Document:

Exhibit
4.2

MERCURY INTERACTIVE
CORPORATION

AMENDED AND RESTATED

1999 STOCK OPTION PLAN

(As Amended Through October
4, 2006)

1.             Purposes of the Plan.  The
purposes of this Stock Option Plan are to attract and retain the best available
personnel for positions of substantial responsibility, to provide additional
incentive to such individuals of the Company and to promote the success of the
Company’s business.  Options granted
hereunder may be either Incentive Stock Options or Nonstatutory Stock Options,
at the discretion of the Administrator and as reflected in the terms of the
written option agreement.

2.             Definitions.  As used herein, the following
definitions shall apply:

(a)           “Administrator”  means the Committee, if one has been
appointed, or the Board of Directors of the Company, if no Committee is
appointed.

(b)           “Board” means the Board of Directors
of the Company.  A member of the Board
shall be referred to hereinafter as a “Director.”

(c)           “Code” means the Internal Revenue Code
of 1986, as amended.

(d)           “Committee”  means the Committee appointed by the Board of
Directors in accordance with paragraph (a) of Section 4 of the Plan, if one is
appointed.

(e)           “Common Stock” means the Common Stock
of the Company.

(f)            “Company” means Mercury Interactive
Corporation, a Delaware corporation.

(g)           “Continuous
Status as an Employee “ means that the employment or consulting
relationship is not interrupted or terminated by the Company, any Parent or
Subsidiary.  Continuous Status as an
Employee shall not be considered interrupted in the case of:  (i) any leave of absence approved by the
Administrator, including sick leave, military leave, or any other personal
leave; provided, however, that for purposes of Incentive Stock Options, any such
leave may not exceed ninety (90) days, unless reemployment upon the expiration
of such leave is guaranteed by contract (including certain Company policies) or
statute; or (ii) transfers between locations of the Company or between the
Company, its Parent, its Subsidiaries or its successor; or (iii) a change in
status from an employee to a consultant if specifically approved by the
Administrator or its designee.

(h)           “Employee” means any person, including
officers and directors, employed by the Company or any Parent or Subsidiary of
the Company.  The payment of a director’s
fee by the Company shall not be sufficient to constitute “employment” by the
Company.

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

(j)            “Incentive Stock Option” means any
Option intended to qualify as an incentive stock option within the meaning of
Section 422 of the Code.

(k)           “Nonstatutory Stock Option” means an
Option not intended to qualify as an Incentive Stock Option.

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(l)            “Option” means a stock option granted
pursuant to the Plan.

(m)          “Optioned Stock” means the Common
Stock subject to an Option.

(n)           “Optionee” means an Employee who
receives an Option.

(o)           “Parent” means a “parent corporation”,
whether now or hereafter existing, as defined in Section 424(e) of the Code.

(p)           “Plan” means this 1999 Stock Option
Plan.

(q)           “Share” means a share of the Common
Stock, as adjusted in accordance with Section 11 of the Plan.

(r)            “Subsidiary” means a “subsidiary
corporation”, whether now or hereafter existing, as defined in Section 424(f)
of the Code.

3.             Stock Subject to the Plan. 
Subject to the provisions to Section 11 of the Plan, the total number of
shares reserved and available for issuance is 23,206,527 Shares.

Subject
to Section 11 of the Plan, if any Shares that have been optioned under an
Option cease to be subject to such Option (other than through exercise of the
Option), or if any Option granted hereunder is forfeited, or any such award
otherwise terminates prior to the issuance of Common Stock to the participant,
the Shares that were subject to such Option shall again be available for
distribution in connection with future Option grants under the Plan.  Shares that have actually been issued under
the Plan, upon exercise of an Option, shall not in any event be returned to the
Plan and shall not become available for future distribution under the Plan.

4.             Administration of the Plan.

(a)           Procedure.

(i)            Multiple Administrative Bodies.  The
Plan may be administered by different bodies with respect to Directors,
Officers who are not Directors, and Employees who are neither Directors nor
Officers.

(ii)           Administration With Respect to Directors and
Officers Subject to Section 16(b).  With respect to Option grants
made to Employees who are also Officers or Directors subject to Section 16(b)
of the Exchange Act, the Plan shall be administered by (A) the Board, if the
Board may administer the Plan in compliance with the rules governing a plan
transaction intended to qualify as an exempt transaction under Rule 16b-3
and/or in accordance with Section 162(m) of the Code, or (B) a Committee (or
Committees) designated by the Board to administer the Plan, which Committee
shall be constituted to comply with the rules governing a plan transaction
intended to qualify as an exempt transaction under Rule 16b-3 and/or in
accordance with Section 162(m) of the Code. 
Once appointed, such Committee shall continue to serve in its designated
capacity until otherwise directed by the Board. 
From time to time, as the Board deems appropriate (and for the purposes
of satisfying Rule 16b-3 and/or Section 162(m)), it may increase the size of
the Committee and appoint additional members, remove members (with or without
cause) and substitute new members, fill vacancies (however caused), and remove
all members of the Committee and thereafter directly administer the Plan.

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(iii)          Administration With Respect to Other Persons.  With
respect to Option grants made to Employees who are neither Directors nor
Officers of the Company, the Plan shall be administered by (A) the Board or (B)
a committee designated by the Board, which committee shall be constituted in
such a manner as to satisfy the legal requirements relating to the
administration of stock option plans, if any, of state corporate law, the
relevant stock exchange and the Code (the “Applicable Rules”).  Once appointed, such Committee shall serve in
its designated capacity until otherwise directed by the Board.  The Board may increase the size of the
Committee and appoint additional members, remove members (with or without
cause) and substitute new members, fill vacancies (however caused), and remove
all members of the Committee and thereafter directly administer the Plan, all
to the extent permitted by the Applicable Rules.

(b)           Powers
of the Administrator.  Subject to the provisions of the Plan, and in
the case of a Committee, subject to the specific duties delegated by the Board
to such Committee, the Administrator shall have the authority, in its
discretion:

(i)            to determine the Fair Market Value of the
Common Stock, in accordance with Section 8(b) of the Plan;

(ii)           to select the Employees to whom Options may
be granted hereunder;

(iii)          to determine whether and to what extent
Options are granted hereunder;

(iv)          to determine the number of shares of Common
Stock to be covered by each Option granted hereunder;

(v)           to approve forms of agreement for use under
the Plan;

(vi)          to determine the terms and conditions, not
inconsistent with the terms of the Plan, of any award granted hereunder.  Such terms and conditions include, but are
not limited to, the exercise price, the time or times when Options may be
exercised (which may be based on performance criteria), any vesting
acceleration or waiver of forfeiture restrictions, and any restriction or
limitation regarding any Option or the shares of Common Stock relating thereto,
based in each case on such factors as the Administrator, in its sole
discretion, shall determine;

(vii)         to construe and interpret the terms of the
Plan and awards granted pursuant to the Plan;

(viii)        to prescribe, amend and rescind rules and
regulations relating to the Plan;

(ix)           to modify or amend each Option (subject to
Section 14(b) of the Plan);

(x)            to authorize any person to execute on behalf
of the Company any instrument required to effect the grant of an Option
previously granted by the Administrator;

(xi)           to determine and recommend the terms of any
Option exchange program or repricing program for Option granted under the Plan,
and subject to stockholder approval only to the extent required in Section
14(a), to institute and implement any such program;

(xii)          to determine the terms and restrictions
applicable to Options; and

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(xiii)         to make all other determinations deemed
necessary or advisable for administering the Plan.

(c)           Effect
of Administrator’s Decision.  The Administrator’s decisions, determinations
and interpretations shall be final and binding on all Optionees and any other
holders of Options.

5.             Eligibility.

(a)           Nonstatutory Stock Options and Incentive
Stock Options may be granted to only to Employees.

(b)           Each
Option shall be designated in the written option agreement as either an
Incentive Stock Option or a Nonstatutory Stock Option.  However, notwithstanding such designations,
to the extent that the aggregate Fair Market Value of the Shares with respect
to which Options designated as Incentive Stock Options are exercisable for the
first time by any Optionee during any calendar year (under all plans of the
Company) exceeds $100,000, such Options shall be treated as Nonstatutory Stock
Options.

(c)           For purposes of Section 5(b), Options shall
be taken into account in the order in which they were granted, and the Fair
Market Value of the Shares shall be determined as of the time the Option with
respect to such Shares is granted.

(d)           Nothing in the Plan or any Option granted hereunder
shall confer upon any Optionee any right with respect to continuation of
employment or consulting relationship with the Company, nor shall it interfere
in any way with the Optionee’s right or the Company’s right to terminate his
employment or consulting relationship at any time, with or without cause.

(e)           The following limitations shall apply to
grants of Options to Employees:

(i) No Employee shall be granted, in any fiscal year of the Company,
Options to purchase more than 1,000,000 Shares.

(ii) In connection with his or her initial employment, an Employee may
be granted Options to purchase up to an additional 2,000,000 Shares which shall
not count against the limit set forth in subsection (i) above.

(iii) The foregoing limitations shall be adjusted proportionately in
connection with any change in the Company’s capitalization as described in
Section 11.

(iv)
If an Option is cancelled in the same fiscal year of the Company in which it
was granted (other than in connection with a transaction described in Section
11), the cancelled Option shall be counted against the limit set forth in
subsection (i) above. For this purpose, if the exercise price of an Option is
reduced, such reduction will be treated as a cancellation of the Option and the
grant of a new Option.

6.             Term of Plan.  The
term of the Plan shall be ten (10) years, commencing on August 31, 1999 and
terminating on August 31, 2009 unless sooner terminated under Section 13 of the
Plan.

7.             Term of Option.  The
term of each Option shall be no more than ten (10) years from the date of
grant.  However, in the case of an
Incentive Stock Option granted to an Optionee who, at the time the Incentive
Stock Option is granted, owns stock representing more than ten percent (10%) of
the voting

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power of all classes of stock of the Company or any
Parent or Subsidiary, the term of the Incentive Stock Option shall be no more
than five (5) years from the date of grant.

8.             Exercise Price and Consideration.

(a)           The per Share exercise price under each
Option shall be such price as is determined by the Administrator, subject to
the following:

(i)            In the case of an Incentive Stock Option

(A)          granted to an Employee who, at the time of
the grant of such Incentive Stock Option, owns stock representing more than ten
percent (10%) of the voting power of all classes of stock of the Company or any
Parent or Subsidiary, the per Share exercise price shall be no less than 110%
of the Fair Market Value per Share on the date of grant.

(B)           granted to any Employee, the per Share exercise
price shall be no less than 100% of the Fair Market Value per Share on the date
of grant.

(ii)           In the case of a Nonstatutory Stock Option
the per Share exercise price shall be no less than 100% of the Fair Market
Value per Share on the date of grant.

For
purposes of this Section 8(a), in the event that an Option is amended to reduce
the exercise price, the date of grant of such Option shall thereafter be
considered to be the date of such amendment.

(b)           The Fair Market Value shall be determined by
the Administrator in good faith; provided, however, that where there is a
public market for the Common Stock, the Fair Market Value per Share shall be
the closing price per share of the Common Stock, as reported in the Wall Street
Journal (or, if not so reported, as otherwise reported by the exchange or
system on which the Common Stock is listed), for the date of determination or,
in the event such date of determination is not a trading day, on the first
trading day following the date of determination.

(c)           The Administrator shall determine the
acceptable form of consideration for exercising an Option, including the method
of payment.  In the case of an Incentive
Stock Option, the Administrator shall determine the acceptable form of
consideration at the time of grant.  Such
consideration may consist entirely of:

(i)            cash;

(ii)           check;

(iii)          other Shares which (A) in the case of Shares
acquired upon exercise of an option, have been owned by the Optionee for more
than six months on the date of surrender, and (B) have a Fair Market Value on
the date of surrender equal to the aggregate exercise price of the Shares as to
which said Option shall be exercised;

(iv)          delivery of a properly executed exercise
notice together with such other documentation as the Administrator and the
broker, if applicable, shall require to effect an exercise of the Option and
delivery to the Company of the sale proceeds required to pay the exercise price
and any tax withholding resulting from such exercise;

(v)           any combination of the foregoing methods of
payment; or

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(vi)          such other consideration and method of
payment for the issuance of Shares to the extent permitted by applicable laws.

(d)           Prior to issuance of the Shares upon exercise
of an Option, the Optionee shall pay or make adequate provision for any federal
or state withholding obligations of the Company, if applicable.

9.             Exercise of Option.

(a)           Procedure for Exercise; Rights as a
Stockholder. Any Option
granted hereunder shall be exercisable at such times and under such conditions
as determined by the Administrator at the time of grant, including performance
criteria with respect to the Company and/or the Optionee, and as shall be
permissible under the terms of the Plan.

An Option may not be exercised for a fraction of a Share.

An Option shall be deemed to be exercised when written notice of such
exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company.  Such exercise shall be in
accordance with the policies and procedures adopted by the Administrator from
time to time.  Full payment may, as
authorized by the Administrator, consist of any consideration and method of
payment allowable under Section 8(c) of the Plan. Until the issuance (as
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company) of the stock certificate evidencing
such Shares, no right to vote or receive dividends or any other rights as a
stockholder shall exist with respect to the Optioned Stock, notwithstanding the
exercise of the Option.  The Company
shall issue (or cause to be issued) such stock certificate as promptly as
practicable upon valid exercise of the Option. 
In the event that the exercise of an Option is treated in part as the
exercise of an Incentive Stock Option and in part as the exercise of a
Nonstatutory Stock Option pursuant to Section 5(b), the Company shall issue a
separate stock certificate evidencing the Shares treated as acquired upon
exercise of an Incentive Stock Option and a separate stock certificate
evidencing the Shares treated as acquired upon exercise of a Nonstatutory Stock
Option, and shall identify each such certificate accordingly in its stock
transfer records.  No adjustment will be
made for a dividend or other right for which the record date is prior to the
date the stock certificate is issued, except as provided in Section 11 of the
Plan.

Exercise of an Option in any manner shall result in a decrease in the
number of Shares which thereafter may be available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.

(b)           Termination of Status as an Employee.  In
the event of termination of an Optionee’s Continuous Status as an Employee with
the Company, such Optionee may, but only within thirty (30) days after the date
of such termination (or such other period as is set out by the Administrator in
the Option Agreement, but in no event later than the expiration date of the
term of such Option as set forth in the Option Agreement), exercise the Option
to the extent that Optionee was entitled to exercise it at the date of such
termination.  To the extent that Optionee
was not entitled to exercise the Option at the date of such termination, or if
Optionee does not exercise such Option to the extent so entitled within the
time specified herein, the Option shall terminate.

(c)           Disability of Optionee.  Notwithstanding
the provisions of Section 9(b) above, in the event of termination of an
Optionee’s Continuous Status as an Employee as a result of his total and
permanent disability (as defined in Section 22(e)(3) of the Code), he may
exercise his Option to the

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extent he was entitled to exercise it at the date of
such termination within six (6) months from the date of such termination (or
such other period as is specified in the grant, but in no event later than the
date of expiration of the term of such Option as set forth in the Option
Agreement).  To the extent that the
Optionee was not entitled to exercise the Option at the date of termination, or
does not exercise such Option (to the extent exercisable) within the time
specified herein, the Option shall terminate.

(d)           Death of Optionee. 
Notwithstanding the provisions of Section 9(b) above, in the event of
the death of an Optionee:

(i)            during the term of the Option, who is at the
time of his death an Employee of the Company and who shall have been in Continuous
Status as an Employee since the date of grant of the Option, the Option may be
exercised, at any time within six (6) months following the date of death ((or
such other period as is specified in the grant, but in no event later than the
date of expiration of the term of such Option as set forth in the Option
Agreement), by the Optionee’s estate or by a person who acquired the right to
exercise the Option by bequest or inheritance, by the Optionee’s estate or by a
person who acquired the right to exercise the Option by bequest or inheritance,
as to all of the Optioned Stock, including Shares as to which it would not
otherwise be exercisable, and such Shares shall be fully vested and not subject
to any repurchase option; or

(ii)           during the
post-termination exercise period specified in the grant with respect to
terminations under Section 9(b) above, 
at any time within six (6) months following the date of death (or such
other period as is determined by the Administrator, but in no event later than
the date of expiration of the term of such Option as set forth in the Option
Agreement), by the Optionee’s estate or by a person who acquired the right to
exercise the Option by bequest or inheritance, but only to the extent of the
right to exercise that had accrued at the date of termination.

10.           Non-Transferability of Options. Except as otherwise designated by the
Administrator, an Option may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws of
descent or distribution and may be exercised, during the lifetime of the
Optionee, only by the Optionee.

11.           Adjustments Upon Changes in Capitalization,
Dissolution, Merger, Asset Sale or Change of Control.

(a)           Changes in Capitalization. 
Subject to any required action by the stockholders of the Company, the
number of shares of Common Stock covered by each outstanding Option, and the
number of shares of Common Stock which have been authorized for issuance under
the Plan but as to which no Options have yet been granted or which have been
returned to the Plan upon cancellation or expiration of an Option, as well as
the price per share of Common Stock covered by each such outstanding Option,
shall be proportionately adjusted for any increase or decrease in the number of
issued shares of Common Stock resulting from a stock split, reverse stock
split, stock dividend, combination or reclassification of the Common Stock, or
any other increase or decrease in the number of issued shares of Common Stock
effected without receipt of consideration by the Company; provided, however,
that conversion of any convertible securities of the Company shall not be
deemed to have been “effected without receipt of consideration.”  Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and
conclusive.  Except as expressly provided
herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of shares of Common Stock subject to an Option.

(b)           Dissolution
or Liquidation.  In the event of the proposed dissolution or
liquidation of the Company, to the extent that an Option has not been
previously exercised, it will

 7
 

 

terminate immediately prior to the consummation of
such proposed action.  The Board may, in
the exercise of its sole discretion in such instances, declare that any Option
shall terminate as of a date fixed by the Board and give each Optionee the
right to exercise his or her Option as to all or any part of the Optioned
Stock, including Shares as to which the Option would not otherwise be
exercisable.

(c)           Merger or Asset Sale.  In
the event of a merger of the Company with or into another corporation or the
sale of substantially all of the assets of the Company:

(i)            Each outstanding Option shall be assumed or
an equivalent option substituted by the successor corporation or a Parent or
Subsidiary of the successor corporation. 
Any Shares subject to a repurchase option of the Company shall be
exchanged for the consideration (whether stock, cash, or other securities or
property) received in the merger or asset sale by the holders of the Common
Stock for the successor corporation or a parent or subsidiary of such successor
corporation for each Share held on the effective date of the transaction and
such consideration shall, in the case of securities of the successor
corporation, be subject to a repurchase option with terms consistent to the
Company’s repurchase option and in the case of any other property shall be
subject to vesting according to the schedule for the lapse of the repurchase
option.

(ii)           In the event that the successor corporation
refuses to assume or substitute for the Option, the Optionee shall have the
right to exercise the Option as to all of the Optioned Stock, including Shares
as to which it would not otherwise be exercisable, and such Shares shall be
fully vested and not subject to any repurchase option.  In the event that the successor corporation
fails to assume the restricted stock purchase agreement pursuant to which the
Optionee purchased unvested Shares, the Company’s repurchase option shall lapse
and the shares shall be fully vested.  If
an Option is exercisable in lieu of assumption or substitution in the event of
a merger or sale of assets, the Administrator shall notify the Optionee that
the Option shall be fully exercisable for a period of fifteen (15) days from
the date of such notice, and the Option shall terminate upon the expiration of
such period.  For the purposes of this
paragraph, the Option shall be considered assumed if, following the merger or
sale of assets, the option confers the right to purchase or receive, for each
Share of Optioned Stock subject to the Option immediately prior to the merger
or sale of assets, the consideration (whether stock, cash, or other securities
or property) received in the merger or sale of assets by holders of Common
Stock for each Share held on the effective date of the transaction (and if
holders were offered a choice of consideration, the type of consideration
chosen by the holders of a majority of the outstanding Shares); provided,
however, that if such consideration received in the merger or sale of assets
was not solely Common Stock of the successor corporation or its Parent, the
Administrator may, with the consent of the successor corporation, provide for
the consideration to be received upon the exercise of the Option, for each
Share of Optioned Stock subject to the Option, to be solely common stock of the
successor corporation or its Parent equal in Fair Market Value to the per share
consideration received by holders of Common Stock in the merger or sale of
assets.

12.           Stock Withholding to Satisfy Withholding Tax
Obligations.  At the discretion of the Administrator,
Optionees may satisfy withholding obligations as provided in this
paragraph.  When an Optionee incurs tax
liability in connection with the exercise of an Option, which tax liability is
subject to tax withholding under applicable tax laws, and the Optionee is
obligated to pay the Company an amount required to be withheld under applicable
tax laws, the Optionee may satisfy the withholding tax obligation by electing
to have the Company withhold from the Shares to be issued upon exercise of the
Option that number of Shares having a Fair Market Value equal to the amount
required to be withheld.  The Fair Market
Value of the Shares to be withheld shall be determined on the date that the
amount of tax to be withheld is determined (the “Tax Date”).

All elections by an Optionee to have Shares withheld for this purpose
shall be made in writing in a form acceptable to the Administrator and shall be
subject to the following restrictions:

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(a)  the election must be made on
or prior to the applicable Tax Date;

(b)  once made, the election
shall be irrevocable as to the particular Shares of the Option as to which the
election is made;

(c)  all elections shall be
subject to the consent of the Administrator;

(d)  if the Optionee is subject
to Rule 16b-3, the election must comply with the applicable provisions of Rule
16b-3 and shall be subject to such additional conditions or restrictions
as may be required thereunder to qualify for the maximum exemption from Section
16 of the Exchange Act with respect to Plan transactions.

In the event the election to have Shares withheld is made by an
Optionee and the Tax Date is deferred under Section 83 of the Code because no
election is filed under Section 83(b) of the Code, the Optionee shall receive
the full number of Shares with respect to which the Option is exercised but
such Optionee shall be unconditionally obligated to tender back to the Company
the proper number of Shares on the Tax Date.

13.           Time of Granting Options.  The
date of grant of an Option shall, for all purposes, be the date on which the
Administrator makes the determination granting such Option.  Notice of the determination shall be given to
each Employee to whom an Option is so granted within a reasonable time after
the date of such grant.

14.           Amendment and Termination of the Plan.

(a)           Amendment and Termination.  The
Board may amend or terminate the Plan from time to time in such respects as the
Board may deem advisable; provided that the following changes shall require
approval of the stockholders of the Company in the manner described in Section
18 of the Plan: (i) revisions or amendments to increase the number of Shares in
the Share Pool (other than in connection with an adjustment under Section 11 of
the Plan); (ii) changes in the designation of the class of persons eligible to
be granted Options and/or (iii)  the
reduction of the exercise price of any Option to the then current Fair Market
Value if the Fair Market Value of the Common Stock covered by such Option shall
have declined since the date the Option was granted.

(b)           Effect of Amendment or Termination.  Any
such amendment or termination of the Plan shall not affect Options already
granted and such Options shall remain in full force and effect as if this Plan
had not been amended or terminated, unless mutually agreed otherwise between
the Optionee and the Board, which agreement must be in writing and signed by
the Optionee and the Company.

15.           Conditions Upon Issuance of Shares. 
Shares shall not be issued pursuant to the exercise of an Option unless
the exercise of such Option and the issuance and delivery of such Shares
pursuant thereto shall comply with all relevant provisions of law, including,
without limitation, the Securities Act of 1933, as amended, the Exchange Act,
the rules and regulations promulgated thereunder, and the requirements of any
stock exchange upon which the Shares may then be listed, and shall be further
subject to the approval of counsel for the Company with respect to such compliance.

As a condition to the exercise of an Option, the Company may require
the person exercising such Option to represent and warrant at the time of any
such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned relevant provisions of law.

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16.           Reservation of Shares.  The
Company, during the term of this Plan, will at all times reserve and keep
available such number of Shares as shall be sufficient to satisfy the
requirements of the Plan.  The inability
of the Company to obtain authority from any regulatory body having jurisdiction,
which authority is deemed by the Company’s counsel to be necessary to the
lawful issuance and sale of any Shares hereunder, shall relieve the Company of
any liability in respect of the failure to issue or sell such Shares as to
which such requisite authority shall not have been obtained.

17.           Option Agreement. 
Options shall be evidenced by written option agreements in such form as
the Administrator shall approve.

18.           Stockholder Approval. Any required stockholder approval obtained
at a duly held stockholders’ meeting, may be obtained by the affirmative vote
of the holders of a majority of the outstanding Shares of the Company present
or represented and entitled to vote thereon.

 10Exhibit 4.1

 

deCODE genetics,
Inc.

3.50% Senior
Convertible Notes due April 15, 2011

INDENTURE

Dated as of
November 17, 2006

The Bank of New
York

TRUSTEE

 

TABLE
OF CONTENTS

	
  

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 1

  	
   

  	
   

  
	
  Definitions and Incorporation by Reference

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 1.01.

  	
   

  	
  Definitions

  	
   

  	
  1

  
	
  Section 1.02.

