Document:

Indenture, dated as of June 25, 2003

 

EXHIBIT 4.1

WMS INDUSTRIES INC.,

as Issuer

BNY MIDWEST TRUST COMPANY,

as Trustee

INDENTURE

Dated as of June 25, 2003

2.75% CONVERTIBLE SUBORDINATED NOTES DUE 2010

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	 	 	 	 	 	 	

	ARTICLE ONE	DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION	 	 	1	 
	 	 	
SECTION 1.1
	 	Definitions
	 	 	1	 
	 	 	
SECTION 1.2
	 	Compliance Certificates and Opinions
	 	 	11	 
	 	 	
SECTION 1.3
	 	Form of Documents Delivered to the Trustee
	 	 	12	 
	 	 	
SECTION 1.4
	 	Acts of Holders of Securities
	 	 	12	 
	 	 	
SECTION 1.5
	 	Notices, Etc., to Trustee and Company
	 	 	14	 
	 	 	
SECTION 1.6
	 	Notice to Holders of Securities; Waiver
	 	 	15	 
	 	 	
SECTION 1.7
	 	Effect of Headings and Table of Contents
	 	 	15	 
	 	 	
SECTION 1.8
	 	Successors and Assigns
	 	 	15	 
	 	 	
SECTION 1.9
	 	Separability Clause
	 	 	15	 
	 	 	
SECTION 1.10
	 	Benefits of Indenture
	 	 	15	 
	 	 	
SECTION 1.11
	 	Governing Law
	 	 	16	 
	 	 	
SECTION 1.12
	 	Legal Holidays
	 	 	16	 
	 	 	
SECTION 1.13
	 	Conflict with Trust Indenture Act
	 	 	16	 
	 	 	
SECTION 1.14
	 	Counterparts
	 	 	16	 
	ARTICLE TWO	THE SECURITIES	 	 	17	 
	 	 	
SECTION 2.1
	 	Form Generally
	 	 	17	 
	 	 	
SECTION 2.2
	 	Title and Terms
	 	 	17	 
	 	 	
SECTION 2.3
	 	Denominations
	 	 	18	 
	 	 	
SECTION 2.4
	 	Execution, Authentication, Delivery and Dating
	 	 	18	 
	 	 	
SECTION 2.5
	 	Global Securities; Temporary Securities
	 	 	19	 
	 	 	
SECTION 2.6
	 	Registration, Registration of Transfer and Exchange;
Restrictions on Transfer
	 	 	21	 
	 	 	
SECTION 2.7
	 	Mutilated, Destroyed, Lost or Stolen Securities
	 	 	23	 
	 	 	
SECTION 2.8
	 	Payment of Interest; Interest Rights Preserved
	 	 	24	 
	 	 	
SECTION 2.9
	 	Persons Deemed Owners
	 	 	25	 
	 	 	
SECTION 2.10
	 	Cancellation
	 	 	25	 
	 	 	
SECTION 2.11
	 	Computation of Interest
	 	 	25	 
	 	 	
SECTION 2.12
	 	CUSIP Numbers
	 	 	25	 
	ARTICLE THREE	SATISFACTION AND DISCHARGE	 	 	26	 

i

 

TABLE OF CONTENTS
(continued)

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	 	 	 	 	 	 	

	 	 	
SECTION 3.1
	 	Satisfaction and Discharge of Indenture
	 	 	26	 
	 	 	
SECTION 3.2
	 	Application of Trust Money
	 	 	27	 
	ARTICLE FOUR	REMEDIES	 	 	27	 
	 	 	
SECTION 4.1
	 	Events of Default
	 	 	27	 
	 	 	
SECTION 4.2
	 	Acceleration of Maturity; Rescission and Annulment
	 	 	29	 
	 	 	
SECTION 4.3
	 	Collection of Indebtedness and Suits for Enforcement by Trustee
	 	 	30	 
	 	 	
SECTION 4.4
	 	Trustee May File Proofs of Claim
	 	 	31	 
	 	 	
SECTION 4.5
	 	Trustee May Enforce Claims without Possession of Securities
	 	 	31	 
	 	 	
SECTION 4.6
	 	Application of Money Collected
	 	 	32	 
	 	 	
SECTION 4.7
	 	Limitation on Suits
	 	 	32	 
	 	 	
SECTION 4.8
	 	Unconditional Right of Holders to Receive Principal,
Premium and Interest and to Convert
	 	 	33	 
	 	 	
