cause
to be paid or discharged, before the same shall become delinquent, (i) all
taxes, assessments and governmental charges (including withholding taxes and
any penalties, interest and additions to taxes) levied or imposed upon the
Company or its Subsidiaries or upon the income, profits or property of the
Company or any such Subsidiary and (ii) all lawful claims for labor, materials
and supplies that, if unpaid, might by law become a lien upon the property of
the Company or any such Subsidiary; provided that the Company shall not be
required to pay or discharge or cause to be paid or discharged any such tax,
assessment, charge or claim whose amount, applicability or validity is being
contested in good faith by appropriate proceedings and for which disputed
amounts adequate reserves have been made.

 

Section 4.10                                INSURANCE.  The Company shall provide, or cause to be
provided, for itself and its Subsidiaries, insurance (including appropriate
self-insurance) against loss or damage of the kinds customarily insured against
by corporations similarly situated and owning like properties, including, but
not limited to, products liability insurance and public liability insurance,
with reputable insurers or with the government of the United States of America
or an agency or instrumentality thereof, in such amounts with such deductibles
and by such methods as shall be determined in good faith by the Board of
Directors to be appropriate.

 

23

 

ARTICLE V

 

NOTEHOLDERS’ LISTS AND REPORTS BY THE COMPANY

 

Section 5.1                                      NOTEHOLDERS’
LISTS.  The Trustee shall preserve in as
current a form as is reasonably practicable the most recent list available to
it of the names and addresses of holders of Notes, the Company and the Trustee,
and shall otherwise comply with Trust Indenture Act Section 312(a).  If the Trustee is not the Notes registrar,
the Company shall furnish to the Trustee on or before at least seven Business Days
preceding 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
reasonably may require of the names and addresses of holders of Notes, and the
Company shall otherwise comply with Trust Indenture Act Section 312(a).

 

Section 5.2                                      REPORTS
BY COMPANY.  The Company shall deliver
to the Trustee within 15 days after it files the same with the Commission,
copies of all reports and information (or copies of such portions of any of the
foregoing as the Commission may by its rules and regulations prescribe), if
any, which the Company is required to file with the Commission pursuant to
Section 13 or 15(d) of the Exchange Act or pursuant to the immediately
following sentence.  So long as at least
$5,000,000 aggregate principal amount of Notes remain outstanding, the Company
shall file with the Commission such reports as may be required pursuant to
Section 13 of the Exchange Act in respect of a security registered pursuant to
Section 12 of the Exchange Act, regardless of whether the Company is otherwise
required to file such reports.  If the
Company is not subject to the reporting requirements of Section 13 or 15(d) of
the Exchange Act (or otherwise required to file reports pursuant to the
immediately preceding sentence), the Company shall deliver to the Trustee,
within 15 days after it would have been required to file such information with
the Commission were it required to do so, annual and quarterly financial
statements, including any notes thereto (and, in the case of a fiscal year end,
an auditors’ report by an independent certified public accounting firm of
established national reputation), and a “Management’s Discussion and Analysis
of Financial Condition and Results of Operations,” in each case substantially
equivalent to that which it would have been required to include in such
quarterly or annual reports, information, documents or other reports if it had
been subject to the requirements of Section 13 or 15(d) of the Exchange
Act.  The Company shall provide copies of
the foregoing materials to the Noteholders to the extent required by the Trust
Indenture Act once this Indenture has been qualified.  The Company shall also comply with the other provisions of the
Trust Indenture Act Section 314(a).

 

If the Company is not required to file the
reports and information described above with the Commission, and the Company’s
Common Stock is still publicly held, the Company shall deliver an annual
financial report for the Common Stock (as required by the Commission) to the Trustee
no later than 120 days from the end of its fiscal year and quarterly financial
reports for the Common Stock (as required by the Commission) no later than 30
days after the end of each quarter; provided, however, that if the Company’s
Common Stock is no longer publicly held, the Company shall deliver annual and
quarterly reports to the Trustee at the same times as described in this
paragraph, but the Company shall not have to include management’s discussion
and analysis of financial conditions and results of operations or description
of the business sections in such reports.

 

24

 

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).

 

ARTICLE VI

 

DEFAULTS AND REMEDIES

 

Section 6.1                                      EVENTS
OF DEFAULT.  In case one or more of the
following Events of Default (whatever the reason for such Event of Default and
whether it shall be voluntary or involuntary or be effected by operation of law
or pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body) shall have occurred and
be continuing:

 

(a)                                  default in the
payment of the principal of or premium, if any, on the Notes when due at
maturity, upon redemption or otherwise, including failure by the Company to
purchase the Notes when required under Section 3.5 (whether or not such payment
shall be prohibited by Article XV of this Indenture); or

 

(b)                                 default in the payment
of any installment of interest on the Notes as and when the same shall become
due and payable (whether or not such payment shall be prohibited by Article XV
of this Indenture), and continuance of such default for a period of 30 days; or

 

(c)                                  a failure on the part
of the Company to duly observe or perform any other covenants or agreements on
the part of the Company in this Indenture (other than a default in the
performance or breach of a covenant or agreement that is specifically dealt
with elsewhere in this Section 6.1) that continues for a period of 90 days
after the date on which written notice of such failure, requiring the Company
to remedy the same, shall have been given to the Company by the Trustee, or to
the Company and a Responsible Officer of the Trustee, by the holders of at
least 25% in aggregate principal amount of the Notes at the time outstanding
determined in accordance with Section 8.4; or

 

(d)                                 an event of default
occurs under any mortgage, indenture or instrument under which there may be
issued or by which there may be secured or evidenced any indebtedness for money
borrowed by the Company or any of its Subsidiaries (or the payment of which is
guaranteed by the Company or any of its Subsidiaries), whether such indebtedness
or guarantee now exists or shall be created after the date hereof, which
default (i) is
caused by a failure to pay principal or interest on such indebtedness prior to
the expiration of the grace period provided in such indebtedness (a “Payment
Default”) or (ii) results
in the acceleration of such indebtedness prior to its expressed maturity and,
in each case, the principal amount of such indebtedness, together with the
principal amount of any other such indebtedness under which there has been a
Payment Default or the maturity of which has been so accelerated, aggregates
$10,000,000 or more;

 

25

 

(e)                                  final judgments or
decrees shall be entered by a court of competent jurisdiction against the
Company or any Subsidiary involving liabilities of  $25,000,000
or more (singly or in the aggregate) (after deducting the portion of such
liabilities accepted by a reputable insurance company) and such final judgments
or decrees shall not have been vacated, discharged, satisfied or stayed pending
appeal within 60 days from the entry thereof;

 

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

 

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

 

then, and in each and every such case (other than an Event of Default
specified in Section 6.1(f) or (g)), unless the principal of all of the Notes
shall have already become due and payable, either the Trustee or the holders of
not less than 25% in aggregate principal amount of the Notes then outstanding
hereunder determined in accordance with Section 8.4, by notice in writing to
the Company (and to the Trustee if given by Noteholders), may declare the
principal of, premium, if any, on the Notes and the interest accrued thereon to
be due and payable immediately, and upon any such declaration the same shall
become and shall be immediately due and payable, anything in this Indenture or
in the Notes contained to the contrary notwithstanding.  If an Event of Default specified in Section
6.1(f) or (g) occurs and is continuing, the principal of all the Notes and the
interest accrued thereon shall be immediately due and payable.  The foregoing provision is subject to the
conditions that if, at any time after the principal of the Notes shall have
been so declared due and payable, and before any judgment or decree for the
payment of the monies due shall have been obtained or entered as hereinafter
provided, the Company shall pay or shall deposit with the Trustee a sum sufficient
to pay all matured installments of interest upon all Notes and the principal of
and premium, if any, on any and all Notes that shall have become due otherwise
than by acceleration (with interest on overdue installments of interest (to the
extent that payment of such interest is enforceable under applicable law) and
on such principal and premium, if any, at the rate borne by the Notes, to the
date of such payment or deposit) and amounts due to the Trustee pursuant to
Section 7.7, and if any and all defaults under this Indenture, other than the
nonpayment of principal of, premium, if any, and accrued interest on Notes that
shall have become due by acceleration, shall have been cured or waived pursuant
to Section 6.7, then and in every such case the holders of a majority in
aggregate principal amount of the Notes then outstanding, by written notice to
the Company and to the Trustee, may waive all defaults or Events of Default and
rescind and annul such declaration and its consequences; but no such waiver or
rescission and annulment shall extend to or shall affect any subsequent

 

26

 

default or Event of Default, or shall impair any right consequent
thereto.  The Company shall notify a
Responsible Officer of the Trustee, promptly upon becoming aware thereof, of
any Event of Default.

 

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

 

Section 6.2                                      PAYMENTS
OF NOTES ON DEFAULT; SUIT THEREFOR.  The
Company covenants that (a) in case a default shall be made in the payment of
any installment of interest upon any of the Notes as and when the same shall
become due and payable, and such default shall have continued for a period of
30 days, or (b) in case default shall be made in the payment of the principal
of or premium, if any, on any of the Notes as and when the same shall have
become due and payable, whether at maturity of the Notes or in connection with
any redemption or repurchase, by declaration or otherwise, then, upon demand of
the Trustee, the Company shall pay to the Trustee, for the benefit of the
holders of the Notes, the whole amount that then shall have become due and
payable on all such Notes for principal of, premium, if any, or interest, or
both, as the case may be, with interest upon the overdue principal, premium, if
any, and (to the extent that payment of such interest is enforceable under
applicable law) upon the overdue installments of interest at the rate borne by
the Notes; and, in addition thereto, such further amount as shall be sufficient
to cover the costs and expenses of collection, including reasonable
compensation to the Trustee, its agents, attorneys and counsel, and any
expenses or liabilities incurred by the Trustee hereunder other than through
its negligence or bad faith.  Until such
demand by the Trustee, the Company may pay the principal of and premium, if
any, and interest on the Notes to the registered holders, whether or not the
Notes are overdue.

 

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

 

In case there shall be pending proceedings
for the bankruptcy or for the reorganization of the Company or any other
obligor on the Notes under Title 11 of the United States Code or any other
applicable law, or in case a receiver, assignee or trustee in bankruptcy or
reorganization, liquidator, sequestrator or similar official shall have been
appointed for or taken possession of the Company or such other obligor, the
property of the Company or such other obligor, or in the case of any other
judicial proceedings relative to the Company or such other obligor upon the
Notes, or to the creditors or property of the Company or such other obligor,
the Trustee, irrespective of whether the principal of the Notes shall then be
due and payable as therein expressed or by declaration or otherwise and
irrespective of whether the

 

27

 

Trustee shall have made any
demand pursuant to the provisions of this Section 6.2, shall be entitled and
empowered, by intervention in such proceedings or otherwise, to file and prove
a claim or claims for the whole amount of principal, premium, if any, and
interest owing and unpaid in respect of the Notes and, in case of any judicial
proceedings, to file such proofs of claim and other papers or documents as may
be necessary or advisable in order to have the claims of the Trustee and of the
Noteholders allowed in such judicial proceedings relative to the Company or any
other obligor on the Notes, its or their creditors, or its or their property
and to collect and receive any monies or other property payable or deliverable
on any such claims and to distribute the same after the deduction of any
amounts due the Trustee under Section 7.7; and any receiver, assignee or
trustee in bankruptcy or reorganization, liquidator, custodian or similar
official is hereby authorized by each of the Noteholders to make such payments
to the Trustee and, in the event that the Trustee shall consent to the making
of such payments directly to the Noteholders, to pay to the Trustee any amount
due it for reasonable compensation, expenses, advances and disbursements,
including counsel fees incurred by it up to the date of such distribution.  To the extent that such payment of
reasonable compensation, expenses, advances and disbursements out of the estate
in any such proceedings shall be denied for any reason, payment of the same
shall be secured by a lien on, and shall be paid out of, any and all
distributions, dividends, monies, securities and other property that the
holders of the Notes may be entitled to receive in such proceedings, whether in
liquidation or under any plan of reorganization or arrangement or otherwise.

 

Nothing herein contained shall be deemed to
authorize the Trustee to authorize or consent to or adopt on behalf of any
Noteholder any plan of reorganization or arrangement affecting the Notes or the
rights of any Noteholder, or to authorize the Trustee to vote in respect of the
claim of any Noteholder in any such proceeding.

 

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

 

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

 

Section 6.3                                      APPLICATION
OF MONIES COLLECTED BY TRUSTEE.  Any
monies collected by the Trustee pursuant to this Article VI shall be applied in
the order following, at the date or dates fixed by the Trustee for the
distribution of such monies, upon presentation of the several Notes and
stamping thereon the payment, if only partially paid, and upon surrender
thereof, if fully paid:

 

First: To the payment of all amounts due the Trustee under
Section 7.7;

 

28

 

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

 

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

 

Section 6.4                                      PROCEEDINGS
BY NOTEHOLDER.  No holder of any Note
shall have any right by virtue of or by availing of any provision of this
Indenture to institute any suit, action or proceeding in equity or at law upon
or under or with respect to this Indenture, or for the appointment of a
receiver, trustee, liquidator, custodian or other similar official, or for any
other remedy hereunder, unless such holder previously shall have given to the
Trustee written notice of an Event of Default and of the continuance thereof,
as hereinbefore provided, and unless also the holders of not less than 25% in
aggregate principal amount of the Notes then outstanding shall have made
written request upon the Trustee to institute such action, suit or proceeding
in its own name as Trustee hereunder and shall have offered to the Trustee such
reasonable indemnity as it may require against the costs, expenses and
liabilities to be incurred therein or thereby, and the Trustee for 60 days
after its receipt of such notice, request and offer of indemnity, shall have
neglected or refused to institute any such action, suit or proceeding, and no
direction inconsistent with such written request shall have been given to the
Trustee pursuant to Section 6.7; it being understood and intended, and being
expressly covenanted by the taker and holder of every Note with every other
taker and holder and the Trustee, that no one or more holders of Notes shall
have any right in any manner whatever by virtue of or by availing of any
provision of this Indenture to affect, disturb or prejudice the rights of any
other holder of Notes, to obtain or seek to obtain priority over or preference
to any other such holder or to enforce any right under this Indenture, except
in the manner herein provided and for the equal, ratable and common benefit of
all holders of Notes (except as otherwise provided herein).  For the protection and enforcement of this
Section 6.4, each and every Noteholder and the Trustee shall be entitled to
such relief as can be given either at law or in equity.

 

Notwithstanding any other provision of this
Indenture and any provision of any Note, the right of any holder of any Note to
receive payment of the principal of, premium, if any, and interest on such
Note, on or after the respective due dates expressed in such Note, or to
institute suit for the enforcement of any such payment on or after such
respective dates against

 

29

 

the Company shall not be
impaired or affected without the consent of such holder except as otherwise set
forth herein.

 

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

 

Section 6.5                                      PROCEEDINGS
BY TRUSTEE.  In case of an Event of
Default and subject to the provisions of Section 7.7 hereof, the Trustee may in
its discretion proceed to protect and enforce the rights vested in it by this
Indenture by such appropriate judicial proceedings as the Trustee shall deem
most effectual to protect and enforce any of such rights, either by suit in
equity or by action at law or by proceeding in bankruptcy or otherwise, whether
for the specific enforcement of any covenant or agreement contained in this
Indenture or in aid of the exercise of any power granted in this Indenture or
to enforce any other legal or equitable right vested in the Trustee by this
Indenture or by law.

 

Section 6.6                                      REMEDIES
CUMULATIVE AND CONTINUING.  Except as
provided in Section 2.7, all powers and remedies given by this Article VI to
the Trustee or to the Noteholders shall, to the extent permitted by law, be
deemed cumulative and not exclusive of such powers and remedies or of any other
powers and remedies available to the Trustee or the holders of the Notes, by
judicial proceedings or otherwise, to enforce the performance or observance of
the covenants and agreements contained in this Indenture, and no delay or
omission of the Trustee or of any holder of any of the Notes to exercise any
right or power accruing upon any default or Event of Default occurring and
continuing as aforesaid shall impair any such right or power or shall be construed
to be a waiver of any such default or any acquiescence therein; and, subject to
the provisions of Section 6.4, every power and remedy given by this Article VI
or by law to the Trustee or to the Noteholders may be exercised from time to
time, and as often as shall be deemed expedient, by the Trustee or by the
Noteholders.

 

Section 6.7                                      DIRECTION
OF PROCEEDINGS AND WAIVER OF DEFAULTS BY MAJORITY OF NOTEHOLDERS.  The holders of a majority in aggregate
principal amount of the Notes at the time outstanding (determined in accordance
with Section 8.4) shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on the Trustee; provided that (a) such direction
shall not be in conflict with any rule of law or with this Indenture and (b)
the Trustee may take any other action deemed proper by the Trustee that is not
inconsistent with such direction.  The
holders of a majority in aggregate principal amount of the Notes at the time
outstanding (determined in accordance with Section 8.4) may on behalf of the
holders of all of the Notes waive any past default or Event of Default
hereunder and its consequences except (i) a default in the payment of
interest or premium, if any, on, or the principal of, the Notes, (ii) a
failure by the Company to convert any Notes into Common Stock or cash, as the
case may be, or (iii) a default in respect of a covenant or provisions
hereof that under Article X cannot be modified or amended without the consent
of the holders of all Notes then outstanding. 
Whenever any default or Event of Default hereunder shall have been
waived as permitted by this Section 6.7, said default or Event of Default shall
for all purposes of the Notes and this Indenture be deemed to have been cured
and to be not continuing and the

 

30

 

Company, the Trustee and the
holders of the Notes shall as reasonably possible be restored to their former
positions and rights hereunder; but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
thereon.

 

Section 6.8                                      NOTICE
OF DEFAULTS.  The Trustee shall, within
90 days after the occurrence of a default, mail to all Noteholders, as the
names and addresses of such holders appear upon the Note register, notice of
all defaults of which a Responsible Officer has actual knowledge, unless such
defaults shall have been cured or waived before the giving of such notice;
provided that, except in the case of default in the payment of the principal
of, premium, if any, or interest on any of the Notes, the Trustee shall be
protected in withholding such notice if and so long as a Responsible Officer of
the Trustee in good faith determine that the withholding of such notice is in
the interests of the Noteholders.