  	
   

  	
  Other Definitions

  	
   

  	
  12

  
	
  Section 1.03.

  	
   

  	
  Incorporation by Reference of Trust Indenture Act

  	
   

  	
  13

  
	
  Section 1.04.

  	
   

  	
  Rules of Construction

  	
   

  	
  14

  
	
  Section 1.05.

  	
   

  	
  Acts of Holders

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 2

  	
   

  	
   

  
	
  The Securities

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 2.01.

  	
   

  	
  Form and Dating

  	
   

  	
  18

  
	
  Section 2.02.

  	
   

  	
  Execution and Authentication

  	
   

  	
  20

  
	
  Section 2.03.

  	
   

  	
  Registrar, Paying Agent and Conversion Agent

  	
   

  	
  22

  
	
  Section 2.04.

  	
   

  	
  Paying Agent to Hold Money and Securities in
  Trust

  	
   

  	
  23

  
	
  Section 2.05.

  	
   

  	
  Securityholder Lists

  	
   

  	
  24

  
	
  Section 2.06.

  	
   

  	
  Transfer and Exchange

  	
   

  	
  24

  
	
  Section 2.07.

  	
   

  	
  Replacement Securities

  	
   

  	
  30

  
	
  Section 2.08.

  	
   

  	
  Outstanding Securities; Determination of Holders’
  Action

  	
   

  	
  31

  
	
  Section 2.09.

  	
   

  	
  Temporary Securities

  	
   

  	
  33

  
	
  Section 2.10.

  	
   

  	
  Cancellation

  	
   

  	
  34

  
	
  Section 2.11.

  	
   

  	
  Persons Deemed Owners

  	
   

  	
  35

  
	
  Section 2.12.

  	
   

  	
  Global Securities

  	
   

  	
  36

  
	
  Section 2.13.

  	
   

  	
  CUSIP Numbers

  	
   

  	
  51

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 3

  	
   

  	
   

  
	
  Redemption and Purchases

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 3.01.

  	
   

  	
  Company’s Right to Redeem; Notices to Trustee

  	
   

  	
  52

  
	
  Section 3.02.

  	
   

  	
  Selection of Securities to Be Redeemed

  	
   

  	
  53

  
	
  Section 3.03.

  	
   

  	
  Notice of Redemption

  	
   

  	
  54

  
	
  Section 3.04.

  	
   

  	
  Effect of Notice Redemption

  	
   

  	
  56

  
	
  Section 3.05.

  	
   

  	
  Deposit of Redemption Price

  	
   

  	
  56

  
	
  Section 3.06.

  	
   

  	
  Securities Redeemed in Part

  	
   

  	
  57

  
	
  Section 3.07.

  	
   

  	
  Purchase of Securities at Option of the Holder
  Upon Change of Control

  	
   

  	
  57

  
	
  Section 3.08.

  	
   

  	
  Effect of Change of Control Purchase Notice;
  Withdrawal

  	
   

  	
  66

  
	
  Section 3.09.

  	
   

  	
  Deposit of Change of Control Purchase Price

  	
   

  	
  68

  
	
  Section 3.10.

  	
   

  	
  Securities Purchased in Part

  	
   

  	
  69

  

 

 

 

	
  Section 3.11.

  	
   

  	
  Covenant to Comply With
  Securities Laws Upon Purchase of Securities

  	
   

  	
  69

  
	
  Section 3.12.

  	
   

  	
  Repayment to the Company

  	
   

  	
  70

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 4

  	
   

  	
   

  
	
  Covenants

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 4.01.

  	
   

  	
  Payment of Securities

  	
   

  	
  71

  
	
  Section 4.02.

  	
   

  	
  SEC and Other Reports

  	
   

  	
  71

  
	
  Section 4.03.

  	
   

  	
  Compliance Certificate

  	
   

  	
  72

  
	
  Section 4.04.

  	
   

  	
  Further Instruments and Acts

  	
   

  	
  73

  
	
  Section 4.05.

  	
   

  	
  Maintenance of Office or Agency

  	
   

  	
  73

  
	
  Section 4.06.

  	
   

  	
  Delivery of Certain Information

  	
   

  	
  74

  
	
  Section 4.07.

  	
   

  	
  Treatment of Securities

  	
   

  	
  75

  
	
  Section 4.08.

  	
   

  	
  Delivery of Original Issue Discount Certificate

  	
   

  	
  75

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 5

  	
   

  	
   

  
	
  Successor Corporation

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 5.01.

  	
   

  	
  When Company May Merge or Transfer Assets

  	
   

  	
  76

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 6

  	
   

  	
   

  
	
  Defaults and Remedies

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 6.01.

  	
   

  	
  Events of Default

  	
   

  	
  78

  
	
  Section 6.02.

  	
   

  	
  Acceleration

  	
   

  	
  82

  
	
  Section 6.03.

  	
   

  	
  Other Remedies

  	
   

  	
  83

  
	
  Section 6.04.

  	
   

  	
  Waiver of Past Defaults

  	
   

  	
  84

  
	
  Section 6.05.

  	
   

  	
  Control by Majority

  	
   

  	
  85

  
	
  Section 6.06.

  	
   

  	
  Limitation on Suits

  	
   

  	
  85

  
	
  Section 6.07.

  	
   

  	
  Rights of Holders to Receive Payment

  	
   

  	
  86

  
	
  Section 6.08.

  	
   

  	
  Collection Suit by Trustee

  	
   

  	
  87

  
	
  Section 6.09.

  	
   

  	
  Trustee May File Proofs of Claim

  	
   

  	
  87

  
	
  Section 6.10.

  	
   

  	
  Priorities

  	
   

  	
  89

  
	
  Section 6.11.

  	
   

  	
  Undertaking for Costs

  	
   

  	
  90

  
	
  Section 6.12.

  	
   

  	
  Waiver of Stay, Extension or Usury Laws

  	
   

  	
  90

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 7

  	
   

  	
   

  
	
  Trustee

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 7.01.

  	
   

  	
  Duties of Trustee

  	
   

  	
  91

  
	
  Section 7.02.

  	
   

  	
  Rights of Trustee

  	
   

  	
  94

  
	
  Section 7.03.

  	
   

  	
  Individual Rights of Trustee

  	
   

  	
  97

  
	
  Section 7.04.

  	
   

  	
  Trustee’s Disclaimer

  	
   

  	
  98

  
	
  Section 7.05.

  	
   

  	
  Notice of Defaults

  	
   

  	
  98

  
	
  Section 7.06.

  	
   

  	
  Reports by Trustee to Holders

  	
   

  	
  99

  
	
  Section 7.07.

  	
   

  	
  Compensation and Indemnity

  	
   

  	
  99

  

 

 ii
 

 

 

	
  Section 7.08.

  	
   

  	
  Replacement of Trustee

  	
   

  	
  101

  
	
  Section 7.09.

  	
   

  	
  Successor Trustee by Merger

  	
   

  	
  103

  
	
  Section 7.10.

  	
   

  	
  Eligibility; Disqualification

  	
   

  	
  103

  
	
  Section 7.11.

  	
   

  	
  Preferential Collection of Claims Against Company

  	
   

  	
  104

  
	
  Section 7.12.

  	
   

  	
  Force Majeure

  	
   

  	
  104

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 8

  	
   

  	
   

  
	
  Amendments

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 8.01.

  	
   

  	
  Without Consent of Holders

  	
   

  	
  104

  
	
  Section 8.02.

  	
   

  	
  With Consent of Holders

  	
   

  	
  106

  
	
  Section 8.03.

  	
   

  	
  Compliance with Trust Indenture Act

  	
   

  	
  109

  
	
  Section 8.04.

  	
   

  	
  Revocation and Effect of Consents, Waivers and
  Actions

  	
   

  	
  109

  
	
  Section 8.05.

  	
   

  	
  Notation on or Exchange of Securities

  	
   

  	
  110

  
	
  Section 8.06.

  	
   

  	
  Trustee to Sign Supplemental Indentures

  	
   

  	
  110

  
	
  Section 8.07.

  	
   

  	
  Effect of Supplemental Indentures

  	
   

  	
  111

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 9

  	
   

  	
   

  
	
  Conversions

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 9.01.

  	
   

  	
  Conversion Privilege

  	
   

  	
  111

  
	
  Section 9.02.

  	
   

  	
  Conversion Procedure; Conversion Price;
  Fractional Shares

  	
   

  	
  112

  
	
  Section 9.03.

  	
   

  	
  Adjustment of Conversion Price

  	
   

  	
  115

  
	
  Section 9.04.

  	
   

  	
  Consolidation or Merger of the Company

  	
   

  	
  137

  
	
  Section 9.05.

  	
   

  	
  Notice of Adjustment

  	
   

  	
  140

  
	
  Section 9.06.

  	
   

  	
  Adjustment to Conversion Rate Upon a Non-Stock
  Change of Control

  	
   

  	
  141

  
	
  Section 9.07.

  	
   

  	
  Notice in Certain Events

  	
   

  	
  144

  
	
  Section 9.08.

  	
   

  	
  Company to Reserve Stock: Registration; Listing

  	
   

  	
  146

  
	
  Section 9.09.

  	
   

  	
  Taxes on Conversion

  	
   

  	
  148

  
	
  Section 9.10.

  	
   

  	
  Conversion After Record Date

  	
   

  	
  148

  
	
  Section 9.11.

  	
   

  	
  Company Determination Final

  	
   

  	
  150

  
	
  Section 9.12.

  	
   

  	
  Responsibility of Trustee and Conversion Agent
  for Conversion Provisions

  	
   

  	
  150

  
	
  Section 9.13.

  	
   

  	
  Unconditional Right of Holders to Convert

  	
   

  	
  151

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 10

  	
   

  	
   

  
	
  Miscellaneous

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 10.01.

  	
   

  	
  Trust Indenture Act Controls

  	
   

  	
  151

  
	
  Section 10.02.

  	
   

  	
  Notices

  	
   

  	
  152

  
	
  Section 10.03.

  	
   

  	
  Communication by Holders with Other Holders

  	
   

  	
  154

  
	
  Section 10.04.

  	
   

  	
  Certificate and Opinion as to Conditions
  Precedent

  	
   

  	
  154

  
	
  Section 10.05.

  	
   

  	
  Statements Required in Certificate or Opinion

  	
   

  	
  154

  
	
  Section 10.06.

  	
   

  	
  Separability Clause

  	
   

  	
  155

  

 

 iii
 

 

 

	
  Section 10.07.

  	
   

  	
  Rules by Trustee, Paying Agent, Conversion Agent
  and Registrar

  	
   

  	
  155

  
	
  Section 10.08.

  	
   

  	
  Legal Holidays

  	
   

  	
  156

  
	
  Section 10.09.

  	
   

  	
  Governing Law

  	
   

  	
  156

  
	
  Section 10.10.

  	
   

  	
  Waiver of Jury Trial

  	
   

  	
  156

  
	
  Section 10.11.

  	
   

  	
  No Recourse Against Others

  	
   

  	
  156

  
	
  Section 10.12.

  	
   

  	
  Successors

  	
   

  	
  157

  
	
  Section 10.13.

  	
   

  	
  Multiple Originals

  	
   

  	
  157

  
	
  Section 10.14.

  	
   

  	
  Effect of Headings and Table of Contents

  	
   

  	
  157

  

 

	
  EXHIBIT A

  	
   

  	
  Form of Global Security

  
	
  EXHIBIT B

  	
   

  	
  Form of Certificated Security

  
	
  EXHIBIT C

  	
   

  	
  Transfer Certificate

  

 

 iv

 

 

INDENTURE dated as of
November 17, 2006 between deCODE genetics, Inc., a Delaware corporation (“Company”), and THE BANK OF NEW YORK, a New
York banking corporation (“Trustee”).

Each party agrees as
follows for the benefit of the other party and for the equal and ratable
benefit of the Holders of the Company’s 3.50% Senior Convertible Notes due
April 15, 2011:

ARTICLE 1

Definitions and Incorporation by Reference

Section 1.01.  Definitions.

“144A Global Security” means a permanent
Global Security in the form of the Security attached hereto as Exhibit A, and
that is deposited with and registered in the name of the Depositary,
representing Securities sold in reliance on Rule 144A under the Securities Act.

“Additional Amounts” shall have the meaning
ascribed to it in the Registration Rights Agreement.

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

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

“Board of Directors” means either the board
of directors of the Company or any duly authorized committee of such board.

“Board Resolution” means a resolution of the
Board of Directors.

“Business Day” means, with respect to any
Security, a day that in The City of New York, is not a Saturday or Sunday or
day on which banking institutions are authorized or required by law or
regulation to close.

 

 

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

“Certificated Securities” means Securities
that are in the form of the Securities attached hereto as Exhibit B.

“Closing Sale Price” of any share of Common
Stock or any other security on any Trading Day means the closing sale price of
such security (or, if no closing sale price is reported, the average of the
closing bid and ask prices or, if more than one in either case, the average of
the average closing bid and the average closing ask prices) on such date as
reported in composite transactions for the principal U.S. securities exchange
on which the shares of Common Stock are traded or, if the shares of Common
Stock are not listed on a U.S. national or regional securities exchange, as
reported by the Nasdaq System or by Pink Sheets LLC.  In the absence of such a quotation, the Company
shall be entitled to determine the Closing Sale Price on the basis it considers
appropriate.  The Closing Sale Price
shall be determined without reference to extended or after hours trading.

“Common Stock” shall mean the Common Stock,
$0.001 par value per share, of the Company existing on the date of this
Indenture or any other shares of Capital Stock of the Company into which such
Common Stock shall be reclassified or changed.

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

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

“Conversion Price” means initially $14.00,
subject to adjustment as set forth herein.

“Corporate Trust Office” means the principal
office of the Trustee at which at any time its corporate trust business shall
be administered, which office at the date hereof is located at 101 Barclay
Street, Floor 4 East, New York, New York 10286 (Attention: Corporate Trust
Administration), or such other address as the Trustee may designate from time
to time by notice to the Holders and the Company, or the principal corporate
trust office of any successor (or such other address as a successor Trustee may
designate from time to time by notice to the Holders and the Company).

“Default” means an event which, with the
giving of notice or the lapse of time, or both, would become an Event of
Default.

 2
 

 

 

“Ex-Dividend Time” means, with respect to
any issuance or distribution on shares of Common Stock, the first date on which
the shares of Common Stock trade regular way on the principal securities market
on which the shares of Common Stock are then traded without the right to
receive such issuance or distribution.

“Global Securities” means Securities that
are in the form of the Securities attached hereto as Exhibit A, and that are
registered in the register of Securities in the name of a Depositary or a
nominee thereof, and to the extent that such Securities are required to bear
the Legend required by Section 2.06 hereof, such Securities will be in the form
of a 144A Global Security.

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

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

“Initial Purchasers” means Lehman Brothers
Inc., and Piper Jeffrey & Co.

“Interest
Payment Date” means each April 15 and October 15,
or if such day is not a Business Day, then the next succeeding Business Day,
commencing April 15, 2007.

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

“Non-Stock Change of Control” means a
transaction described under clause (i) or clause (iii) in the definition of
Change of Control pursuant to which 10% or more of the consideration for Common
Stock (other than cash payments for fractional shares, if applicable, and cash
payments made in respect of dissenters’ appraisal rights) in such transaction
consists of cash or securities (or other property) that are not shares of
common stock, depositary receipts or other certificates representing common
equity interests traded or scheduled to be traded immediately following such
transaction on a U.S. national securities exchange or The Nasdaq Global Market.

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

“Officers’ Certificate” means a written
certificate containing the information specified in Sections 10.04 and 10.05,
signed in the name of the Company by any two Officers, and delivered to the
Trustee. An Officers’

 3
 

 

Certificate given pursuant to Section 4.03 shall be
signed by the principal executive Officer, principal financial Officer or
principal accounting Officer of the Company but need not contain the
information specified in Sections 10.04 and 10.05.

“Opinion of Counsel” means a written opinion
containing the information specified in Sections 10.04 and 10.05, from legal
counsel who is reasonably acceptable to the Trustee. The counsel may be an
employee of, or counsel to, the Company.

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

“Redemption Date” or “redemption date” shall mean the date
specified in a notice of redemption on which the Securities may be redeemed in
accordance with the terms of the Securities and this Indenture.

“Redemption Price” or “redemption price” shall have the meaning
set forth in Section 5 of the Securities.

“Registration Rights Agreement” means the
Resale Registration Rights Agreement, dated as of the date hereof, between the
Company and Lehman Brothers Inc. as representative of the Initial Purchasers.

“Responsible Officer” shall mean, when used
with respect to the Trustee, any officer within the corporate trust department
of the Trustee, including any vice president, assistant vice president,
assistant secretary, assistant treasurer, trust officer or any other officer of
the Trustee who customarily performs functions similar to those performed by
the persons who at the time shall be such officers, respectively, or to whom
any corporate trust matter is referred because of such person’s knowledge of
and familiarity with the particular subject and who shall have direct
responsibility for the administration of this Indenture.

“Restricted Security” means a Security
required to bear the restrictive legend set forth in the form of Security set
forth in Exhibits A and B of this Indenture.

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

“Sale Price” of a security on any date of
determination means:

(i)            the
closing sales price as reported by The Nasdaq Global Market;

 4
 

 

 

(ii)           if
such security is not so reported on any such date, the closing sale price as
reported in the composite transactions for the principal U.S. securities
exchange on which such security is so listed;

(iii)          if
such security is not so reported, the last price quoted by Interactive Data
Corporation for such security on such date or, if Interactive Data Corporation
is not quoting such price, a similar quotation service selected by the Company;

(iv)          if
such security is not so quoted, the average of the mid-point of the last bid
and ask prices for such security on such date from at least two dealers
recognized as market-makers for such security selected by the Company for this
purpose; or

(v)           if
such security is not so quoted, the average of that last bid and ask prices for
such security on such date from a dealer engaged in the trading of convertible
securities selected by the Company for this purpose.

“SEC” means the Securities and Exchange Commission.

“Securities” means any of the Company’s
3.50% Senior Convertible Notes due April 15, 2011, as amended or supplemented
from time to time, issued under this Indenture.

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

“Significant Subsidiary” shall have the
meaning ascribed to such term in Rule 405 of the Securities Act.

“Stated Maturity”, when used with respect to
any Security, means April 15, 2011.

“Subsidiary” means any Person of which at
least a majority of the outstanding Voting Stock shall at the time directly or
indirectly be owned or controlled by the Company or by one or more Subsidiaries
or by the Company and one or more Subsidiaries.

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

“Trading Day” means a day during which
trading in securities generally occurs on The Nasdaq Global Market or, if the
Common Stock is not quoted on The Nasdaq Global Market, on the principal other
national or regional securities exchange on which the Common Stock then is
listed or, if the Common Stock is

 5
 

 

not traded on The Nasdaq
Global Market or listed on a national or regional securities exchange, on the
principal other market on which the Common Stock is then traded or quoted.

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

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

Section 1.02.  Other
Definitions.  

	
  Term

  	
   

  	
  Section in which the

  term is defined

  
	
   

  	
   

  	
   

  
	
  “Act”

  	
   

  	
  1.05

  	
   

  
	
  “Agent Members”

  	
   

  	
  2.12

  	
  (e)

  
	
  “beneficial
  owner”

  	
   

  	
  3.07

  	
  (a)

  
	
  “Change of
  Control”

  	
   

  	
  3.07

  	
  (a)

  
	
  “Change of
  Control Purchase Date”

  	
   

  	
  3.07

  	
  (a)

  
	
  “Change of
  Control Purchase Notice”

  	
   

  	
  3.07

  	
  (c)

  
	
  “Change of
  Control Purchase Price”

  	
   

  	
  3.07

  	
  (a)

  
	
  “Common Stock
  Restrictive Legend”

  	
   

  	
  2.06

  	
  (e)

  
	
  “Continuing
  Director

  	
   

  	
  3.07

  	
  (a)

  
	
  “Conversion
  Agent”

  	
   

  	
  2.03

  	
   

  
	
  “Current Market
  Price”

  	
   

  	
  9.03

  	
  (g)

  
	
  “Depositary”

  	
   

  	
  2.01

  	
  (a)

  
	
  “distributed
  assets”

  	
   

  	
  9.03

  	
  (d)

  
	
  “DTC”

  	
   

  	
  2.01

  	
  (a)

  
	
  “Event of
  Default”

  	
   

  	
  6.01

  	
   

  
	
  “Exchange Act”

  	
   

  	
  2.12

  	
  (e)

  
	
  “Expiration
  Time”

  	
   

  	
  9.03

  	
  (f)

  
	
  “Fair Market
  Value”

  	
   

  	
  9.03

  	
  (g)

  
	
  “issuer tender
  offer”

  	
   

  	
  3.11

  	
   

  
	
  “Legal Holiday”

  	
   

  	
  10.08

  	
   

  
	
  “Legend”

  	
   

  	
  2.06

  	
  (e)

  
	
  “Non-Electing
  Share”

  	
   

  	
  9.04

  	
   

  
	
  “Paying Agent”

  	
   

  	
  2.03

  	
   

  
	
  “Purchased
  Shares”

  	
   

  	
  9.03

  	
  (f)

  
	
  “QIB”

  	
   

  	
  2.01

  	
  (a)

  

 

 6
 

 

 

	
  Term

  	
   

  	
  Section in which the

  term is defined

  
	
   

  	
   

  	
   

  
	
  “Record Date”

  	
   

  	
  9.03

  	
  (g)

  
	
  “Reference
  Period”

  	
   

  	
  9.03

  	
  (d)

  
	
  “Registrar”

  	
   

  	
  2.03

  	
   

  
	
  “Rule 144A
  Information”

  	
   

  	
  4.06

  	
   

  
	
  “Securities Act”

  	
   

  	
  2.06

  	
  (e)

  
	
  “Spin-Off”

  	
   

  	
  9.03

  	
  (d)

  
	
  “transfer”

  	
   

  	
  2.12

  	
  (d)

  
	
  “Trigger Event”

  	
   

  	
  9.03

  	
  (d)

  

 

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

“Commission” means the
SEC.

“indenture securities”
means the Securities.

“indenture security
holder” means a Securityholder.

“indenture to be
qualified” means this Indenture.

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

“obligor” on the
indenture securities means the Company.

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

Section 1.04.  Rules of
Construction.  Unless the
context otherwise requires:

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

(ii)   an accounting term not otherwise defined has
the meaning assigned to it in accordance with U.S. generally accepted accounting
principles as in effect from time to time;

(iii)  “or” is not exclusive;

(iv)  “including” means including, without
limitation; and

 7
 

 

 

(v)   words in the singular include the plural, and
words in the plural include the singular.

Section 1.05.  Acts of Holders.  (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by Holders may be embodied in and evidenced
by one or more instruments of substantially similar tenor signed by such
Holders in person or by an agent duly appointed in writing; and, except as
herein otherwise expressly provided, such action shall become effective when
such instrument or instruments are delivered to the Trustee and, where it is
hereby expressly required, to the Company, as described in Section 10.02.  Such instrument or instruments (and the
action embodied therein and evidenced thereby) are herein sometimes referred to
as the “Act” of Holders signing
such instrument or instruments.  Proof of
execution of any such instrument or of a writing appointing any such agent
shall be sufficient for any purpose of this Indenture and conclusive in favor
of the Trustee and the Company, if made in the manner provided in this Section.

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

(c)        The principal amount and serial number
of any Security and the ownership of Securities shall be proved by the register
for the Securities.

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

(e)        If the Company shall solicit from the
Holders any request, demand, authorization, direction, notice, consent, waiver
or other Act, the Company may, at its option, by or pursuant to a Board
Resolution, fix in advance a record date for the determination of Holders
entitled to give such request, demand, authorization, direction, notice,
consent, waiver or other Act, but the Company shall have no obligation to do
so. If such a record date is fixed, such request, demand, authorization,
direction, notice, consent, waiver or other Act may be given before or after
such record date, but only the Holders of record at the close of business

 8
 

 

on such record date shall
be deemed to be Holders for the purposes of determining whether Holders of the
requisite proportion of outstanding Securities have authorized or agreed or
consented to such request, demand, authorization, direction, notice, consent,
waiver or other Act, and for that purpose the outstanding Securities shall be
computed as of such record date; provided that no such authorization, agreement
or consent by the Holders on such record date shall be deemed effective unless
it shall become effective pursuant to the provisions of this Indenture not
later than six months after the record date.

ARTICLE 2

The Securities

Section 2.01.  Form and
Dating.  The Securities and
the Trustee’s certificate of authentication shall be substantially in the form
of Exhibits A and B, which are a part of this Indenture.  The Securities may have notations, legends or
endorsements required by law, stock exchange rule or usage (provided that any
such notation, legend or endorsement required by usage is in a form acceptable
to the Company).  The Company shall provide
any such notations, legends or endorsements to the Trustee in writing.  Each Security shall be dated the date of its
authentication.