SECTION 4.9
	 	Restoration of Rights and Remedies
	 	 	33	 
	 	 	
SECTION 4.10
	 	Rights and Remedies Cumulative
	 	 	33	 
	 	 	
SECTION 4.11
	 	Delay or Omission Not Waiver
	 	 	33	 
	 	 	
SECTION 4.12
	 	Control by Holders of Securities
	 	 	33	 
	 	 	
SECTION 4.13
	 	Waiver of Past Defaults
	 	 	34	 
	 	 	
SECTION 4.14
	 	Undertaking for Costs
	 	 	34	 
	 	 	
SECTION 4.15
	 	Waiver of Stay, Usury or Extension Laws
	 	 	34	 
	ARTICLE FIVE	THE TRUSTEE	 	 	35	 
	 	 	
SECTION 5.1
	 	Certain Duties and Responsibilities
	 	 	35	 
	 	 	
SECTION 5.2
	 	Notice of Defaults
	 	 	36	 
	 	 	
SECTION 5.3
	 	Certain Rights of Trustee
	 	 	36	 
	 	 	
SECTION 5.4
	 	Not Responsible for Recitals or Issuance of Securities
	 	 	37	 
	 	 	
SECTION 5.5
	 	May Hold Securities, Act as Trustee under Other Indentures
	 	 	37	 
	 	 	
SECTION 5.6
	 	Money Held in Trust
	 	 	38	 
	 	 	
SECTION 5.7
	 	Compensation and Reimbursement
	 	 	38	 
	 	 	
SECTION 5.8
	 	Corporate Trustee Required; Eligibility
	 	 	38	 
	 	 	
SECTION 5.9
	 	Resignation and Removal; Appointment of Successor
	 	 	39	 
	 	 	
SECTION 5.10
	 	Acceptance of Appointment by Successor
	 	 	40	 

ii

 

TABLE OF CONTENTS
(continued)

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	 	 	 	 	 	 	

	 	 	
SECTION 5.11
	 	Merger, Conversion, Consolidation or Succession to Business
	 	 	40	 
	 	 	
SECTION 5.12
	 	Authenticating Agents
	 	 	41	 
	 	 	
SECTION 5.13
	 	Disqualification; Conflicting Interests
	 	 	42	 
	 	 	
SECTION 5.14
	 	Preferential Collection of Claims Against Company
	 	 	42	 
	ARTICLE SIX	CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE	 	 	42	 
	 	 	
SECTION 6.1
	 	Company May Consolidate, Etc., Only on Certain Terms
	 	 	42	 
	 	 	
SECTION 6.2
	 	Successor Substituted
	 	 	43	 
	ARTICLE SEVEN	SUPPLEMENTAL INDENTURES	 	 	43	 
	 	 	
SECTION 7.1
	 	Supplemental Indentures without Consent of Holders of Securities
	 	 	43	 
	 	 	
SECTION 7.2
	 	Supplemental Indentures with Consent of Holders of Securities
	 	 	44	 
	 	 	
SECTION 7.3
	 	Execution of Supplemental Indentures
	 	 	45	 
	 	 	
SECTION 7.4
	 	Effect of Supplemental Indentures
	 	 	45	 
	 	 	
SECTION 7.5
	 	Reference in Securities to Supplemental Indentures
	 	 	46	 
	 	 	
SECTION 7.6
	 	Notice of Supplemental Indentures
	 	 	46	 
	ARTICLE EIGHT	COVENANTS	 	 	46	 
	 	 	
SECTION 8.1
	 	Payment of Principal, Premium and Interest
	 	 	46	 
	 	 	
SECTION 8.2
	 	Maintenance of Offices or Agencies
	 	 	46	 
	 	 	
SECTION 8.3
	 	Money for Security Payments to Be Held in Trust
	 	 	47	 
	 	 	
SECTION 8.4
	 	Existence
	 	 	48	 
	 	 	
SECTION 8.5
	 	Statement by Officers as to Default
	 	 	48	 
	 	 	
SECTION 8.6
	 	Delivery of Certain Information
	 	 	49	 
	ARTICLE NINE	CONVERSION OF SECURITIES	 	 	49	 
	 	 	
SECTION 9.1
	 	Conversion Privilege and Conversion Rate
	 	 	49	 
	 	 	
SECTION 9.2
	 	Exercise of Conversion Privilege
	 	 	50	 
	 	 	
SECTION 9.3
	 	Fractions of Shares
	 	 	51	 
	 	 	
SECTION 9.4
	 	Adjustment of Conversion Rate
	 	 	51	 
	 	 	
SECTION 9.5
	 	Notice of Adjustments of Conversion Ratio
	 	 	56	 
	 	 	
SECTION 9.6
	 	Notice of Certain Corporate Action
	 	 	56	 
	 	 	
SECTION 9.7
	 	Company to Reserve Common Stock
	 	 	57	 

iii

 

TABLE OF CONTENTS
(continued)