 

Section 6.9                                      UNDERTAKING
TO PAY COSTS.  All parties to this
Indenture agree, and each holder of any Note by his acceptance thereof shall be
deemed to have agreed, that any court may, in its discretion, require, in any
suit for the enforcement of any right or remedy under this Indenture, or in any
suit against the Trustee for any action taken or omitted by it as Trustee, the
filing by any party litigant in such suit of an undertaking to pay the costs of
such suit and that such court may in its discretion assess reasonable costs,
including reasonable attorneys’ fees and expenses, against any party litigant
in such suit, having due regard to the merits and good faith of the claims or defenses
made by such party litigant; provided that the provisions of this Section 6.9
shall not apply to any suit instituted by the Trustee, to any suit instituted
by any Noteholder or group of Noteholders holding in the aggregate more than
10% in principal amount of the Notes at the time outstanding determined in
accordance with Section 8.4 or to any suit instituted by any Noteholder for the
enforcement of the payment of the principal of, premium, if any, or interest on
any Note on or after the due date expressed in such Note or to any suit for the
enforcement of the right to convert any Note in accordance with the provisions
of Article XIV.

 

ARTICLE VII

 

CONCERNING THE TRUSTEE

 

Section 7.1                                      DUTIES
AND RESPONSIBILITIES OF TRUSTEE.

 

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

 

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

 

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

 

(ii)                                  in
the absence of bad faith on its part, the Trustee may conclusively rely, as to
the truth of the statements and the correctness of the

 

31

 

opinions
expressed therein, upon certificates or opinions furnished to the Trustee and
conforming to the requirements of this Indenture; provided that in the case of
any such certificates or opinions that by any provision hereof are specifically
required to be furnished to the Trustee, the Trustee shall be under a duty to
examine the same to determine whether or not they conform to the requirements
of this Indenture (but need not confirm or investigate the accuracy of
mathematical calculations or other facts stated therein).

 

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

 

(i)                                     this
paragraph (c) does not limit the effect of paragraph (b) of this Section 7.1;

 

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

 

(iii)                               the
Trustee shall not be liable with respect to any action it takes or omits to
take in good faith in accordance with a direction received by it pursuant to
Section 6.7.

 

(d)                                 Every provision of
this Indenture that in any way relates to the Trustee is subject to paragraphs
(a), (b), (c) and (e) of this Section 7.1.

 

(e)                                  The Trustee may
refuse to perform any duty or exercise any right or power or extend or risk its
own funds or otherwise incur any financial liability unless it receives
indemnity satisfactory to it against any loss, liability or expense.

 

Section 7.2                                      REPORTS
BY TRUSTEE TO HOLDERS.  Within 60 days
after each April 1 commencing with the April 1 following the date of this
Indenture, the Trustee shall, if required by the Trust Indenture Act, mail to
each Noteholder a brief report dated as of such April 1 that complies with
Trust Indenture Act Section 313(a).  The
Trustee also shall comply with Trust Indenture Act Sections 313(b) and 313(c).

 

The Company shall promptly notify the Trustee
in writing if the Notes become listed or delisted on any stock exchange or
automatic quotation system.

 

A copy of each report at the time of its
mailing to Noteholders shall be mailed to the Company and, to the extent
required by Section 5.2 hereof and of the Trust Indenture Act Section 313(d),
filed with the Commission and each stock exchange, if any, on which the Notes
are listed.

 

Section 7.3                                      RELIANCE
ON DOCUMENTS, OPINIONS, ETC.  Except as
otherwise provided in Section 7.1:

 

32

 

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

 

(b)                                 Any request,
direction, order or demand of the Company mentioned herein shall be
sufficiently evidenced by an Officers’ Certificate (unless other evidence in
respect thereof be herein specifically prescribed or required by the Trust
Indenture Act); and any resolution of the Board of Directors may be evidenced
to the Trustee by a copy thereof certified by the Secretary or an Assistant
Secretary of the Company;

 

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

 

(d)                                 The Trustee may
execute any of the trusts or powers hereunder or perform any duties hereunder
either directly or by or through agents or attorneys, and the Trustee shall not
be responsible for any misconduct or negligence on the part of any agent or
attorney appointed by it with due care hereunder; no Depository, Custodian or
paying agent who is not the Trustee shall be deemed an agent of the Trustee,
and the Trustee (in its capacity as Trustee) shall not be responsible for any
act or omission by any such Depository, Custodian or paying agent;

 

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

 

(f)                                    Subject to the
provisions of Section 7.1(c), the Trustee shall not be liable for any action it
takes or omits to take in good faith that it believes to be authorized or
within its rights or powers;

 

(g)                                 In connection with any
request to transfer or exchange any Note, the Trustee may request a direction
(in the form of an Officers’ Certificate) from the Company and an Opinion of
Counsel with respect to compliance with any restrictions on transfer or
exchange imposed by this Indenture, the Securities Act, other applicable law or
the rules and regulations of any exchange on which the Notes or the Common
Stock may be traded, and the Trustee may rely and shall be protected in acting
upon such direction and in accordance with such Officers’ Certificate and
Opinion of Counsel;

 

(h)                                 The Trustee may rely
and shall be fully protected in acting upon the determination and notice by the
Company of the Conversion Price; and

 

(i)                                     The Trustee shall
not be deemed to have knowledge of any Event of Default or other fact or event
upon the occurrence of which it may be required to take action

 

33

 

hereunder unless one of its
Responsible Officers has actual knowledge thereof obtained by a written
statement.

 

Section 7.4                                      NO
RESPONSIBILITY FOR RECITALS, ETC.  The
recitals contained herein and in the Notes (except in the Trustee’s certificate
of authentication) shall be taken as the statements of the Company, and the
Trustee assumes no responsibility for the correctness of the same.  The Trustee makes no representations as to
the validity or sufficiency of this Indenture or of the Notes.  The Trustee shall not be accountable for the
use or application by the Company of any Notes or the proceeds of any Notes
authenticated and delivered by the Trustee in conformity with the provisions of
this Indenture.

 

Section 7.5                                      TRUSTEE,
PAYING AGENTS, CONVERSION AGENTS OR REGISTRAR MAY OWN NOTES.  The Trustee, any paying agent, any
conversion agent or any Note registrar, in its individual or any other
capacity, may become the owner or pledgee of Notes with the same rights it
would have if it were not Trustee, paying agent, conversion agent or Note
registrar.

 

Section 7.6                                      MONIES
TO BE HELD IN TRUST.  Subject to the
provisions of Section 12.4, all monies received by the Trustee shall, until
used or applied as herein provided, be held in trust for the purposes for which
they were received.  Money held by the
Trustee in trust hereunder need not be segregated from other funds except to
the extent required by law.  The Trustee
shall be under no liability for interest on any money received by it hereunder
except as may be agreed to in writing from time to time by the Company and the
Trustee.

 

Section 7.7                                      COMPENSATION
AND EXPENSES OF TRUSTEE.  The Company
covenants and agrees to pay to the Trustee from time to time, and the Trustee
shall be entitled to, such compensation as the Company and the Trustee shall
from time to time agree in writing, for all services rendered by it hereunder
in any capacity (which shall not be limited by any provision of law in regard
to the compensation of a trustee of an express trust), and the Company shall
pay or reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance with
any of the provisions of this Indenture (including the reasonable compensation
and the expenses and disbursements of its counsel and of all persons not
regularly in its employ) except any such expense, disbursement or advance as
may arise from its negligence or bad faith. 
The Company also covenants to indemnify each of the Trustee or any
predecessor Trustee in any capacity under this Indenture and its agents and any
authenticating agent for, and to hold them harmless against, any and all loss,
liability, damage, claim or expense, including taxes (other than taxes based on
the income of the Trustee) incurred without negligence or bad faith on the part
of the Trustee or such agent or authenticating agent, as the case may be, and
arising out of or in connection with the acceptance or administration of this
trust or in any other capacity hereunder, including the costs and expenses of
defending themselves against any claim of liability in the premises.  The obligations of the Company under this
Section 7.7 to compensate or indemnify the Trustee and to pay or reimburse the
Trustee for expenses, disbursements and advances shall be secured by a lien
prior to that of the Notes upon all property and funds held or collected by the
Trustee as such, except funds held in trust for the benefit of the holders of
particular Notes.  The obligation of the
Company under this Section shall survive the satisfaction and discharge of this
Indenture.

 

34

 

Section 7.8                                      OFFICERS’
CERTIFICATE AS EVIDENCE.  Except as
otherwise provided in Section 7.1, whenever in the administration of the
provisions of this Indenture the Trustee shall deem it necessary or desirable
that a matter be proved or established prior to taking or omitting any action
hereunder, such matter (unless other evidence in respect thereof be herein
specifically prescribed) may, in the absence of negligence or bad faith on the
part of the Trustee, be deemed to be conclusively proved and established by an
Officers’ Certificate delivered to the Trustee, and such Officers’ Certificate,
in the absence of negligence or bad faith on the part of the Trustee, shall be full
warrant to the Trustee for any action taken or omitted by it under the
provisions of this Indenture upon the faith thereof.

 

Section 7.9                                      CONFLICTING
INTERESTS OF TRUSTEE.  In the event that
the Trust Indenture Act is applicable hereto, and if the Trustee has or shall
acquire a conflicting interest within the meaning of Trust Indenture Act
Section 310(b) and there exists an Event of Default hereunder (exclusive of any
period of grace or requirement of notice), the Trustee shall either eliminate
such interest or resign, to the extent and in the manner provided by, and
subject to the provisions of, the Trust Indenture Act and this Indenture.

 

Section 7.10                                ELIGIBILITY
OF TRUSTEE.  There shall at all times be
a Trustee hereunder that shall be a person that satisfies the requirements of
Trust Indenture Act Section 310(a)(1) and Section 310(a)(5) and that has a
combined capital and surplus of at least $50,000,000.  If such person publishes reports of condition at least annually,
pursuant to law or to the requirements of any supervising or examining
authority, then for the purposes of this Section, the combined capital and
surplus of such person shall be deemed to be its combined capital and surplus
as set forth in its most recent report of condition so published.  If at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section, it shall resign
immediately in the manner and with the effect hereinafter specified in this
Article VII.

 

Section 7.11                                RESIGNATION
OR REMOVAL OF TRUSTEE.

 

(a)                                  The Trustee may at
any time resign by giving written notice of such resignation to the Company;
and the Company shall mail, or cause to be mailed, notice thereof to the
holders of Notes at their addresses as they shall appear on the Note register.  Upon receiving such notice of resignation,
the Company shall promptly appoint a successor trustee by written instrument,
in duplicate, executed by order of the Board of Directors, one copy of which
instrument shall be delivered to the resigning Trustee and one copy to the
successor trustee.

 

(b)                                 In case at any time
any of the following shall occur:

 

(i)                                     the
Trustee shall fail to comply with Section 7.9 after written request therefor by
the Company or by any Noteholder who has been a BONA FIDE holder of a Note or
Notes for at least six months; or

 

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

 

(iii)                               the
Trustee shall become incapable of acting, or shall be adjudged a bankrupt or
insolvent, or a receiver of the Trustee or of its property shall be

 

35

 

appointed, or
any public officer shall take charge or control of the Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation,

 

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

 

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

 

If no successor trustee shall have been so
appointed and have accepted appointment within 60 days after removal or the
mailing of such notice of resignation to the Noteholders, the Trustee resigning
or being removed may petition any court of competent jurisdiction for the
appointment of a successor trustee, or, in the case of either resignation or
removal, any Noteholder who has been a BONA FIDE holder of a Note or Notes for
at least six months may, on behalf of himself and all others similarly
situated, petition any such court for the appointment of a successor
trustee.  Such court may thereupon,
after such notice, if any, as it may deem proper and prescribe, appoint a
successor trustee.

 

(d)                                 Any resignation or
removal of the Trustee and appointment of a successor trustee pursuant to any
of the provisions of this Section 7.11 shall become effective upon acceptance
of appointment by the successor trustee as provided in Section 7.12.

 

Section 7.12                                ACCEPTANCE
BY SUCCESSOR TRUSTEE.  Any successor
trustee appointed as provided in Section 7.11 shall execute, acknowledge and
deliver to the Company and to its predecessor trustee an instrument accepting
such appointment hereunder, and thereupon, the resignation or removal of the
predecessor trustee shall become effective and such successor trustee, without
any further act, deed or conveyance, shall become vested with all the rights,
powers, duties and obligations of its predecessor hereunder, with like effect
as if originally named as trustee herein; but on the written request of the
Company or of the successor trustee, the Trustee ceasing to act shall, upon
payment of any amounts then due it pursuant to the provisions of Section 7.7,
execute and deliver an instrument transferring to such successor trustee all
the rights and powers of the Trustee so ceasing to act.  Upon request of any such successor trustee,
the Company shall execute any and all instruments in writing for more fully and
certainly vesting in and confirming to such successor trustee all such rights
and powers.  Any Trustee ceasing to act
shall, nevertheless, retain a lien upon all property and funds held or

 

36

 

collected by such trustee as
such, except for funds held in trust for the benefit of holders of particular
Notes, to secure any amounts then due it pursuant to the provisions of Section
7.7.

 

No successor
trustee shall accept appointment as provided in this Section 7.12 unless at the
time of such acceptance such successor trustee shall be qualified under the
provisions of Section 7.9 and eligible under the provisions of Section 7.10.

 

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

 

Section 7.13                                SUCCESSOR,
BY MERGER, ETC.  Any corporation into
which the Trustee may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of the
Trustee, shall be the successor to the Trustee hereunder, provided such
corporation shall be qualified under the provisions of Section 7.9 and eligible
under the provisions of Section 7.10 without the execution or filing of any
paper or any further act on the part of any of the parties hereto.

 

Section 7.14                                LIMITATION
ON RIGHTS OF TRUSTEE AS CREDITOR.  If
and when the Trustee shall be or become a creditor of the Company (or any other
obligor upon the Notes) and the Trust Indenture Act is applicable hereto, the
Trustee shall be subject to the provisions of Trust Indenture Act Section
311(a) or, if applicable, Trust Indenture Act Section 311(b) regarding the
collection of the claims against the Company (or any such other obligor).

 

ARTICLE VIII

 

CONCERNING THE NOTEHOLDERS

 

Section 8.1                                      ACTION
BY NOTEHOLDERS.  Whenever in this
Indenture it is provided that the holders of a specified percentage in
aggregate principal amount of the Notes may take any action (including the
making of any demand or request, the giving of any notice, consent or waiver or
the taking of any other action), the fact that at the time of taking any such
action, the holders of such specified percentage have joined therein may be
evidenced (a) by any instrument or any number of instruments of similar tenor
executed by Noteholders in person or by agent or proxy appointed in writing,
(b) by the record of the holders of Notes voting in favor thereof at any
meeting of Noteholders duly called and held in accordance with the provisions
of Article IX or (c) by a combination of such instrument or instruments and any
such record of such a meeting of Noteholders. 
Whenever the Company or the Trustee solicits the taking of any action by
the holders of the Notes, the Company or the Trustee may fix in advance of such
solicitation, a date as the record date for determining holders entitled to
take such action.  The

 

37

 

record date shall be not more
than 15 days prior to the date of commencement of solicitation of such action.

 

Section 8.2                                      PROOF
OF EXECUTION BY NOTEHOLDERS.  Subject to
the provisions of Sections 7.1, 7.2 and 9.5, proof of the execution of any
instrument by a Noteholder or by agent or proxy shall be sufficient if made in
accordance with Section 7.3 hereof.  The
holding of Notes shall be proved by the Note register or by a certificate of
the Note registrar.

 

The record of any Noteholders’ meeting shall
be proved in the manner provided in Section 9.5.

 

Section 8.3                                      WHO
ARE DEEMED ABSOLUTE OWNERS.  The
Company, the Trustee, any paying agent, any conversion agent and any Note
registrar may deem the person in whose name such Note shall be registered upon
the books of the Company to be, and may treat such person as, the absolute
owner of such Note (whether or not such Note shall be overdue and
notwithstanding any notation of ownership or other writing thereon) for the
purpose of receiving payment of or on account of the principal of, premium, if
any, and interest on such Note, for conversion of such Note and for all other
purposes; and neither the Company nor the Trustee nor any paying agent nor any
conversion agent nor any Note registrar shall be affected by any notice to the
contrary.  All such payments so made to
any holder for the time being, or upon order of such holder, shall be valid
and, to the extent of the sum or sums so paid, effectual to satisfy and
discharge the liability for monies payable upon any such Note.

 

The Depository shall be deemed to be the
owner of the Global Note for all purposes, including receipt of notices to
Noteholders and payment of principal of, premium, if any, and interest on the
Notes.  None of the Company, the Trustee
(in its capacity as Trustee), any paying agent or the Note registrar (or
co-registrar) shall have any responsibility for any aspect of the records
relating to or payments made on account of beneficial interests of the Global
Note or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.

 

Section 8.4                                      COMPANY-OWNED
NOTES DISREGARDED.  In determining
whether the holders of the requisite aggregate principal amount of Notes have
concurred in any direction, consent, waiver or other action under this
Indenture, Notes that are owned by the Company or any other obligor on the
Notes or by any person directly or indirectly controlling or controlled by or
under direct or indirect common control with the Company or any other obligor
on the Notes shall be disregarded and deemed not to be outstanding for the
purpose of any such determination; provided that for the purposes of
determining whether the Trustee shall be protected in relying on any such
direction, consent, waiver or other action, only Notes that a Responsible
Officer of the Trustee actually knows are so owned shall be so disregarded.

 

Notes so owned that have been pledged in good faith may be regarded as
outstanding for the purposes of this Section 8.4 if the pledgee shall establish
to the satisfaction of the Trustee the pledger’s right to vote such Notes and
that the pledgee is not the Company, any other obligor on the Notes or a person
directly or indirectly controlling or controlled by or under direct or indirect
common control with the Company or any such other obligor.

 

38

 

In the case of a dispute as to such right, any decision by the Trustee
taken upon the advice of counsel shall be full protection to the Trustee.  Upon request of the Trustee, the Company
shall furnish to the Trustee promptly an Officers’ Certificate listing and
identifying all Notes, if any, known by the Company to be owned or held by or
for the account of any of the above described persons; and subject to Section
7.1, the Trustee shall be entitled to accept such Officers’ Certificate as
conclusive evidence of the facts therein set forth and of the fact that all
Notes not listed therein are outstanding for the purpose of any such
determination.