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

(b)        Global
Securities in General.  Each
Global Security shall represent such of the outstanding Securities as shall be
specified therein and each shall provide that it shall represent the aggregate
amount of outstanding Securities from time to time endorsed thereon and that
the aggregate amount of outstanding Securities represented thereby may from
time to time be reduced or increased, as appropriate, to reflect exchanges,
redemptions, repurchases and conversions.

Any adjustment of the
aggregate principal amount of a Global Security to reflect the amount of any
increase or decrease in the amount of outstanding Securities represented
thereby shall be made by the Trustee in accordance with instructions given by
the Holder thereof as required by Section 2.12 hereof and shall be made on the
records of the Trustee and the Depositary.

 9
 

 

 

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

The Company shall execute
and the Trustee shall, in accordance with this Section 2.01(c), authenticate
and deliver initially one or more Global Securities that (a) shall be
registered in the name of the Depositary, (b) shall be delivered by the Trustee
to the Depositary or pursuant to the Depositary’s instructions and (c) shall be
substantially in the form of Exhibit A attached hereto; provided that the
Legend (other than the first and second paragraphs thereof) may be removed from
such Global Security on satisfaction of the conditions specified in this
Indenture.

(d)        Certificated
Securities.  Securities not
issued as interests in the Global Securities will be issued in certificated
form substantially in the form of Exhibit B attached hereto; provided that the
Legend may be removed from such Securities on satisfaction of the conditions
specified in this Indenture.

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

Securities bearing the
manual or facsimile signatures of individuals who were, at the time of the
execution of the Securities, Officers shall bind the Company, notwithstanding
that such individuals or any of them have ceased to hold such offices prior to
the authentication and delivery of such Securities or did not hold such offices
at the date of authentication of such Securities.

No Security shall be
entitled to any benefit under this Indenture or be valid or obligatory for any
purpose unless there appears on such Security a certificate of authentication
substantially in the form provided for herein duly executed by the Trustee by
manual signature of an authorized signatory, and such certificate upon any
Security shall be conclusive evidence, and the only evidence, that such
Security has been duly authenticated and delivered hereunder.

The Trustee shall
authenticate and deliver the Securities for original issue in an aggregate
principal amount of $80,000,000 (of which $65,000,000 represents the original
issue and $15,000,000 is issued pursuant to the exercise by the Initial
Purchasers of their option to purchase up to $15,000,000 aggregate principal
amount of additional Securities) upon one or more Company Orders without any
further action by the Company (other than as contemplated in Section 10.04 and
Section 10.05 hereof).  The aggregate
principal amount of the Securities due at the Stated Maturity thereof
outstanding at any time may not exceed the amount set forth in the foregoing
sentence.

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

 10
 

 

 

Section 2.03.  Registrar,
Paying Agent and Conversion Agent.  The
Company shall maintain an office or agency where Securities may be presented
for registration of transfer or for exchange (“Registrar”), an office or agency where Securities may be
presented for purchase or payment (“Paying
Agent”) and an office or agency where Securities may be presented
for conversion (“Conversion Agent”).  The Registrar shall keep a register of the
Securities and of their transfer and exchange. 
The Company may have one or more co registrars, one or more additional
paying agents and one or more additional conversion agents.  The term Paying Agent includes any additional
paying agent, including any named pursuant to Section 4.05.  The term Conversion Agent includes any
additional conversion agent, including any named pursuant to Section 4.05.

The Company shall enter
into an appropriate agency agreement with any Registrar, Paying Agent,
Conversion Agent or co registrar (in each case, if such Registrar, agent or
co-registrar is a Person other than the Trustee).  The agreement shall implement the provisions
of this Indenture that relate to such agent. 
The Company shall notify the Trustee in writing of the name and address
of any such agent.  If the Company fails
to maintain a Registrar, Paying Agent or Conversion Agent, the Trustee shall
act as such and shall be entitled to appropriate compensation therefor pursuant
to Section 7.07.  The Company or any
Subsidiary or an Affiliate of either of them may act as Paying Agent,
Registrar, Conversion Agent or co registrar.

The Company initially
appoints the Trustee as Registrar, Paying Agent and Conversion Agent in
connection with the Securities.

Section 2.04.  Paying Agent
to Hold Money and Securities in Trust.  Except
as otherwise provided herein, on or prior to each due date of payments in
respect of any Security, the Company shall deposit with the Paying Agent a sum
of money (in immediately available funds if deposited on the due date)
sufficient to make such payments when so becoming due.  The Company shall require each Paying Agent
(other than the Trustee) to agree in writing that the Paying Agent shall hold
in trust for the benefit of Securityholders or the Trustee all money held by
the Paying Agent for the making of payments in respect of the Securities and
shall notify the Trustee of any default by the Company in making any such
payment.  At any time during the continuance
of any such default, the Paying Agent shall, upon the written request of the
Trustee, forthwith pay to the Trustee all money so held in trust.  If the Company, a Subsidiary or an Affiliate
of either of them acts as Paying Agent, it shall segregate the money held by it
as Paying Agent and hold it as a separate trust fund.  The Company at any time may require a Paying
Agent to pay all money held by it to the Trustee and to account for any funds
and Common Stock disbursed by it.  Upon
doing so, the Paying Agent shall have no further liability for the money.

Section 2.05. 
Securityholder Lists.  The
Registrar shall preserve in as current a form as is reasonably practicable the
most recent list available to it of

 11
 

 

the names and addresses of Securityholders.  If the Trustee is not the Registrar, the
Company shall cause to be furnished to the Trustee at least semiannually on
April 1 and October 1 a listing of Securityholders dated within 15 days of the
date on which the list is furnished and at such other times as the Trustee may
request in writing a list in such form and as of such date as the Trustee may
reasonably require of the names and addresses of Securityholders.

Section 2.06.  Transfer and
Exchange.  Subject to Section
2.12, upon surrender for registration of transfer of any Security, together
with a written instrument of transfer satisfactory to the Registrar duly
executed by the Securityholder or such Securityholder’s attorney duly
authorized in writing, at the office or agency of the Company designated as
Registrar or co registrar pursuant to Section 2.03, the Company shall execute,
and the Trustee shall authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Securities of any authorized
denomination or denominations, of a like aggregate principal amount.  The Company shall not charge a service charge
for any registration of transfer or exchange, but the Company may require
payment of a sum sufficient to pay all taxes, assessments or other governmental
charges that may be imposed in connection with the transfer or exchange of the
Securities from the Securityholder requesting such transfer or exchange.

At the option of the
Holder, Securities may be exchanged for other Securities of any authorized
denomination or denominations, of a like aggregate principal amount upon
surrender of the Securities to be exchanged, together with a written instrument
of transfer satisfactory to the Registrar duly executed by the Securityholder
or such Securityholder’s attorney duly authorized in writing, at such office or
agency.  Whenever any Securities are so
surrendered for exchange, the Company shall execute, and the Trustee shall
authenticate and deliver, the Securities which the Holder making the exchange
is entitled to receive.

The Company shall not be
required to make, and the Registrar need not register, transfers or exchanges
of Securities selected for redemption (except, in the case of Securities to be
redeemed in part, the portion thereof not to be redeemed) or any Securities in
respect of which a Change of Control Purchase Notice has been given and not
withdrawn by the Holder thereof in accordance with the terms of this Indenture
(except, in the case of Securities to be purchased in part, the portion thereof
not to be purchased) or any Securities for a period of 15 days before the
mailing of a notice of redemption of Securities to be redeemed.

(a)        Notwithstanding any provision to the
contrary herein, so long as a Global Security remains outstanding and is held
by or on behalf of the Depositary, (i) transfers of beneficial interests in a
Global Security, in whole or in part, may be effected only through a book entry
system maintained by the Holder of such Global Security (or its agent) in
accordance with Applicable Procedures, (ii) ownership of a beneficial interest
in the Security shall be required to be reflected in book entry and (iii)
transfers of Global Securities or beneficial interests in

 12
 

 

Global Securities shall
be made only in accordance with Section 2.12 and this Section 2.06(a).  Transfers of a Global Security shall be
limited to transfers of such Global Security in whole or in part, to the
Depositary, to nominees of the Depositary or to a successor of the Depositary
or such successor’s nominee.

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

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

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

(e)        If Securities are issued upon the
transfer, exchange or replacement of Securities subject to restrictions on
transfer and bearing the legends set forth on the forms of Security attached
hereto as Exhibits A and B setting forth such restrictions (collectively, the “Legend”), or if a request is made to remove
the Legend on a Security, the Securities so issued shall bear the Legend, or
the Legend shall not be removed, as the case may be, unless there is delivered
to the Company and the Registrar such satisfactory evidence, which shall
include an opinion of counsel, as may be reasonably required by the Company,
that neither the Legend nor the restrictions on transfer set forth therein are
required to ensure that transfers thereof comply with the provisions of Rule
144A or Rule 144 under the Securities Act of 1933, as amended (“Securities Act”) or that such Securities
are not “restricted” within the meaning of Rule 144 under the Securities
Act.  Upon (i) provision of such
satisfactory evidence, or (ii) notification by the Company to the Trustee and
Registrar of the sale of such Security pursuant to a registration statement
that is effective at the time of such sale, the Trustee, at the written
direction of the Company, shall authenticate and deliver a Security that does
not bear the Legend.  If the Legend is
removed from the face of a Security and the Security is subsequently held by
the Company or an Affiliate of the Company, the Legend shall be reinstated.

In the event Rule 144(k)
as promulgated under the Securities Act is amended to shorten the two-year
period under Rule 144(k), then, the references in the Legend to “TWO YEARS”,
and in the corresponding transfer restrictions described above, will be deemed
to refer to such shorter period, from and after receipt by the Trustee of an
Officers’ Certificate and an Opinion of Counsel to that effect.  As soon as practicable after the Company
knows of the effectiveness of any such amendment to shorten the two-year period
under Rule 144(k), unless

 13
 

 

such changes would otherwise be prohibited by, or
would cause a violation of, the federal securities laws applicable at the time,
the Company will provide to the Trustee an Officers’ Certificate and an Opinion
of Counsel as to the effectiveness of such amendment and the effectiveness of
such change to the restrictive legends and transfer restrictions.

Until the Legend on any
Restricted Security has been removed in compliance with this Section 2.06(e),
all shares of Common Stock (or other securities issuable upon conversion as a
result of the provisions of this Indenture) issued upon conversion of such Restricted
Security shall bear a legend substantially in the form of the Legend (the “Common Stock Restrictive Legend”) and shall
be subject to the same restrictions on transfer as such Restricted
Security.  At any time following the time
when the restrictions on transfer set forth in the Common Stock Restrictive
Legend shall have expired in accordance with their terms or shall have
terminated under applicable law, the holder of such Common Stock may, upon a
surrender of the certificate representing such Common Stock exchange to the
Company’s transfer agent in accordance with such agent’s customary procedures
(accompanied, in the event that such restrictions on transfer have terminated
by reason of a transfer in compliance with Rule 144 or any successor provision,
by an opinion of counsel having substantial experience in practice under the
Securities Act and otherwise reasonably acceptable to the Company, addressed to
the Company and in form acceptable to the Company, to the effect that the
transfer of such Common Stock has been made in compliance with Rule 144 or such
successor provision), may receive a new certificate representing such Common
Stock, in like amount, which shall not bear the Common Stock Restrictive
Legend.

Section 2.07.  Replacement
Securities.  If any mutilated
Security is surrendered to the Trustee, or the Company and the Trustee receive
evidence to their satisfaction of the destruction, loss or theft of any
Security, and there is delivered to the Company and the Trustee such security
or indemnity as may be required by them to save each of them harmless, then, in
the absence of notice to the Company or the Trustee that such Security has been
acquired by a bona fide purchaser, the Company shall execute and upon its
written request the Trustee shall authenticate and deliver, in exchange for any
such mutilated Security or in lieu of any such destroyed, lost or stolen
Security, a new Security of like tenor and principal amount, bearing a
certificate number not contemporaneously outstanding.

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

Upon the issuance of any
new Securities under this Section 2.07, the Company may require the payment of
a sum sufficient to cover any tax or other

 14
 

 

governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the Trustee)
connected therewith.

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

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

Section 2.08.  Outstanding
Securities; Determination of Holders’ Action. 
Securities outstanding at any time are all the Securities
authenticated by the Trustee except for those cancelled by it, those paid
pursuant to Section 2.07, those delivered to it for cancellation and those described
in this Section 2.08 as not outstanding. 
A Security does not cease to be outstanding because the Company or an
Affiliate thereof holds the Security; provided,
however, that in determining whether the Holders of the requisite
principal amount of Securities have given or concurred in any request, demand,
authorization, direction, notice, consent, waiver, or other Act hereunder,
Securities owned by the Company or any other obligor upon the Securities or any
Affiliate of the Company or such other obligor shall be disregarded and deemed
not to be outstanding, except that, in determining whether the Trustee shall be
protected in relying upon any such request, demand, authorization, direction,
notice, consent, waiver or other Act, only Securities which a Responsible
Officer of the Trustee actually knows to be so owned shall be so
disregarded.  Subject to the foregoing,
only Securities outstanding at the time of such determination shall be
considered in any such determination (including, without limitation,
determinations pursuant to Articles 6 and 8 hereof).

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

If the Paying Agent holds, in accordance with this
Indenture, on a Redemption Date, or on the Business Day following a Change of
Control Purchase Date, or on Stated Maturity, money sufficient to pay
Securities payable on that date, then immediately after such Redemption Date,
Change of Control Purchase Date or Stated Maturity, as the case may be, such
Securities shall cease to be outstanding and interest, including Additional
Amounts, if any, on such Securities shall cease to accrue; provided, that if
such Securities are to be redeemed, notice of such redemption has been duly
given pursuant to this Indenture or provision therefor satisfactory to the
Trustee has been made.

 15

 

 

If a Security is
converted in accordance with Article 9, then from and after the time of
conversion on the date of conversion, such Security shall cease to be
outstanding and interest, including Additional Amounts, if any, shall cease to
accrue on such Security.

Section 2.09.  Temporary
Securities.  Pending the
preparation of definitive Securities, the Company may execute, and upon Company
Order the Trustee shall authenticate and deliver, temporary Securities which
are printed, lithographed, typewritten, mimeographed or otherwise produced, in
any authorized denomination, substantially of the tenor of the definitive
Securities in lieu of which they are issued and with such appropriate
insertions, omissions, substitutions and other variations as the officers executing
such Securities may determine, as conclusively evidenced by their execution of
such Securities.

If temporary Securities
are issued, the Company will cause definitive Securities to be prepared without
unreasonable delay.  After the
preparation of definitive Securities, the temporary Securities shall be
exchangeable for definitive Securities upon surrender of the temporary
Securities at the office or agency of the Company designated for such purpose
pursuant to Section 2.03, without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Securities, the Company shall execute
and the Trustee shall authenticate and deliver in exchange therefor a like
principal amount of definitive Securities of authorized denominations.  Until so exchanged the temporary Securities
shall in all respects be entitled to the same benefits under this Indenture as
definitive Securities.

Section 2.10. 
Cancellation. If the Company shall acquire any of the
Securities, such acquisition shall not operate as a redemption or satisfaction
of the indebtedness represented by such Securities unless the same are
delivered to the Trustee for cancellation. 
All Securities surrendered for payment, purchase by the Company pursuant
to Article 3, conversion, redemption or registration of transfer or exchange
shall, if surrendered to any Person other than the Trustee, be delivered to the
Trustee and shall be promptly cancelled by it. 
The Company may at any time deliver to the Trustee for cancellation any
Securities previously authenticated and delivered hereunder which the Company
may have acquired in any manner whatsoever, and all Securities so delivered
shall be promptly cancelled by the Trustee. 
The Company may not issue new Securities to replace Securities it has paid
or delivered to the Trustee for cancellation or that any Holder has converted
pursuant to Article 9.  No Securities
shall be authenticated in lieu of or in exchange for any Securities cancelled
as provided in this Section, except as expressly permitted by this
Indenture.  All cancelled Securities held
by the Trustee shall be disposed of by the Trustee in accordance with the
Trustee’s customary procedure.

Section 2.11.  Persons
Deemed Owners.  Prior to due
presentment of a Security for registration of transfer, the Company, the
Trustee and any agent of

 16
 

 

the Company or the Trustee may treat the Person in
whose name such Security is registered as the owner of such Security for the
purpose of receiving payment of principal of the Security or the payment of any
Redemption Price or Change of Control Purchase Price in respect thereof, and
interest thereon, for the purpose of conversion and for all other purposes
whatsoever, whether or not such Security be overdue, and neither the Company,
the Trustee nor any agent of the Company or the Trustee shall be affected by
notice to the contrary.

Section 2.12.  Global
Securities.  (a)
Notwithstanding any other provisions of this Indenture or the Securities, (A)
transfers of a Global Security, in whole or in part, shall be made only in
accordance with Section 2.06 and Section 2.12(a)(i), (B) transfers or exchanges
of a beneficial interest in a Global Security for an interest in the same or
another Global Security shall comply with Section 2.06 and Section 2.12(a)(ii)
below, (C) transfers or exchanges of a beneficial interest in a Global Security
for a Certificated Security shall comply with Section 2.06, Section
2.12(a)(iii) below and Section 2.12(e)(i) below, and (D) transfers or exchanges
of a Certificated Security shall comply with Section 2.06 and Sections
2.12(a)(iv) and (a)(v) below.

(i)    Transfer
of Global Security.  A Global
Security may not be transferred, in whole or in part, to any Person other than
the Depositary or a nominee or any successor thereof, and no such transfer to
any such other Person may be registered; provided that this clause (i) shall
not prohibit any transfer of a Certificated Security that is issued in exchange
for a Global Security.  No transfer of a
Global Security to any Person shall be effective under this Indenture or the
Securities unless and until such Security has been registered in the name of
such Person.  Nothing in this Section
2.12(a)(i) shall prohibit or render ineffective any transfer of a beneficial
interest in a Global Security effected in accordance with the other provisions
of this Section 2.12.

(ii)   Transfer
or Exchange of a Beneficial Interest in a Global Security for a Beneficial
Interest in the Same or Another Global Security.

(A)           A beneficial interest in a Global
Security may not be transferred or exchanged for a beneficial interest in
another Global Security except upon satisfaction of the requirements set forth
below.  Upon receipt by the Trustee of a
request to transfer or exchange of a beneficial interest in a Global Security
in accordance with Applicable Procedures for a beneficial interest in another
Global Security,  together with:

(1)                so long as the Securities are
Restricted Securities,  certification in
the form set forth in Exhibit C;

 17
 

 

 

(2)                written instructions to the
Trustee to make, or direct the Registrar to make, in the case of a transfer or
exchange of a beneficial interest in a Global Security for a beneficial
interest in another Global Security, an adjustment on its books and records
with respect to such Global Securities to reflect a decrease and increase in
the aggregate principal amount of the Securities represented by such Global
Securities, such instructions to contain information regarding the Depositary
accounts to be credited with such decrease and increase; and

(3)                if the Company or the Trustee so
requests, an Opinion of Counsel or other evidence reasonably satisfactory to it
as to the compliance with the restrictions set forth in the Legend,

then
the Trustee, (x) shall cause, or direct the Registrar to cause, in accordance
with the standing instructions and procedures existing between the Depositary
and the Registrar, the aggregate principal amount of the Securities represented
by the appropriate Global Security to be decreased by the aggregate principal amount
that the other Global Security is increased and (y) in accordance with the
standing instructions and procedures existing between the Depositary and the
Registrar and Applicable Procedures, shall debit and credit or cause to be
debited or credited, as appropriate, to the accounts of the persons specified
in such instructions a beneficial interest in the Global Security or Global
Securities, as appropriate, equal to the amount of the beneficial interests so
transferred or exchanged.

(B)            Beneficial interests in a Global
Security may be transferred to Persons who take delivery in the same Global
Security in accordance with the Applicable Procedures and, if the Global
Security is a Restricted Security, in accordance with the transfer restrictions
set forth in the Legend.  No written
orders or instructions shall be required to be delivered to the Registrar or
the Trustee to effect the transactions described in this Section
2.12(a)(ii)(B).

(C)            Other than transfers to the Company
or to an Affiliate of the Company, beneficial interests in a Global Security
that is not a Restricted Security may not be transferred to a Person who takes
delivery thereof in the form of a beneficial interest in a Global Security that
is a Restricted Security.

 18
 

 

 

(iii)     Transfer
or Exchange of a Beneficial Interest in a Global Security for a Certificated
Security.  A beneficial
interest in a Global Security may not be exchanged for a Certificated Security
except upon satisfaction of the requirements set forth below and in Section
2.12(e)(i) below.  Upon request to the
Trustee for a transfer of a beneficial interest in a Global Security in
accordance with Applicable Procedures for a Certificated Security, together
with:

(A)           so long as the Securities are
Restricted Securities, certification in the form set forth in Exhibit C;

(B)           written instructions to the Trustee
to make, or direct the Registrar to make, an adjustment on its books and
records with respect to such Global Security to reflect a decrease in the
aggregate principal amount of the Securities represented by the Global
Security, such instructions to contain information regarding the Depositary
account to be debited with such decrease; and

(C)           if the Company so requests, an
Opinion of Counsel or other evidence reasonably satisfactory to it as to the
compliance with the restrictions set forth in the Legend,

then the Trustee shall cause, or direct the Registrar
to cause, in accordance with the standing instructions and procedures existing
between the Depositary and the Registrar, the aggregate principal amount of the
Securities represented by the Global Security to be decreased by the aggregate
principal amount of the Certificated Security to be issued, shall issue such
Certificated Security and shall debit or cause to be debited to the account of
the person specified in such instructions a beneficial interest in the Global
Security equal to the principal amount of the Certificated Security so issued.

(iv)     Transfer
and Exchange of Certificated Securities.  When Certificated Securities are presented to
the Registrar with a request:

(A)           to register the transfer of such
Certificated Securities; or

(B)           to exchange such Certificated
Securities for an equal principal amount of Certificated Securities of other
authorized denominations,

the Registrar shall register the transfer or make the
exchange as requested if its reasonable requirements for such transaction are
met; provided, however, that the
Certificated Securities surrendered for transfer or exchange:

 19
 

 

 

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

(2)   so long as such Securities are Restricted
Securities, such Securities are being transferred or exchanged pursuant to an
effective registration statement under the Securities Act or pursuant to clause
(x), (y) or (z) below, and are accompanied by the following additional
information and documents, as applicable:

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

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

(z)  if such
Certificated Securities are being transferred pursuant to an exemption from
registration, (i) a certification to that effect (in the form set forth in
Exhibit C, if applicable) and (ii) if the Company so requests, an Opinion of
Counsel or other evidence reasonably satisfactory to it as to the compliance
with the restrictions set forth in the Legend.

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

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

(A)           so long as the Securities are
Restricted Securities, certification, in the form set forth in Exhibit C,
that such Certificated Security is being transferred to a QIB in accordance
with Rule 144A, or to an institutional accredited investor within

 20
 

 

the meaning of Rule 501(a)(1), (2), (3) or (7) of
Regulation D of the Securities Act; and

(B)           written instructions directing the
Trustee to make, or to direct the Registrar to make, an adjustment on its books
and records with respect to such Global Security to reflect an increase in the
aggregate principal amount of the Securities represented by the Global
Security, such instructions to contain information regarding the Depositary account
to be credited with such increase, then the Trustee shall cancel such
Certificated Security and cause, or direct the Registrar to cause, in
accordance with the standing instructions and procedures existing between the
Depositary and the Registrar, the aggregate principal amount of Securities
represented by the Global Security to be increased by the aggregate principal
amount of the Certificated Security to be exchanged, and shall credit or cause
to be credited to the account of the Person specified in such instructions a
beneficial interest in the Global Security equal to the principal amount of the
Certificated Security so cancelled.  If
no Global Securities are then outstanding, the Company shall issue and the
Trustee shall authenticate, upon written order of the Company in the form of a
Company Order, a new Global Security in the appropriate principal amount.

(b)   Subject to the succeeding Section 2.12(c),
every Security shall be subject to the restrictions on transfer provided in the
Legend and herein including the delivery of an Opinion of Counsel, if so
required.  Whenever any Restricted
Security is presented or surrendered for transfer or for exchange, such
Security must be accompanied by a certificate in substantially the form set
forth in Exhibit C, dated the date of such surrender and signed by the Holder
of such Security or in the case of a transfer of a beneficial interest in a
Global Security, the DTC participant holding such interest, as to compliance
with such restrictions on transfer.  The
Registrar shall not be required to accept for such transfer or exchange any
Security not so accompanied by a properly completed certificate.

(c)   The restrictions imposed by the Legend upon
the transferability of any Security shall cease and terminate when such
Security has been sold pursuant to an effective registration statement under
the Securities Act or transferred in compliance with Rule 144 under the
Securities Act (or any successor provision thereto) or, if earlier, upon the
expiration of the holding period applicable to sales thereof under Rule 144(k)
under the Securities Act (or any successor provision).  Any Security as to which such restrictions on
transfer shall have expired in accordance with their terms or shall have
terminated may, upon a surrender of such Security for exchange to the Registrar
in accordance with the provisions of this Section 2.12 (accompanied, in the
event that such restrictions on transfer have terminated by reason of a
transfer in compliance with Rule 144 or any successor

 21
 

 

provision, by an Opinion
of Counsel having substantial experience in practice under the Securities Act
and otherwise reasonably acceptable to the Company, addressed to the Company
and in form acceptable to the Company, to the effect that the transfer of such
Security has been made in compliance with Rule 144 or such successor
provision), be exchanged for a new Security, of like tenor and aggregate
principal amount, which shall not bear the restrictive Legend.  The Company shall inform the Trustee of the
effective date of any registration statement registering the Securities under
the Securities Act.  The Trustee shall
not be liable for any action taken or omitted to be taken by it in good faith
in accordance with the aforementioned opinion of counsel or registration
statement.

(d)   As used in the preceding two paragraphs of
this Section 2.12, the term “transfer”
encompasses any sale, pledge, transfer, loan, hypothecation, or other
disposition of any interest in any Security.

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

(i)       Notwithstanding any other provisions of
this Indenture or the Securities, a Global Security shall not be exchanged in
whole or in part for a Security registered in the name of any Person other than
the Depositary or one or more nominees thereof, provided that a Global Security
may be exchanged for Securities registered in the names of any Person
designated by the Depositary in the event that (A) the Depositary has notified
the Company that it is unwilling or unable to continue as Depositary for such
Global Security or such Depositary has ceased to be a “clearing agency”
registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and a successor Depositary
is not appointed by the Company within 90 days or (B) an Event of Default has
occurred and is continuing with respect to the Securities.  Any Global Security exchanged pursuant to
clause (A) above shall be so exchanged in whole and not in part, and any Global
Security exchanged pursuant to clause (B) above may be exchanged in whole or
from time to time in part as directed by the Depositary.  Any Security issued in exchange for a Global
Security or any portion thereof shall be a Global Security; provided that any such
Security so issued that is registered in the name of a Person other than the
Depositary or a nominee thereof shall not be a Global Security.

(ii)      Securities issued in exchange for a Global
Security or any portion thereof shall be issued in definitive, fully registered
form, without interest coupons, shall have an aggregate principal amount equal
to that of such Global Security or portion thereof to be so exchanged, shall be
registered in such names and be in such authorized denominations as the Depositary
shall designate and shall bear the applicable legends provided for herein.  Any Global Security to be exchanged in whole
shall be

 22
 

 

surrendered by the Depositary to the Trustee, as
Registrar.  With regard to any Global
Security to be exchanged in part, either such Global Security shall be so
surrendered for exchange or, if the Trustee is acting as custodian for the
Depositary or its nominee with respect to such Global Security, the principal
amount thereof shall be reduced, by an amount equal to the portion thereof to
be so exchanged, by means of an appropriate adjustment made on the records of
the Trustee.  Upon any such surrender or
adjustment, the Trustee shall authenticate and deliver the Security issuable on
such exchange to or upon the order of the Depositary or an authorized
representative thereof.

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

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

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

(f)         By its acceptance of any Security
bearing the Legend, each Holder of such Security acknowledges the restrictions
on transfer of such Security set forth in this Indenture and agrees that it
will transfer such Security only as provided in this Indenture.

Section 2.13.  CUSIP
Numbers.  The Company may
issue the Securities with one or more “CUSIP” numbers (if then generally in
use), and, if so, the

 23
 

 

 

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 Securities or as contained in any notice of a redemption and
that reliance may be placed only on the other identification numbers printed on
the Securities, and any such redemption shall not be affected by any defect in
or omission of such numbers.  The Company
will promptly notify the Trustee in writing of any change in the CUSIP numbers.

ARTICLE 3

Redemption and Purchases

Section 3.01.  Company’s
Right to Redeem; Notices to Trustee.  Prior
to April 20, 2009, the Securities will not be redeemable at the Company’s
option.  Beginning on April 20, 2009, the
Company, at its option, may redeem the Securities, subject to and in accordance
with the terms and conditions of Section 5 of the Securities, for cash, as
a whole or in part, at a redemption price equal to the principal amount of
those Securities plus any accrued and unpaid interest, including Additional
Amounts, if any, on those Securities to the Redemption Date.  If the Company elects to redeem Securities
pursuant to Section 5 of the Securities, it shall notify the Trustee in
writing of the Redemption Date, the principal amount of Securities to be
redeemed and the Redemption Price.

The Company shall give
the notice to the Trustee of its intention to exercise its right to redeem the
Securities as provided for in this Section 3.01 by a Company Order at least ten
(10) Business Days prior to the day the Redemption Notice is to be mailed.

Section 3.02.  Selection of
Securities to Be Redeemed.  If
less than all the Securities are to be redeemed, unless the procedures of the
Depositary provide otherwise, the Trustee shall select the Securities to be
redeemed by lot, on a pro rata basis or by another method the Trustee considers
fair and appropriate (so long as such method is not prohibited by the rules of
any stock exchange on which the Securities are then listed).  The Trustee shall make the selection within
five Business Days after it receives the notice provided for in Section 3.01
from outstanding Securities not previously called for redemption. The Trustee
may select for redemption portions of the principal amount of Securities that
have denominations larger than $1,000.

Securities and portions
of Securities that the Trustee selects shall be in principal amounts of $1,000
or an integral multiple of $1,000. 
Provisions of this Indenture that apply to Securities called for
redemption also apply to portions of Securities called for redemption.  The Trustee shall notify the Company promptly
of the Securities or portions of the Securities to be redeemed.

 24
 

 

 

Securities and portions
of Securities that are to be redeemed are convertible by the Holder until the
close of business on the second Business Day prior to the Redemption Date
unless the Company fails to pay the Redemption Price on the Redemption
Date.  If any Security selected for
partial redemption is converted in part before termination of the conversion
right with respect to the portion of the Security so selected, the converted
portion of such Security shall be deemed (so far as may be) to be the portion
selected for redemption.  Securities
which have been converted during a selection of Securities to be redeemed may
be treated by the Trustee as outstanding for the purpose of such selection.

Section 3.03.  Notice of
Redemption.  At least 20 days
but not more than 60 days before a Redemption Date, the Company shall mail a
notice of redemption by first class mail, postage prepaid, to each Holder of
Securities to be redeemed.

The notice shall identify
the Securities to be redeemed and shall state:

(a)        the Redemption Date;

(b)        the Redemption Price;

(c)        the Conversion Price;

(d)        the name and address of the Paying Agent
and Conversion Agent;

(e)        that Securities called for redemption
may be converted at any time before the close of business on the second
Business Day prior to the Redemption Date;

(f)         that Holders who wish to convert their
Securities must satisfy the requirements set forth in Section 8 of the
Securities;

(g)        that Securities called for redemption
must be surrendered to the Paying Agent to collect the Redemption Price;

(h)        if fewer than all of the outstanding
Securities are to be redeemed, the certificate numbers, if any, and principal
amounts of the particular Securities to be redeemed;

(i)         that, unless the Company defaults in
making payment of such Redemption Price, interest, including Additional
Amounts, if any, on Securities called for redemption will cease to accrue
interest on and after the Redemption Date; and

(j)         the CUSIP number(s) of the Securities.

 25
 

 

 

At the Company’s written
request, the Trustee shall give the notice of redemption in the Company’s name
and at the Company’s expense, provided that the Company makes such request at
least ten Business Days prior to the date by which such notice of redemption is
to be given to Holders in accordance with this Section 3.03, unless the Trustee
agrees in writing to a shorter period.

Section 3.04.  Effect of
Notice Redemption.  Once
notice of redemption is given, Securities called for redemption become due and
payable on the Redemption Date and at the Redemption Price stated in the notice
except for Securities which are converted in accordance with the terms of this
Indenture. Upon surrender to the Paying Agent, such Securities shall be paid at
the Redemption Price stated in the notice.

Section 3.05.  Deposit of
Redemption Price.  Prior to
10:00 a.m., New York City time, on the Business Day preceding the Redemption
Date, the Company shall deposit with the Paying Agent (or if the Company or a
Subsidiary or an Affiliate of either of them is the Paying Agent, shall
segregate and hold in trust) money sufficient to pay the applicable Redemption
Price of all Securities to be redeemed on that date other than Securities or
portions of Securities called for redemption which on or prior thereto have
been delivered by the Company to the Trustee for cancellation or have been
converted.  The Paying Agent shall as
promptly as practicable return to the Company any money not required for that
purpose because of conversion of Securities pursuant to Article 9.  If such money is then held by the Company in
trust and is not required for such purpose, it shall be discharged from such
trust.

Section 3.06.  Securities
Redeemed in Part.  Upon
surrender of a Security that is redeemed in part, the Company shall execute and
the Trustee shall authenticate and deliver to the Holder a new Security in an
authorized denomination equal in principal amount to the unredeemed portion of
the Security surrendered.

Section 3.07.  Purchase of
Securities at Option of the Holder Upon Change of Control.  (a) If a Change of Control occurs
(subject to certain exceptions set forth below), the Securities not previously
purchased by the Company shall be purchased by the Company for cash, at the
option of the Holder thereof, at a purchase price specified in Section 6
of the Securities (the “Change of Control
Purchase Price”), as of the date that is between 30 and 60 days
after the date of a notice of Change of Control delivered by the Company
pursuant to Section 3.07(b) (the “Change of
Control Purchase Date”), subject to satisfaction by or on behalf of
the Holder of the requirements set forth in Section 3.07(c).

A “Change of Control” will be deemed to have
occurred at such time after the Securities are originally issued when any of
the following events shall occur:

 26
 

 

 

(i)       the acquisition by any Person, including
any syndicate or group deemed to be a “person” under Section 13(d)(3) of the
Exchange Act, of beneficial ownership, directly or indirectly, through a
purchase, merger or other acquisition transaction or series of purchases,
mergers or other acquisition transactions of shares of the Capital Stock of the
Company entitling that Person to exercise 50% or more of the total voting power
of all shares of the Capital Stock of the Company entitled to vote generally in
elections of directors, other than any acquisition by the Company, any of its
subsidiaries or any of its employee benefit plans; or

(ii)      the first day on which a majority of the
members of the Board of Directors of the Company does not consist of Continuing
Directors; or

(iii)     the Company consolidates or merges with or
into any other Person, any merger of another Person into the Company, or any
conveyance, transfer, sale, lease or other disposition of all or substantially
all of the Company’s properties and assets to another Person, other than: (A)
any transaction: (1) that does not result in any reclassification, conversion,
exchange or cancellation of outstanding shares of the Company’s Capital Stock;
and (2) pursuant to which the holders of 50% or more of the total voting power
of the Company’s Capital Stock entitled to vote generally in elections of
directors immediately prior to the transaction have the entitlement to
exercise, directly or indirectly, 50% or more of the total voting power of all
shares of Capital Stock entitled to vote generally in elections of directors of
the continuing or surviving Person immediately after giving effect to such
issuance; and (B) any merger primarily for the purpose of changing the Company’s
jurisdiction of incorporation and resulting in a reclassification, conversion
or exchange of outstanding shares of Common Stock, if at all, solely into
shares of common stock of the surviving entity.

A “Continuing Director” shall mean, as of any
date of determination, any member of the Board of Directors who:

(i)            was a member of the Board of
Directors of the Company on November 14, 2006; or

(ii)           was nominated for election or elected
to the Board of Directors with the approval of a majority of the Continuing Directors
who were members of the Board of Directors at the time of the new director’s
nomination or election.

(b)        Notwithstanding the provisions of
Section 3.07(a), the Company shall not be required to purchase the Securities
of the Holders upon a Change of

 27
 

 

Control pursuant to this
Section 3.07 (and a Change of Control shall be deemed not to have occurred) if:

(i)            the Sale Price per share of Common
Stock for any five Trading Days within (A) the period of 10 consecutive Trading
Days ending immediately after the later of the Change of Control or the public
announcement of the Change of Control, in the case of a Change of Control under
clause (i) or (ii) of the definition of “Change of Control” above, or (B) the
period of 10 consecutive Trading Days ending immediately before the Change of
Control, in the case of a Change of Control under clause (iii) of the
definition of “Change of Control” above, equals or exceeds 110% of the
Conversion Price of the Securities in effect on each of those five Trading
Days; or

(ii)           90% or more of the consideration in
the transaction or transactions (other than cash payments for fractional shares
and cash payments made in respect of dissenters’ appraisal rights) constituting
a Change of Control consists of shares of common stock traded or to be traded
immediately following a Change of Control on a national securities exchange or
The Nasdaq Global Market, and, as a result of the transaction or transactions,
the Securities become convertible solely into that common stock (and any rights
attached thereto).

For the purposes of this Section 3.07, (x) whether a
Person is a “beneficial owner” shall be determined in accordance with Rule 13d-3
and Rule 13d-5 under the Exchange Act (except that any of those Persons
shall be deemed to have beneficial ownership of all securities it has the right
to acquire, whether the right is currently exercisable or is exercisable only
upon the occurrence of a subsequent condition) and (y) the term “Person”
includes any syndicate or group that would be deemed to be a “person” under
Section 13(d)(3) of the Exchange Act.

(c)        No later than 30 days after the
occurrence of a Change of Control, the Company shall mail a written notice of
the Change of Control by first class mail to the Trustee and to each Holder
(and to beneficial owners as required by applicable law).  The notice shall include a form of Change of
Control Purchase Notice to be completed by the Holder and shall state:

(i)            briefly, the events causing a Change
of Control and the date of such Change of Control;

(ii)           the date by which the Change of
Control Purchase Notice pursuant to this Section 3.07 must be delivered to the
Paying Agent in order for a Holder to exercise the repurchase rights;

(iii)          the Change of Control Purchase Date;

(iv)          the Change of Control Purchase Price;

 28
 

 

 

(v)           the name and address of the Paying
Agent and the Conversion Agent;

(vi)          the Conversion Price and any
adjustments thereto;

(vii)         that the Securities as to which a
Change of Control Purchase Notice has been given may be converted if they are
otherwise convertible pursuant to Article 10 hereof only if the Change of
Control Purchase Notice has been withdrawn in accordance with the terms of this
Indenture;

(viii)        that the Securities must be surrendered
to the Paying Agent to collect payment;

(ix)          that the Change of Control Purchase
Price for any Security as to which a Change of Control Purchase Notice has been
duly given and not withdrawn will be paid promptly following the later of the
Change of Control Purchase Date and the time of surrender of such Security as
described in clause (8) above;

(x)           briefly, the procedures the Holder
must follow to exercise rights under this Section 3.07;

(xi)          briefly, the conversion rights of the
Securities;

(xii)         the procedures for withdrawing a Change
of Control Purchase Notice;

(xiii)        that, unless the Company defaults in
making payment of such Change of Control Purchase Price, interest, if any, on
Securities surrendered for purchase by the Company will cease to accrue on and
after the Change of Control Purchase Date; and

(xiv)        the CUSIP number(s) of the Securities.

Without otherwise
limiting the Company’s obligations pursuant to this Section 3.07 in any way,
the Company shall also issue a press release through Dow Jones & Company,
Inc. or Bloomberg Business News containing the relevant information and
otherwise make this information available on the Company’s web site or through
another public medium as the Company may use at that time.

(d)   A Holder may exercise its rights specified in
Section 3.07(a) upon delivery of a written notice of purchase (a “Change of Control Purchase Notice”) to the
Paying Agent at any time on or prior to the close of business on the second
Business Day preceding the Change of Control Purchase Date (unless the Company
shall specify a later date), specifying:

 29

 

 

(i)            the certificate number of the
Security which the Holder will deliver to be purchased or the appropriate
depositary procedures if Certificated Securities have not been issued;

(ii)           the portion of the principal amount
of the Security which the Holder will deliver to be purchased, which portion
must be $1,000 or an integral multiple of $1,000; and

(iii)          that such Security shall be purchased
pursuant to the terms and conditions specified in Section 6 of the
Securities and in this Indenture.

The delivery of such
Security to the Paying Agent with the Change of Control Purchase Notice
(together with all necessary endorsements) at the offices of the Paying Agent
shall be a condition to the receipt by the Holder of the Change of Control
Purchase Price therefor; provided, however,
that such Change of Control Purchase Price shall be so paid pursuant to this
Section 3.07 and Section 3.08 only if the Security so delivered to the Paying
Agent shall conform in all respects to the description thereof set forth in the
related Change of Control Purchase Notice.

The Company shall
purchase from the Holder thereof, pursuant to this Section 3.07 and Section
3.08, a portion of a Security if the principal amount of such portion is $1,000
or an integral multiple of $1,000. Provisions of this Indenture that apply to
the purchase of all of a Security also apply to the purchase of such portion of
such Security.

Any purchase by the
Company contemplated pursuant to the provisions of this Section 3.07 and
Section 3.08 shall be consummated by the delivery of the consideration to be
received by the Holder.

Notwithstanding anything
herein to the contrary, any Holder delivering to the Paying Agent the Change of
Control Purchase Notice contemplated by this Section 3.07(c) shall have the
right to withdraw such Change of Control Purchase Notice at any time prior to
the close of business on the last Business Day immediately preceding the Change
of Control Purchase Date by delivery of a written notice of withdrawal to the
Paying Agent in accordance with Section 3.08.

The Paying Agent shall
promptly notify the Company of the receipt by it of any Change of Control
Purchase Notice or written withdrawal thereof.

Section 3.08.  Effect of
Change of Control Purchase Notice; Withdrawal. 
Upon receipt by the Paying Agent of the Change of Control
Purchase Notice specified in Section 3.07(c), the Holder of the Security in
respect of which such Change of Control Purchase Notice was given shall (unless
such Change of Control Purchase Notice is withdrawn as specified in the
following two paragraphs) thereafter be entitled to receive solely the Change
of Control

 30
 

 

Purchase Price with respect to such Security.  Such Change of Control Purchase Price shall
be paid to such Holder, subject to the receipt of funds by the Paying Agent,
promptly following the later of (x) the Change of Control Purchase Date with
respect to such Security (provided the conditions in Section 3.07(c) have been
satisfied) and (y) the time of delivery of such Security to the Paying Agent by
the Holder thereof in the manner required by Section 3.07(c).  Securities in respect of which a Change of
Control Purchase Notice has been given by the Holder thereof may not be
converted pursuant to Article 9 hereof on or after the date of the delivery of
such Change of Control Purchase Notice unless such Change of Control Purchase
Notice has first been validly withdrawn as specified in the following two
paragraphs.

A Change of Control
Purchase Notice may be withdrawn by means of a written notice of withdrawal delivered
to the office of the Paying Agent in accordance with the Change of Control
Purchase Notice, at any time prior to the close of business on the Change of
Control Purchase Date, specifying:

(a)        the certificate number, if any, of the
Security in respect of which such notice of withdrawal is being submitted,

(b)        the principal amount of the Security
with respect to which such notice of withdrawal is being submitted, and

(c)        the principal amount, if any, of such
Security which remains subject to the original Change of Control Purchase
Notice, and which has been or will be delivered for purchase by the Company.

There shall be no
purchase of any Securities pursuant to Section 3.07 if there has occurred
(prior to, on or after, as the case may be, the giving, by the Holders of such
Securities, of the required Change of Control Purchase Notice) and is
continuing an Event of Default (other than a default in the payment of the
Change of Control Purchase Price with respect to such Securities). The Paying
Agent will promptly return to the respective Holders thereof any Securities (x)
with respect to which a Change of Control Purchase Notice has been withdrawn in
compliance with this Indenture, or (y) held by it during the continuance of an
Event of Default (other than a default in the payment of the Change of Control
Purchase Price with respect to such Securities) in which case, upon such
return, the Change of Control Purchase Notice with respect thereto shall be
deemed to have been withdrawn.

Section 3.09.  Deposit of
Change of Control Purchase Price.  Prior
to 10:00 a.m., New York City time, on the Change of Control Purchase Date, the
Company shall deposit with the Trustee or with the Paying Agent (or, if the
Company or a Subsidiary or an Affiliate of either of them is acting as the
Paying Agent, shall segregate and hold in trust as provided in Section 2.04) an
amount of cash (in immediately available funds if deposited on such Business
Day)

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sufficient to pay the aggregate Change of Control
Purchase Price of all the Securities or portions thereof which are to be
purchased as of the Change of Control Purchase Date.

Section 3.10.  Securities
Purchased in Part.  Any
Certificated Security which is to be purchased only in part shall be
surrendered at the office of the Paying Agent (with, if the Company or the
Trustee so requires, due endorsement by, or a written instrument of transfer in
form satisfactory to the Company and the Trustee duly executed by, the Holder
thereof or such Holder’s attorney duly authorized in writing) and the Company
shall execute and the Trustee shall authenticate and deliver to the Holder of
such Security, without service charge, a new Security or Securities, of any
authorized denomination as requested by such Holder in aggregate principal
amount equal to, and in exchange for, the portion of the principal amount of
the Security so surrendered which is not purchased.

Section 3.11.  Covenant to
Comply With Securities Laws Upon Purchase of Securities.  When complying with the provisions
of Section 3.07 (provided that such offer or purchase constitutes an “issuer tender offer” for purposes of Rule
13e-4 (which term, as used herein, includes any successor provision
thereto) under the Exchange Act at the time of such offer or purchase), and
subject to any exemptions available under applicable law, the Company shall (i)
comply with Rule 13e-4 and Rule 14e-1 (or any successor provision)
under the Exchange Act, (ii) file the related Schedule TO (or any successor
schedule, form or report) under the Exchange Act, and (iii) otherwise comply
with all Federal and state securities laws so as to permit the rights and
obligations under Section 3.07 to be exercised in the time and in the manner
specified in Section 3.07.

Section 3.12.  Repayment to
the Company.  The Trustee and
the Paying Agent shall return to the Company any cash that remains unclaimed as
provided in Section 11 of the Securities, together with interest or
dividends, if any, thereon (subject to the provisions of Section 7.01(f)), held
by them for the payment of the Change of Control Purchase Price; provided, however, that to the extent that
the aggregate amount of cash deposited by the Company pursuant to Section 3.09
exceeds the aggregate Change of Control Purchase Price of the Securities or
portions thereof which the Company is obligated to purchase as of the Change of
Control Purchase Date, then, unless otherwise agreed in writing with the
Company, promptly after the Business Day following the Change of Control
Purchase Date, the Trustee shall return any such excess to the Company together
with interest thereon (subject to the provisions of Section 7.01(f)).

ARTICLE 4

Covenants

Section 4.01.  Payment of
Securities.  The Company shall
promptly make all payments in respect of the Securities on the dates and in the
manner provided

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in the Securities or pursuant to this Indenture.  Any amounts of cash to be given to the
Trustee or Paying Agent, shall be deposited with the Trustee or Paying Agent by
10:00 a.m., New York City time, on the Business Day preceding the date on which
any payment is due by the Company. 
Principal amount plus accrued interest, if any, including Additional
Amounts, if any, the Redemption Price, the Change of Control Purchase Price and
cash interest, if any, shall be considered paid on the applicable date due if
on such date the Trustee or the Paying Agent holds, in accordance with this
Indenture, cash sufficient to pay all such amounts then due.

Section 4.02.  SEC and
Other Reports.  The Company
shall file with the Trustee, within 15 days after it files such annual and
quarterly reports, information, documents and other reports with the SEC,
copies of its annual report and of the information, documents and other reports
(or copies of such portions of any of the foregoing as the SEC may by rules and
regulations prescribe) which the Company is required to file with the SEC
pursuant to Section 13 or 15(d) of the Exchange Act.  In the event the Company is at any time no
longer subject to the reporting requirements of Section 13 or 15(d) of the Exchange
Act, it shall continue to provide the Trustee with reports containing
substantially the same information as would have been required to be filed with
the SEC had the Company continued to have been subject to such reporting
requirements.  In such event, such
reports shall be provided at the times the Company would have been required to
provide reports had it continued to have been subject to such reporting
requirements.  The Company also shall
comply with the other provisions of TIA Section 314(a).  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 conclusively on Officers’ Certificates).

Section 4.03.  Compliance
Certificate.  The Company
shall deliver to the Trustee within 120 days after the end of each fiscal year
of the Company (beginning with the fiscal year ending on December 31,
2006) an Officers’ Certificate, stating whether or not to the knowledge of the
signers thereof, the Company is in default in the performance and observance of
any of the terms, provisions and conditions of this Indenture (without regard
to any period of grace or requirement of notice provided hereunder) and if the
Company shall be in default, specifying all such defaults and the nature and
status thereof of which they may have knowledge.

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

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Section 4.05.  Maintenance
of Office or Agency.  The
Company will maintain in the Borough of Manhattan, the City of New York, an
office or agency of the Trustee, Registrar, Paying Agent and Conversion Agent
where Securities may be presented or surrendered for payment, where Securities
may be surrendered for registration of transfer, exchange, purchase, redemption
or conversion and where notices and demands to or upon the Company in respect
of the Securities and this Indenture may be served.  The office of The Bank of New York, 101
Barclay Street, Floor 4E, New York, New York 
10286 (Attention:  Corporate Trust
Trustee Administration), shall initially be such office or agency for all of
the aforesaid purposes.  The Company
shall give prompt written notice to the Trustee of the location, and of any
change in the location, of any such office or agency (other than a change in
the location of the office of the Trustee). 
If at any time the Company shall fail to maintain any such required
office or agency or shall fail to furnish the Trustee with the address thereof,
such presentations, surrenders, notices and demands may be made or served at
the address of the Trustee set forth in Section 10.02.