 

Section 8.5                                      REVOCATION
OF CONSENTS, FUTURE HOLDERS BOUND.  At
any time prior to (but not after) the evidencing to the Trustee, as provided in
Section 8.1, of the taking of any action by the holders of the percentage in
aggregate principal amount of the Notes specified in this Indenture in
connection with such action, any holder of a Note that is shown by the evidence
to be included in the Notes the holders of which have consented to such action
may, by filing written notice with the Trustee at its Corporate Trust Office
and upon proof of holding as provided in Section 8.2, revoke such action so far
as concerns such Note.  Except as
aforesaid, any such action taken by the holder of any Note shall be conclusive
and binding upon such holder and upon all future holders and owners of such
Note and of any Notes issued in exchange or substitution therefor, irrespective
of whether any notation in regard thereto is made upon such Note or any Note
issued in exchange or substitution therefor.

 

ARTICLE IX

 

NOTEHOLDERS’ MEETINGS

 

Section 9.1                                      PURPOSES
FOR WHICH MEETINGS MAY BE CALLED.  A
meeting of Noteholders may be called at any time and from time to time pursuant
to the provisions of this Article IX for any of the following purposes:

 

(i)                                     to
give any notice to the Company or to the Trustee, or to give any directions to
the Trustee, or to consent to the waiving of any default hereunder and its
consequences, or to take any other action authorized to be taken by Noteholders
pursuant to any of the provisions of Article VI;

 

(ii)                                  to
remove the Trustee and appoint a successor trustee pursuant to the provisions
of Article VII;

 

(iii)                               to
consent to the execution of an indenture or indentures supplemental hereto
pursuant to the provisions of Section 10.2; or

 

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

 

Section 9.2                                      MANNER
OF CALLING MEETINGS; RECORD DATE.  The
Trustee may at any time call a meeting of Noteholders to take any action
specified in Section 9.1, to be held at such time and at such place in
Minneapolis, Minnesota as the Trustee shall determine.  Notice of every meeting of the Noteholders,
setting forth the time and the place of

 

39

 

such meeting and in general
terms the action proposed to be taken at such meeting, shall be mailed not less
than 30 nor more than 60 days prior to the date fixed for the meeting to such
Noteholders at their addresses as such addresses appear in the Note
register.  For the purpose of
determining Noteholders entitled to notice of any meeting of Noteholders, the
Company, upon written notice to the Trustee, shall fix in advance a date as the
record date for such determination, such date to be a business day not more
than ten days prior to the date of the mailing of such notice as hereinabove
provided.  Only persons in whose name
any Note shall be registered in the Note register at the close of business on a
record date fixed by the Trustee as aforesaid, or by the Company or the Noteholders
as provided in Section 9.3, shall be entitled to notice of the meeting of
Noteholders with respect to which such record date was so fixed.

 

Section 9.3                                      CALL
OF MEETING BY COMPANY OR NOTEHOLDERS. 
In case at any time the Company, pursuant to a resolution of its Board
of Directors or the holders of at least 10% in aggregate principal amount of
the Notes then outstanding shall have requested the Trustee to call a meeting
of Noteholders to take any action authorized in Section 9.1 by written request
setting forth in reasonable detail the action proposed to be taken at the
meeting, and the Trustee shall not have mailed notice of such meeting within 20
days after receipt of such request, then the Company or the holders of Notes in
the amount above specified, as the case may be, may fix the record date with
respect to, and determine the time and the place for, such meeting and may call
such meeting to take any action authorized in Section 9.1, by mailing notice
thereof as provided in Section 9.2.  The
record date fixed as provided in the preceding sentence shall be set forth in a
written notice to the Trustee and shall be a business day not less than 15 nor
more than 20 days after the date on which the original request is sent to the
Trustee.

 

Section 9.4                                      WHO
MAY ATTEND AND VOTE AT MEETINGS.  Only persons
entitled to receive notice of a meeting of Noteholders and their respective
proxies duly appointed by an instrument in writing shall be entitled to vote at
such meeting.  The only persons who
shall be entitled to be present or to speak at any meeting of Noteholders shall
be the persons entitled to vote at such meeting and their counsel and any
representatives of the Trustee and its counsel and any representatives of the
Company and its counsel.  When a determination
of Noteholders entitled to vote at any meeting of Noteholders has been made as
provided in this Section, such determination shall apply to any adjournments
thereof.

 

Section 9.5                                      MANNER
OF VOTING AT MEETINGS AND RECORD TO BE KEPT. 
The vote upon any resolution submitted to any meeting of Noteholders
shall be by written ballots on each of which shall be subscribed the signature
of the Noteholder or proxy casting such ballot and the identifying number or
numbers of the Notes held or represented in respect of which such ballot is
cast.  The chairman of the meeting shall
appoint two inspectors of votes who shall count all votes cast at the meeting
for or against any resolution and who shall make and file with the secretary of
the meeting their verified written reports in duplicate of all votes cast at
the meeting.  A record in duplicate of
the proceedings of each meeting of Noteholders shall be prepared by the
secretary of the meeting and there shall be attached to said record the
original reports of the inspectors of votes on any vote by ballot taken thereat
and affidavits by one or more persons having knowledge of the facts setting
forth a copy of the notice of the meeting and showing that said notice was
mailed as provided in Section 9.2.  The
record shall show the identifying numbers of the Notes voting in favor of or
against any resolution.  Each
counterpart of such record shall be signed and verified by the affidavits of
the chairman and

 

40

 

secretary of the meeting and
one of the counterparts shall be delivered to the Company and the other to the
Trustee to be preserved by the Trustee.

 

Any counterpart record so signed and verified
shall be conclusive evidence of the matters therein stated and shall be the
record referred to in clause (b) of Section 8.1.

 

Section 9.6                                      EXERCISE
OF RIGHTS OF TRUSTEE AND NOTEHOLDERS NOT TO BE HINDERED OR DELAYED.  Nothing in this Article IX contained shall
be deemed or construed to authorize or permit, by reason of any call of a
meeting of Noteholders or any rights expressly or impliedly conferred hereunder
to make such call, any hindrance or delay in the exercise of any right or
rights conferred upon or reserved to the Trustee or to the Noteholders under
any of the provisions of this Indenture or of the Notes.

 

ARTICLE X

 

SUPPLEMENTAL INDENTURES

 

Section 10.1                                SUPPLEMENTAL
INDENTURES WITHOUT CONSENT OF NOTEHOLDERS. 
The Company, when authorized by a Board Resolution, and the Trustee may
from time to time and at any time enter into an indenture or indentures
supplemental hereto for one or more of the following purposes:

 

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

 

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

 

(c)                                  to evidence the
succession of another person to the Company, or successive successions, and the
assumption by the Successor Company of the covenants, agreements and
obligations of the Company pursuant to Article XI;

 

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

 

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

 

41

 

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

 

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

 

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

 

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

 

Any supplemental indenture authorized by the
provisions of this Section 10.1 may be executed by the Company and the Trustee
without the consent of the holders of any of the Notes at the time outstanding,
notwithstanding any of the provisions of Section 10.2.

 

Section 10.2                                SUPPLEMENTAL
INDENTURES WITH CONSENT OF NOTEHOLDERS. 
With the consent (evidenced as provided in Article VIII) of the holders
of not less than a majority in aggregate principal amount of the Notes at the
time outstanding, the Company, when authorized by a Board Resolution and the
Trustee, may from time to time and at any time enter into an indenture or
indentures supplemental hereto for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Indenture
or any supplemental indenture or of modifying in any manner the rights of the
holders of the Notes; provided that no such supplemental indenture shall (i)
without the consent of the holders of each Note so affected, extend the fixed
maturity of any Note, or reduce the rate or extend the time of payment of
interest thereon, or reduce the principal amount thereof or premium, if any,
thereon or reduce any amount payable on redemption or repurchase thereof, alter
the obligation of the Company to repurchase the Notes at the option of the
holder upon the occurrence of a Change of Control or impair or affect the right
of any Noteholder to institute suit for the payment thereof or make the
principal thereof or interest or premium, if any, thereon payable in any coin
or currency other than that provided in the Notes, modify the subordination
provisions in a manner adverse to the holders of the Notes, or impair the right
to convert the Notes into Common Stock or cash subject to the terms set forth
herein or (ii) without the consent of the holders of all the Notes then
outstanding, reduce the aforesaid percentage of Notes, the holders of which are
required to consent to any such supplemental indenture.

 

Upon the request of the Company, accompanied
by a copy of a Board Resolution certified by its Secretary or Assistant
Secretary authorizing the execution of any such supplemental indenture, and
upon the filing with the Trustee of evidence of the consent of

 

42

 

Noteholders as aforesaid, the
Trustee shall join with the Company in the execution of such supplemental
indenture unless such supplemental indenture affects the Trustee’s own rights,
duties or immunities under this Indenture or otherwise, in which case the
Trustee may in its discretion, but shall not be obligated to, enter into such
supplemental indenture.

 

It shall not be necessary for the consent of
the Noteholders under this Section 10.2 to approve the particular form of any
proposed supplemental indenture, but it shall be sufficient if such consent
shall approve the substance thereof.

 

Section 10.3                                EFFECT
OF SUPPLEMENTAL INDENTURES.  Any
supplemental indenture executed pursuant to the provisions of this Article X
shall comply with the Trust Indenture Act, as then in effect, if such supplemental
indenture is then required to so comply. 
Upon the execution of any supplemental indenture pursuant to the
provisions of this Article X, this Indenture shall be and be deemed to be
modified and amended in accordance therewith and the respective rights,
limitation of rights, obligations, duties and immunities under this Indenture
of the Trustee, the Company and the holders of Notes shall thereafter be
determined, exercised and enforced hereunder subject in all respects to such
modifications and amendments and all the terms and conditions of any such
supplemental indenture shall be and be deemed to be part of the terms and
conditions of this Indenture for any and all purposes.

 

Section 10.4                                NOTATION
ON NOTES.  Notes authenticated and
delivered after the execution of any supplemental indenture pursuant to the
provisions of this Article X may bear a notation in form approved by the
Company as to any matter provided for in such supplemental indenture, but they
need not do so.  After notice to the
Trustee, if the Company shall determine to add such a notation, new Notes so
modified as to conform, in the opinion of the Board of Directors, to any
modification of this Indenture contained in any such supplemental indenture
may, at the Company’s expense, be prepared and executed by the Company,
authenticated by the Trustee (or an authenticating agent duly appointed by the
Trustee pursuant to Section 16.14) and delivered in exchange for the Notes then
outstanding, upon surrender of such Notes then outstanding.

 

Section 10.5                                EVIDENCE
OF COMPLIANCE OF SUPPLEMENTAL INDENTURE TO BE FURNISHED TO THE TRUSTEE.  The Trustee shall be furnished with and,
subject to the provisions of Sections 7.1 and 7.2, may rely conclusively upon
an Officers’ Certificate and an Opinion of Counsel as conclusive evidence that
any supplemental indenture executed pursuant hereto complies with the
requirements of this Article X.

 

ARTICLE XI

 

CONSOLIDATION, MERGER, SALE, CONVEYANCE,
TRANSFER AND LEASE

 

Section 11.1                                COMPANY
MAY CONSOLIDATE, ETC. ON CERTAIN TERMS. 
The Company shall not consolidate with or merge with or into, or convey,
transfer or lease all or substantially all of its assets (determined on a
consolidated basis) to any person unless: (i) either the Company is the
resulting, surviving or transferee person (the “Successor Company”) or the
Successor Company is a person organized and existing under the laws of the
United States or any State thereof or the District of Columbia, and the
Successor Company (if

 

43

 

not the Company) expressly
assumes by a supplemental indenture, executed and delivered to the Trustee, in
form satisfactory to the Trustee, all the obligations of the Company under this
Indenture and the Notes, including the rights pursuant to Article XIV hereof,
(ii) immediately after giving effect to such transaction, no Event of
Default has happened and is continuing and (iii) the Company delivers to
the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating
that such consolidation, merger or transfer and such supplemental indenture (if
any) comply with this Indenture.

 

Section 11.2                                SUCCESSOR
COMPANY TO BE SUBSTITUTED.  In case of
any such consolidation, merger, sale, conveyance, transfer or lease and upon
the assumption by the Successor Company, by supplemental indenture, executed
and delivered to the Trustee and satisfactory in form to the Trustee, of the
due and punctual payment of the principal of, premium, if any, and interest on
all of the Notes and the due and punctual performance of all of the covenants
and conditions of this Indenture to be performed by the Company, such Successor
Company shall succeed to and be substituted for the Company, with the same
effect as if it had been named herein as the party hereto.  When a Successor Company duly assumes all
the obligations of the Company pursuant to this Indenture and the Notes, the
predecessor shall be released from all such obligations.

 

Section 11.3                                OPINION
OF COUNSEL TO BE GIVEN TO TRUSTEE.  The
Trustee, subject to Sections 7.1 and 7.2, shall receive an Officers’
Certificate and an Opinion of Counsel as conclusive evidence that any such
consolidation, merger, sale, conveyance, transfer or lease and any such
assumption complies with the provisions of this Article XI.

 

ARTICLE XII

 

SATISFACTION AND DISCHARGE OF INDENTURE;
UNCLAIMED MONEYS

 

Section 12.1                                LEGAL
DEFEASANCE AND COVENANT DEFEASANCE OF THE NOTES.

 

(a)                                  The Company may, at
its option by Board Resolution, at any time, with respect to the Notes, elect
to have either paragraph (b) or paragraph (c) below be applied to the
outstanding Notes upon compliance with the conditions set forth in paragraph
(d).

 

(b)                                 Upon the Company’s
exercise under paragraph (a) of the option applicable to this paragraph (b),
the Company shall be deemed to have been released and discharged from its
obligations with respect to the outstanding Notes on the date the conditions
set forth in paragraph (d) below are satisfied (hereinafter, “legal
defeasance”).  For this purpose, such
legal defeasance means that the Company shall be deemed to have paid and
discharged the entire indebtedness represented by the outstanding Notes, which
shall thereafter be deemed to be “outstanding” only for the purposes of the
Sections of and matters under this Indenture referred to in clauses (i) and
(ii) below and to have satisfied all its other obligations under such Notes and
this Indenture insofar as such Notes are concerned, except for the following,
which shall survive until otherwise terminated or discharged hereunder: (i) the rights of
holders of outstanding Notes to receive solely from the trust fund described in
paragraph (d) below and as more fully set forth

 

44

 

in such paragraph, payments in
respect of the principal of, premium, if any, and interest on such Notes when
such payments are due and (ii) obligations listed in Section 12.3.

 

(c)                                  Upon the Company’s
exercise under paragraph (a) of the option applicable to this paragraph (c),
the Company shall be released and discharged from its obligations under any
covenant contained in Article XI and Section 3.5 with respect to the
outstanding Notes on and after the date the conditions set forth in paragraph
(d) are satisfied (hereinafter, “covenant defeasance”), and the Notes shall
thereafter be deemed to be not “outstanding” for the purpose of any direction,
waiver, consent or declaration or act of holders (and the consequences of any
thereof) in connection with such covenants, but shall continue to be deemed
“outstanding” for all other purposes hereunder.  For this purpose, such covenant defeasance means that, with
respect to the outstanding Notes, the Company may omit to comply with and shall
have no liability in respect of any term, condition or limitation set forth in
any such covenant, whether directly or indirectly, by reason of any reference
elsewhere herein to any such covenant or by reason of any reference in any such
covenant to any other provision herein or in any other document, and such
omission to comply shall not constitute a Default or an Event of Default under
Section 6.1, but, except as specified above, the remainder of this Indenture
and such Notes shall be unaffected thereby.

 

(d)                                 The following shall be
the conditions to application of either paragraph (b) or paragraph (c) above to
the outstanding Notes:

 

(i)                                     The
Company shall have irrevocably deposited in trust with the Trustee, pursuant to
an irrevocable trust and security agreement in form and substance satisfactory
to the Trustee, cash or non-callable U.S. Government Obligations maturing as to
principal and interest at such times, or a combination thereof, in such amounts
as are sufficient, without consideration of the reinvestment of such interest
and after payment of all federal, state and local taxes or other charges or
assessments in respect thereof payable by the Trustee, in the opinion of a
nationally recognized firm of independent public accountants expressed in a
written certification thereof (in form and substance reasonably satisfactory to
the Trustee) delivered to the Trustee, to pay the principal of, premium, if
any, and interest on the outstanding Notes on the dates on which any such
payments are due and payable in accordance with the terms of this Indenture and
of the Notes as well as all other sums payable hereunder by the Company;

 

(ii)                                  (A)
No Event of Default shall have occurred or be continuing on the date of such
deposit, and (B) no Default or Event of Default under Section 6.1(f) or
6.1(g) shall occur on or before the 123rd day after the date of such
deposit;

 

(iii)                               Such
deposit shall not result in a Default under this Indenture or a breach or
violation of, or constitute a default under, any other instrument or agreement
to which the Company is a party or by which it or its property is bound;

 

45

 

(iv)                              In
the case of a legal defeasance under paragraph (b) above, the Company shall
have delivered to the Trustee an Opinion of Counsel in form and substance
reasonably satisfactory to the Trustee stating that (A) the Company has
received from, or there has been published by, the Internal Revenue Service a
ruling applicable to such a defeasance or (B) since the date of this Indenture,
there has been a change in the applicable federal income tax law, in either
case to the effect that, and based thereon such opinion shall confirm that, the
holders of the Notes shall not recognize income, gain or loss for federal
income tax purposes as a result of such deposit, defeasance and discharge and
shall be subject to federal income tax on the same amounts and in the same
manner and at the same times as would have been the case if such deposit,
defeasance and discharge had not occurred; and, in the case of a covenant
defeasance under paragraph (c) above, the Company shall have delivered to the
Trustee an Officers’ Certificate and an Opinion of Counsel, in form and
substance reasonably satisfactory to the Trustee, to the effect that holders of
the Notes shall not recognize income, gain or loss for federal income tax
purposes as a result of such deposit and defeasance and shall be subject to
federal income tax on the same amounts and in the same manner and at the same
times as would have been the case if such deposit and defeasance had not
occurred;

 

(v)                                 The
holders shall have a perfected security interest under applicable law in the
cash or U.S. Government Obligations deposited pursuant to Section 12.1(d)(i)
above;

 

(vi)                              The
Company shall have delivered to the Trustee an Opinion of Counsel, in form and substance
reasonably satisfactory to the Trustee, to the effect that, after the passage
of 123 days following the deposit, the trust funds shall not be subject to any
applicable bankruptcy, insolvency, reorganization or similar law affecting
creditors’ rights generally;

 

(vii)                           Such
defeasance shall not cause the Trustee to have a conflicting interest with
respect to any securities of the Company; and

 

(viii)                        The
Company shall have delivered to the Trustee an Officers’ Certificate and an
Opinion of Counsel in form and substance reasonably satisfactory to the
Trustee, each stating that all conditions precedent specified herein relating
to the defeasance contemplated by this Section 12.1 have been complied with;

 

provided, that no deposit under clause (i) shall be effective to
terminate the obligations of the Company under the Notes or this Indenture
prior to the passage of 123 days following such deposit.