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

Section 4.06.  Delivery of
Certain Information.  At any
time when the Company is not subject to Section 13 or 15(d) of the Exchange
Act, upon the request of a Holder or any beneficial owner of Securities or
holder or beneficial owner of shares of Common Stock issued upon conversion
thereof, the Company will promptly furnish or cause to be furnished Rule 144A
Information (as defined below) to such Holder or any beneficial owner of
Securities or holder or beneficial owner of shares of Common Stock, or to a
prospective purchaser of any such security designated by any such holder, as
the case may be, to the extent required to permit compliance by such Holder or
holder with Rule 144A under the Securities Act in connection with the resale of
any such security.  “Rule 144A Information” shall be such
information as is specified pursuant to Rule 144A(d)(4) under the Securities
Act.  Whether a Person is a beneficial
owner shall be determined by the Company to the Company’s reasonable
satisfaction.

Section 4.07.  Treatment of
Securities.  Each Holder, by
acceptance of a Security, and beneficial owner, by acceptance of a beneficial
ownership interest in a Security, agrees to treat the Securities as
indebtedness of the Company for U.S. federal income tax purposes and not to
take any action inconsistent with such treatment.

Section 4.08.  Delivery
of Original Issue Discount Certificate.  On December 31 of each year, commencing
December 31, 2006, the Company shall

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deliver an Officer’s Certificate to the Trustee
certifying as to the accreted value of each $1,000 principal amount of the
Securities as of that date.

ARTICLE 5

Successor Corporation

Section 5.01.  When Company
May Merge or Transfer Assets.  The
Company shall not consolidate with or merge with or into any other Person or
convey, transfer, sell, lease or otherwise dispose of all or substantially all
of its properties and assets to any Person, unless:

(a)        either (i) the Company shall be the
continuing corporation or (ii) the Person (if other than the Company) formed by
such consolidation or into which the Company is merged or the Person which
acquires by conveyance, transfer or lease all or substantially all of the
properties and assets of the Company substantially as an entirety (A) shall be
organized and validly existing under the laws of the United States or any State
thereof or the District of Columbia and (B)shall expressly assume, by an
indenture supplemental hereto, executed and delivered to the Trustee, in form
reasonably satisfactory to the Trustee, all of the obligations of the Company
under the Securities and this Indenture;

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

(c)        the Company shall have delivered to the
Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that
such consolidation, merger, conveyance, transfer or lease and, if a
supplemental indenture is required in connection with such transaction, such
supplemental indenture, comply with this Article 5 and that all conditions
precedent herein provided for relating to such transaction have been satisfied.

For purposes of the
foregoing, the transfer (by lease, assignment (excluding the grant of a
security interest but including any foreclosure thereon), sale or otherwise) of
the properties and assets of one or more Subsidiaries (other than to the
Company or another Subsidiary), which, if such assets were owned by the
Company, would constitute all or substantially all of the properties and assets
of the Company, shall be deemed to be the transfer of all or substantially all
of the properties and assets of the Company.

The successor Person
formed by such consolidation or into which the Company is merged or the
successor Person to which such conveyance, transfer or lease is made shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company under this Indenture with the same effect as if such successor had
been named as the Company herein; and thereafter, except in

 35
 

 

the case of a lease and obligations the Company may
have under a supplemental indenture, the Company shall be discharged from all
obligations and covenants under this Indenture and the Securities.  Subject to Section 8.06, the Company, the
Trustee and the successor Person shall enter into a supplemental indenture to
evidence the succession and substitution of such successor Person and such
discharge and release of the Company.

ARTICLE 6

Defaults and Remedies

Section 6.01.  Events of
Default.  So long as any
Securities are outstanding, each of the following shall be an “Event of Default”:

(a)        the Company defaults in the payment of
the principal amount on any Security when the same becomes due and payable at
its Stated Maturity;

(b)        the Company defaults in its obligation
to repurchase any Security, or any portion thereof, upon the exercise by the
Holder of such Holder’s right to require the Company to purchase such
Securities pursuant to and in accordance with Section 3.07 hereof;

(c)        the Company defaults in its obligation
to redeem any Security, or any portion thereof, called for redemption by the
Company pursuant to and in accordance with Section 3.01 hereof;

(d)        the Company defaults in the payment of
any accrued and unpaid interest, including Additional Amounts, if any, on any
Security, in each case when due and payable, and continuance of such default
for a period of 30 days;

(e)        the Company fails to comply with any of
its covenants or agreements in the Securities or this Indenture (other than
those referred to in clauses (a) through (d) above) and such failure continues
for 60 days after receipt by the Company of a Notice of Default;

(f)         a default under any indebtedness for
money borrowed by the Company or any Significant Subsidiary in an aggregate
outstanding principal amount of $5.0 million or more, for a period of 30 days
after written notice of default is given to the Company by the Trustee or to
the Company and the Trustee by Holders of not less than 25% in aggregate
principal amount of the Securities then outstanding, which default (i) is
caused by the failure to pay principal or interest when due on such
indebtedness by the end of the applicable grace period, if any, unless such
indebtedness is discharged, or (ii) results in the acceleration of such
indebtedness, unless such acceleration is waived, cured, rescinded or annulled
or unless such indebtedness is discharged;

 36
 

 

 

(g)        the entry by a court having jurisdiction
in the premises of (i) a decree or order for relief in respect of the Company
or any of its Subsidiaries that is a Significant Subsidiary, in an involuntary
case or proceeding under any applicable bankruptcy, insolvency, reorganization
or other similar law or (ii) a decree or order adjudging the Company or any of
its Subsidiaries that is a Significant Subsidiary, as bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization, arrangement,
adjustment or composition of or in respect of the Company or any of its
Subsidiaries that is a Significant Subsidiary, under any applicable law, or
appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or
other similar official of the Company or of any substantial part of its
property, or ordering the winding up or liquidation of its affairs, and the
continuance of any such decree or order for relief or any such other decree or
order unstayed and in effect for a period of 60 consecutive days; or

(h)        the commencement by the Company or any
of its Subsidiaries that is a Significant Subsidiary, of a voluntary case or
proceeding under any applicable bankruptcy, insolvency, reorganization or other
similar law or of any other case or proceeding to be adjudicated a bankrupt or
insolvent, or the consent by the Company or any of its Subsidiaries that is a
Significant Subsidiary, to the entry of a decree or order for relief in respect
of the Company or any of its Subsidiaries that is a Significant Subsidiary, in
an involuntary case or proceeding under any applicable bankruptcy, insolvency,
reorganization or other similar law or to the commencement of any bankruptcy or
insolvency case or proceeding against the Company, or the filing by the Company
or any of its Subsidiaries that is a Significant Subsidiary, of a petition or
answer or consent seeking reorganization or relief under any applicable law, or
the consent by the Company to the filing of such petition or to the appointment
of or the taking possession by a custodian, receiver, liquidator, assignee,
trustee, sequestrator or other similar official of the Company or of any
substantial part of its property, or the making by the Company or any of its
Subsidiaries that is a Significant Subsidiary, of an assignment for the benefit
of creditors, or the admission by the Company or any of its Subsidiaries that
is a Significant Subsidiary, in writing of its inability to pay its debts
generally as they become due, or the taking of corporate action by the Company
or any of its Subsidiaries that is a Significant Subsidiary, expressly in
furtherance of any such action.

A Default under clause
(e) above is not an Event of Default until the Trustee notifies the Company, or
the Holders of at least 25% in aggregate principal amount of the Securities at
the time outstanding notify the Company and the Trustee, of the Default and the
Company does not cure such Default (and such Default is not waived) within the
time specified in clause (e) above after actual receipt of such notice.  Any such notice must specify the Default,
require that it be remedied and state that such notice is a “Notice of Default.”

The Trustee shall, within
90 days of the occurrence of a Default or Event of Default, give to the Holders
of the Securities notice of all uncured Defaults or

 37
 

 

Events of Default known to it, its status and what
action the Company is taking or proposes to take with respect thereto; provided, however, the Trustee shall be
protected in withholding such notice if it, in good faith, determines that the
withholding of such notice is in the best interest of such Holders, except in
the case of a Default or Event of Default under clause (a), (b), (c) or (d)
above.

Section 6.02. 
Acceleration.  If an
Event of Default (other than an Event of Default specified in Section 6.01(g)
or (h) with respect to the Company) occurs and is continuing (the Event of
Default not having been cured or waived as provided in this Article 6), the
Trustee by notice to the Company, or the Holders of at least 25% in aggregate
principal amount of the Securities at the time outstanding by notice to the
Company and the Trustee, may declare the principal amount plus accrued and
unpaid interest, including Additional Amounts, if any, on all the Securities to
be immediately due and payable.  Upon
such a declaration, such accelerated amount shall be due and payable
immediately.  If an Event of Default
specified in Section 6.01(g) or (h) occurs (with respect to the Company) and is
continuing, the principal amount plus accrued and unpaid interest, including
Additional Amounts, if any, on all the Securities shall become and be
immediately due and payable without any declaration or other act on the part of
the Trustee or any Securityholders.  The
Holders of a majority in aggregate principal amount of the Securities at the
time outstanding, by written notice to the Trustee (and without notice to any
other Securityholder) may rescind an acceleration and its consequences if the
rescission would not conflict with any judgment or decree and if all existing
Events of Default have been cured or waived except nonpayment of the principal
amount plus accrued and unpaid interest, including Additional Amounts, if any,
that have become due solely as a result of acceleration and if all amounts due
to the Trustee under Section 7.07 have been paid.  No such rescission shall affect any
subsequent Default or impair any right consequent thereto.

Section 6.03.  Other
Remedies.  If an Event of
Default occurs and is continuing, the Trustee may pursue any available remedy
to collect the payment of the principal amount plus accrued and unpaid
interest, including Additional Amounts, if any, on the Securities or to enforce
the performance of any provision of the Securities or this Indenture.

The Trustee may maintain
a proceeding even if the Trustee does not possess any of the Securities or does
not produce any of the Securities in the proceeding.  A delay or omission by the Trustee or any
Securityholder in exercising any right or remedy accruing upon an Event of
Default shall not impair the right or remedy or constitute a waiver of, or
acquiescence in, the Event of Default. 
No remedy is exclusive of any other remedy.  All available remedies are cumulative.

Section 6.04.  Waiver of
Past Defaults.  The Holders of
a majority in aggregate principal amount of the Securities at the time
outstanding, by written

 38
 

 

notice to the Trustee (and without notice to any other
Securityholder), may waive an existing Default and its consequences except (a)
an Event of Default described in Section 6.01(a), 6.01(b), 6.01(c) or 6.01(d),
(b) a Default in respect of a provision that under Section 8.02 cannot be
amended without the consent of each Securityholder affected or (c) a Default
which constitutes a failure to convert any Security in accordance with the
terms of Article 9.  When a Default is
waived, it is deemed cured, but no such waiver shall extend to any subsequent
or other Default or impair any consequent right.  This Section 6.04 shall be in lieu of Section
316(a)(1)(B) of the TIA and such Section 316(a)(1)(B) is hereby expressly
excluded from this Indenture, as permitted by the TIA.

Section 6.05.  Control by
Majority.  The Holders of a
majority in aggregate principal amount of the Securities at the time
outstanding may direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee or of exercising any trust or power
conferred on the Trustee. However, the Trustee may refuse to follow any
direction that conflicts with law or this Indenture or that the Trustee
determines in good faith is unduly prejudicial to the rights of other
Securityholders or would involve the Trustee in personal liability unless the
Trustee is offered indemnity satisfactory to it.  This Section 6.05 shall be in lieu of Section
316(a)(1)(A) of the TIA and such Section 316(a)(1)(A) is hereby expressly
excluded from this Indenture, as permitted by the TIA.

Section 6.06.  Limitation
on Suits.  A Securityholder
may not pursue any remedy with respect to this Indenture or the Securities
unless:

(a)        the Holder gives to the Trustee written
notice stating that an Event of Default is continuing;

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

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

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

(e)        the Holders of a majority in aggregate
principal amount of the Securities at the time outstanding do not give the
Trustee a direction inconsistent with the request during such 60 day period.

A Securityholder may not
use this Indenture to prejudice the rights of any other Securityholder or to
obtain a preference or priority over any other Securityholder.

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Section 6.07.  Rights of
Holders to Receive Payment.  Notwithstanding
any other provision of this Indenture, the right of any Holder to receive
payment of the principal amount, Redemption Price, Change of Control Purchase
Price or interest, including Additional Amounts, if any, in respect of the
Securities held by such Holder, on or after the respective due dates expressed
in the Securities or any Redemption Date, and to convert the Securities in
accordance with Article 9, or to bring suit for the enforcement of any such
payment on or after such respective dates or the right to convert, shall not be
impaired or affected adversely without the consent of such Holder.

Section 6.08.  Collection
Suit by Trustee.  If an Event
of Default described in Section 6.01(a), (b), (c) or (d) occurs and is
continuing, the Trustee may recover judgment in its own name and as trustee of
an express trust against the Company for the whole amount owing with respect to
the Securities and the amounts provided for in Section 7.07.

Section 6.09.  Trustee May
File Proofs of Claim.  In case
of the pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to the Company or any other obligor upon the Securities or
the property of the Company or of such other obligor or their creditors, the
Trustee (irrespective of whether the principal amount, Redemption Price, Change
of Control Purchase Price or interest, including Additional Amounts, if any, in
respect of the Securities shall then be due and payable as therein expressed or
by declaration or otherwise and irrespective of whether the Trustee shall have
made any demand on the Company for the payment of any such amount) shall be
entitled and empowered, by intervention in such proceeding or otherwise,

(a)        to file and prove a claim for the whole
amount of the principal amount, Redemption Price, Change of Control Purchase
Price, or interest, including Additional Amounts, if any, and to file such
other papers or documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel or
any other amounts due the Trustee under Section 7.07) and of the Holders
allowed in such judicial proceeding, and

(b)        to collect and receive any moneys or
other property payable or deliverable on any such claims and to distribute the
same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator
or similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders,
to pay the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any
other amounts due the Trustee under Section 7.07.

 40
 

 

 

Nothing herein contained
shall be deemed to authorize the Trustee to authorize or consent to or accept
or adopt on behalf of any Holder any plan of reorganization, arrangement,
adjustment or composition affecting the Securities or the rights of any Holder
thereof, or to authorize the Trustee to vote in respect of the claim of any
Holder in any such proceeding.

Section 6.10. 
Priorities.  If the
Trustee collects any money pursuant to this Article 6, it shall pay out the
money in the following order:

FIRST: to the Trustee for
amounts due under Section 7.07;

SECOND: to
Securityholders for amounts due and unpaid on the Securities for the principal
amount, Redemption Price, Change of Control Purchase Price or interest,
including Additional Amounts, if any, as the case may be, ratably, without
preference or priority of any kind, according to such amounts due and payable
on the Securities; and

THIRD: the balance, if
any, to the Company.

The Trustee may fix a
record date and payment date for any payment to Securityholders pursuant to
this Section 6.10.  At least 15 days
before such record date, the Trustee shall mail to each Securityholder and the
Company a notice that states the record date, the payment date and the amount
to be paid.

Section 6.11.  Undertaking
for Costs.  In any suit for
the enforcement of any right or remedy under this Indenture or in any suit
against the Trustee for any action taken or omitted by it as Trustee, a court
in its discretion may require the filing by any party litigant (other than the
Trustee) in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys’ fees and expenses, against any party litigant in the suit, having
due regard to the merits and good faith of the claims or defenses made by the
party litigant.  This Section 6.11 does
not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 6.07
or a suit by Holders of more than 10% in aggregate principal amount of the
Securities at the time outstanding.  This
Section 6.11 shall be in lieu of Section 315(e) of the TIA and such Section 315(e)
is hereby expressly excluded from this Indenture, as permitted by the TIA.

Section 6.12.  Waiver of
Stay, Extension or Usury Laws.  The
Company covenants (to the extent that it may lawfully do so) that it will not
at any time insist upon, or plead, or in any manner whatsoever claim or take
the benefit or advantage of, any stay or extension law or any usury or other
law wherever enacted, now or at any time hereafter in force, which would
prohibit or forgive the Company from paying all or any portion of the principal
amount, Redemption Price or Change of Control Purchase Price in respect of
Securities, or any interest, including Additional Amounts, if any, on such
amounts, as contemplated herein,

 41
 

 

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

ARTICLE 7

Trustee

Section 7.01.  Duties of
Trustee.  (a) If an Event of
Default has occurred and is continuing, the Trustee shall exercise the rights
and powers vested in it by this Indenture and use the same degree of care and
skill in its exercise as a prudent person would exercise or use under the
circumstances in the conduct of such person’s own affairs.

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

(i)    the Trustee 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 opinions expressed therein, upon certificates or opinions
furnished to the Trustee and conforming to the requirements of this Indenture,
but in the case of any such certificates or opinions which by any provision
hereof are specifically required to be furnished to the Trustee, the Trustee
shall examine the certificates and opinions to determine whether or not they
conform to the requirements of this Indenture, but need not confirm or
investigate the accuracy of mathematical calculations or other facts stated
therein.  This Section 7.01(b) shall be
in lieu of Section 315(a) of the TIA and such Section 315(a) is hereby
expressly excluded from this Indenture, as permitted by the TIA.

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

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

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

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(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 6.05.

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

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

(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.

(f)         Money held by the Trustee in trust
hereunder need not be segregated from other funds except to the extent required
by law.  The Trustee (acting in any
capacity hereunder) shall be under no liability for interest on any money
received by it hereunder unless otherwise agreed in writing with the Company.

Section 7.02.  Rights of
Trustee.  Subject to its
duties and responsibilities under the TIA,

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

(b)        whenever in the administration of this
Indenture the Trustee shall deem it desirable that a matter be proved or
established prior to taking, suffering or omitting any action hereunder, the Trustee
(unless other evidence be herein specifically prescribed) may, in the absence
of bad faith on its part, conclusively rely upon an Officers’ Certificate or an
Opinion of Counsel;

(c)        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
with due care by it hereunder;

(d)        the Trustee shall not be liable for any
action taken, suffered, or omitted to be taken by it in good faith which it
believes to be authorized or within its rights or powers conferred under this
Indenture;

(e)        the Trustee may consult with counsel
selected by it and any advice or Opinion of Counsel shall be full and complete
authorization and protection in

 43
 

 

respect of any action
taken or suffered or omitted by it hereunder in good faith and in accordance
with such advice or Opinion of Counsel;

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

(g)        any request or direction of the Company
mentioned herein shall be sufficiently evidenced by a Company Request or
Company Order and any resolution of the Board of Directors may be sufficiently
evidenced by a Board Resolution;

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

(i)         the Trustee shall not be deemed to have
notice of any Default or Event of Default unless a Responsible Officer of the
Trustee has actual knowledge thereof or unless written notice of any event
which is in fact such a default is received by the Trustee at the Corporate
Trust Office of the Trustee, and such notice references the Securities and this
Indenture;

(j)         the rights, privileges, protections,
immunities and benefits given to the Trustee, including, without limitation,
its right to be indemnified, are extended to, and shall be enforceable by, the
Trustee in each of its capacities hereunder, to each other Paying Agent,
Registrar, Conversion Agent or co-registrar appointed hereunder, and to each
agent, custodian and other Person employed to act hereunder;

(k)        in no event shall the Trustee be
responsible or liable for special, indirect or consequential loss of damage of
any kind whatsoever (including, but not limited to, loss of profit)
irrespective of whether the Trustee has been advised of the likelihood of such
loss or damage and regardless of the form of action; and

(l)         the Trustee may request that the
Company deliver an Officers’ Certificate setting forth the names of individuals
and/or titles of officers authorized at such time to take specified actions
pursuant to this Indenture, which

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Officers’ Certificate may
be signed by any Person authorized to sign an Officers’ Certificate, including
any Person specified as so authorized in any such certificate previously
delivered and not superseded.

Section 7.03.  Individual
Rights of Trustee.  The
Trustee in its individual or any other capacity may become the owner or pledgee
of Securities and may otherwise deal with the Company or its Affiliates with
the same rights it would have if it were not Trustee.  Any Paying Agent, Registrar, Conversion Agent
or co registrar may do the same with like rights.  However, the Trustee must comply with
Sections 7.10 and 7.11.

Section 7.04.  Trustee’s
Disclaimer.  The Trustee makes
no representation as to the validity or adequacy of this Indenture, the
Securities or any offering materials, it shall not be accountable for the
Company’s use or application of the proceeds from the Securities, it shall not
be responsible for any statement in the registration statement for the
Securities under the Securities Act or in any offering document for the
Securities, the Indenture or the Securities (other than its certificate of
authentication), or the determination as to which beneficial owners are
entitled to receive any notices hereunder.

Section 7.05.  Notice of
Defaults.  If a Default occurs
and if it is known to the Trustee, the Trustee shall give to each
Securityholder notice of the Default within 90 days after it occurs or, if
later, within 15 days after it is known to the Trustee, unless such Default
shall have been cured or waived before the giving of such notice.  Notwithstanding the preceding sentence,
except in the case of a Default described in Section 6.01(a), (b), (c) or (d),
the Trustee may withhold the notice if and so long as a committee of its
Responsible Officers in good faith determines that withholding the notice is in
the interest of the Securityholders.  The
preceding sentence shall be in lieu of the proviso to Section 315(b) of the TIA
and such proviso is hereby expressly excluded from this Indenture, as permitted
by the TIA.  The Trustee shall not be
deemed to have knowledge of a Default unless a Responsible Officer of the
Trustee has received written notice of such Default, which notice specifically
references this Indenture and the Securities.

Section 7.06.  Reports by
Trustee to Holders.  Within 60
days after each May 15 beginning with the May 15 following the date of this
Indenture, the Trustee shall mail to each Securityholder a brief report dated
as of such May 15 that complies with TIA Section 313(a), if required by such
Section 313(a).  The Trustee also shall
comply with TIA Section 313(b).

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

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Section 7.07.  Compensation
and Indemnity.  The Company
agrees:

(a)        to pay to the Trustee from time to time
such compensation as the Company and the Trustee shall from time to time agree
in writing for all services rendered by it hereunder (which compensation shall
not be limited (to the extent permitted by law) by any provision of law in
regard to the compensation of a trustee of an express trust);

(b)        to reimburse the Trustee upon its
request for all reasonable expenses, disbursements and advances incurred or
made by the Trustee in accordance with any provision of this Indenture
(including the reasonable compensation and the expenses, advances and
disbursements of its agents and counsel), except any such expense, disbursement
or advance as may be attributable to its negligence or bad faith; and

(c)        to indemnify the Trustee or any
predecessor Trustee and their agents for, and to hold them harmless against,
any loss, damage, claim, liability, cost or expense (including attorney’s fees
and expenses, and taxes (other than taxes based upon, measured by or determined
by the income of the Trustee and any and all franchise taxes of the Trustee))
incurred without negligence or bad faith on its part, arising out of or in
connection with the acceptance or administration of this trust, including the
costs and expenses of defending itself against any claim (whether asserted by
the Company or any Holder or any other Person) or liability in connection with
the exercise or performance of any of its powers or duties hereunder.

To secure the Company’s
payment obligations in this Section 7.07, the Trustee shall have a lien prior
to the Securities on all money or property held or collected by the Trustee,
except that held in trust to pay the principal amount, Redemption Price, Change
of Control Purchase Price or interest, including Additional Amounts, if any, as
the case may be, on particular Securities.

The Company’s payment
obligations pursuant to this Section 7.07 shall survive the payment of the
Securities, the discharge of this Indenture and the resignation or removal of
the Trustee.  When the Trustee incurs
expenses or renders services after the occurrence of a Default specified in
Section 6.01(f) or (g), the expenses including the reasonable charges and
expenses of its counsel, and the compensation for the services are intended to
constitute expenses of administration under any bankruptcy law.

Section 7.08.  Replacement
of Trustee.  The Trustee may
resign by so notifying the Company; provided,
however, no such resignation shall be effective until a successor
Trustee has accepted its appointment pursuant to this Section 7.08.  The Holders of a majority in aggregate
principal amount of the Securities at the time outstanding may remove the
Trustee by so notifying the Trustee and the Company in writing. The Company
shall remove the Trustee if:

 46
 

 

 

(a)        the Trustee fails to comply with Section
7.10;

(b)        the Trustee is adjudged bankrupt or
insolvent;

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

(d)        the Trustee otherwise becomes incapable
of acting.

If the Trustee resigns or
is removed or if a vacancy exists in the office of Trustee for any reason, the
Company shall promptly appoint, by resolution of its Board of Directors, a successor
Trustee.

A successor Trustee shall
deliver a written acceptance of its appointment to the retiring Trustee and to
the Company satisfactory in form and substance to the retiring Trustee and the
Company. Thereupon the resignation or removal of the retiring Trustee shall
become effective, and the successor Trustee shall have all the rights, powers
and duties of the Trustee under this Indenture. 
The successor Trustee shall mail a notice of its succession to Securityholders.  The retiring Trustee shall promptly transfer
all property held by it as Trustee to the successor Trustee, subject to the
lien provided for in Section 7.07.

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

If the Trustee fails to
comply with Section 7.10, any Securityholder may petition any court of
competent jurisdiction for the removal of the Trustee and the appointment of a
successor Trustee.

Section 7.09.  Successor
Trustee by Merger.  If the
Trustee consolidates with, merges or converts into, or transfers all or
substantially all its corporate trust business (including in its capacity as
Trustee hereunder) or assets to, another corporation, the resulting, surviving
or transferee corporation without any further act shall be the successor
Trustee.

Section 7.10.  Eligibility;
Disqualification.  The Trustee
shall at all times satisfy the requirements of TIA Sections 310(a)(1) and
310(b).  The Trustee (or its parent
holding company) shall have a combined capital and surplus of at least
$50,000,000 as set forth in its most recent published annual report of
condition. Nothing herein contained shall prevent the Trustee from filing with
the Commission the application referred to in the penultimate paragraph of TIA
Section 310(b).

 47
 

 

 

Section 7.11.  Preferential
Collection of Claims Against Company.  The
Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). 
A Trustee who has resigned or been removed shall be subject to TIA Section
311(a) to the extent indicated therein.

Section 7.12.  Force
Majeure.  In no event shall
the Trustee be responsible or liable for any failure or delay in the
performance of its obligations under this Indenture arising out of or caused
by, directly or indirectly, forces beyond its reasonable control, including
without limitation strikes, work stoppages, accidents, acts of war or
terrorism, civil or military disturbances, nuclear or natural catastrophes or
acts of god, and interruptions, loss or malfunctions or utilities,
communications or computer (software or hardware) services.

ARTICLE 8

Amendments

Section 8.01.  Without
Consent of Holders.  The
Company and the Trustee may amend, modify or supplement this Indenture or the
Securities without the consent of any Securityholder to:

(a)        add to the covenants of the Company for
the benefit of the Holders of Securities;

(b)        surrender any right or power herein
conferred upon the Company;

(c)        provide for conversion rights of Holders
of Securities if any reclassification or change of the Common Stock or any
consolidation, merger or sale of all or substantially all of the Company’s
assets occurs;

(d)        provide for the assumption of the
Company’s obligations to the Holders of Securities in the case of a merger,
consolidation, conveyance, transfer or lease pursuant to Article 5 hereof;

(e)        reduce the Conversion Price; provided, however:  (i) that the Conversion Price shall not be
reduced below $10.37, (ii) that such reduction in the Conversion Price shall
not adversely affect the interests of the Holders of Securities (after taking
into account tax and other consequences of such reduction), and (iii) that the
Conversion Price shall not be reduced without seeking and obtaining the consent
of the holders of the Common Stock, if such consent is required pursuant to the
rules of The Nasdaq Global Market or any exchange or other market on which the
Common Stock is then listed or traded;

(f)         comply with the requirements of the SEC
in order to effect or maintain the qualification of this Indenture under the
TIA;

 48
 

 

 

(g)        cure any ambiguity, to correct or
supplement any provision herein which may be inconsistent with any other
provision herein or which is otherwise defective; provided, however, that such action pursuant to this clause
(g) does not, in the good faith opinion of the Board of Directors of the
Company (as evidenced by a Board Resolution), adversely affect the interests of
the Holders of Securities in any material respect; and

(h)        add or modify any other provisions
herein with respect to matters or questions arising hereunder which the Company
and the Trustee may deem necessary or desirable and that will not, in the good
faith opinion of the Board of Directors of the Company (as evidenced by a Board
Resolution), adversely affect the interests of the Holders of Securities.

Section 8.02.  With Consent
of Holders.  Except as
provided below in this Section 8.02, this Indenture or the Securities may be
amended, modified or supplemented, and noncompliance in any particular instance
with any provision of this Indenture or the Securities may be waived, in each
case with the written consent of the Holders of at least a majority of the
principal amount of the Securities at the time outstanding.

Without the written
consent or the affirmative vote of each Holder of Securities affected thereby,
an amendment or waiver under this Section 8.02 may not:

(a)        change the maturity of the principal
amount of, or the date any installment of interest, including Additional
Amounts, is due on, any Security;

(b)        reduce the principal amount of, or
interest, including Additional Amounts payable on, or the Redemption Price or
Change of Control Purchase Price of, any Security;

(c)        change the currency of any amount owed
or owing under the Security or any interest thereon from U.S. Dollars;

(d)        impair the right of any Holder to
institute suit for the enforcement of any payment or with respect to, or
conversion of, any Security;

(e)        modify the obligation of the Company to
maintain an office or agency in The City of New York pursuant to Section 4.05;

(f)         except as otherwise permitted or
contemplated by the provisions of this Indenture, adversely affect the
repurchase right of the Holders of the Securities as provided in Article 3 or
the right of the Holders of the Securities to convert any Security as provided
in Article 9;

(g)        modify the provisions of Article 5 in a
manner adverse to the Holders of the Securities;

 49
 

 

 

(h)        modify any of the provisions of this
Section 8.02, or reduce the principal amount of outstanding Securities required
to waive a default, except to provide that certain other provisions of this
Indenture cannot be modified or waived without the consent of the Holder of
each outstanding Security affected thereby; or

(i)         reduce the percentage of the principal
amount of the outstanding Securities the consent of whose Holders is required
for any such supplemental indenture or the consent of whose Holders is required
for any waiver provided for in this Indenture.

It shall not be necessary
for the consent of the Holders under this Section 8.02 to approve the
particular form of any proposed amendment, but it shall be sufficient if such
consent approves the substance thereof.

After an amendment under
this Section 8.02 becomes effective, the Company shall mail to each Holder a
notice briefly describing the amendment.

Nothing in this Section
8.02 shall impair the ability of the Company and the Trustee to amend this
Indenture or the Securities without the consent of any Securityholder to
provide for the assumption of the Company’s obligations to the Holders of
Securities in the case of a merger, consolidation, conveyance, transfer or
lease pursuant to Article 5 hereof.

Section 8.03.  Compliance
with Trust Indenture Act.  Every
supplemental indenture executed pursuant to this Article shall comply with the
TIA.

Section 8.04.  Revocation
and Effect of Consents, Waivers and Actions. 
Until an amendment, waiver or other action by Holders becomes
effective, a consent thereto by a Holder of a Security hereunder is a continuing
consent by the Holder and every subsequent Holder of that Security or portion
of the Security that evidences the same obligation as the consenting Holder’s
Security, even if notation of the consent, waiver or action is not made on the
Security.  However, any such Holder or
subsequent Holder may revoke the consent, waiver or action as to such Holder’s
Security or portion of the Security if the Trustee receives the notice of
revocation before the date the amendment, waiver or action becomes
effective.  After an amendment, waiver or
action becomes effective, it shall bind every Securityholder.

Section 8.05.  Notation on
or Exchange of Securities.  Securities
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article may, and shall if required by the Trustee, bear a
notation in form approved by the Trustee as to any matter provided for in such
supplemental indenture.  If the Company
shall so determine, new Securities so modified as to conform, in the opinion of
the Trustee and the Board of Directors, to any such supplemental indenture may
be prepared and executed by the

 50
 

 

Company and authenticated and delivered by the Trustee
in exchange for outstanding Securities.

Section 8.06.  Trustee to
Sign Supplemental Indentures.  The
Trustee shall sign any supplemental indenture authorized pursuant to this
Article 8 if the amendment contained therein does not adversely affect the
rights, duties, liabilities or immunities of the Trustee.  If it does, the Trustee may, but need not,
sign such supplemental indenture.  In
signing such supplemental indenture the Trustee shall receive, and (subject to
the provisions of Section 7.01) shall be fully protected in relying upon, an
Officers’ Certificate and an Opinion of Counsel stating that such amendment is
authorized or permitted by this Indenture.

Section 8.07.  Effect of
Supplemental Indentures.  Upon
the execution of any supplemental indenture under this Article, this Indenture
shall be modified in accordance therewith, and such supplemental indenture
shall form a part of this Indenture for all purposes; and every Holder of
Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.

ARTICLE 9

Conversions

Section 9.01.  Conversion
Privilege.  Subject to and
upon compliance with the provisions of this Article 9, a Holder of a Security
shall have the right, at such Holder’s option, to convert all or any portion
(if the portion to be converted is $1,000 or an integral multiple of $1,000) of
such Security into shares of Common Stock at the Conversion Price in effect on
the date of conversion, at any time prior to the close of business on the
Business Day prior to the Stated Maturity of the Securities.

Section 9.02.  Conversion
Procedure; Conversion Price; Fractional Shares. 
Each Security shall be convertible at the office of the
Conversion Agent into fully paid and nonassessable shares (calculated to the
nearest 1/100th of a share) of Common Stock. 
The Security will be converted into shares of Common Stock at the
Conversion Price therefor.  No payment or
adjustment shall be made in respect of dividends on the Common Stock or accrued
interest on a converted Security, except as described in Section 9.10 hereof.  The Company shall not issue any fraction of a
share of Common Stock in connection with any conversion of Securities, but
instead shall, subject to Section 9.03(k) hereof, make a cash payment
(calculated to the nearest cent) equal to such fraction multiplied by the Sale
Price of the Common Stock on the last Trading Day prior to the date of
conversion.  Notwithstanding the
foregoing, a Security in respect of which a Holder has delivered a Change of
Control Purchase Notice exercising such Holder’s option to require the Company
to repurchase such Security may be converted only if such notice of exercise is
withdrawn in accordance with the Section 3.08 hereof.

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(a)        Before any Holder of a Security shall be
entitled to convert the same into Common Stock, such Holder shall, in the case
of Global Securities, comply with the procedures of the Depositary in effect at
that time, and in the case of Certificated Securities, surrender such
Securities, duly endorsed to the Company or in blank, at the office of the
Conversion Agent, and shall give written notice to the Company at said office
or place that such Holder elects to convert the same and shall state in writing
therein the principal amount of Securities to be converted and the name or
names (with addresses) in which such Holder wishes the certificate or certificates
for Common Stock to be issued.

Before any such
conversion, a Holder also shall pay all funds required, if any, relating to
interest on the Securities, as provided in Section 9.10, and all taxes or
duties, if any, as provided in Section 9.09.

If more than one Security
shall be surrendered for conversion at one time by the same Holder, the number
of full shares of Common Stock which shall be deliverable upon conversion shall
be computed on the basis of the aggregate principal amount of the Securities (or
specified portions thereof to the extent permitted thereby) so
surrendered.  Subject to the next
succeeding sentence, the Company will, as soon as practicable thereafter, issue
and deliver at said office or place to such Holder of a Security, or to such
Holder’s nominee or nominees, certificates for the number of full shares of
Common Stock to which such Holder shall be entitled as aforesaid, together with
cash in lieu of any fraction of a share to which such Holder would otherwise be
entitled.  The Company shall not be
required to deliver certificates for shares of Common Stock while the stock
transfer books for such stock or the security register are duly closed for any
purpose, but certificates for shares of Common Stock shall be issued and
delivered as soon as practicable after the opening of such books or security
register.

(b)        A Security shall be deemed to have been
converted as of the close of business on the date of the surrender of such
Securities for conversion as provided above, and the Person or Persons entitled
to receive the Common Stock issuable upon such conversion shall be treated for
all purposes as the record Holder or Holders of such Common Stock as of the
close of business on such date.

(c)        In case any Security shall be
surrendered for partial conversion, the Company shall execute and the Trustee
shall authenticate and deliver to or upon the written order of the Holder of
the Security so surrendered, without charge to such Holder (subject to the
provisions of Section 9.09 hereof), a new Security or Securities in authorized
denominations in an aggregate principal amount equal to the unconverted portion
of the surrendered Securities.

Section 9.03.  Adjustment
of Conversion Price.  The
Conversion Price shall be adjusted from time to time as follows:

 52
 

 

 

(a)        In case the Company shall, at any time
or from time to time while any of the Securities are outstanding, pay a
dividend or make a distribution in shares of Common Stock to all holders of its
outstanding shares of Common Stock, then the Conversion Price in effect at the
opening of business on the date following the record date fixed for the
determination of stockholders entitled to receive such dividend or other
distribution shall be reduced by multiplying such Conversion Price by a
fraction:

(i)    the numerator of which shall be the number
of shares of Common Stock outstanding at the close of business on the Record
Date fixed for such determination; and

(ii)   the denominator of which shall be the sum of
such number of shares and the total number of shares constituting such dividend
or other distribution.

Such reduction shall
become effective immediately after the opening of business on the day following
the Record Date fixed for such determination. 
If any dividend or distribution of the type described in this Section
9.03(a) is declared but not so paid or made, the Conversion Price shall again
be adjusted to the Conversion Price which would then be in effect if such
dividend or distribution had not been declared.

(b)        In case the Company shall, at any time
or from time to time while any of the Securities are outstanding, subdivide its
outstanding shares of Common Stock into a greater number of shares of Common
Stock, then 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 the Company shall, at any time
or from time to time while any of the Securities are outstanding, combine its
outstanding shares of Common Stock into a smaller number of shares of Common
Stock, then 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, shall become effective immediately after the
opening of business on the day following the day upon which such subdivision or
combination becomes effective.

(c)        In case the Company shall, at any time
or from time to time while any of the Securities are outstanding, issue rights
or warrants (other than any rights or warrants referred to in Section 9.03(d))
to all or substantially all holders of its shares of Common Stock entitling
them to subscribe for or purchase, for a period of up to 45 days, shares of
Common Stock (or securities convertible into shares of Common Stock) at a price
per share (or having a conversion price per share) less than the Sale Price on
the Business Day immediately preceding the date of the announcement of such
issuance (treating the conversion price per share

 53
 

 

of the securities
convertible into Common Stock as equal to (x) the sum of (i) the price for a
unit of the security convertible into Common Stock and (ii) any additional
consideration initially payable upon the conversion of such security into
Common Stock divided by (y) the number of shares of Common Stock initially
underlying such convertible security), then the Conversion Price shall be
adjusted so that the same shall equal the price determined by multiplying the
Conversion Price in effect at the opening of business on the date after such
date of announcement by a fraction:

(i)    the numerator of which shall be the number
of shares of Common Stock outstanding on the close of business on the date of
announcement, plus the number of shares or securities which the aggregate
offering price of the total number of shares or securities so offered for
subscription or purchase (or the aggregate conversion price of the convertible
securities so offered) would purchase at such Sale Price of the Common Stock;
and

(ii)   the denominator of which shall be the number
of shares of Common Stock outstanding at the close of business on the date of
announcement, plus the total number of additional shares of Common Stock so
offered for subscription or purchase (or into which the convertible securities
so offered are convertible).

Such adjustment shall
become effective immediately after the opening of business on the day following
the date of announcement of such issuance. 
To the extent that shares of Common Stock (or securities convertible
into shares of Common Stock) are not delivered pursuant to such rights or
warrants, upon the expiration or termination of such rights or warrants, the
Conversion Price shall be readjusted to the Conversion Price which would then
be in effect had the adjustments made upon the issuance of such rights or
warrants been made on the basis of the delivery of only the number of shares of
Common Stock (or securities convertible into shares of Common Stock) actually
delivered.  In the event that such rights
or warrants are not so issued, the Conversion Price shall again be adjusted to
be the Conversion Price which would then be in effect if the date fixed for the
determination of stockholders entitled to receive such rights or warrants had
not been fixed.  In determining whether
any rights or warrants entitle the holders to subscribe for or purchase shares
of Common Stock at less than such Sale Price, and in determining the aggregate
offering price of such shares of Common Stock, there shall be taken into
account any consideration received for such rights or warrants, the value of
such consideration if other than cash, to be determined by the Board of
Directors.

(d)        In case the Company shall, at any time
or from time to time while any of the Securities are outstanding, by dividend
or otherwise, distribute to all or substantially all holders of its shares of
Common Stock (including any such distribution made in connection with a
consolidation or merger in which the

 54
 

 

Company is the continuing
corporation and the Common Stock is not changed or exchanged), cash (other than
any dividends or distributions consisting exclusively of cash to which Section
9.03(e) applies), shares of Common Stock (other than any dividends or distributions
to which Section 9.03(a) applies), evidences of its indebtedness or other
assets, including securities, but excluding (i) any rights or warrants referred
to in Section 9.03(c) and (ii) dividends or distributions of stock, securities
or other property or assets (including cash) in connection with a
reclassification, consolidation, merger, statutory share exchange, combination,
sale or conveyance to which Section 9.04 applies (such capital stock, evidence
of its indebtedness, and other assets or securities being distributed
hereinafter in this Section 9.03(d) called the “distributed assets”), then, in
each such case, subject to the second and third succeeding paragraphs and the
last paragraph of this Section 9.03(d), 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 with respect to such distribution by a fraction:

(i)    the numerator of which shall be the Current
Market Price of the Common Stock, less the Fair Market Value on such date of
the portion of the distributed assets so distributed applicable to one share of
Common Stock (determined on the basis of the number of shares of Common Stock
outstanding on the record date) (determined as provided in Section 9.03(g));
and

(ii)   the denominator of which shall be such
Current Market Price.

Such reduction shall become effective immediately
prior to the opening of business on the day following the Record Date for such
distribution.  In the event that such
dividend or distribution is not so paid or made, the Conversion Price shall
again be adjusted to be the Conversion Price which would then be in effect if
such dividend or distribution had not been declared.

If the Board of Directors
determines the Fair Market Value of any distribution for purposes of this
Section 9.03(d) by reference to the actual or when issued trading market for
any distributed assets comprising all or part of such distribution, it must in
doing so consider the prices in such market over the same period (the “Reference Period”) used in computing the
Current Market Price pursuant to Section 9.03(g) to the extent possible, unless
the Board of Directors determines in good faith that determining the Fair
Market Value during the Reference Period would not be in the best interest of
the Holders.  In the event any such
distribution consists of shares of capital stock of, or similar equity
interests in, one or more of the Company’s Subsidiaries (a “Spin-Off”), 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

 55
 

 

close of business on the Record Date with respect to
such distribution by a fraction:

(i)          the numerator of which shall be the
Current Market Price on such date; and

(ii)         the denominator of which shall be the
Current Market Price of the Common Stock, plus the Fair Market Value on such
date of the portion of the distributed assets so distributed applicable to one
share of Common Stock (determined on the basis of the number of shares of
Common Stock outstanding on the record date) (determined as set forth in the
second and third succeeding sentences).

Such reduction shall become effective immediately
prior to the opening of business on the day following the Record Date for such
distribution.  In the event that such
dividend or distribution is not so paid or made, the Conversion Price shall
again be adjusted to be the Conversion Price which would then be in effect if
such dividend or distribution had not been declared.  In the case of a Spin-Off, the Fair Market
Value of the securities to be distributed shall equal the average of the
closing sale prices of such securities on the principal securities market on
which such securities are traded for the five consecutive Trading Days
commencing on and including the sixth day of trading of those securities after
the effectiveness of the Spin-Off, and the Current Market Price shall be
measured for the same period.  In the
event, however, that an underwritten initial public offering of the securities
in the Spin-Off occurs simultaneously with the Spin-Off, Fair Market Value of
the securities distributed in the Spin-Off shall mean the initial public offering
price of such securities and the Current Market Price shall mean the Sale Price
for the Common Stock on the same Trading Day.

Rights or warrants
distributed by the Company to all holders of its shares of Common Stock
entitling them to subscribe for or purchase shares of the Company’s capital
stock (either initially or under certain circumstances), which rights or
warrants, until the occurrence of a specified event or events (“Trigger Event”), (i) are deemed to be
transferred with such shares of Common Stock, (ii) are not exercisable and
(iii) are also issued in respect of future issuances of shares of Common Stock
shall be deemed not to have been distributed for purposes of this Section
9.03(d) (and no adjustment to the Conversion Price under this Section 9.03(d)
will be required) until the occurrence of the earliest Trigger Event.  If such right or warrant is subject to
subsequent events, upon the occurrence of which such right or warrant shall
become exercisable to purchase different distributed assets, evidences of
indebtedness or other assets, or entitle the holder to purchase a different
number or amount of the foregoing or to purchase any of the foregoing at a
different purchase price, then the occurrence of each such event shall be
deemed to be the date of issuance and record date with respect to a new right
or warrant (and a termination or expiration of the existing right or warrant
without exercise by the holder thereof). 
In addition, in the event of any

 56
 

 

distribution (or deemed distribution) of rights or
warrants, or any Trigger Event or other event (of the type described in the
preceding sentence) with respect thereto, that resulted in an adjustment to the
Conversion Price under this Section 9.03(d)):

(i)          in the case of any such rights or
warrants which shall all have been redeemed or repurchased without exercise by
any holders thereof, the Conversion Price shall be readjusted upon such final
redemption or repurchase to give effect to such distribution or Trigger Event,
as the case may be, as though it were a cash distribution, equal to the per
share redemption or repurchase price received by a holder of shares of Common
Stock with respect to such rights or warrants (assuming such holder had
retained such rights or warrants), made to all holders of shares of Common
Stock as of the date of such redemption or repurchase; and

(ii)         in the case of such rights or warrants
which shall have expired or been terminated without exercise, the Conversion
Price shall be readjusted as if such rights and warrants had never been issued.

For purposes of this
Section 9.03(d) and Section 9.03(a), 9.03(b) and 9.03(c), any dividend or
distribution to which this Section 9.03(d) is applicable that also includes (i)
shares of Common Stock, (ii) a subdivision or combination of shares of Common
Stock to which Section 9.03(b) applies or (iii) rights or warrants to subscribe
for or purchase shares of Common Stock to which Section 9.03(c) applies (or any
combination thereof), shall be deemed instead to be:

(i)          a dividend or distribution of the
evidences of indebtedness, assets, shares of capital stock, rights or warrants,
other than such shares of Common Stock, such subdivision or combination or such
rights or warrants to which Section 9.03(a), 9.03(b) and 9.03(c) apply, respectively
(and any Conversion Price reduction required by this Section 9.03(d) with
respect to such dividend or distribution shall then be made), immediately
followed by

(ii)         a dividend or distribution of such
shares of Common Stock, such subdivision or combination or such rights or
warrants (and any further Conversion Price reduction required by Section
9.03(a), 9.03(b) and 9.03(d) 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 (1) “the date fixed for the determination
of stockholders entitled to receive such dividend or other distribution,” “Record
Date fixed for such determinations” and “Record Date” within the meaning of
Section 9.03(a) and 9.03(b), (2) “the day upon which such subdivision becomes
effective” and

 57
 

 

“the day upon which such combination becomes effective”
within the meaning of Section 9.03(b), and (3) as “the date fixed for the
determination of stockholders entitled to receive such rights or warrants,” “the
Record Date fixed for the determination of the stockholders entitled to receive
such rights or warrants” and such “Record Date” within the meaning of Section
9.03(c); 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 9.03(a) and any reduction or increase in the number of shares of Common
Stock resulting from such subdivision or combination shall be disregarded in
connection with such dividend or distribution.

In the event of any
distribution referred to in this Section 9.03(d) in which (i) the value of such
distributions per share of Common Stock equals or exceeds the average of the
Sale Prices of the Common Stock over the ten consecutive Trading Day period
ending on the Record Date for such distribution, or (ii) such average of the
Sale Prices of the Common Stock exceeds the Fair Market Value applicable to one
share of Common Stock (as determined by the Board of Directors) by less than
$1.00, then, in each such case, in lieu of an adjustment to the Conversion
Price, adequate provision shall be made so that each Holder shall have the
right to receive upon conversion of a Security, in addition to shares of Common
Stock, the kind and amount of such distribution such Holder would have received
had such Holder converted such Security immediately prior to the Record Date
for determining the shareholders entitled to receive the distribution.

No adjustment to the
Conversion Price or the ability of a Holder of a Security to convert will be
made if the Holder will otherwise participate in such distribution without
conversion.

(e)        In case the Company shall, by dividend
or otherwise, distribute to all or substantially all holders of its Common
Stock cash (excluding any dividend or distribution in connection with the
liquidation, dissolution or winding up of the Company, whether voluntary or
involuntary), then, in such case, the Conversion Price shall be reduced so that
the same shall equal the rate determined by dividing the Conversion Price in
effect on the applicable record date by a fraction,

(i)    the numerator of which shall be the Current
Market Price on such record date; and

(ii)   the denominator of which shall be the Current
Market Price minus the amount distributed per ordinary share of Common Stock.

 58

 

 

Such adjustment shall
become effective immediately after the opening of business on the day following
the Record Date fixed for the determination of the stockholders entitled to
receive such cash dividend or other distribution consisting exclusively of cash.  If any dividend or distribution of the type
described in this Section 9.03(e) is declared but not so paid or made, the
Conversion Price shall again be adjusted to the Conversion Price which would
then be in effect if such dividend or distribution had not been declared.