 

Section 12.2                                TERMINATION
OF OBLIGATIONS UPON CANCELLATION OF THE NOTES. 
In addition to the Company’s rights under Section 12.1, the Company may
terminate all of its obligations under this Indenture (subject to Section 12.3)
when:

 

46

 

(a)                                  (i)                                     all Notes
theretofore authenticated and delivered (other than Notes that have been
destroyed, lost or stolen and that have been replaced, converted or paid as
provided in Section 2.6) have been delivered to the Trustee for cancellation;
and

 

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

 

(b)                                 (i) the Notes not
previously delivered to the Trustee for cancellation shall have become due and
payable or are by their terms to become due and payable within one year or are
to be called for redemption under arrangements satisfactory to the Trustee upon
delivery of notice, (ii) the
Company shall have irrevocably deposited with the Trustee, as trust funds,
cash, in an amount sufficient to pay principal of premium, if any, and interest
on the outstanding Notes, to maturity or redemption, as the case may be, (iii) such deposit shall
not result in a breach or violation of, or constitute a default under, any
agreement or instrument pursuant to which the Company is a party or by which it
or its property is bound and (iv) the
Company has delivered to the Trustee an Officers’ Certificate and an Opinion of
Counsel in form and substance reasonably satisfactory to the Trustee, each
stating that all conditions related to such defeasance have been complied with.

 

Section 12.3                                SURVIVAL
OF CERTAIN OBLIGATIONS.  Notwithstanding
the satisfaction and discharge of this Indenture and of the Notes referred to
in Section 12.1 or 12.2, the respective obligations of the Company and the
Trustee under Sections 2.3, 2.4, 2.5, 2.6, 3.1, 4.2, 5.1, 6.4, 6.9, 7.6, 7.11,
12.5, 12.6, 12.7, Articles XIV and XV shall survive until the Notes are no
longer outstanding, and thereafter, the obligations of the Company and the
Trustee under Sections 6.9, 7.6, 12.5, 12.6 and 12.7 shall survive.  Nothing contained in this Article XII shall
abrogate any of the rights, obligations or duties of the Trustee under this
Indenture.

 

Section 12.4                                ACKNOWLEDGMENT
OF DISCHARGE BY TRUSTEE.  Subject to
Section 12.7, after (i) the conditions of Section 12.1 or 12.2 have been satisfied,
(ii) the Company has paid or caused to be paid all other sums payable hereunder
by the Company and (iii) the Company has delivered to the Trustee an Officers’
Certificate and an Opinion of Counsel, each stating that all conditions
precedent referred to in clause (i) above relating to the satisfaction and
discharge of this Indenture have been complied with, the Trustee upon written
request shall acknowledge in writing the discharge of the Company’s obligations
under this Indenture except for those surviving obligations specified in
Section 12.3.

 

Section 12.5                                APPLICATION
OF TRUST ASSETS.  The Trustee shall hold
any cash or U.S. Government Obligations deposited with it in the irrevocable
trust established pursuant to Section 12.1 or 12.2, as the case may be.  The Trustee shall apply the deposited cash
or the U.S. Government Obligations, together with earnings thereon in
accordance with this Indenture and the terms of the irrevocable trust agreement
established pursuant to Section 12.1 or 12.2, as the case may be, to the
payment of principal of, premium, if any, and interest on the Notes.  The cash or U.S. Government Obligations so
held in trust and deposited with the Trustee in compliance with Section 12.1 or
12.2, as the case may be, shall not be part of the trust estate under this
Indenture, but shall constitute a separate trust fund for the benefit of all
holders entitled thereto.  Except as
specifically provided herein, the Trustee shall not be requested to

 

47

 

invest any amounts held by it
for the benefit of the holders or pay interest on uninvested amounts to any
holder.

 

The Company shall pay and indemnify the
Trustee against any tax, fee or other charge imposed on or assessed against the
U.S. Government Obligations deposited pursuant to Section 12.1 hereof or
Section 12.2 hereof or the principal and interest received in respect thereof
other than any such tax, fee or other charge which by law is for the account of
the holders of outstanding Notes.

 

Section 12.6                                REPAYMENT
TO THE COMPANY; UNCLAIMED MONEY. 
Subject to applicable laws governing escheat of such property, and upon
termination of the trust established pursuant to Section 12.1 hereof or 12.2
hereof, as the case may be, the Trustee shall promptly pay to the Company upon
written request any excess cash or U.S. Government Obligations held by
them.  Additionally, if amounts for the
payment of principal, premium, if any, or interest remains unclaimed for two
years, the Trustee shall, upon written request, pay such amounts back to the
Company forthwith.  Thereafter, all
liability of the Trustee with respect to such amounts shall cease.  After payment to the Company, holders
entitled to such payment must look to the Company for such payment as general
creditors unless an applicable abandoned property law designates another
person.

 

Section 12.7                                REINSTATEMENT.  If the Trustee is unable to apply any cash
or U.S. Government Obligations in accordance with Section 12.1 or 12.2 by
reason of any legal proceeding or by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, the Company’s obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 12.1 or 12.2 until such time as the Trustee is permitted to apply all
such cash or U.S. Government Obligations in accordance with Section 12.1 or
12.2, as the case may be; provided that if the Company makes any payment of
principal of, premium, if any, or interest on any Notes following the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the holders of such Notes to receive such payment from the amounts held by
the Trustee.

 

ARTICLE XIII

 

IMMUNITY OF INCORPORATORS, SHAREHOLDERS,
OFFICERS AND DIRECTORS

 

Section 13.1                                INDENTURE
AND NOTES SOLELY CORPORATE OBLIGATIONS. 
No recourse for the payment of the principal of, or premium, if any, or
interest on any Note, or for any claim based thereon or otherwise in respect
thereof, and no recourse under or upon any obligation, covenant or agreement of
the Company in this Indenture or in any supplemental indenture or in any Note,
or because of the creation of any indebtedness represented thereby, shall be
had against any incorporator, shareholder, officer or director, as such, past,
present or future, of the Company or of any successor entity, either directly
or through the Company or any successor entity, whether by virtue of any
constitution, statute or rule of law, or by the enforcement of any assessment
or penalty or otherwise; it being expressly understood that all such liability
is hereby expressly waived and released as a condition of, and as a
consideration for, the execution of this Indenture and the issuance of the
Notes.

 

48

 

ARTICLE XIV

 

CONVERSION OF NOTES

 

Section 14.1                                RIGHT
TO CONVERT.

 

(a)                                  Subject to and upon
compliance with the provisions of this Indenture, the holder of any Note shall
have the right to convert the principal hereof or any portion of such principal
that is $1,000 or an integral multiple thereof, into the Company’s Common Stock
at any time following the earlier of (i) May 27, 2003 and (ii) the
approval by the Company’s shareholders of an amendment to the Company’s
Articles of Incorporation to increase the number of authorized shares of Common
Stock to an amount sufficient to cover the conversion of the Notes, the
conversion of the Company’s existing notes due in 2003 and 2008, the conversion
of the Company’s convertible preferred stock issuable upon execution of the
warrants granted to Centre Solutions (Bermuda) Limited and the exercise of
outstanding options granted pursuant to the Company’s stock option plan, and
prior to the close of business on October 14, 2008 (except that, with respect
to any Note or portion of a Note that shall be called for redemption or
delivered for repurchase, such right shall terminate at the close of business
one Business Day immediately preceding the date fixed for redemption or
repurchase of such Note or portion of a Note unless the Company shall default
in payment due upon redemption or repurchase thereof).  The principal amount of any such Note, or
any portion of such principal amount that is $1,000 or an integral multiple
thereof, is convertible into that number of fully paid and nonassessable shares
of Common Stock (as such shares shall then be constituted) obtained by dividing
the aggregate principal amount of the Notes or portion thereof surrendered for
conversion by the Conversion Price in effect at such time rounded to the
nearest 1/100,000th of a share (with 0.000005 being rolled upward)
as such amount shall be certified by the Company as provided in an Officers’
Certificate, by following the procedures specified in Section 14.2.  A Note (or portion thereof) in respect of
which a holder is exercising its option to require repurchase upon a change of
control pursuant to Section 3.5 of this Indenture, may only be converted if
such holder withdraws its election to exercise said redemption option in
accordance with the terms of this Indenture. 
A holder of Notes is not entitled to any rights of a holder of Common
Stock until such holder has converted such holder’s Notes to Common Stock and
only to the extent such Notes are deemed to have been converted to Common Stock
under this Article XIV.

 

(b)                                 In the event that the
Company does not amend its Articles of Incorporation on or before May 27, 2003
to increase the number of authorized shares of Common Stock to an amount
sufficient to cover the conversion of the Notes and the existing notes due in
2008, the Company will, at the request of any Noteholder providing notice to
the Company in a manner consistent with Section 16.4, purchase such Noteholder’s
Notes in cash at a price equal to 125% of the principal amount of such
Noteholder Notes plus accrued, but unpaid interest.  The right of a Noteholder to request that the Company purchase
such Noteholder’s Notes pursuant to this Section 14.1(b) shall terminate upon
the amendment of the Company’s Articles of Incorporation to increase the number
of authorized shares of Common Stock to an amount sufficient to cover the
conversion of the Notes and the existing notes due in 2008.

 

49

 

(c)                                  In the event a
Noteholder desires to convert all, or any portion, of its Notes into shares of
Common Stock (or other securities into which the Notes are then convertible)
and the Company does not have authorized a sufficient number of shares of
Common Stock (or other securities into which the Notes are then convertible)
for such conversion, then in lieu of delivering shares of Common Stock (or
other securities into which the Notes are then convertible) upon conversion
pursuant to 14.1(a) of that portion of such holder’s Notes for which there is
an insufficient number of shares of Common Stock (or other securities into
which the Notes are then convertible) (the “Cash Equivalent Notes”), the
Company shall pay to the holder converting the Cash Equivalent Notes who
properly exercises the conversion privilege, as set forth in Section 14.2, an
amount, as calculated by the Company and certified to the Trustee in an
Officers’ Certificate of the Company, in cash equal to the Market Cash Conversion
Price of the shares of Common Stock into which such Cash Equivalent Notes are
then convertible.

 

(d)                                 In the event that the
Company directs the Trustee to pay cash upon any conversion in lieu of
delivering shares of Common Stock or any other securities, as the case may be,
the Company shall deliver to the Trustee written notice of such direction not
later than the close of business on the first Trading Day after the date of
receipt by the Trustee of the notice of conversion delivered by such holder pursuant
to Section 14.2, and the Trustee shall notify by facsimile the contact person
specified in the holder’s conversion notice of such election by the Company to
such holder.  In such event,
notwithstanding any other provisions in this Article XIV, in lieu of delivering
Common Stock upon conversion of such Notes surrendered in accordance with
Section 14.2, the Company shall pay or direct the Trustee to pay the holder
surrendering such securities an amount in cash equal to the Market Cash
Conversion Price of the shares of Common Stock, plus any cash and other
property theretofore apportioned to such shares of Common Stock in accordance
with Section 14.2.  Prior to or
concurrently with such cash payment, the Company will provide the Trustee with
an Officers’ Certificate setting forth the Market Cash Conversion Price and
will deposit with the paying agent the cash so payable.  The Trustee shall have no obligation or
liability with respect to the calculation of the Market Cash Conversion Price.

 

(e)                                  In the event that a
Noteholder desires to convert all or any portion of its Notes into shares of
Common Stock prior to October 15, 2005, the Company will pay such Noteholder an
amount equal to the interest that would have been otherwise earned on such
Notes between the date of such conversion and October 15, 2005 discounted to
present value utilizing a rate of 6.25% with simple interest over a 360 day
year.  In the event that a Noteholder
elects to convert prior to October 15, 2005 and the Company is required to pay
interest pursuant to this Section 14.1(e), the Company may, in its sole
discretion, elect to make such interest payment in cash or in shares of Common
Stock based on 90% of the average Closing Prices of the Common Stock for the
five Trading Days immediately preceding the conversion date.  Prior to or concurrently with such payment,
the Company will provide the Trustee with an Officers’ Certificate setting
forth the calculation of the payment required by this Section 14.1(e).  The Trustee shall have no obligation or
liability with respect to the calculation of the payments required by this
Section 14.1(e).

 

Section 14.2                                EXERCISE
OF CONVERSION PRIVILEGE; ISSUANCE OF COMMON STOCK ON CONVERSION; NO ADJUSTMENT
FOR INTEREST OR DIVIDENDS.  In order to
exercise the conversion privilege with respect to any interest in the

 

50

 

Global Note, the beneficial
holder must complete the appropriate instruction form for conversion pursuant
to the Depository’s book-entry conversion program and follow the other
procedures set forth in such program.

 

As promptly as practicable after satisfaction
of the requirements for conversion set forth above, subject to Section 14.1(c)
and in compliance with any restrictions on transfer if shares issuable on
conversion are to be issued in a name other than that of the Noteholder (as if
such transfer were a transfer of the Note or Notes (or portion thereof) so
converted), the Company shall issue in book-entry form the number of full
shares issuable upon the conversion of such Note or portion thereof in the name
of such holder in compliance with the Depository’s book-entry conversion
program and with the provisions of this Article XIV and shall issue a check or
cash in respect of any fractional interest in respect of a share of Common
Stock arising upon such conversion, as provided in Section 14.4.

 

Each conversion shall be deemed to have been
effected as to any such Note (or portion thereof) on the date on which the
requirements set forth above in this Section 14.2 have been satisfied as to
such Note (or portion thereof), and, subject to Section 14.1(c), the person in
whose name any shares of Common Stock shall be issuable upon such conversion
shall be deemed to have become on said date the holder of record of the shares
represented thereby.

 

Any unpaid interest on any Note or portion
thereof as of the date such Note or portion thereof is surrendered for
conversion shall (unless such Note or portion thereof being converted shall
have been called for redemption on a redemption date during the period from the
close of business on or after any record date for the payment of interest to
the close of business on the business day following the corresponding interest
payment date) be paid in cash to the former holder of such Note or portion
thereof on the next succeeding interest payment date.

 

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

 

Section 14.3                                MANDATORY
CONVERSION.  The Notes shall be
automatically converted into Common Stock on the first date (the “Mandatory
Conversion Date”) on or after the 15th Trading Day following October 15, 2005,
on which: (i) the average of the Closing Price (as defined in Section 14.6(g))
of the Common Stock on 15 consecutive preceding Trading Days is equal to or
greater than 110% of the Conversion Price and (ii) the Company has sufficient
shares of Common Stock (or other securities into which the Notes are then
convertible) authorized to execute the Mandatory Conversion (as defined
below).  The Notes shall be converted
into that number of fully paid and nonassessable shares of Common Stock (or
other securities into which the Notes are then convertible) obtained by
dividing the aggregate principal amount of the Notes by the Conversion Price in
effect at such time rounded to the nearest 1/100,000th of a share
(with 0.000005 being rolled upward) (the “Mandatory Conversion”).

 

The Company will monitor the Closing Price of
the Common Stock.  Upon the occurrence
of Mandatory Conversion, the Company shall complete the appropriate instruction
form for conversion pursuant to the Depository’s book-entry conversion program
and follow the

 

51

 

procedures set forth in such
program.  Any interest on the Notes
accrued as of the Mandatory Conversion Date shall be paid in cash to the former
holders of such Notes on the next succeeding interest payment date.  After the Mandatory Conversion, the Notes
will no longer represent Indebtedness of the Company, will no longer accrue
interest or require the Company to make any payment of principal, and the
Company’s obligations to make any further payments with respect to the Notes
will terminate (except for under this Section 14.3).  The Company will cause to be issued in
book-entry form shares of Common Stock sufficient to effect the Mandatory
Conversion and shall issue a check or cash in respect of any fractional
interest in respect of a share of Common Stock arising upon such conversion, as
provided in Section 14.4.  The shares of
Common Stock issued as a result of the Mandatory Conversion shall be credited
through the Depository’s book-entry conversion program to the respective
account of each Noteholder as of the Mandatory Conversion Date.

 

Section 14.4                                CASH
PAYMENTS IN LIEU OF FRACTIONAL SHARES. 
No fractional shares of Common Stock or scrip representing fractional
shares shall be issued upon conversion of Notes.  Subject to Section 14.1(c), (i) if more than one Note shall be
surrendered for conversion at one time by the same holder, the number of fully
paid and nonassessable shares of Common Stock issuable upon conversion of a Note
shall be determined by dividing the aggregate principal amount of such Notes or
portion thereof surrendered for conversion by the Conversion Price and (ii) the
aggregate number of shares of Common Stock issuable upon conversion shall be
rounded to the nearest 1/100,000th of a share (with .0000005 being rolled
upward).  If any fractional share of
stock would be issuable upon the conversion of any Note or Notes, the Company
shall make an adjustment therefor in cash at the current market value
thereof.  The current market value of a
share of Common Stock shall be determined by multiplying the fractional share
by the Closing Price on the Trading Day immediately preceding the Mandatory
Conversion Date or the date, pursuant to Section 14.2, on which the Notes (or
specified portions thereof) are deemed to have been converted.

 

Section 14.5                                CONVERSION
PRICE.  The conversion price of the
Notes (the “Conversion Price”) shall be $1.75 per share of Common Stock,
subject to adjustment as provided in this Article XIV.

 

Section 14.6                                ADJUSTMENT
OF CONVERSION PRICE.  The Conversion
Price shall be adjusted from time to time by the Company as follows:

 

(a)                                  In case the Company
shall (i) pay
a dividend or make a distribution on its outstanding Common Stock in shares of
its Common Stock, (ii) subdivide
or split its outstanding Common Stock into a greater number of shares, (iii) combine its
outstanding Common Stock into a smaller number of shares or (iv) issue any shares of
Capital Stock by reclassification of its Common Stock, the conversion price in
effect immediately prior thereto shall be adjusted so that the holder of any
Notes thereafter surrendered for conversion shall be entitled to receive the
number of shares of Common Stock of the Company which such holder would have owned
or have been entitled to receive after the occurrence of any of the events
described above had such Notes been surrendered for conversion immediately
prior to the occurrence of such event or the record date therefor, whichever is
earlier.  An adjustment made pursuant to
this subsection (a) shall become effective immediately after the close of
business on the record date for determination of shareholders entitled to
receive such dividend or distribution in the case of a

 

52

 

dividend or distribution
(except as provided in Section 14.6(j)) and shall become effective immediately
after the close of business on the effective date in the case of a subdivision,
split, combination or reclassification. 
Any shares of Common Stock issuable in payment of a dividend shall be
deemed to have been issued immediately prior to the close of business on the
record date for such dividend for purposes of calculating the number of
outstanding shares of Common Stock under Sections 14.6(b) and (c).

 

(b)                                 In case the Company
shall issue rights, options or warrants to all holders of its outstanding
shares of Common Stock entitling them to subscribe for or purchase shares of
Common Stock at a price per share less than the Current Market Price (as
defined in Section 14.6(g)) on the Record Date fixed for determination of
shareholders entitled to receive such rights, options or warrants, the
Conversion Price shall be adjusted so that the same shall equal the price
determined by multiplying the Conversion Price in effect at the opening of
business on the date after the Record Date by a fraction the numerator of which
shall be the number of shares of Common Stock outstanding at the close of
business on the Record Date plus the number of shares that the aggregate
offering price of the total number of shares so offered would purchase at such
Current Market Price, and the denominator of which shall be the number of
shares of Common Stock outstanding on the close of business on the Record Date
plus the total number of additional shares of Common Stock so offered for
subscription or purchase.  Such
adjustment shall become effective immediately after the opening of business on
the day following the Record Date fixed for determination of shareholders entitled
to receive such rights, options or warrants. 
To the extent that shares of Common Stock are not delivered after the
expiration or termination of such rights, options or warrants, the Conversion
Price shall be readjusted to the Conversion Price that would then be in effect
had the adjustments made upon the issuance of such rights, options or warrants
been made on the basis of delivery of only the number of shares of Common Stock
actually delivered.  In the event that
such rights, options or warrants are not so issued, the Conversion Price shall
again be adjusted to be the Conversion Price that would then be in effect if
such date fixed for the determination of shareholders entitled to receive such
rights, options or warrants had not been fixed.  In determining whether any rights, options or warrants entitle
the holders to subscribe for or purchase shares of Common Stock at less than
such Current Market Price, and in determining the aggregate offering price of
such shares of Common Stock, there shall be taken into account any
consideration received for such rights, options or warrants, the value of such
consideration, if other than cash, to be determined by the Board of Directors.

 

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

 

(d)                                 In case the Company
shall, by dividend or otherwise, distribute to all holders of its Common Stock
shares of any class of Capital Stock of the Company (other than

 

53

 

any dividends or distributions
to which Section 14.6(a) applies) or evidences of its indebtedness or assets
(including securities, but excluding any rights, options or warrants referred
to in Section 14.6(b), and excluding any dividend or distribution (x) in
connection with the liquidation, dissolution or winding-up of the Company,
whether voluntary or involuntary, (y) exclusively in cash or (z) referred to in
Section 14.6(a) (any of the foregoing hereinafter in this Section 14.6(d)
called the “Securities”)), then, in each such case, the Conversion Price shall
be reduced so that the same shall be equal to the price determined by
multiplying the Conversion Price in effect immediately prior to the close of
business on the Record Date (as defined in Section 14.6(g)) with respect to
such distribution by a fraction of which the numerator shall be the Current
Market Price (determined as provided in Section 14.6(g)) on such date less the
fair market value (as determined by the Board of Directors, whose determination
shall be conclusive and described in a Board Resolution) on such date of the
portion of the Securities so distributed applicable to one share of Common
Stock and the denominator shall be such Current Market Price, such reduction to
become effective immediately prior to the opening of business on the day
following the Record Date; provided that in the event the then fair market
value (as so determined) of the portion of the Securities so distributed
applicable to one share of Common Stock is equal to or greater than the Current
Market Price on the Record Date, in lieu of the foregoing adjustment, adequate
provision shall be made so that each Noteholder shall have the right to receive
upon conversion the amount of Securities such holder would have received had
such holder converted each Note on such date. 
In the event that such dividend or distribution is not so paid or made,
the Conversion Price shall again be adjusted to be the Conversion Price that
would then be in effect if such dividend or distribution had not been
declared.  If the Board of Directors
determines the fair market value of any distribution for purposes of this
Section 14.6(d) by reference to the actual or when issued trading market for
any securities comprising all or part of such distribution, it must in doing so
consider the prices in such market over the same period used in computing the
Current Market Price pursuant to Section 14.6(g) to the extent possible.

 

Notwithstanding the foregoing provisions of
this Section 14.6(d), no adjustment shall be made hereunder for any
distribution of Securities if the Company makes proper provision so that each
Noteholder who converts a Note (or any portion thereof) after the date fixed
for determination of shareholders entitled to receive such distribution shall
be entitled to receive upon such conversion, in addition to the shares of
Common Stock issuable upon such conversion, the amount and kind of Securities
that such holder would have been entitled to receive if such holder had,
immediately prior to such determination date, converted such Note into Common
Stock; provided that, with respect to any Securities that are convertible,
exchangeable or exercisable, the foregoing provision shall only apply to the
extent (and so long as) the Securities receivable upon conversion of such Note
would be convertible, exchangeable or exercisable, as applicable, without any
loss of rights or privileges for a period of at least 60 days following
conversion of such Note.

 

Rights, options or warrants distributed by
the Company to all holders of Common Stock entitling the holders thereof to
purchase shares of the Company’s Capital Stock (either initially or under
certain circumstances), which rights, options or warrants, until the occurrence
of a specified event or events (the “Trigger Event”) (i) are deemed to be
transferred with such shares of Common Stock, (ii) are not exercisable and
(iii) are also issued in respect of future issuances of Common Stock, shall not
be deemed distributed for purposes of this Section 14.6(d) (and no adjustment
to the Conversion Price under Section 14.6(d) shall be required) until the

 

54

 

occurrence of the earliest
Trigger Event.  In addition, in the
event of any distribution of rights, options or warrants, or any Trigger Event
with respect thereto, that shall have resulted in an adjustment to the
Conversion Price under this Section 14.6(d), (1) in the case of any such
rights, options or warrants that shall all have been redeemed or repurchased
without exercise by any holders thereof, the Conversion Price shall be
readjusted upon such final redemption or repurchase to give effect to such
distribution or Trigger Event, as the case may be, as though it were a cash
distribution, equal to the per share redemption or repurchase price received by
a holder of Common Stock with respect to such rights, options or warrants
(assuming such holder had retained such rights, options or warrants), made to
all holders of Common Stock as of the date of such redemption or repurchase,
and (2) in the case of such rights, options or warrants all of which shall have
expired or been terminated without exercise by any holder thereof, the
Conversion Price shall be readjusted as if such issuance had not occurred.

 

For purposes of this Section 14.6(d) and
Sections 14.6(a) and (b), any dividend or distribution to which this Section
14.6(d) is applicable that also includes shares of Common Stock, or rights,
options or warrants to subscribe for or purchase shares of Common Stock (or
both), shall be deemed instead to be (1) a dividend or distribution of the
evidences of indebtedness, assets or shares of Capital Stock other than such
shares of Common Stock or rights, options or warrants (and any Conversion Price
reduction required by this Section 14.6(d) with respect to such dividend or
distribution shall then be made) immediately followed by (2) a dividend or
distribution of such shares of Common Stock or such rights, options or warrants
(and any further Conversion Price reduction required by Sections 14.6(a) and
(b) with respect to such dividend or distribution shall then be made) except
(A) the Record Date of such dividend or distribution shall be substituted as
“the date fixed for the determination of shareholders entitled to receive such
dividend or other distribution” and “the date fixed for such determination”
within the meaning of Sections 14.6(a) and (b) and (B) any shares of Common
Stock included in such dividend or distribution shall not be deemed
“outstanding at the close of business on the date fixed for such determination”
within the meaning of Section 14.6(a).

 

(e)                                  In case the Company
shall, by dividend or otherwise, distribute to all holders of its Common Stock
cash (excluding any cash that is distributed upon a merger or consolidation to
which Section 14.7 applies or as part of a distribution referred to in Section
14.6(d) for which an adjustment to the Conversion Price is provided therein) in
an aggregate amount that, combined together with (1) the aggregate amount of
any other such distributions to all holders of its Common Stock made
exclusively in cash within the 12 months preceding the date of payment of such
distribution, and in respect of which no adjustment pursuant to this Section
14.6(e) has been made, and (2) the aggregate of any cash plus the fair market
value (as determined by the Board of Directors, whose determination shall be
conclusive and described in a Board Resolution) of consideration payable in
respect of any tender offer, by the Company or any of its Subsidiaries for all
or any portion of the Common Stock concluded within the 12 months preceding the
date of payment of such distribution, and in respect of which no adjustment
pursuant to Section 14.6(f) has been made, exceeds 20.0% of the product of the
Current Market Price (determined as provided in Section 14.6(g)) on the Record
Date with respect to such distribution times the number of shares of Common
Stock outstanding on such date, then, and in each such case, immediately after
the close of business on such date, unless the Company elects to reserve such
cash for distribution to the holders of the Notes upon the conversion of the
Notes so that any such holder converting Notes shall receive upon such

 

55

 

conversion, in addition to the
shares of Common Stock to that such holder is entitled, the amount of cash
which such holder would have received if such holder had, immediately prior to
the Record Date for such distribution of cash, converted its Notes into Common
Stock, the Conversion Price shall be reduced so that the same shall equal the
price determined by multiplying the Conversion Price in effect immediately
prior to the close of business on such date by a fraction (i) the numerator of
which shall be equal to the Current Market Price on the Record Date less an
amount equal to the quotient of (x) the excess of such combined amount over
such 20.0% and (y) the number of shares of Common Stock outstanding on the
Record Date and (ii) the denominator of which shall be equal to the Current
Market Price on such date; provided that in the event the portion of the cash
so distributed applicable to one share of Common Stock is equal to or greater
than the Current Market Price of the Common Stock on the Record Date, in lieu
of the foregoing adjustment, adequate provision shall be made so that each
Noteholder shall have the right to receive upon conversion the amount of cash
such holder would have received had such holder converted each Note on the
Record Date.  In the event that such
dividend or distribution is not so paid or made, the Conversion Price shall again
be adjusted to be the Conversion Price that would then be in effect if such
dividend or distribution had not been declared.

 

(f)                                    In case a tender
offer made by the Company or any of its Subsidiaries for all or any portion of
the Common Stock shall expire and such tender offer (as amended upon the
expiration thereof) shall require the payment to shareholders (based on the
acceptance (up to any maximum specified in the terms of the tender offer) of
Purchased Shares (as defined below)) of an aggregate consideration having a
fair market value (as determined by the Board of Directors, whose determination
shall be conclusive and described in a Board Resolution) that combined together
with (1) the aggregate of the cash plus the fair market value (as determined by
the Board of Directors, whose determination shall be conclusive and described
in a Board Resolution), as of the expiration of such tender offer, of
consideration payable in respect of any other tender offer, by the Company or
any of its Subsidiaries for all or any portion of the Common Stock expiring
within the 12 months preceding the expiration of such tender offer, and in
respect of which no adjustment pursuant to Section 14.6(f) has been made, and
(2) the aggregate amount of any distributions to all holders of the Company’s
Common Stock made exclusively in cash within 12 months preceding the expiration
of such tender offer, and in respect of which no adjustment pursuant to Section
14.6(e) has been made, exceeds 20.0% of the product of the Current Market Price
(determined as provided in Section 14.6(g)) as of the last time (the
“Expiration Time”) tenders could have been made pursuant to such tender offer
(as it may be amended) times the number of shares of Common Stock outstanding
(including any tendered shares) on the Expiration Time, then, and in each such
case, immediately prior to the opening of business on the day after the date of
the Expiration Time, the Conversion Price shall be adjusted so that the same
shall equal the price determined by multiplying the Conversion Price in effect
immediately prior to close of business on the date of the Expiration Time by a
fraction of which the numerator shall be the number of shares of Common Stock
outstanding (including any tendered shares) on the Expiration Time multiplied
by the Current Market Price of the Common Stock on the Trading Day next
succeeding the Expiration Time and the denominator shall be the sum of (x) the
fair market value (determined as aforesaid) of the aggregate consideration
payable to 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

 

56

 

(y) the product of the number
of shares of Common Stock outstanding (less any Purchased Shares) on the
Expiration Time and the Current Market Price of the Common Stock on the Trading
Day next succeeding the Expiration Time, such reduction to become effective
immediately prior to the opening of business on the day following the
Expiration Time.  In the event that the
Company is obligated to purchase shares pursuant to any such tender offer, but
the Company is permanently prevented by applicable law from effecting any such
purchases or all such purchases are rescinded, the Conversion Price shall again
be adjusted to be the Conversion Price that would then be in effect if such
tender offer had not been made.

 

(g)                                 For purposes of this
Section 14.6, the following terms shall have the meaning indicated:

 

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

 

(ii)                                  “Current
Market Price” shall mean the average of the daily Closing Prices per share of
Common Stock for the ten consecutive Trading Days immediately prior to the date
in question; provided that (1) if the “ex” date (as hereinafter defined) for
any event (other than the issuance or distribution or Change of Control
requiring such computation) that requires an adjustment to the Conversion Price
pursuant to Section 14.6(a), (b), (c), (d), (e) or (f) 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 multiplying such Closing
Price by the same fraction by which the Conversion Price is so required to be
adjusted as a result of such other event, (2) if the “ex” date for any event (other
than the issuance, distribution or Change of Control requiring such
computation) that requires an adjustment to the Conversion Price pursuant to
Section 14.6(a), (b), (c), (d), (e) or (f) occurs on or after the “ex” date for
the issuance or distribution requiring such computation and prior to the day in
question, the Closing Price for each Trading Day on and after the “ex” date for
such other event shall be adjusted by multiplying such Closing Price by the
reciprocal of the fraction by which the Conversion Price is so required to be
adjusted as a result of such other event and (3) if the “ex” date for the
issuance, distribution or Change of Control requiring such computation is prior
to the day in question, after taking

 

57

 

into account
any adjustment required pursuant to clause (1) or (2) of this proviso, the
Closing Price for each Trading Day on or after such “ex” date shall be adjusted
by adding thereto the amount of any cash and the fair market value (as
determined by the Board of Directors in a manner consistent with any
determination of such value for purposes of Section 14.6(d) or (f), whose
determination shall be conclusive and described in a Board Resolution) of the
evidences of indebtedness, shares of Capital Stock or assets being distributed
applicable to one share of Common Stock as of the close of business on the day
before such “ex” date.  For purposes of
any computation under Section 14.6(f), the Current Market Price of the Common
Stock on any date shall be deemed to be the average of the daily Closing Prices
per share of Common Stock for such day and the next two succeeding Trading
Days; provided that if the “ex” date for any event (other than the tender or
exchange offer requiring such computation) that requires an adjustment to the
Conversion Price pursuant to Section 14.6(a), (b), (c), (d), (e) or (f) occurs
on or after the Expiration Time for the tender or exchange offer requiring such
computation and prior to the day in question, the Closing Price for each
Trading Day on and after the “ex” date for such other event shall be adjusted
by multiplying such Closing Price by the reciprocal of the fraction by which
the Conversion Price is so required to be adjusted as a result of such other
event.  For purposes of this paragraph,
the term “ex” date, (1) when used with respect to any issuance or distribution,
means the first date on which the Common Stock trades regular way on the
relevant exchange or in the relevant market from which the Closing Price was
obtained without the right to receive such issuance or distribution, (2) when
used with respect to any subdivision or combination of shares of Common Stock,
means the first date on which the Common Stock trades regular way on such
exchange or in such market after the time at which such subdivision or
combination becomes effective and (3) when used with respect to any tender or
exchange offer means the first date on which the Common Stock trades regular
way on such exchange or in such market after the expiration of such offer.  Notwithstanding the foregoing, whenever
successive adjustments to the Conversion Price are called for pursuant to this
Section 14.6, such adjustments shall be made to the Current Market Price as may
be necessary or appropriate to effectuate the intent of this Section 14.6 and
to avoid unjust or inequitable results as determined in good faith by the Board
of Directors.

 

(iii)                               “fair
market value” shall mean the amount that a willing buyer would pay a willing
seller in an arm’s-length transaction.

 

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

 

58

 

(h)                                 The Company may make
such reductions in the Conversion Price, in addition to those required by
Sections 14.6(a), (b), (c), (d), (e) and (f), as the Board of Directors
considers to be advisable to avoid or diminish any income tax to holders of
Common Stock or rights to purchase Common Stock resulting from any dividend or
distribution of stock (or rights to acquire stock) or from any event treated as
such for income tax purposes.  To the
extent permitted by applicable law, the Company from time to time may reduce
the Conversion Price by any amount for any period of time if the period is at
least 20 days, the reduction is irrevocable during the period and the Board of
Directors shall have made a determination that such reduction would be in the
best interests of the Company, which determination shall be conclusive and
described in a Board Resolution.  Whenever
the Conversion Price is reduced pursuant to the preceding sentence, the Company
shall mail to all holders of record of the Notes a notice of the reduction at
least 15 days prior to the date the reduced Conversion Price takes effect, and
such notice shall state the reduced Conversion Price and the period it shall be
in effect.

 

(i)                                     No adjustment in
the Conversion Price shall be required unless such adjustment would require an
increase or decrease of at least 1% in such price; provided that any
adjustments that by reason of this Section 14.6(i) are not required to be made
shall be carried forward and taken into account in any subsequent
adjustment.  All calculations under this
Article XIV shall be made by the Company and shall be made to the nearest 1/100,000
(with 0.0000005 being rolled upward).

 

No adjustment need be made for rights to
purchase Common Stock pursuant to a Company plan for reinvestment of dividends
or interest.

 

No adjustment need be made for a change in
the par value, or to or from no par value, of the Common Stock.

 

To the extent the Notes become convertible
into cash, assets, property or securities (other than Common Stock of the
Company), no adjustment need be made thereafter as to the cash, assets,
property or such securities (except as such securities may otherwise by their
terms provide), and interest shall not accrue on such cash.