(f)         In case a tender or exchange offer made
by the Company or any Subsidiary for all or any portion of the Common Stock
shall expire and such tender or exchange offer (as amended upon the expiration
thereof) shall require the payment to stockholders of consideration per share
of Common Stock having a Fair Market Value (as determined by the Board of
Directors, whose determination shall be conclusive and described in a
resolution of the Board of Directors) that as of the last time (the “Expiration Time”) tenders or exchanges may
be made pursuant to such tender or exchange offer (as it may be amended)
exceeds the Closing Sale Price of a share of Common Stock on the Trading Day
next succeeding the Expiration Time, the Conversion Price shall be reduced so
that the same shall equal the price determined by multiplying the Conversion
Price in effect immediately prior to the Expiration Time by a fraction,

(i)       the numerator of which shall be the
number of shares of Common Stock outstanding (including any tendered or
exchanged shares) at the Expiration Time multiplied by the Sale Price of a
share of Common Stock on the Trading Day next succeeding the Expiration Time
such adjustment to become effective immediately prior to the opening of
business on the day following the Expiration Time; and

(ii)      the denominator of which shall be the sum
of (x) the Fair Market Value (determined as aforesaid) of the aggregate
consideration payable to stockholders based on the acceptance (up to any
maximum specified in the terms of the tender or exchange offer) of all shares
validly tendered or exchanged and not withdrawn as of the Expiration Time (the
shares deemed so accepted up to any such maximum, being referred to as the “Purchased Shares”) and (y) the product of
the number of shares of Common Stock outstanding (less any Purchased Shares) at
the Expiration Time and the Sale Price of a share of Common Stock on the
Trading Day next succeeding the Expiration Time.

If the Company is obligated to purchase shares
pursuant to any such tender or exchange 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 or exchange offer
had not been made.

 59
 

 

 

(g)        For purposes of this Article 9, the
following terms shall have the meanings indicated:

“Current Market Price” on any date means the
average of the daily Sale Prices per share of Common Stock for the ten
consecutive Trading Days immediately prior to such date; provided, however, that if:

(i)    the “ex” date (as hereinafter defined) for
any event (other than the issuance or distribution requiring such computation)
that requires an adjustment to the Conversion Price pursuant to Section
9.03(a), (b), (c), (d), (e) or (f) occurs during such ten consecutive Trading
Days, the Sale Price for each Trading Day prior to the “ex” date for such other
event shall be adjusted by dividing such Sale Price by the same fraction by
which the Conversion Price is so required to be adjusted as a result of such
other event;

(ii)   the “ex” date for any event (other than the
issuance or distribution requiring such computation) that requires an
adjustment to the Conversion Price pursuant to Section 9.03(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 Sale Price for
each Trading Day on and after the “ex” date for such other event shall be
adjusted by dividing such Sale 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

(iii)  the “ex” date for the issuance or distribution
requiring such computation is prior to the day in question, after taking into
account any adjustment required pursuant to clause (1) or (2) of this proviso,
the Sale 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 9.03(d), (e) or (f)) 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 9.03(f),
if the “ex” date for any event (other than the tender offer requiring such
computation) that requires an adjustment to the Conversion Price pursuant to
Section 9.03(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 Sale Price for each Trading Day on and after the “ex”
date for such other event shall be adjusted by dividing such Sale 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, when used:

 60
 

 

 

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

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

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

Notwithstanding the foregoing, whenever successive
adjustments to the Conversion Price are called for pursuant to this Section
9.03, such adjustments shall be made to the Current Market Price as may be
necessary or appropriate to effectuate the intent of this Section 9.03 and to
avoid unjust or inequitable results as determined in good faith by the Board of
Directors.

“Fair Market Value” shall mean the amount
that a willing buyer would pay a willing seller in an arm’s-length transaction
(as determined by the Board of Directors, whose determination shall be
conclusive).

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

(h)        The Company shall be entitled to make
such additional reductions in the Conversion Price, in addition to those
required by Section 9.03(a), (b), (c), (d), (e) or (f), as shall be necessary
in order that any dividend or distribution of Common Stock, any subdivision,
reclassification or combination of shares of Common Stock or any issuance of
rights or warrants referred to above shall not be taxable to the holders of
Common Stock for United States Federal income tax purposes.

(i)         To the extent permitted by applicable
law, the Company may, from time to time, reduce the Conversion Price by any
amount for any period of time, if such period is at least 20 days and the
reduction is irrevocable during the period. 
Whenever the Conversion Price is reduced pursuant to the preceding
sentence, the Company shall mail to the Trustee and each Holder at the address
of such Holder

 61
 

 

as it appears in the
register of the Securities maintained by the Registrar, at least 15 days prior
to the date the reduced Conversion Price takes effect, a notice of the
reduction stating the reduced Conversion Price and the period during which it
will be in effect.

(j)         In any case in which this Section 9.03
shall require that any adjustment be made effective as of or retroactively
immediately following a Record Date, the Company may elect to defer (but only
for five Trading Days following the filing of the statement referred to in
Section 9.05) issuing to the Holder of any Securities converted after such
Record Date the shares of Common Stock issuable upon such conversion over and
above the shares of Common Stock issuable upon such conversion on the basis of
the Conversion Price prior to adjustment; provided,
however, that the Company shall deliver to such Holder a due bill or
other appropriate instrument evidencing such Holder’s right to receive such
additional shares upon the occurrence of the event requiring such adjustment.

(k)        All calculations under this Section 9.03
shall be made to the nearest cent or one hundredth of a share, with one half
cent and 0.005 of a share, respectively, being rounded upward.

(l)         In the event that at any time, as a
result of an adjustment made pursuant to this Section 9.03, the Holder of any
Securities thereafter surrendered for conversion shall become entitled to
receive any shares of stock of the Company other than shares of Common Stock
into which the Securities originally were convertible, the Conversion Price of
such other shares so receivable upon conversion of any such Security shall be
subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to Common Stock
contained in subparagraphs (a) through (k) of this Section 9.03, and the
provision of Sections 9.01, 9.02 and 9.04 through 9.10 with respect to the
Common Stock shall apply on like or similar terms to any such other shares and
the determination of the Board of Directors as to any such adjustment shall be
conclusive.

(m)       No adjustment shall be made pursuant to
this Section 9.03 (i) if the effect thereof would be to reduce the Conversion
Price below $10.37, or (ii) if the Holders of the Securities may participate in
the transaction that would otherwise give rise to an adjustment pursuant to
this Section 9.03, or (iii) if the consent of the holders of the Common Stock
would be required for the issuance of, or the Company’s agreement to issue, the
Common Stock at the adjusted Conversion Price pursuant to the rules of The
Nasdaq Global Market or any exchange or other market on which the Common Stock
is then listed or traded and the Company has not obtained such consent in
compliance with the applicable rules.

Section 9.04. 
Consolidation or Merger of the Company. 
If any of the following events occurs, namely:

 62
 

 

 

(a)        any reclassification or change of the
outstanding Common Stock (other than a change in par value, or from par value
to no par value, or from no par value to par value, or as a result of a
subdivision or combination);

(b)        any merger, consolidation, statutory
share exchange 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

(c)        any sale or conveyance of the properties
and assets of the Company as, or substantially as, an entirety to any other
corporation as a result of which holders of Common Stock shall be entitled to
receive stock, securities or other property or assets (including cash) with
respect to or in exchange for such Common Stock;

the Company or the
successor or purchasing corporation, as the case may be, shall execute with the
Trustee a supplemental indenture (which shall comply with the Trust Indenture
Act as in force at the date of execution of such supplemental indenture, if
such supplemental indenture is then required to so comply) providing that such
Securities shall be convertible into the kind and amount of shares of stock and
other securities or property or assets (including cash) which such Holder would
have been entitled to receive upon such reclassification, change, merger,
consolidation, statutory share exchange, combination, sale or conveyance had
such Securities been converted into Common Stock immediately prior to such
reclassification, change, merger, consolidation, statutory share exchange,
combination, sale or conveyance assuming such holder of Common Stock did not
exercise its rights of election, if any, as to the kind or amount of
securities, cash or other property receivable upon such merger, consolidation,
statutory share exchange, sale or conveyance (provided, that if the kind or
amount of securities, cash or other property receivable upon such merger,
consolidation, statutory share exchange, sale or conveyance is not the same for
each share of Common Stock in respect of which such rights of election shall
not have been exercised (“Non-Electing Share”),
then for the purposes of this Section 9.04, the kind and amount of securities,
cash or other property receivable upon such merger, consolidation, statutory
share exchange, sale or conveyance for each Non-Electing Share shall be deemed
to be the kind and amount so receivable per share by a plurality of the
Non-Electing Shares).  Such supplemental
indenture shall provide for adjustments which shall be as nearly equivalent as
may be practicable to the adjustments provided for in this Article 9.  In the event holders of Common Stock have the
opportunity to elect the form of consideration to be received in such
transaction, then from and after the effective date of such transaction, the
Securities shall be convertible into the consideration that a majority of the
holders of Common Stock who made such an election received in such
transaction.  If, in the case of any such
reclassification, change, merger, consolidation, statutory share exchange,
combination, sale or conveyance, the stock or other securities and assets

 63
 

 

receivable thereupon by a holder of Common Stock
includes shares of stock or other securities and assets of a corporation other
than the successor or purchasing corporation, as the case may be, in such
reclassification, change, merger, consolidation, statutory share exchange,
combination, sale or conveyance, then such supplemental indenture shall also be
executed by such other corporation and shall contain such additional provisions
to protect the interests of the Holders of the Securities as the Board of
Directors shall reasonably consider necessary by reason of the foregoing,
including to the extent practicable the provisions providing for the conversion
rights set forth in this Article 9.

The Company shall cause
notice of the execution of such supplemental indenture to be mailed to each
Holder, at the address of such Holder as it appears on the register of the
Securities maintained by the Registrar, 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 9.04 shall similarly apply to successive reclassifications,
mergers, consolidations, statutory share exchanges, combinations, sales and
conveyances.

If this Section 9.04
applies to any event or occurrence, Section 10.03 shall not apply.

Section 9.05.  Notice of
Adjustment.  Whenever an
adjustment in the Conversion Price or the conversion rate with respect to the
Securities is required:

(a)        the Company shall forthwith place on
file with the Trustee and any Conversion Agent for such securities a
certificate of the Treasurer of the Company, stating the adjusted Conversion
Price determined as provided herein and setting forth in reasonable detail such
facts as shall be necessary to show the reason for and the manner of computing
such adjustment; and

(b)        a notice stating that the Conversion
Price has been adjusted and setting forth the adjusted Conversion Price shall
forthwith be given by the Company or, at the Company’s request, by the Trustee
in the name and at the expense of the Company, to each Holder in the manner
provided in Section 10.02.  Any notice so
given shall be conclusively presumed to have been duly given, whether or not the
Holder receives such notice.

In addition, whenever an adjustment in the Conversion
Price with respect to the Securities is required, the Company will issue a
press release through Dow Jones & Company, Inc. or Bloomberg Business News
containing the relevant information and make this information available on the
Company’s web site or through another public medium as it may use at that time.

Section 9.06.  Adjustment
to Conversion Rate Upon a Non-Stock Change of Control.  If and only to the extent a holder
elects to convert Securities at any

 64
 

 

time subsequent to the date on which a Non-Stock
Change of Control becomes effective (the “Effective
Date”) but before 5:00 p.m., New York City time, on the Business Day
immediately preceding the related Change of Control Purchase Date, the Company
shall increase the number of shares of Common Stock issuable upon conversion of
the Securities by a number of additional shares of Common Stock as set forth
below.  The number of additional shares
of Common Stock shall be determined by reference to the table below, based on
the Effective Date and the price (the “Stock
Price”) paid per share for the Common Stock in the Non-Stock Change
of Control.  If holders of Common Stock
receive only cash in the Non-Stock Change of Control, the Stock Price shall be
the cash amount paid per share. Otherwise, the Stock Price shall be the average
of the Closing Sale Prices of the Common Stock on the five Trading Days prior
to but not including the Effective Date of such Non-Stock Change of Control.

The numbers of additional
shares of Common Stock set forth in the table below shall be adjusted as of any
date on which the conversion rate is adjusted in the same manner in which the
conversion rate is adjusted.  The Stock
Prices set forth in the table below shall be adjusted, as of any date on which
the conversion rate is adjusted, to equal the Stock Price applicable
immediately prior to such adjustment multiplied by a fraction, of which

(a)        the numerator shall be the conversion
rate immediately prior to the adjustment and

(b)        the denominator shall be the conversion
rate as so adjusted.

The following table sets
forth the Stock Price and number of additional shares by which the conversion
rate shall be adjusted: 

	
  Effective
  Date

  	
   

  	
  $

  	
  10.37

  	
   

  	
  $

  	
  14.00

  	
   

  	
  $

  	
  17.50

  	
   

  	
  $

  	
  20.00

  	
   

  	
  $

  	
  22.50

  	
   

  	
  $

  	
  25.00

  	
   

  	
  $

  	
  27.50

  	
   

  	
  $

  	
  30.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  November 15,
  2006

  	
   

  	
  17.8715

  	
   

  	
  9.3848

  	
   

  	
  5.7771

  	
   

  	
  4.3455

  	
   

  	
  3.4039

  	
   

  	
  2.7539

  	
   

  	
  2.2859

  	
   

  	
  1.9362

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  April 20, 2007

  	
   

  	
  17.7273

  	
   

  	
  8.8603

  	
   

  	
  5.2290

  	
   

  	
  3.8428

  	
   

  	
  2.9587

  	
   

  	
  2.3656

  	
   

  	
  1.9492

  	
   

  	
  1.6445

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  April 20, 2008

  	
   

  	
  17.1526

  	
   

  	
  7.0083

  	
   

  	
  3.3974

  	
   

  	
  2.2376

  	
   

  	
  1.5998

  	
   

  	
  1.2271

  	
   

  	
  0.9934

  	
   

  	
  0.8361

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  April 20, 2009

  	
   

  	
  17.3460

  	
   

  	
  2.9519

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  

 

If the Stock Price and
Effective Date are not set forth on the table above and the Stock Price is:

 65
 

 

 

(i)            between two Stock Prices on the
table or the Effective Date is between two days on the table, the number of
additional shares of Common Stock shall be determined by the Company by
straight-line interpolation between the number of additional shares of Common
Stock set forth for the higher and lower Stock Price and the two Effective
Dates, as applicable, based on a 360-day year;

(ii)           in excess of $30.00 per share
(subject to adjustment), no additional shares of Common Stock shall be issued
upon conversion; or

(iii)          less than $10.37 per share (subject to
adjustment), no additional shares of Common Stock shall be issued upon
conversion.

Notwithstanding the
foregoing, in no event will the total number of shares of Common Stock issuable
upon conversion exceed 197.6285 per $1,000 principal amount of the Securities,
subject to adjustments in the same manner as the number of additional shares of
Common Stock as set forth in this Section 9.06(b).

The Company shall provide
written notice to all Holders and to the Trustee at least 20 calendar days
prior to the anticipated Effective Date of a Non-Stock Change of Control.  The Company must also provide written notice
to all Holders and to the Trustee upon the effectiveness of such Non-Stock
Change of Control.

Section 9.07.  Notice in
Certain Events.  In case:

(a)        of a consolidation or merger to which
the Company is a party and for which approval of any stockholders of the
Company is required, or of the sale or conveyance to another Person or entity
or group of Persons or entities acting in concert as a partnership, limited
partnership, syndicate or other group (within the meaning of Rule 13d-3
under the Exchange Act) of all or substantially all of the property and assets
of the Company; or

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

(c)        of any action triggering an adjustment
of the Conversion Price referred to in clauses (x) or (y) below;

then, in each case, the Company shall cause to be
filed with the Trustee and the Conversion Agent, and shall cause to be given,
to the Holders of the Securities in the manner provided in Section 10.02, at
least 15 days prior to the applicable date hereinafter specified, a notice
stating (x) the date on which a record is to be taken for the purpose of any
distribution or grant of rights or warrants triggering an adjustment to the
Conversion Price pursuant to this Article 9, or, if a record is not to be
taken, the date as of which the holders of record of Common Stock entitled

 66
 

 

to such distribution, rights or warrants are to be
determined, or (y) the date on which any reclassification, consolidation,
merger, sale, conveyance, dissolution, liquidation or winding up triggering an
adjustment to the Conversion Price pursuant to this Article 9 is expected to
become effective, and the date as of which it is expected that holders of
Common Stock of record shall be entitled to exchange their Common Stock for
securities or other property deliverable upon such reclassification,
consolidation, merger sale, conveyance, dissolution, liquidation or winding up.

Failure to give such
notice or any defect therein shall not affect the legality or validity of the
proceedings described in clause (a), (b) or (c) of this Section 9.07.

Section 9.08.  Company to
Reserve Stock: Registration; Listing.

(a)        The Company shall, in accordance with
the laws of the State of Delaware, at all times reserve and keep available,
free from preemptive rights, out of its authorized but unissued shares of
Common Stock, for the purpose of effecting the conversion of the Securities,
such number of its duly authorized shares of Common Stock as shall from time to
time be sufficient to effect the conversion of all Securities then outstanding
into such Common Stock at any time (assuming that, at the time of the
computation of such number of shares or securities, all such Securities would
be held by a single Holder); provided,
however, that nothing contained herein shall preclude the Company
from satisfying its obligations in respect of the conversion of the Securities
by delivery of purchased shares of Common Stock which are then held in the
treasury of the Company.  The Company
covenants that all shares of Common Stock which may be issued upon conversion
of Securities will upon issue be fully paid and nonassessable and free from all
liens and charges and, except as provided in Section 9.09, taxes with respect
to the issue thereof.

(b)        If any shares of Common Stock which
would be issuable upon conversion of Securities hereunder require registration
with or approval of any governmental authority before such shares or securities
may be issued upon such conversion, the Company will in good faith and as
expeditiously as possible endeavor to cause such shares or securities to be
duly registered or approved, as the case may be.  The Company further covenants that so long as
the Common Stock shall be listed on The Nasdaq Global Market, the Company will,
if permitted by the rules of such exchange, list and keep listed all Common
Stock issuable upon conversion of the Securities, and the Company will endeavor
to list the shares of Common Stock required to be delivered upon conversion of
the Securities prior to such delivery upon any other national securities exchange
upon which the outstanding Common Stock is listed at the time of such delivery.

Section 9.09.  Taxes on
Conversion.  The issue of
stock certificates on conversion of Securities shall be made without charge to
the converting Holder

 67
 

 

for any documentary, stamp or similar issue or
transfer taxes in respect of the issue thereof, and the Company shall pay any
and all documentary, stamp or similar issue or transfer taxes that may be
payable in respect of the issue or delivery of shares of Common Stock on conversion
of Securities pursuant hereto. The Company shall not, however, be required to
pay any such tax which may be payable in respect of any transfer involved in
the issue or delivery of shares of Common Stock or the portion, if any, of the
Securities which are not so converted in a name other than that in which the
Securities so converted were registered, and no such issue or delivery shall be
made unless and until the Person requesting such issue has paid to the Company
the amount of such tax or has established to the satisfaction of the Company
that such tax has been paid.

Section 9.10.  Conversion
After Record Date.  Except as
provided below, if any Securities are surrendered for conversion on any day
other than an Interest Payment Date, the Holder of such Securities shall not be
entitled to receive any interest that has accrued on such Securities since the
prior Interest Payment Date.  By delivery
to the Holder of the number of shares of Common Stock or other consideration
issuable upon conversion in accordance with this Article 9, any accrued and
unpaid interest on such Securities will be deemed to have been paid in full.

If any Securities are
surrendered for conversion subsequent to the Record Date preceding an Interest
Payment Date but on or prior to such Interest Payment Date, the Holder of such
Securities at the close of business on such Record Date shall receive the
interest payable on such Securities on such Interest Payment Date
notwithstanding the conversion thereof. 
Securities surrendered for conversion during the period from the close
of business on any Record Date preceding any Interest Payment Date to the
opening of business on such Interest Payment Date shall (except in the case of
Securities which have been called for redemption on a Redemption Date between
such Record Date and the third Business Day after such Interest Payment Date)
be accompanied by payment by Holders, for the account of the Company, in New
York Clearing House funds or other funds of an amount equal to the interest
payable on such Interest Payment Date on the Securities being surrendered for
conversion.  Except as provided in this
Section 9.10, no adjustments in respect of payments of interest on Securities
surrendered for conversion or any dividends or distributions or interest on the
Common Stock issued upon conversion shall be made upon the conversion of any
Securities.

Section 9.11.  Company
Determination Final.  Any
determination that the Company or the Board of Directors must make pursuant to
this Article 9 shall be conclusive if made in good faith and in accordance with
the provisions of this Article, absent manifest error, and set forth in a Board
Resolution.

Section 9.12. 
Responsibility of Trustee and Conversion Agent for Conversion
Provisions.  Neither the
Trustee nor the Conversion Agent has the

 68
 

 

duty to make any calculation, any determination when
an adjustment under this Article 9 should be made, how it should be made or
what it should be, or any other determination under this Article 9.  Neither the Trustee nor the Conversion Agent
makes any representation as to the validity or value of any securities or
assets issued upon conversion of Securities. 
The Company shall, in each case where a calculation, adjustment or other
determination is required hereunder, make such calculation, adjustment or
determination and promptly notify the Conversion Agent in writing of such
calculation, adjustment or determination. 
If any payment is required to be made by the Company pursuant to this Article
9, the Company shall provide the Conversion Agent with written instructions
relating to such payment. Neither the Trustee nor the Conversion Agent shall be
responsible for any failure of the Company to comply with this Article 9.  Each Conversion Agent other than the Company
shall have the same protection under this Section 9.12.

The rights, privileges,
protections, immunities and benefits given to the Trustee under the Indenture
including, without limitation, its rights to be indemnified, are extended to,
and shall be enforceable by, the Trustee in each of its capacities hereunder,
and each Paying Agent or Conversion Agent acting hereunder.

Section 9.13. 
Unconditional Right of Holders to Convert.  Notwithstanding any other
provision in this Indenture, the Holder of any Security shall have the right,
which is absolute and unconditional, to convert its Security in accordance with
this Article 9 and to bring an action for the enforcement of any such right to
convert, and such rights shall not be impaired or affected without the consent
of such Holder.

ARTICLE 10

Miscellaneous

Section 10.01.  Trust
Indenture Act Controls.  If
any provision of this Indenture limits, qualifies, or conflicts with another
provision which is required to be included in this Indenture by the TIA, the
required provision shall control.

Section 10.02. 
Notices.  Any request,
demand, authorization, notice, waiver, consent or communication shall be in
writing and delivered in person or mailed by first class mail, postage prepaid,
addressed as follows or transmitted by facsimile transmission (followed by a
hard copy delivered by overnight courier) to the following facsimile numbers:

if to the Company:

deCODE
genetics Inc.

Sturlungata 8

Reykjavik, Iceland

Attention:            Corporate
Counsel

Facsimile No.:     +354-570-1806

 69
 

 

 

With a copy to:

Stevens
& Lee, P.C.

600 College Road East

Suite 4400

Attention:            Marsha
E. Novick

Facsimile No.:     (610) 371-7929

if to the Trustee:

The
Bank of New York

101 Barclay Street, Floor 4 East

New York, New York 10286

Facsimile No. (212) 815-5008/5603

Attention:  Corporate Trust
Administration

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

Any notice or communication
given to a Securityholder shall be mailed to the Securityholder, by first class
mail, postage prepaid, at the Securityholder’s address as it appears on the
registration books of the Registrar and shall be sufficiently given if so
mailed within the time prescribed.

Failure to mail a notice
or communication to a Securityholder or any defect in it shall not affect its
sufficiency with respect to other Securityholders.  If a notice or communication is mailed in the
manner provided above, it is duly given, whether or not received by the
addressee; provided that all notices to the Trustee shall be deemed effective
upon actual receipt thereof.

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

Section 10.03. 
Communication by Holders with Other Holders.  Securityholders may communicate
pursuant to TIA Section 312(b) with other Securityholders with respect to their
rights under this Indenture or the Securities. 
The Company, the Trustee, the Registrar, the Paying Agent, the
Conversion Agent and anyone else shall have the protection of TIA Section
312(c).

 70
 

 

 

Section 10.04.  Certificate
and Opinion as to Conditions Precedent.  Upon
any request or application by the Company to the Trustee to take any action
under this Indenture, the Company shall furnish to the Trustee:

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

(b)        an Opinion of Counsel stating that, in
the opinion of such counsel, all such conditions precedent have been complied
with.

Section 10.05.  Statements
Required in Certificate or Opinion.  Each
Officers’ Certificate or Opinion of Counsel with respect to compliance with a
covenant or condition provided for in this Indenture shall include:

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

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

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

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

Section 10.06.  Separability
Clause.  In case any provision
in this Indenture or in the Securities shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.