 

(j)                                     Whenever the
Conversion Price is adjusted as herein provided, the Company shall promptly
file with the Trustee and any conversion agent other than the Trustee an
Officers’ Certificate setting forth the Conversion Price after such adjustment
and setting forth a brief statement of the facts requiring such
adjustment.  Promptly after delivery of
such certificate, the Company shall prepare a notice of such adjustment of the
Conversion Price setting forth the adjusted Conversion Price and the date on
which each adjustment becomes effective and shall mail such notice of such
adjustment of the Conversion Price to the holder of each Note at his last
address appearing on the Note register provided for in Section 2.5, within 20
days after execution thereof.  Failure
to deliver such notice shall not effect the legality or validity of any such
adjustment.

 

(k)                                  In any case in which
this Section 14.6 provides that an adjustment shall become effective immediately
after a Record Date for an event, the Company may defer until the occurrence of
such event (i) issuing to the holder of any Note converted after such Record
Date and before the occurrence of such event the additional shares of Common
Stock issuable upon

 

59

 

such conversion by reason of
the adjustment required by such event over and above the Common Stock issuable
upon such conversion before giving effect to such adjustment and (ii) paying to
such holder any amount in cash in lieu of any fraction pursuant to Section
14.4.

 

Section 14.7                                EFFECT
OF RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE.  If any of the following events occur, namely (i) any
reclassification or change of outstanding shares of Common Stock (other than a
change in par value, or to or from no par value, as a result of a subdivision
or combination), (ii) any consolidation, merger or combination of the Company
with another corporation as a result of which holders of Common Stock shall be
entitled to receive stock, securities or other property or assets (including
cash) with respect to or in exchange for such Common Stock or (iii) any sale or
conveyance of the properties and assets of the Company as, or substantially as,
an entirety (determined on a consolidated basis) to any other corporation as a
result of which holders of Common Stock shall be entitled to receive stock,
securities or other property or assets (including cash) with respect to or in
exchange for such Common Stock, then the Company or the successor or purchasing
corporation, as the case may be, shall execute with the Trustee a supplemental
indenture (which shall comply with the Trust Indenture Act as in force at the
date of execution of such supplemental indenture if such supplemental indenture
is then required to so comply) providing that the Notes shall be convertible
into the kind and amount of shares of stock and other securities or property or
assets (including cash) receivable upon such reclassification, change, consolidation,
merger, combination, sale or conveyance by a holder of a number of shares of
Common Stock issuable upon conversion of such Notes (assuming, for such
purposes, a sufficient number of authorized shares of Common Stock available to
convert all such Notes) immediately prior to such reclassification, change,
consolidation, merger, combination, sale or conveyance, assuming such holder of
Common Stock did not exercise his rights of election, if any, as to the kind or
amount of securities, cash or other property receivable upon such
reclassification, change, consolidation, merger, combination, sale or
conveyance (provided that, if the kind or amount of securities, cash or other
property receivable upon such reclassification, change, consolidation, merger,
combination, sale or conveyance is not the same for each share of Common Stock
in respect of which such rights of election shall not have been exercised
(“non-electing share”), then for the purposes of this Section 14.7 the kind and
amount of securities, cash or other property receivable upon such
reclassification, change, consolidation, merger, combination, sale or
conveyance for each non-electing share shall be deemed to be the kind and
amount so receivable per share by a plurality of the non-electing shares).  Such supplemental indenture shall provide
for adjustments that shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Article XIV.

 

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

 

The above provisions of this Section 14.7
shall similarly apply to successive reclassifications, changes, consolidations,
mergers, combinations, sales and conveyances.

 

Section 14.8                                TAXES
ON SHARES ISSUED.  The issuance of stock
certificates on conversions of Notes shall be made without charge to the
converting Noteholder for any

 

60

 

transfer or similar tax in
respect of the issue thereof.  The
Company shall not, however, be required to pay any tax that may be payable in
respect of any transfer involved in the issue and delivery of stock in any name
other than that of the holder of any Note converted, and the Company shall not
be required to issue or deliver any such stock certificate unless and until the
person or persons requesting the issuance thereof shall have paid to the
Company the amount of such tax or shall have established to the satisfaction of
the Company that such tax has been paid.

 

Section 14.9                                RESERVATION
OF SHARES; SHARES TO BE FULLY PAID; LISTING OF COMMON STOCK.  Subject to Section 14.1(c) the Company shall
provide, free from preemptive rights, out of its authorized but unissued shares
or shares held in treasury, sufficient shares to provide for the conversion of
the Notes from time to time as such Notes are presented for conversion.

 

Before taking any action that would cause an
adjustment reducing the Conversion Price below the then par value, if any, of
the shares of Common Stock issuable upon conversion of the Notes, the Company
shall take all corporate action that may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue shares of
such Common Stock at such adjusted Conversion Price.

 

The Company covenants that all shares of
Common Stock that may be issued upon conversion of Notes shall, upon issuance,
be fully paid and nonassessable by the Company and free from all taxes, liens
and charges with respect to the issuance thereof.

 

Section 14.10                          RESPONSIBILITY
OF TRUSTEE.  The Trustee and any other conversion
agent shall not at any time be under any duty or responsibility to any holder
of Notes to determine whether any facts exist that may require any adjustment
of the Conversion Price or notice thereof, or with respect to the nature,
accuracy or extent or calculation of any such adjustment when made, or with
respect to the method employed, or herein or in any supplemental indenture
provided to be employed, in making the same. 
The Trustee and any other conversion agent shall not be accountable with
respect to the validity or value (or the kind or amount) of any shares of
Common Stock, or of any securities or property, that may at any time be issued
or delivered upon the conversion of any Note; and the Trustee and any other
conversion agent make no representations with respect thereto or actions or
omissions by the Company in connection with this Article XIV.  Subject to the provisions of Section 7.1,
neither the Trustee nor any conversion agent shall be responsible for any
failure of the Company to issue, transfer or deliver any shares of Common Stock
or stock certificates or other securities or property or cash upon the
surrender of any Note for the purpose of conversion or to comply with any of
the duties, responsibilities or covenants of the Company contained in this
Article XIV.  Without limiting the
generality of the foregoing, neither the Trustee nor any conversion agent shall
be under any responsibility to determine whether a supplemental indenture under
Section 14.7 hereof need to be entered into or the correctness of any
provisions contained in any supplemental indenture entered into pursuant to
Section 14.7 relating either to the kind or amount of shares of stock or
securities or property (including cash) receivable by Noteholders upon the conversion
of their Notes after any event referred to in such Section 14.7 or to any
adjustment to be made with respect thereto, and may accept as conclusive
evidence of the correctness of any such provisions, and shall be protected in
relying upon, the Officers’

 

61

 

Certificate (which the Company
shall be obligated to file with the Trustee prior to the execution of any such
supplemental indenture) with respect thereto.

 

Section 14.11                          NOTICE
TO HOLDERS PRIOR TO CERTAIN ACTIONS.  In
case:

 

(a)                                  the Company makes any
distribution or dividend that would require an adjustment in the Conversion
Price pursuant to Section 14.6; or

 

(b)                                 the Company takes any
action that would require a supplemental indenture pursuant to Section 14.7; or

 

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

 

the Company shall cause to be filed with the Trustee and to be mailed
to each holder of Notes at his address appearing on the Note register, as promptly
as possible but in any event at least 15 days prior to the applicable date
hereinafter specified, a notice stating (x) the date on which a record date is
to be taken for the purpose of such dividend, distribution, rights, options or
warrants, or, if a record is not to be taken, the date as of which the holders
of Common Stock of record to be entitled to such dividend, distribution,
rights, options or warrants are to be determined or (y) the date on which such
reclassification, change, consolidation, merger, sale, conveyance, transfer,
dissolution, liquidation or winding-up is expected to become effective or occur
and the date as of which it is expected that holders of record of Common Stock
shall be entitled to exchange their Common Stock for securities or other
property deliverable upon such reclassification, change, consolidation, merger,
sale, conveyance, transfer, dissolution, liquidation or winding-up.  Neither the failure to give such notice nor
any defect therein shall affect the legality or validity of the proceedings
referenced in clauses (a) through (c) of this Section 14.11.

 

Section 14.12                          SUPPLEMENTAL
INDENTURE PRIOR TO ISSUANCE OF NOTES IN DEFINITIVE FORM.  If the Company is required by this Indenture
or chooses to issue Notes in definitive form, then the Company shall execute
with the Trustee a supplemental indenture (which shall comply with the Trust
Indenture Act as in force at the date of execution of such supplemental
indenture of such supplemental indenture is then required to so comply) stating
procedures under this Article XIV for the mandatory and optional conversion of
definitive Notes into Common Stock.

 

ARTICLE XV

 

SUBORDINATION

 

Section 15.1                                AGREEMENT
TO SUBORDINATE.  The Company agrees, and
each Noteholder by accepting a Note agrees, that the indebtedness evidenced by
the Notes is subordinated in right of payment, to the extent and in the manner
provided in this Article XV, to the prior payment in full of all Senior
Indebtedness and that the subordination is for the benefit of the holders of
Senior Indebtedness.

 

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Section 15.2                                CERTAIN
DEFINITIONS.  For purposes of this
Article XV, the following terms shall have the meaning indicated:

 

(1)                                  “Representative”
shall mean a duly authorized indenture trustee or other trustee, agent or
representative for any Senior Indebtedness.

 

(2)                                  “Senior
Indebtedness” with respect to the Notes means the principal of, premium, if
any, and interest on, and any fees, costs, expenses and any other amounts (including
indemnity payments) related to the following, whether outstanding on the date
hereof or hereafter incurred or created: (a) indebtedness, matured or
unmatured, whether or not contingent, of the Company for money borrowed
evidenced by notes or other written obligations, (b) any interest rate
contract, interest rate swap agreement or other similar agreement or
arrangement designed to protect the Company or any of its Subsidiaries against
fluctuations in interest rates, (c) indebtedness, matured or unmatured,
whether or not contingent, of the Company evidenced by notes, debentures, bonds
or similar instruments or letters of credit (or reimbursement agreements in
respect thereof), (d) obligations of the Company as lessee under
capitalized leases and under leases of property made as part of any sale and
leaseback transactions, (e) indebtedness of others of any of the kinds
described in the preceding clauses (a) through (d) assumed or guaranteed by the
Company and (f) renewals, extensions, modifications, amendments, and
refundings of, and indebtedness and obligations of a successor person issued in
exchange for or in replacement of, indebtedness or obligations of the kinds
described in the preceding clauses (a) through (f), unless the agreement
pursuant to which any such indebtedness described in clauses (a) through (f) is
created, issued, assumed or guaranteed expressly provides that such
indebtedness is not senior or superior in right of payment to the Notes;
provided that the following shall not constitute Senior Indebtedness:
(i) any indebtedness or obligation of the Company in respect of the Notes,
(ii) any indebtedness of the Company to any of its Subsidiaries or other
Affiliates; (iii) any indebtedness that is subordinated or junior in any
respect to any other indebtedness of the Company other than Senior
Indebtedness; (iv) any indebtedness incurred for the purchase of goods or
materials in the ordinary course of business and (v) any indebtedness or
obligation of the Company in respect of the 6-1/4% Convertible Subordinated
Notes Due 2003.

 

For the purposes of this Indenture, Senior
Indebtedness shall not be deemed to have been paid in full until the holders of
the Senior Indebtedness shall have indefeasibly received payment in full in
cash of all Senior Indebtedness; provided that if any holder of Senior
Indebtedness agrees to accept payment in full of such Senior Indebtedness for
consideration other than cash, such holder shall be deemed to have indefeasibly
received payment in full of such Senior Indebtedness.  The provisions of this Article XV shall continue to be effective
or be reinstated, as the case may be, if at any time any payment of any of the
Senior Indebtedness is rescinded or must otherwise be returned by any holder of
Senior Indebtedness upon the insolvency, bankruptcy or organization of the
Company or otherwise, all as though such payment had not been made.

 

A distribution may consist of cash,
securities or other property, by set-off or otherwise.

 

63

 

Section 15.3                                LIQUIDATION;
DISSOLUTION; BANKRUPTCY.  Upon any
distribution to creditors of the Company in a liquidation or dissolution of the
Company or in a bankruptcy, reorganization, insolvency, receivership or similar
proceeding relating to the Company or its property, in an assignment for the
benefit of creditors or any marshalling of the Company’s assets and
liabilities, (a) holders of all Senior Indebtedness shall first be entitled to
receive payment in full of all amounts due or to become due thereon before
Noteholders shall be entitled to receive any payment with respect to the
principal of, premium, if any, or interest on the Notes (except that
Noteholders may receive securities that are subordinated to at least the same
extent as the Notes to Senior Indebtedness and any securities issued in
exchange for Senior Indebtedness) and (b) until all Senior Indebtedness (as
provided in clause (a) above) is paid in full, any distribution to which
Noteholders would be entitled but for this Article shall be made to holders of
Senior Indebtedness (except that Noteholders may receive securities that are
subordinated to at least the same extent as the Notes to (x) Senior
Indebtedness and (y) any securities issued in exchange for Senior
Indebtedness), as their interests may appear.

 

Section 15.4                                DEFAULT
ON SENIOR INDEBTEDNESS.  The Company may
not make any payment upon or in respect of the Notes (except in such
subordinated securities) and may not acquire from the Trustee or any Noteholder
any Note for cash or property (other than securities that are subordinated to
at least the same extent as the Note to (i) Senior Indebtedness and (ii) any
securities issued in exchange for Senior Indebtedness) until all Senior
Indebtedness has been paid in full if:

 

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

 

(b)                                 a default, other than
a Payment Default on Senior Indebtedness occurs and is continuing that permits
holders of the Senior Indebtedness as to which such default relates to
accelerate its maturity (a “Nonpayment Default”) and the Trustee receives a
notice of the default (a “Payment Blockage Notice”) from the Representative or
Representatives of holders of at least a majority in principal amount of Senior
Indebtedness then outstanding.  No
Nonpayment Default that existed or was continuing on the date of delivery of
any such Payment Blockage Notice to the Trustee shall be, or be made, the basis
for a subsequent Payment Blockage Notice unless such default shall have been
cured or waived for a period of not less than 180 days.  No new period of payment blockage may be
commenced within 360 days after the receipt by the Trustee of any prior Payment
Blockage Notice.

 

The Company, with notice and evidence of the
occurrence of (c) or (d) provided to the Trustee, may and shall resume payments
on and distributions in respect of the Notes and may acquire them upon the
earlier of:

 

(c)                                  in the case of a
Payment Default, upon the date on which the default is cured or waived, or

 

(d)                                 in the case of a
default other than a NonPayment Default: 179 days after the date on which the
applicable Payment Blockage Notice is received, unless the maturity of

 

64

 

such Senior Indebtedness has
been accelerated, if this Article XV otherwise permits the payment,
distribution or acquisition at the time of such payment or acquisition.

 

Section 15.5                                WHEN
DISTRIBUTION MUST BE PAID OVER.  In the
event that the Trustee (or paying agent if other than the Trustee) or any
Noteholder receives any payment of principal or interest with respect to the
Notes at a time when such payment is prohibited by Section 15.3 or 15.4 hereof,
such payment shall be held by the Trustee (or paying agent if other than the
Trustee) or such Noteholder, in trust for the benefit of, and immediately shall
be paid over and delivered, upon written request, to, the holders of Senior
Indebtedness as their interests may appear or their Representative under the
indenture or other agreement (if any) pursuant to which Senior Indebtedness may
have been issued, as their respective interests may appear, for application to
the payment of all Senior Indebtedness remaining unpaid to the extent necessary
to pay all Senior Indebtedness in full in accordance with its terms, after
giving effect to any concurrent payment or distribution to or for the holders
of Senior Indebtedness.

 

With respect to the holders of Senior
Indebtedness, the Trustee undertakes to perform only such obligations on the
part of the Trustee as are specifically set forth in this Article XV, and no
implied covenants or obligations with respect to the holders of Senior
Indebtedness shall be read into this Indenture against the Trustee.  The Trustee shall not be deemed to owe any
fiduciary duty to the holders of Senior Indebtedness and shall not be liable to
any such holders if the Trustee shall pay over or distribute to or on behalf of
Noteholders or the Company or any other person money or assets to which any
holders of Senior Indebtedness shall be entitled by virtue of this Article XV,
except if such payment is made as a result of the willful misconduct or gross
negligence of the Trustee.

 

Section 15.6                                NOTICE
BY COMPANY.  The Company shall promptly
notify the Trustee and the paying agent in writing of any facts known to the
Company that would cause a payment of any principal or interest with respect to
the Notes to violate this Article XV, but failure to give such notice shall not
affect the subordination of the Notes to the Senior Indebtedness as provided in
this Article XV.

 

Section 15.7                                SUBROGATION.  Until all Senior Indebtedness is paid in
full and until the Notes are paid in full, Noteholders shall be subrogated
(equally and ratably with all other indebtedness pari passu with the Notes) to
the rights of holders of Senior Indebtedness to receive distributions
applicable to Senior Indebtedness to the extent that distributions otherwise
payable to the Noteholders have been applied to the payment of Senior
Indebtedness.  A distribution made under
this Article XV to holders of Senior Indebtedness that otherwise would have
been made to Noteholders is not, as between the Company and Noteholders, a payment
by the Company on the Notes.

 

Section 15.8                                RELATIVE
RIGHTS.  This Article XV defines the
relative rights of Noteholders and holders of Senior Indebtedness.  Nothing in this Indenture shall:

 

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

 

65

 

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

 

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

 

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

 

Section 15.9                                SUBORDINATION
MAY NOT BE IMPAIRED BY COMPANY.  No
right of any holder of Senior Indebtedness to enforce the subordination of the
indebtedness evidenced by the Notes shall be impaired by any act or failure to
act by the Company or any holder of Notes or by the failure of the Company or
any holder of Notes to comply with this Indenture.

 

Section 15.10                          DISTRIBUTION
OR NOTICE TO REPRESENTATIVE.  Whenever a
distribution is to be made or a notice given to holders of Senior Indebtedness,
the distribution may be made and the notice given to their Representative.

 

Upon any payment or distribution of assets of
the Company referred to in this Article XV, the Trustee and the Noteholders
shall be entitled to rely upon any order or decree made by any court of
competent jurisdiction or upon any certificate of such Representative or of the
liquidating trustee or agent or other person making any distribution to the
Trustee or to the Noteholders for the purpose of ascertaining the persons
entitled to participate in such distribution, the holders of the Senior
Indebtedness and other indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all
other facts pertinent thereto or to this Article XV.