Section 10.07.  Rules by
Trustee, Paying Agent, Conversion Agent and Registrar.  The Trustee may make reasonable
rules for action by or a meeting of Securityholders. The Registrar, the
Conversion Agent and the Paying Agent may make reasonable rules for their
functions.

Section 10.08.  Legal
Holidays.  A “Legal Holiday” is any day other than a
Business Day. If any specified date (including a date for giving notice) is a
Legal Holiday, the action shall be taken on the next succeeding day that is not
a Legal Holiday, and, if the action to be taken on such date is a payment in
respect of the Securities, no interest, if any, shall accrue for the
intervening period.

 71
 

 

 

Section 10.09.  Governing
Law.  THIS INDENTURE SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.

Section 10.10.  Waiver of
Jury Trial.  EACH OF THE
COMPANY AND THE TRUSTEE HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE, THE SECURITIES OR THE
TRANSACTIONS CONTEMPLATED HEREBY.

Section 10.11.  No Recourse
Against Others.  A director,
officer, employee or stockholder, as such, of the Company shall not have any
liability for any obligations of the Company under the Securities or this
Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation.  By accepting
a Security, each Securityholder shall waive and release all such
liability.  The waiver and release shall
be part of the consideration for the issue of the Securities.

Section 10.12. 
Successors.  All
agreements of the Company in this Indenture and the Securities shall bind its
successor.  All agreements of the Trustee
in this Indenture shall bind its successor.

Section 10.13.  Multiple
Originals.  The parties may
sign any number of copies of this Indenture. Each signed copy shall be an
original, but all of them together represent the same agreement.  One signed copy is enough to prove this
Indenture.

Section 10.14.  Effect of
Headings and Table of Contents.  The
Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.

 72
 

 

 

IN WITNESS WHEREOF, the
undersigned, being duly authorized, have executed this Indenture on behalf of
the respective parties hereto as of the date first above written.

	
  

  	
  deCODE genetics, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Kari Stefansson

  
	
   

  	
   

  	
  Name:

  	
  Kari Stefansson

  
	
   

  	
   

  	
  Title:

  	
  President and Chief

  Executive Officer

  

 

	
  

  	
  THE BANK OF NEW
  YORK

  As Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Lici Zhu

  
	
   

  	
   

  	
  Name:

  	
  Lici Zhu

  
	
   

  	
   

  	
  Title:

  	
  Assistant Treasurer

  

 

 73

 

EXHIBIT
A

[FORM OF FACE OF
GLOBAL SECURITY]

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

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

THE NOTES EVIDENCED
HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”). NEITHER
THIS NOTE NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF
SUCH REGISTRATION OR UNLESS THE TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.

EACH PURCHASER OF THE
SECURITY EVIDENCED HEREBY IS NOTIFIED THAT THE SELLER MAY BE RELYING ON THE
EXEMPTION FROM SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A
THEREUNDER. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF:

(1)           REPRESENTS THAT (A) IT IS A “QUALIFIED
INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B)
IT IS NOT A U.S. PERSON AND IS ACQUIRING 

 A-1
 

 

ITS NOTE IN AN “OFFSHORE TRANSACTION” PURSUANT TO RULE
904 OF REGULATION S UNDER THE SECURITIES ACT,

(2)           AGREES THAT IT WILL NOT PRIOR TO (X)
THE DATE WHICH IS TWO YEARS (OR SUCH SHORTER PERIOD OF TIME AS PERMITTED BY
RULE 144(K) UNDER THE SECURITIES ACT OR ANY SUCCESSOR PROVISION THEREUNDER)
AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF (OR OF ANY PREDECESSOR OF
THIS NOTE) OR THE LAST DAY ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY
WAS THE OWNER OF THIS NOTE (OR ANY PREDECESSOR OF THIS NOTE) AND (Y) SUCH LATER
DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE LAW (THE “RESALE RESTRICTION
TERMINATION DATE”), OFFER, SELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO
THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE NOTES ARE ELIGIBLE
FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED
INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT
PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL
BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR
OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE
SECURITIES ACT OR (E) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, AND

(3)           AGREES THAT IT WILL GIVE TO EACH
PERSON TO WHOM THIS NOTE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF
THIS LEGEND; PROVIDED THAT THE COMPANY, THE TRUSTEE AND THE REGISTRAR SHALL
HAVE THE RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (D)
OR (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/ OR
OTHER INFORMATION SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE REMOVED
UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.
AS USED HEREIN, THE TERMS “OFFSHORE TRANSACTION”, “UNITED STATES” AND “U.S.
PERSON” HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES
ACT.

The foregoing legend may
be removed from this Security on satisfaction of the conditions specified in
the Indenture.

 A-2
 

 

THIS SECURITY HAS BEEN
ISSUED WITH ORIGINAL ISSUE DISCOUNT FOR PURPOSES OF SECTIONS 1272, 1273 AND
1275 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED; FOR EACH $1,000
PRINCIPAL AMOUNT OF THIS SECURITY, THE ISSUE PRICE IS $700.00, THE AMOUNT OF
ORIGINAL ISSUE DISCOUNT IS $300.00, THE ISSUE DATE IS NOVEMBER 17, 2006 AND THE
YIELD TO MATURITY IS 12.6% PER ANNUM.

deCODE genetics,
Inc.

3.50% Senior
Convertible Notes due April 15, 2011

	
  No.:

  	
  CUSIP: 243586 AC8

  
	
  Issue Date:
  November 17, 2006

  	
  ISIN: US243586AC87

  
	
   

  	
  Principal Amount: $

  

 

deCODE genetics, Inc., a
Delaware corporation, promises to pay to Cede & Co. or registered assigns,
the principal amount of              
dollars ($           )
on April 15, 2011.

Interest Payment Dates:  April 15 and October 15, commencing April 15,
2007.

Record Dates:  April 1 and October 1.

Reference is hereby made
to the further provisions of this Security set forth on the reverse side of
this Security, which further provisions shall for all purposes have the same
effect as if set forth at this place.

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

Dated:                 ,
200 

	
   

  	
  deCODE genetics, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Title:

  

 

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

THE BANK OF NEW YORK,

as Trustee, certifies that this is one

of the Securities referred to in the

within mentioned Indenture.

	
  By:

  	
   

  	
   

  
	
   

  	
      Authorized
  Signatory

  

 

Dated:        , 200 

 A-3
 

 

[FORM OF REVERSE
OF GLOBAL SECURITY]

3.50% Senior
Convertible Notes due April 15, 2011

This Security is one of a
duly authorized issue of the 3.50% Senior Convertible Notes due April 15, 2011
(the “Securities”) of deCODE
genetics, Inc., a Delaware corporation (including any successor corporation
under the Indenture hereinafter referred to, the “Company”), issued under an Indenture, dated as of November 17,
2006 (the “Indenture”), between
the Company and The Bank of New York, as trustee (the “Trustee”). 
The terms of the Security include those stated in the Indenture, those
made part of the Indenture by reference to the Trust Indenture Act of 1939, as
amended (“TIA”), and those set
forth in this Security.  This Security is
subject to all such terms, and Holders are referred to the Indenture and the
TIA for a statement of all such terms. 
To the extent permitted by applicable law, in the event of any
inconsistency between the terms of this Security and the terms of the Indenture,
the terms of the Indenture shall control. 
Capitalized terms used but not defined herein have the meanings assigned
to them in the Indenture referred to above unless otherwise indicated.

1.             Interest.

The Company promises to
pay interest on the principal amount of the Securities at the interest rate of
3.50% (the “Interest Rate”) from
the date of issuance until repayment in full at April 15, 2011, or until an
earlier conversion, redemption or repurchase. 
The Company will pay interest on this Security semi annually in arrears
on April 15 and October 15 of each year (each, an “interest payment date”), commencing April 15, 2007.

The Securities shall bear
interest from October 15, 2006 until the principal amount thereof is paid or
made available for payment, or until such date on which the Securities are
converted, redeemed or purchased as provided herein at a rate of 3.50% per
annum.

Interest on the
Securities shall be computed (i) for any full semi-annual period for which a
particular Interest Rate is applicable, on the basis of a 360-day year of
twelve 30 day months and (ii) for any period for which a particular Interest
Rate is applicable for less than a full semiannual period for which interest is
calculated, on the basis of a 30-day month and, for such periods of less than a
month, the actual number of days elapsed over a 30-day month.

If this Security is
redeemed or repurchased by the Company on a date that is after the record date
and prior to the corresponding interest payment date, interest and Additional
Amounts, if any, accrued and unpaid hereon to but not including the applicable
Redemption Date or Change of Control Purchase Date, as the case may be, will be
paid to the same Holder to whom the Company pays the principal of this
Security.

 A-4
 

 

Interest on Securities
converted after a record date but prior to the corresponding interest payment
date will be paid to the Holder of the Securities on the record date but, upon
conversion, the Holder must pay the Company the interest and Additional
Amounts, if any, which have accrued and will be paid on such interest payment
date; provided, that no such
payment need be made with respect to Securities which will be redeemed by the
Company after a record date and prior to the third Business Day after the
corresponding interest payment date.

If the principal amount
hereof or any portion of such principal amount or any interest, including
Additional Amounts, if any, on any Security is not paid when due (whether upon
acceleration pursuant to Section 6.02 of the Indenture, upon the date set for
payment of the Redemption Price pursuant to Section 5 hereof or the Change of
Control Purchase Price pursuant to Section 6 hereof or upon the Stated Maturity
of this Security), then in each such case the overdue amount shall, to the
extent permitted by law, bear interest at the Interest Rate, compounded semi
annually, which interest shall accrue from the date on which such overdue
amount was originally due until the date on which payment of such amount,
including interest thereon, has been made or duly provided for.  All such interest shall be payable on demand.

2.             Method of Payment.

Except as provided below,
interest will be paid (i) on the Global Securities to The Depository Trust
Company (“DTC”) or its nominee in
immediately available funds, (ii) on any definitive Securities having an
aggregate principal amount of $5,000,000 or less, by check mailed to the
Holders of such Securities, and (iii) on any definitive Securities having an
aggregate principal amount of more than $5,000,000, by wire transfer in
immediately available funds at the election of the Holders of such Securities.

At Stated Maturity, the
Company will pay interest on definitive Securities at the Company’s office or
agency in New York City, which initially will be the Corporate Trust Office of
the Trustee in New York City.

Principal on Global
Securities will be paid to DTC or its nominee in immediately available
funds.  Principal on definitive
Securities will be payable, upon Stated Maturity or when due, at the office or
agency of the Company in New York City, maintained for such purpose, initially
the Corporate Trust Office of the Trustee in New York City.

Subject to the terms and
conditions of the Indenture, the Company will make payments in cash in respect
of Redemption Prices, Change of Control Purchase Prices and at Stated Maturity
to Holders who surrender Securities to a Paying Agent to collect such payments
in respect of the Securities. The Company will pay cash amounts in money of the
United States that at the time of payment is 

 A-5
 

 

legal tender for payment of public and private debts.
However, the Company may make such cash payments by check payable in such
money.

3.             Paying Agent, Conversion Agent and Registrar.

Initially, The Bank of
New York will act as Paying Agent, Conversion Agent and Registrar. The Company
may appoint and change any Paying Agent, Conversion Agent or Registrar without
notice, other than notice to the Trustee; provided that the Company will
maintain at least one Paying Agent in the State of New York, City of New York,
Borough of Manhattan, which shall initially be an office or agency of the
Trustee. The Company or any of its Subsidiaries or any of their Affiliates may
act as Paying Agent, Conversion Agent or Registrar.

4.             Indenture.

The Securities are senior
unsecured obligations of the Company limited to $80,000,000 aggregate principal
amount (of which $65,000,000 represents the original issue and $15,000,000 is
issued pursuant to the exercise by the Initial Purchasers of their option to
purchase up to $15,000,000 aggregate principal amount of additional
Securities).  The Indenture does not
limit other indebtedness of the Company, secured or unsecured.

5.             Redemption at the Option of the Company.

No sinking fund is
provided for the Securities. The Securities are not redeemable by the Company
prior to April 20, 2009.  The Securities
are redeemable for cash at the option of the Company, in whole or in part, at
any time or from time to time, on or after April 20, 2009 upon not less than 20
nor more than 60 days’ notice (the “Redemption
Notice”) by mail for a redemption price equal to the principal
amount of those Securities plus accrued and unpaid interest, including
Additional Amounts, if any, up to the Redemption Date.

6.             Purchase by the Company at the Option of the Holder.

At the option of the
Holder and subject to the terms and conditions of the Indenture, the Company
shall become obligated to offer to purchase the Securities held by such Holder
within 30 days after the occurrence of a Change of Control of the Company for a
Change of Control Purchase Price equal to the principal amount plus accrued and
unpaid interest, including Additional Amounts, if any, of such Security on the
Change of Control Purchase Date.  The
Change of Control Purchase Date shall be between 30 and 60 days of the Company’s
delivery of the notice described in the preceding sentence. The Change of
Control Purchase Price shall be paid in cash.

Holders have the right to
withdraw any Change of Control Purchase Notice, as the case may be, by
delivering to the Paying Agent a written notice of withdrawal in accordance
with the provisions of the Indenture.

 A-6
 

 

If cash sufficient to pay
the Change of Control Purchase Price of all Securities, or portions thereof to
be purchased as of the Change of Control Purchase Date, is deposited with the
Paying Agent on the Business Day following the Change of Control Purchase Date,
interest will cease to accrue on such Securities (or portions thereof)
immediately after such Change of Control Purchase Date, and the Holder thereof
shall have no other rights as such other than the right to receive the Change
of Control Purchase Price upon surrender of such Security.

7.             Notice of Redemption.

Notice of redemption
pursuant to Section 5 of this Security will be mailed at least 20 days but not
more than 60 days before the Redemption Date to each Holder of Securities to be
redeemed at the Holder’s registered address. If money sufficient to pay the
Redemption Price of all Securities (or portions thereof) to be redeemed on the
Redemption Date is deposited with the Paying Agent prior to or on the
Redemption Date, immediately after such Redemption Date interest ceases to
accrue on such Securities or portions thereof. Securities in denominations
larger than $1,000 of principal amount may be redeemed in part but only in
integral multiples of $1,000 of principal amount.

8.             Conversion.

Subject to and in
compliance with the provisions of the Indenture, a Holder is entitled, at such
Holder’s option, to convert the Holder’s Security (or any portion of the
principal amount thereof that is $1,000 or an integral multiple of $1,000),
into fully paid and nonassessable shares of Common Stock at the Conversion
Price in effect at the time of conversion.

A Security in respect of
which a Holder has delivered a Change of Control Purchase Notice, exercising
the option of such Holder to require the Company to purchase such Security, may
be converted only if such Change of Control Purchase Notice is withdrawn in
accordance with the terms of the Indenture.

The initial Conversion
Price is $14.00, subject to adjustment in certain events described in the
Indenture. No fractional shares of Common Stock shall be issued upon conversion
of any Security. A Holder that surrenders Securities for conversion will
receive cash or a check in lieu of any fractional share of Common Stock.

To surrender a Security
for conversion, a Holder must (i) complete and manually sign the conversion
notice below (or complete and manually sign a facsimile of such notice) and
deliver such notice to the Conversion Agent, (ii) surrender the Security to the
Conversion Agent, (iii) furnish appropriate endorsements and transfer documents
and (iv) pay any transfer or similar tax, if required by the Indenture.

 A-7
 

 

If and only to the
extent holders elect to convert the Securities in connection with certain types
of Change of Control pursuant to which 10% or more of the consideration for the
Common Stock (other than cash payments for fractional shares and cash payments
made in respect of dissenters’ appraisal rights) consists of cash or securities
(or other property) that are not common equity interests traded or scheduled to
be traded immediately following such transaction on a U.S. national securities
exchange or The Nasdaq Global Market, such a transaction being referred to as a
“Non-Stock Change of Control,” the Company will increase the number of shares
of Common Stock issuable upon conversion.

If the Company (i) is a
party to a consolidation, merger or binding share exchange, (ii) reclassifies
the Common Stock or (iii) conveys, transfers or leases its properties and
assets substantially as an entirety to any Person, the right to convert a
Security into shares of Common Stock may be changed into a right to convert it
into securities, cash or other assets of the Company or such other Person, in
each case in accordance with the Indenture.

9.             Denominations; Transfer; Exchange.

The Securities are in
fully registered form, without coupons, in denominations of $1,000 of principal
amount and integral multiples of $1,000. 
A Holder may transfer or exchange Securities in accordance with the
Indenture.  The Registrar may require a
Holder, among other things, to furnish appropriate endorsements and transfer
documents and to pay any taxes and fees required by law or permitted by the
Indenture.  The Registrar need not
transfer or exchange any Securities selected for redemption (except, in the
case of a Security to be redeemed in part, the portion of the Security not to
be redeemed) or any Securities in respect of which a Change of Control Purchase
Notice has been given and not withdrawn (except, in the case of a Security to
be purchased in part, the portion of the Security not to be purchased) or any
Securities for a period of 15 days before the mailing of a notice of redemption
of Securities to be redeemed.

10.           Persons Deemed Owners.

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

11.           Unclaimed Money or Securities.

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

 A-8
 

 

12.           Amendment; Waiver.

Subject to certain
exceptions set forth in the Indenture, (i) the Indenture or the Securities may
be amended with the written consent of the Holders of at least a majority in
aggregate principal amount of the outstanding Securities and (ii) certain
Defaults may be waived with the written consent of the Holders of a majority in
aggregate principal amount of the outstanding Securities.  The Indenture and the Securities may also be
amended by the Company and the Trustee, without the consent of any Holder, in
certain circumstances set forth in the Indenture; provided, that certain provisions
of the Indenture and the Securities may not be amended without the consent of
each affected  Holder.

13.           Defaults and Remedies.

If any Event of Default
with respect to Securities shall occur and be continuing, the principal of all
the Securities may be declared due and payable in the manner and with the
effect provided in the Indenture.

14.           Trustee Dealings with the Company.

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

15.           No Recourse Against Others.

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

16.           Treatment of Securities.

Each holder, by
acceptance of a Security, and beneficial owner, by acceptance of a beneficial
ownership interest in a Security, agrees to treat the Securities as
indebtedness of the Company for U.S. federal income tax purposes and to not
take any action inconsistent with such treatment.

17.           Authentication.

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

 A-9
 

 

18.           Abbreviations.

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

19.           GOVERNING LAW.

THIS SECURITY AND THE
INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK.

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

deCODE
genetics, Inc.

Sturlungata 8

Reykjavik, Iceland

Attn:       Corporate Counsel

Facsimile No.:  +354-570-1806

20.           Registration Rights.

The Holders of the
Securities are entitled to the benefits of the Registration Rights Agreement,
dated as of November 17, 2006, between the Company, and Lehman Brothers Inc.,
as representative of the Initial Purchasers including the receipt of Additional
Amounts upon a registration default (as defined in such agreement).

 A-10
 

 

 

	
   ASSIGNMENT FORM

  	
   

  	
  CONVERSION NOTICE

  
	
  To assign this
  Security, fill in the form below:

  	
   

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

  
	
   

  	
   

  	
   

  
	
  I or we assign and
  transfer this Security to 

                                                    

                                                    

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

                                                    

                                                    

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

   

  and irrevocably appoint
  

   

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

  	
   

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

   

   

  $                                                  

   

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

                                                    

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

   

                                                    

                                                    

                                                    

                                                    

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

  

 

	
  Date:

  	
   

  	
  Your Signature:

  	
   

  	
   

  
	
   

  
	
   

  	
   

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

  

 

Signature Guaranteed

	
   

  	
   

  
	
  Participant in a Recognized
  Signature

  
	
  Guarantee
  Medallion Program

  

 

	
  By:

  	
   

  	
   

  
	
   

  	
    Authorized
  Signatory

  

 A-11
 

 

SCHEDULE OF
INCREASES AND DECREASES OF GLOBAL SECURITY

Initial Principal
Amount of Global Security:                   
($               ).

	
  Date

  	
   

  	
  Amount of 

  Increase in 

  Principal 

  Amount of 

  Global 

  Security

  	
   

  	
  Amount of 

  Decrease in 

  Principal 

  Amount of 

  Global 

  Security

  	
   

  	
  Principal 

  Amount of 

  Global 

  Security After 

  Increase or 

  Decrease

  	
   

  	
  Notation by 

  Registrar or 

  Security 

  Custodian

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 A-12

 

EXHIBIT
B

[FORM OF FACE OF
CERTIFICATED SECURITY]

THE NOTES EVIDENCED
HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”). NEITHER
THIS NOTE NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF
SUCH REGISTRATION OR UNLESS THE TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.

EACH PURCHASER OF THE
SECURITY EVIDENCED HEREBY IS NOTIFIED THAT THE SELLER MAY BE RELYING ON THE
EXEMPTION FROM SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A
THEREUNDER. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF:

(1)           REPRESENTS THAT (A) IT IS A “QUALIFIED
INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B)
IT IS NOT A U.S. PERSON AND IS ACQUIRING ITS NOTE IN AN “OFFSHORE TRANSACTION”
PURSUANT TO RULE 904 OF REGULATION S UNDER THE SECURITIES ACT,

(2)           AGREES THAT IT WILL NOT PRIOR TO (X)
THE DATE WHICH IS TWO YEARS (OR SUCH SHORTER PERIOD OF TIME AS PERMITTED BY
RULE 144(K) UNDER THE SECURITIES ACT OR ANY SUCCESSOR PROVISION THEREUNDER)
AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF (OR OF ANY PREDECESSOR OF
THIS NOTE) OR THE LAST DAY ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY
WAS THE OWNER OF THIS NOTE (OR ANY PREDECESSOR OF THIS NOTE) AND (Y) SUCH LATER
DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE LAW (THE “RESALE RESTRICTION
TERMINATION DATE”), OFFER, SELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO
THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE NOTES ARE ELIGIBLE
FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED
INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT
PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL
BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A,

 B-1
 

 

(D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS
THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER
THE SECURITIES ACT OR (E) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, AND

(3)           AGREES THAT IT WILL GIVE TO EACH
PERSON TO WHOM THIS NOTE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF
THIS LEGEND; PROVIDED THAT THE COMPANY, THE TRUSTEE AND THE REGISTRAR SHALL
HAVE THE RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (D)
OR (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/ OR
OTHER INFORMATION SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE REMOVED
UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.
AS USED HEREIN, THE TERMS “OFFSHORE TRANSACTION”, “UNITED STATES” AND “U.S.
PERSON” HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES
ACT.

The foregoing legend may
be removed from this Security on satisfaction of the conditions specified in
the Indenture.

 B-2
 

 

THIS SECURITY HAS BEEN
ISSUED WITH ORIGINAL ISSUE DISCOUNT FOR PURPOSES OF SECTIONS 1272, 1273 AND
1275 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED; FOR EACH $1,000
PRINCIPAL AMOUNT OF THIS SECURITY, THE ISSUE PRICE IS $700.00, THE AMOUNT OF
ORIGINAL ISSUE DISCOUNT IS $300.00, THE ISSUE DATE IS NOVEMBER 17, 2006 AND THE
YIELD TO MATURITY IS 12.6% PER ANNUM.

deCODE genetics,
Inc.

3.50% Senior
Convertible Notes due April 15, 2011

	
  No.: 

  	
  CUSIP: [       ]

  	
   

  
	
  Issue Date: [•]

  	
  ISIN:  [  ]

  	
   

  
	
   

  	
  Principal Amount: $

  	
   

  

 

deCODE genetics, Inc., a
Delaware corporation, promises to pay to                                       .
or registered assigns, the principal amount of [                  
dollars ($                  
)] on [•].

Interest Payment
Dates:  April 15 and October 15,
commencing April 15, 2007.

Record Dates:  April 1 and October 1.

Reference is hereby made
to the further provisions of this Security set forth on the reverse side of
this Security, which further provisions shall for all purposes have the same
effect as if set forth at this place.

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

Dated:               ,
200  

	
  

  	
  deCODE genetics, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Title:

  

 

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

THE BANK OF NEW YORK,

as Trustee, certifies that this is one

of the Securities referred to in the

within mentioned Indenture.

	
  By:

  	
   

  	
   

  
	
   

  	
  Authorized Signatory

  

 

 B-3
 

 

[FORM OF REVERSE
OF CERTIFICATED SECURITY IS IDENTICAL TO EXHIBIT A]

 B-4

 

EXHIBIT
C

3.50% Senior
Convertible Notes due April 15, 2011

Transfer
Certificate

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

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

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

o            The transfer of the Surrendered
Securities complies with Rule 501(a)(1), (2), (3) or (7) of Regulation D under
the Securities Act; or

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

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

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

o            The
transferee is an Affiliate of the Company.

Dated:             ,
200    

	
  

  	
   

  	 

	
  Signature
  Guarantee:

  
	
   

  
	
   

  
	
   

  	
   

  
	
  Signature must be guaranteed by a

  
	
  participant in a recognized signature

  
	
  guaranty medallion program or other

  
	
  signature guarantor acceptable to the

  
	
  Trustee.

  
				

 

 C-1

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