 

Section 15.11                          RIGHTS
OF TRUSTEE AND PAYING AGENT. 
Notwithstanding the provisions of this Article XV or any other provision
of this Indenture, the Trustee shall not be charged with knowledge of the
existence of any facts that would prohibit the making of any payment or
distribution by the Trustee, and the Trustee and the paying agent may continue
to make payments on the Notes, unless the Trustee shall have received at its
Corporate Trust Office at least three Business Days prior to the date of such
payment written notice of facts that would cause the payment of any principal,
premium, if any, and interest with respect to the Notes to violate this Article
XV.  Only the Company or a Representative
may give the notice.  Nothing in this Article
XV shall impair the claims of, or payments to, the Trustee under or pursuant to
Section 7.6 hereof.

 

The Trustee shall be entitled to rely on the
delivery to it of a written notice by a person representing such person to be a
holder of Senior Indebtedness (or a trustee or agent on behalf of such holder)
to establish that such notice has been given by a holder of Senior Indebtedness
(or a trustee or agent on behalf of any such holder).  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 XV, the Trustee may request such person to furnish evidence to the
reasonable

 

66

 

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 XV, and
if such evidence is not furnished, the Trustee may defer any payment which it
may be required to make for the benefit of such person pursuant to the terms of
this Indenture pending judicial determination as to the rights of such person
to receive such payment.

 

The Trustee in its individual or any other
capacity may hold Senior Indebtedness with the same rights it would have if it
were not Trustee.  Any paying agent, any
authenticating agent, any conversion agent, any Note registrar and their
successors may do the same with like rights.

 

Section 15.12                          AUTHORIZATION
TO EFFECT SUBORDINATION.  Each holder of
a Note by the holder’s acceptance thereof authorizes and directs the Trustee on
the holder’s behalf to take such action as may be necessary or appropriate to
effectuate the subordination as provided in this Article XV and appoints the
Trustee to act as the holder’s attorney-in-fact for any and all such
purposes.  Without limiting the
foregoing, each Representative is hereby irrevocably authorized and empowered
(in its own name or in the name of the Noteholders or the Trustee or
otherwise), but shall have no obligation, to demand, sue for, collect and
receive every payment or distribution referred to in Section 15.3 above and
give acquittance therefor and to file claims and proofs of claim and take such
other action as it may deem necessary or advisable for the exercise or
enforcement of any of the rights or interests of the holders or owners of the
Senior Indebtedness hereunder; provided that for purposes of this Section 15.12
holders or owners of Senior Indebtedness may act only through such
Representative.

 

Section 15.13                          CONVERSIONS
NOT DEEMED PAYMENT.  For the purposes of
this Article XV only, the issuance and delivery of Common Stock upon conversion
of the Notes in accordance with Article XIV shall not be deemed to constitute a
payment or distribution on account of the principal of or interest on the Notes
or on account of the purchase or other acquisition of Notes.  Nothing contained in this Article or
elsewhere in this Indenture or in the Notes is intended to or shall impair, as
among the Company, its creditors other than holders of Senior Indebtedness and
the holders, the right, which is absolute and unconditional, of the holder of
any Note to convert such Note in accordance with Article XIV.

 

Section 15.14                          AMENDMENTS.  The provisions of this Article XV shall not
be amended or modified without the written consent of the holders of Senior
Indebtedness.

 

ARTICLE XVI

 

MISCELLANEOUS PROVISIONS

 

Section 16.1                                POOLING
OF INTERESTS.  The Company desires to
preserve its ability to account for acquisition and other business combination
transactions using the pooling-of-interests method where appropriate, and the
provisions of this Indenture shall be interpreted accordingly.

 

67

 

Section 16.2                                PROVISIONS
BINDING ON COMPANY’S SUCCESSORS.  All
the covenants, stipulations, promises and agreements in this Indenture made by
the Company shall bind its successors and assigns whether so expressed or not.

 

Section 16.3                                OFFICIAL
ACTS BY SUCCESSOR COMPANY.  Any act or
proceeding by any provision of this Indenture authorized or required to be done
or performed by any board (including the Board of Directors), committee or
officer of the Company shall and may be done and performed with like force and
effect by the like board, committee or officer of any corporation that shall at
the time be the lawful sole successor of the Company.

 

Section 16.4                                ADDRESSES
FOR NOTICES, ETC.  Any notice or demand
that by any provision of this Indenture is required or permitted to be given or
served by the Trustee or by the holders of Notes on the Company shall be deemed
to have been sufficiently given or made, for all purposes if given or served by
being sent by prepaid overnight delivery or being deposited postage prepaid by
registered or certified mail in a post office letter box addressed (until
another address is filed by the Company with the Trustee) to Penn Treaty
American Corporation, 5440 Lehigh Street, Allentown, Pennsylvania 18103,
Attention: General Counsel with a copy to Justin P. Klein, Ballard Spahr
Andrews & Ingersoll, LLP, 1735 Market Street, Philadelphia, Pennsylvania
19103.  Any notice, direction, request
or demand hereunder to or upon the Trustee shall be deemed to have been
sufficiently given or made, for all purposes, if given or served by being sent
by prepaid overnight delivery or being deposited postage prepaid by registered
or certified mail in a post office letter box addressed to the Trustee, which
office is, at the date as of which this Indenture is dated, located at 6th
Street & Marquette Avenue, MAC N9303-110, Minneapolis, Minnesota
55479.  Attention:  Corporate Trust Services.

 

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

 

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

 

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

 

Section 16.5                                COMMUNICATIONS
BY HOLDERS WITH OTHER HOLDERS. 
Noteholders may communicate pursuant to Trust Indenture Act Section
312(b) with other Noteholders with respect to their rights under this Indenture
or the Notes.  The Company, the Trustee,
the Note registrar and any other person shall have the protection of Trust
Indenture Act Section 312(c).

 

Section 16.6                                GOVERNING
LAW.  This Indenture shall be deemed to
be a contract made under the substantive laws of New York and for all purposes
shall be construed in accordance with the substantive laws of New York without
regard to conflicts of laws principles thereof.

 

68

 

Section 16.7                                EVIDENCE
OF COMPLIANCE WITH CONDITIONS PRECEDENT; CERTIFICATES TO TRUSTEE.  Upon any application or demand by the
Company to the Trustee to take any action under any of the provisions of this
Indenture, including those actions set forth in Trust Indenture Act Section
314(c), the Company shall furnish to the Trustee an Officers’ Certificate
stating that all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with, and an Opinion of
Counsel stating that, in the opinion of such counsel, all such conditions
precedent have been complied with.

 

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

 

Section 16.8                                LEGAL
HOLIDAYS.  In any case where any
interest payment date, date fixed for redemption, stated maturity or Change of
Control Purchase Date of any Note or the last date on which a holder has the
right to convert his Notes shall not be a Business Day, then (notwithstanding
any other provision of this Indenture or of the Notes) payment of interest or
principal (and premium, if any) or conversion of the Notes need not be made on
such date, but may be made on the next succeeding Business Day with the same
force and effect as if made on the Interest Payment Date, date fixed for
redemption, Change of Control Purchase Date, or at the stated maturity, or on
such last day for conversion, provided that no interest shall accrue for the
period from and after such interest payment date, date fixed for redemption,
Change of Control Purchase Date or stated maturity, as the case may be.

 

Section 16.9                                NO
SECURITY INTEREST CREATED.  Nothing in
this Indenture or in the Notes, expressed or implied, shall be construed to
constitute a security interest under the Uniform Commercial Code or similar
legislation, as now or hereafter enacted and in effect, in any jurisdiction
where property of the Company or its Subsidiaries is located.

 

Section 16.10                          TRUST
INDENTURE ACT.  This Indenture is hereby
made subject to, and shall be governed by, the provisions of the Trust
Indenture Act required to be part of and to govern indentures qualified under
the Trust Indenture Act.

 

Section 16.11                          TRUST
INDENTURE ACT CONTROLS.  If any
provision of this Indenture limits, qualifies, or conflicts with the duties
imposed by operation of the Trust Indenture Act, the imposed duties, upon
qualification of this Indenture under the Trust Indenture Act, shall control.

 

Section 16.12                          BENEFITS
OF INDENTURE.  Nothing in this Indenture
or in the Notes, expressed or implied, shall give to any person, other than the
parties hereto, any paying agent, any authenticating agent, any conversion
agent, any Note registrar and their successors

 

69

 

hereunder and the holders of
Notes, any benefit or any legal or equitable right, remedy or claim under this
Indenture.

 

Section 16.13                          TABLE
OF CONTENTS, HEADINGS ETC.  The table of
contents and the titles and headings of the articles and sections of this
Indenture have been inserted for convenience of reference only, are not to be
considered a part hereof, and shall in no way modify or restrict any of the
terms or provisions hereof.

 

Section 16.14                          AUTHENTICATING
AGENT.  The Trustee may appoint an
authenticating agent that shall be authorized to act on its behalf and subject
to its direction in the authentication and delivery of Notes in connection with
the original issuance thereof and transfers and exchanges of Notes hereunder,
including under Sections 2.4, 2.5, 2.6, 2.7 and 3.3, as fully to all intents
and purposes as though the authenticating agent had been expressly authorized
by this Indenture and those Sections to authenticate and deliver Notes.  For all purposes of this Indenture, the
authentication and delivery of Notes by the authenticating agent shall be
deemed to be authentication and delivery of such Notes “by the Trustee” and a
certificate of authentication executed on behalf of the Trustee by an
authenticating agent shall be deemed to satisfy any requirement hereunder or in
the Notes for the Trustee’s certificate of authentication.  Such authenticating agent shall at all times
be a person eligible to serve as Trustee hereunder pursuant to Section 7.10.

 

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

 

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

 

The Company agrees to pay to the
authenticating agent from time to time reasonable compensation for its
services.

 

The provisions of Sections 7.3, 7.4, 7.5, 8.3
and this Section 16.14 shall be applicable to any authenticating agent.

 

70

 

Section 16.15                          EXECUTION
IN COUNTERPARTS.  This Indenture may be
executed in any number of counterparts, each of which shall be an original, but
such counterparts shall together constitute but one and the same instrument.

 

71

 

Wells Fargo Bank Minnesota, N.A. hereby
accepts the trusts in this Indenture declared and provided, upon the terms and
conditions hereinabove set forth.

 

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

 

	
   

  	
   

  	
  PENN TREATY AMERICAN CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Cameron B. Waite

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Cameron B. Waite

  
	
   

  	
   

  	
  Title:

  	
  EVP and CFO

  
	
   

  	
   

  	
   

  
	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Mark Cloutier

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  WELLS FARGO BANK MINNESOTA, N.A., as Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Michael G. Slade

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Michael G. Slade

  
	
   

  	
   

  	
  Title:

  	
  Corporate Trust Officer

  
	
   

  	
   

  	
   

  
	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Julie Pelletier

  	
   

  	
   

  	
   

  

 

72

 

EXHIBIT A - FORM OF GLOBAL NOTE

 

[FORM OF FACE OF NOTE]

 

	
  No. A-

  	
   

  	
  $
                             

  
	
   

  	
   

  	
    CUSIP

  

 

PENN TREATY AMERICAN CORPORATION

 

6-1/4% Convertible Subordinated Notes Due 2008

 

PENN TREATY AMERICAN CORPORATION, a
corporation duly organized and validly existing under the laws of the
Commonwealth of Pennsylvania (the “Company”), which term includes any Successor
Company under the Indenture referred to on the reverse hereof, for value
received hereby promises to pay to Cede & Co., or registered assigns, the
principal sum of
                                                                      
Dollars (subject to adjustment as set forth in the next paragraph hereof) on
October 15, 2008, at the office or agency of the Company maintained for that
purpose in the Borough of Manhattan, The City of New York, or, at the option of
the holder of this Global Note, 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 shall be legal tender for the payment of public and private debts, and
to pay interest, semi-annually on April 15 and October 15 of each year
(each an “Interest Payment Date”), commencing                 ,
         , on said principal sum
at said office or agency, in like coin or currency, at the rate per annum
specified in the title of this Global Note, from
                    ,
         or the most recent Interest
Payment Date, as the case may be, next preceding the date of this Global Note
to which interest has been paid or duly provided for, unless the date hereof is
a date to which interest has been paid or duly provided for, in which case from
the date of this Global Note, or unless no interest has been paid or duly
provided for on the Notes, in which case from
                    ,
         , until payment of said
principal sum has been made or duly provided for.  Any interest on any Note that is payable, but is not punctually
paid or duly provided for on said April 15 or October 15 (herein called
“Defaulted Interest”) shall forthwith cease to be payable to the Noteholder on
the relevant record date by virtue of his having been such Noteholder; and such
Defaulted Interest shall be paid by the Company, at its election in each case,
either (i) by notifying the Trustee of a special record date, the amount
of interest to be paid on such special record date and the date of payment (not
more than 25 days after receipt by the Trustee of such interest, unless the
Trustee shall consent to an earlier date) and depositing with the Trustee an
amount of money equal to the aggregate amount to be paid in respect of such
Defaulted Interest on making arrangements satisfactory to the Trustee for such
deposit or (ii) in any lawful manner not inconsistent with the
requirements of any securities exchange on which the Notes may be listed and
upon notice requested by such exchange, if, after notice to the Trustee, the
Trustee deems such manner of payment to be practicable.  The interest so payable on any April 15
or October 15 will be paid to the person in whose name this Global Note
(or one or more Predecessor Notes) is registered at the close of business on
the record date, which shall be the April 1 and October 1 (record
date) (whether or not a Business Day) next preceding such April 15 and
October 15, respectively, provided that any such interest not punctually
paid or duly provided for shall be payable as provided in the Indenture.  Interest shall be paid by check mailed to
the registered holder at the

 

A-1

 

registered address of such
person unless other arrangements are made in accordance with the provisions of
the Indenture.

 

The aggregate principal amount of this Global
Note represented hereby may from time to time be reduced or increased to
reflect exchanges of a part of this Global Note for interests in the Global
Note or definitive Notes or exchanges of interests in the Global Note or
definitive Notes for a part of this Global Note or conversions, redemptions or
repurchases of a part of this Global Note or cancellations of a part of this
Global Note or transfers of interests in the Global Note or definitive Notes in
return for a part of this Global Note or transfers of a part of this Global
Note effected by delivery of interests in the Global Note or definitive Notes,
in each case, and in any such case, by means of notations on the Schedule of
Exchanges, Conversions, Redemptions, Repurchases, Cancellations and Transfers
on the last page hereof. 
Notwithstanding any provision of this Global Note to the contrary, (i)
exchanges of a part of this Global Note for interests in the Global Note or
definitive Notes, (ii) exchanges of interests in the Global Note or definitive
Notes for a part of this Global Note, (iii) conversions, redemptions or
repurchases of a part of this Global Note, (iv) cancellations of a part of this
Global Note, (v) transfers of interests in the Global Note or definitive Notes
in return for a part of this Global Note and (vi) transfers of a part of this
Global Note effected by delivery of interests in the Global Note or definitive
Notes may be effected without the surrendering of this Global Note, provided
that appropriate notations on the Schedule of Exchanges, Conversions,
Redemptions, Repurchases, Cancellations and Transfers are made by the Trustee,
or the Custodian at the direction of the Trustee, to reflect the appropriate
reduction or increase, as the case may be, in the aggregate principal amount of
this Global Note resulting therefrom or as a consequence thereof.

 

Reference is made to the further provisions
of this Global Note set forth on the reverse hereof, including, without
limitation, provisions giving the holder of this Global Note the right to
convert this Global Note into Common Stock of the Company (or, under certain
circumstances specified in the Indenture, into an amount of cash as set forth
in the Indenture) on the terms and subject to the limitations referred to on
the reverse hereof and as more fully specified in the Indenture.  Such further provisions shall for all
purposes have the same effect as though fully set forth at this place.

 

A-2

 

This Global Note shall not be valid or become
obligatory for any purpose until the certificate of authentication hereon shall
have been manually signed by the Trustee or a duly authorized authenticating
agent under the Indenture.

 

IN WITNESS WHEREOF, the Company has caused
this Global Note to be duly executed under its corporate seal.

 

	
   

  	
   

  	
  PENN TREATY AMERICAN CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Secretary

  	
   

  	
   

  
					

 

A-3

 

[FORM OF CERTIFICATE OF AUTHENTICATION]

 

CERTIFICATE OF AUTHENTICATION

 

Dated:

 

This is one of the Notes described in the
within-named Indenture.

 

	
   

  	
   

  	
  WELLS FARGO BANK MINNESOTA, N.A., as Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Authorized Signatory

  

 

A-4

 

[FORM OF REVERSE OF GLOBAL NOTE]

 

PENN TREATY AMERICAN CORPORATION

 

6-1/4% Convertible Subordinated Notes Due 2008

 

This Global Note is one of a duly authorized
issue of Notes of the Company, designated as its 6-1/4% Convertible
Subordinated Notes Due 2008 (herein called the “Notes”), limited to the
aggregate principal amount of
$                        
all issued or to be issued under and pursuant to an Indenture dated as of
February     , 2003 (the “Indenture”), between the
Company and Wells Fargo Bank Minnesota, N.A., as trustee (the “Trustee”), to
which Indenture and all indentures supplemental thereto reference is hereby
made for a complete description of the rights, limitations of rights,
obligations, duties and immunities thereunder of the Trustee, the Company and
the holders of the Notes.  Each Note is
subject to, and qualified by, all such terms as set forth in the Indenture
certain of which are summarized hereon and each holder of a Note is referred to
the corresponding provisions of the Indenture for a complete statement of such
terms.  To the extent that there is any
inconsistency between the summary provisions set forth in the Notes and the
Indenture, the provisions of the Indenture shall govern.  Capitalized terms used but not defined in
this Global Note shall have the meanings ascribed to them in the Indenture.

 

In case an Event of Default, as defined in
the Indenture, shall have occurred and be continuing, the principal of,
premium, if any, and accrued interest on all Notes may be declared, and upon
said declaration shall become, due and payable, in the manner, with the effect
and subject to the conditions provided in the Indenture.

 

The payment of principal of, premium, if any,
and interest on the Notes will, to the extent set forth in the Indenture, be
subordinated in right of payment to the prior payment in full of all Senior
Indebtedness (as defined in the Indenture). 
Upon any distribution to creditors of the Company in a liquidation or
dissolution of the Company or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding related to the Company or its property, in
an assignment for the benefit of creditors or any marshalling of the Company’s
assets and liabilities, the holders of all Senior Indebtedness will first be
entitled to receive payment in full of all amounts due or to become due thereon
before the holders of the Notes will be entitled to receive any payment in
respect of the principal of, premium, if any, or interest on the Notes (except
that holders of Notes may receive securities that are subordinated at least to
the same extent as the Notes to Senior Indebtedness and any securities issued
in exchange for Senior Indebtedness).

 

The Company also may not make any payment
upon or in respect of the Notes (except in such subordinated securities) and
may not acquire from the Trustee or the holder of any Note for cash or property
(other than securities subordinated to at least the same extent as the Note to
(i) Senior Indebtedness and (ii) any securities issued in exchange for Senior
Indebtedness) until all Senior Indebtedness has been paid in full if (a) a
default in the payment of the principal of, premium, if any, or interest on
Senior Indebtedness occurs and is continuing beyond any applicable period of
grace or (b) any other default occurs and is continuing with respect to Senior
Indebtedness that permits holders of the Senior Indebtedness as to which such
default relates to accelerate its maturity and the Trustee receives a notice of
such default (a

 

A-5

 

“Payment Blockage Notice”) from
the representative or representatives of holders of at least a majority in
principal amount of Senior Indebtedness then outstanding.  Payments on the Notes may and shall be
resumed (i) in the case of a Payment Default, upon the date on which such
default is cured or waived, or (ii) in the case of a Nonpayment Default, 179
days after the date on which the applicable Payment Blockage Notice is
received, unless the maturity of any Senior Indebtedness has been accelerated.  No new period of payment blockage may be
commenced within 360 days after the receipt by the Trustee of any prior Payment
Blockage Notice.  No default, other than
a Nonpayment Default, that existed or was continuing on the date of delivery of
any Payment Blockage Notice to the Trustee shall be, or be made, the basis for
a subsequent Payment Blockage Notice unless such default shall have been cured
or waived for a period of not less than 180 days.

 

In the event that the Trustee (or paying
agent if other than the Trustee) or any holder of the Notes receives any
payment of principal or interest with respect to the Notes at a time when such
payment is prohibited under the Indenture, such payment shall be held in trust
for the benefit of, and immediately shall be paid over and delivered to, the
holders of Senior Indebtedness or their representative as their respective
interests may appear.  After all Senior
Indebtedness is paid in full and until the Notes are paid in full, the holders
of the Notes shall be subrogated (equally and ratably with all other
Indebtedness pari passu with the Notes) to the rights of holders of Senior
Indebtedness to receive distributions applicable to Senior Indebtedness to the
extent that distributions otherwise payable to the holders of the Notes have
been applied to the payment of Senior Indebtedness.

 

The Indenture contains provisions permitting
the Company and the Trustee, with the consent of the holders of not less than a
majority in aggregate principal amount of the Notes at the time outstanding,
evidenced as in the Indenture provided, to execute supplemental indentures
adding any provisions to or changing in any manner or eliminating any of the
provisions of the Indenture or of any supplemental indenture or modifying in
any manner the rights of the holders of the Notes; provided that no such
supplemental indenture shall (i) extend the fixed maturity of any Note, or
reduce the rate or extend the time of payment of interest thereon, or reduce
the principal amount thereof or premium, if any, thereon, or reduce any amount
payable on redemption thereof, alter the obligation of the Company to
repurchase the Notes at the option of the holders upon the occurrence of a
Change of Control, or impair or affect the right of any Noteholder to institute
suit for the payment thereof, or make the principal thereof or interest or
premium, if any, thereon payable in any coin or currency other than that
provided in the Notes, modify the subordination provisions in a manner adverse
to the holders of the Notes, or impair the right to convert the Notes into
Common Stock subject to the terms set forth in the Indenture without the
consent of the holder of each Note so affected or (ii) reduce the aforesaid
percentage of Notes, the holders of which are required to consent to any such
supplemental indenture, without the consent of the holders of all Notes then
outstanding.  The Company and the
Trustee may amend or supplement the Indenture without notice to or consent of
any holder of Notes in certain events specified in the Indenture.  It is also provided in the Indenture that,
prior to any declaration accelerating the maturity of the Notes, the holders of
a majority in aggregate principal amount of the Notes at the time outstanding
may on behalf of the holders of all of the Notes waive any past default or
Event of Default under the Indenture and its consequences except a default in
the payment of interest or any premium on or the principal of any of the Notes,
a failure by the Company to convert any Notes into Common Stock of the

 

A-6

 

Company, unless otherwise
excused pursuant to the terms of the Indenture, or a default in respect of a
covenant or provision of the Indenture that under Article X thereof cannot be
modified or amended without the consent of the holders of all Notes then
outstanding.  Any such consent or waiver
by the holder of this Global Note (unless revoked as provided in the Indenture)
shall be conclusive and binding upon such holder and upon all future holders
and owners of this Global Note and any Notes that may be issued in exchange or
substitution hereof, irrespective of whether or not any notation thereof is
made upon this Global Note or such other Notes.

 

No reference herein to the Indenture and no
provision of this Global Note or of the Indenture shall alter or impair the
obligation of the Company, which is absolute and unconditional, to pay the
principal of and any premium and interest on this Global Note at the place, at
the respective times, at the rate and in the coin or currency herein
prescribed.

 

Interest on the Notes shall be computed on
the basis of a 360-day year composed of twelve 30-day months.

 

The Notes are issuable in registered form
without coupons in denominations of $1,000 principal amount and integral
multiples thereof.  At the office or
agency of the Company referred to on the face hereof, and in the manner and
subject to the limitations provided in the Indenture, without payment of any
service charge but with payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any registration or
exchange of Notes, Notes may be exchanged for a like aggregate principal amount
of Notes of other authorized denominations.

 

The Notes are not redeemable at the option of
the Company prior to October 15, 2005. 
At any time on or after that date, the Notes may be redeemed at the
Company’s option, upon notice as set forth in the Indenture, in whole at any time
or in part from time to time, at the price of 100% of the principal amount,
together with accrued interest to the date fixed for redemption; provided that
if the date fixed for redemption is a date on or after the record date and on
or before the next following Interest Payment Date, then the interest payable
on such date shall be paid to the holder of record on the next preceding
October 1 or April 1, respectively.

 

If a Change of Control (as defined in the
Indenture) shall occur at any time, then each holder of Notes shall have the
right to require that the Company repurchase such holder’s Notes in whole or in
part in integral multiples of $1,000, at a purchase price in cash in an amount
equal to 101% of the principal amount of such Notes, plus accrued and unpaid
interest, if any, to the repurchase date pursuant to an offer to be made by the
Company and in accordance with the procedures set forth in the Indenture.

 

Subject to the provisions of the Indenture,
the holder hereof has the right to convert the principal hereof or any portion
of such principal that is $1,000 or an integral multiple thereof, into the
Company’s Common Stock at any time following the earlier of (i) May 27,
2003 and (ii) the approval by our shareholders of an amendment to our
Articles of Incorporation to increase the number of authorized shares of Common
Stock to an amount sufficient to cover the conversion of the Notes, the
conversion of the Company’s existing notes due in 2003 and 2008, the conversion
of the Company’s convertible preferred stock issuable upon execution of the
warrants granted to Centre Solutions (Bermuda) Limited and the exercise of
outstanding options

 

A-7

 

granted pursuant to the
Company’s stock option plan, until the close of business on October 14,
2008, subject to prior redemption or repurchase, or, as to all or any portion
hereof called for redemption, prior to the close of business one business day
before the date fixed for redemption (unless the Company shall default in
payment due upon redemption thereof). 
The principal hereof or any portion of such principal that is $1,000 or
an integral multiple thereof, is convertible into that number of fully paid and
non-assessable shares of the Company’s Common Stock, as said shares shall be
constituted at the date of conversion, obtained by dividing the principal
amount of this Global Note or portion thereof to be converted by the conversion
price of $1.75 per share or such conversion price as adjusted from time to time
as provided in the Indenture, upon surrender of this Global Note to the Company
at the office or agency of the Company maintained for that purpose in the
Borough of Manhattan, the City of New York, or at the option of such holder,
the Corporate Trust Office of the Trustee, and, unless the shares issuable on
conversion are to be issued in the same name as this Global Note, duly endorsed
by, or accompanied by instruments of transfer in form satisfactory to the
Company duly executed by, the holder or by his duly authorized attorney.

 

Except as described in the Indenture, no
adjustment will be made on conversion of any Notes for interest accrued thereon
or for dividends paid on any Common Stock issued.  A Holder of Notes at the close of business on a record date will
be entitled to receive the interest payable on such Notes on the corresponding
interest payment date.  Any unpaid
interest on any Note or portion thereof as of the date such Note or portion
thereof is surrendered for conversion shall (unless such Note or portion
thereof being converted is called for redemption on a redemption date during
the period from the close of business on or after any record date to the close
of business on the business day following the corresponding interest payment
date) be paid in cash to the former holder of such Note or portion thereof on
the next succeeding interest payment date.

 

In the event that the Company does not amend
its Articles of Incorporation on or before May 27, 2003 to increase the number
of authorized shares of Common Stock to an amount sufficient to cover the
conversion of the Notes and the existing notes due in 2008, the Company will,
at the request of any holder, purchase such holder’s Notes at a price equal to
125% of the principal amount of such Notes. 
The right of a holder to request that the Company purchase such holder’s
Notes pursuant to this Section 14.1(b) shall terminate upon the amendment of
the Company’s Articles of Incorporation to increase the number of authorized
Shares of Common Stock to an amount sufficient to cover the conversion of the
Notes and the existing Notes due in 2008.

 

In the event a holder desires to convert all
or any portion of its Notes into shares of Common Stock and the Company does
not have authorized a sufficient number of shares of Common Stock for such
conversion, in lieu of delivering shares of Common Stock (or other securities
into which the Notes are then convertible) upon conversion of that portion of
such holder’s Notes for which there is an insufficient number of shares of
Common Stock (the “Cash Equivalent Notes”) pursuant to the provisions of the
Indenture, the Company will pay to the holder converting the Cash Equivalent
Notes who properly exercises the conversion privilege, as set forth in the
Indenture, an amount in cash equal to the Market Cash Conversion Price (as
defined in the Indenture) of the shares of Common Stock into which such Cash
Equivalent Notes are then convertible.

 

A-8

 

On any date on or after the 15th business day
following October 15, 2005, if: (i) the average of the closing price of the
Common Stock on 15 consecutive business days is equal to or greater than 110%
of the conversion price (as it may be adjusted in the Indenture) and (ii) the
Company has sufficient shares of Common Stock (or other securities into which
the Notes are then convertible) authorized to execute the Mandatory Conversion
(as defined below), then the Notes shall be converted into that number of fully
paid and nonassessable shares of Common Stock (or other securities into which
the Notes are then convertible) obtained by dividing the aggregate principal
amount of the Notes by the conversion price in effect at such time rounded to
the nearest 1/100,000th of a share (with 0.000005 being rolled
upward) (the “Mandatory Conversion”). 
After the Mandatory Conversion, the Notes will no longer represent
indebtedness of the Company and will no longer accrue interest or require the
Company to make any payment of principal; and the Company’s obligations to make
any further payments with respect to the Notes will terminate.

 

In the event that a Noteholder desires to
convert all or any portion of its Notes into shares of Common Stock prior to
October 15, 2005, the Company will pay such Noteholder an amount equal to the
interest that would have been otherwise earned on such Notes between the date
of such conversion and October 15, 2005 discounted to present value utilizing a
rate of 6.25% with simple interest over a 360 day year.  In the event that a Noteholder elects to
convert prior to October 15, 2005 and the Company is required to pay interest
pursuant to this Section 14.1(e), the Company may, in its sole discretion,
elect to make such interest payment in cash or in shares of Common Stock based
on 90% of the average Closing Prices of the Common Stock for the five Trading
Days immediately preceding the conversion date.

 

The Company is not required to issue
fractional shares of Common Stock upon conversion of Notes and, in lieu
thereof, will pay a cash adjustment based upon the closing price of the Common
Stock on the last business day prior to the date of conversion.

 

Upon due presentment for registration of
transfer of this Global Note at the office or agency of the Company in the
Borough of Manhattan, The City of New York, or at the option of the holder of
this Global Note, at the Corporate Trust Office of the Trustee, a new Note or
Notes of authorized denominations for an equal aggregate principal amount will
be issued to the transferee in exchange thereof, subject to the conditions and limitations
provided in the Indenture, without charge except for any tax or other
governmental charge imposed in connection therewith.

 

The Company, the Trustee, any authenticating
agent, any paying agent, any conversion agent and any Note registrar may deem
and treat the registered holder hereof as the absolute owner of this Global
Note (whether or not this Global Note shall be overdue and notwithstanding any
notation of ownership or other writing hereon made by anyone other than the
Company or any Note registrar), for the purpose of receiving payment hereof, or
on account hereof, for the conversion hereof and for all other purposes, and
neither the Company nor the Trustee nor any other authenticating agent nor any
paying agent nor any other conversion agent nor any Note registrar shall be
affected by any notice to the contrary. 
All payments made to or upon the order of such registered holder shall,
to the extent of the sum or sums paid, satisfy and discharge liability for
monies payable on this Global Note.

 

A-9

 

No recourse for the payment of the principal
of or any premium or interest on this Global Note, or for any claim based
hereon or otherwise in respect hereof, and no recourse under or upon any
obligation, covenant or agreement of the Company in the Indenture or any
indenture supplemental thereto or in any Note, or because of the creation of
any indebtedness represented thereby, shall be had against any incorporator,
shareholder, officer or director, as such, past, present or future, of the
Company or of any Successor Company, either directly or through the Company or
any Successor Company, whether by virtue of any constitution, statute or rule
of law or by the enforcement of any assessment or penalty or otherwise, all
such liability being, by the acceptance hereof and as part of the consideration
for the issue hereof, expressly waived and released.

 

A-10

 

ABBREVIATIONS

 

The following abbreviations, when used in the
inscription of the face of this Global Note, shall be construed as though they
were written out in full according to applicable laws or regulations:

 

	
  TEN COM

  	
  -

  	
  as tenants
  in common

  	
  UNIF GIFT
  MIN ACT -

  Uniform Gifts to Minors Act

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (State)

  
	
  TEN ENT

  	
  -

  	
  as tenants
  by the entireties

  	
   

  	
  Custodian

  	
   

  
	
   

  	
   

  	
   

  	
  (Cust)

  	
   

  	
   

  
	
  JT TEN

  	
  -

  	
  as joint
  tenants with right of survivorship and not as tenants in common

  	
   

  	
  under

  	
   

  
	
  (Minor)

  	
   

  
	
   

  	
   

  
							

 

Additional abbreviations may also be used

though not in the above list.

 

A-11

 

	
  Fill in for
  registration of shares if to be issued, and

  Notes if to be delivered, other than to and in the

  name of the registered holder:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  (Name)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  (Street
  Address)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  (City, State
  and Zip Code)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Please print
  name and address

  	
   

  	
   

  

 

 

	
   

  	
  Principal amount to be converted

  	
   

  
	
   

  	
  (if less than all)

  	
   

  
	
   

  	
  $
                                   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Social Security or Other Taxpayer

  	
   

  
	
   

  	
  Identification Number

  	
   

  

 

A-12

 

[FORM OF OPTION TO ELECT REPAYMENT

 

UPON A CHANGE OF CONTROL]

 

To: Penn Treaty American Corporation

 

The undersigned registered owner of this
Global Note hereby irrevocably acknowledges receipt of a notice from Penn
Treaty American Corporation (the “Company”) as to the occurrence of a Change of
Control with respect to the Company and requests and instructs the Company to
repay the entire principal amount of this Global Note, or the portion thereof
(which is $1,000 principal amount or an integral multiple thereof) below
designated, in accordance with the terms of the Indenture referred to in this
Global Note, together with accrued interest to such date, to the registered
holder hereof.

 

	
  Dated:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature(s)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Social Security or Other Taxpayer

  Identification Number

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Principal amount to be repaid (if less than

  all): $
                                          

  	
   

  

 

A-13

 

[FORM OF ASSIGNMENT]

 

For value received
                                                                   
hereby sell(s), assign(s) and transfer(s) unto
                                   
(please insert social security or other identifying number of assignee) the within
Note, and hereby irrevocably constitutes and appoints
                                                      
attorney to transfer the said Note on the books of the Company, with full power
of substitution in the premises.

 

	
  Dated:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Signature(s)

  	
   

  	
   

  	
   

  	
   

  

 

	
  Signature(s) must be guaranteed by an eligible Guarantor Institution
  (banks, stock brokers, savings and loan associations and credit unions) with
  membership in an approved signature guarantee medallion program pursuant to
  Securities and Exchange Commission Rule 17Ad-15.

  	
   

  	
   

  	
   

  	
   

  

 

 

	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Signature Guarantee

  	
   

  	
   

  	
   

  	
   

  

 

NOTICE: The
option to elect payment upon a Change of Control or the assignment must
correspond with the name as written upon the face of the Note in every
particular without alteration or enlargement or any change whatever.

 

A-14

 

SCHEDULE A

 

SCHEDULE OF EXCHANGES, CONVERSIONS,

REDEMPTIONS, REPURCHASES, CANCELLATIONS AND TRANSFERS

 

The initial principal amount of this Global Note
is U.S.
$                          .  The following additions to principal, redemptions,
repurchases, exchanges of a part of this Global Note for an interest in the
Global Note, definitive Notes and conversions into Common Stock or cash have
been made:

 

	
  Date of
  Addi-

  tion to Prin-

  cipal, Re-

  demption,

  Repurchase,

  Exchange or

  Conversion

  	
   

  	
  Principal

  Amount Added

  on

  Exchange of

  Interest in

  the Global

  Note or

  Definitive

  Notes

  	
   

  	
  Principal

  Amount

  Redeemed,

  Repurchased

  Exchanged for

  Interest in

  the Global

  Note or

  Definitive

  Notes or

  Converted into

  Common Stock

  or Cash

  	
   

  	
  Remaining

  Principal

  Amount Out-

  standing

  Following

  such Transac-

  tion

  	
   

  	
  Notation

  Made by or

  on behalf of

  the Trustee

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

A-15

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00052-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00052-of-00352.parquet"}]]