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	 	 	 	 	 	 	

	 	 	
SECTION 9.8
	 	Taxes on Conversions
	 	 	58	 
	 	 	
SECTION 9.9
	 	Covenant as to Common Stock
	 	 	58	 
	 	 	
SECTION 9.10
	 	Cancellation of Converted Securities
	 	 	58	 
	 	 	
SECTION 9.11
	 	Provision in Case of Consolidation, Merger or Sale of Assets
	 	 	58	 
	 	 	
SECTION 9.12
	 	Responsibility of Trustee for Conversion Provisions
	 	 	59	 
	ARTICLE TEN	SUBORDINATION OF SECURITIES	 	 	60	 
	 	 	
SECTION 10.1
	 	Securities Subordinate to Senior Debt
	 	 	60	 
	 	 	
SECTION 10.2
	 	No Payments in Certain Circumstances; Payment Over of
Proceeds Upon Dissolution, Etc
	 	 	60	 
	 	 	
SECTION 10.3
	 	Trustee to Effectuate Subordination
	 	 	62	 
	 	 	
SECTION 10.4
	 	No Waiver of Subordination Provisions
	 	 	62	 
	 	 	
SECTION 10.5
	 	Notice to Trustee
	 	 	62	 
	 	 	
SECTION 10.6
	 	Reliance on Judicial Order or Certificate of Liquidating Agent
	 	 	63	 
	 	 	
SECTION 10.7
	 	Trustee Not Fiduciary for Holders of Senior Debt
	 	 	63	 
	 	 	
SECTION 10.8
	 	Reliance by Holders of Senior Debt on Subordination Provisions
	 	 	64	 
	 	 	
SECTION 10.9
	 	Rights of Trustee as Holder of Senior Debt;
Preservation of Trustee’s Rights
	 	 	64	 
	 	 	
SECTION 10.10
	 	Article Applicable to Paying Agents
	 	 	64	 
	 	 	
SECTION 10.11
	 	Certain Conversions and Repurchases Deemed Payment
	 	 	64	 
	ARTICLE ELEVEN	DIVIDEND PROTECTION PAYMENT	 	 	65	 
	 	 	
SECTION 11.1
	 	Additional Interest Amounts
	 	 	65	 
	ARTICLE TWELVE	REPURCHASE OF SECURITIES AT THE OPTION OF THE HOLDER UPON A CHANGE IN CONTROL	 	 	65	 
	 	 	
SECTION 12.1
	 	Right to Require Repurchase
	 	 	65	 
	 	 	
SECTION 12.2
	 	Conditions to the Company’s Election to Pay the
Repurchase Price in Common Stock
	 	 	66	 
	 	 	
SECTION 12.3
	 	Notices; Method of Exercising Repurchase Right, Etc
	 	 	67	 
	ARTICLE THIRTEEN	HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY; NON-RECOURSE	 	 	70	 
	 	 	
SECTION 13.1
	 	Company to Furnish Trustee Names and Addresses of Holders
	 	 	70	 
	 	 	
SECTION 13.2
	 	Preservation of Information
	 	 	70	 

iv

 

TABLE OF CONTENTS
(continued)

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	 	 	 	 	 	 	

	 	 	
SECTION 13.3
	 	No Recourse Against Others
	 	 	70	 
	 	 	
SECTION 13.4
	 	Reports by Trustee
	 	 	71	 
	 	 	
SECTION 13.5
	 	Reports by Company
	 	 	71	 

v

 

               INDENTURE, dated as of June 25, 2003, between WMS Industries Inc., a
corporation duly organized and existing under the laws of the State of
Delaware, having its principal office at 800 South Northpoint Boulevard,
Waukegan, IL 60085 (herein called the “Company”), and BNY Midwest Trust
Company, an Illinois trust company, as Trustee hereunder (herein called the
“Trustee”).

RECITALS OF THE COMPANY 

     The Company has duly authorized the creation of an issue of its 2.75%
Convertible Subordinated Notes due 2010 (herein called the “Securities”), of
substantially the tenor and amount hereinafter set forth, and to provide
therefor the Company has duly authorized the execution and delivery of this
Indenture.

     All things necessary to make the Securities, when the Securities are
executed by the Company and authenticated and delivered hereunder, the valid
and legally binding obligations of the Company and to make this Indenture a
valid and legally binding agreement of the Company, in accordance with their
and its terms, have been done. Further, all things necessary to duly authorize
the issuance of shares of common stock of the Company issuable upon the
conversion of the Securities, and to duly reserve for issuance the number of
shares of Common Stock issuable upon such conversion, have been done.

NOW, THEREFORE, THIS INDENTURE WITNESSETH: 

     For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually covenanted and agreed, for
the equal and proportionate benefit of all Holders of the Securities, as
follows:

ARTICLE ONE 

DEFINITIONS AND OTHER PROVISIONS

OF GENERAL APPLICATION 

SECTION 1.1 Definitions.

     For all purposes of this Indenture, except as otherwise expressly provided
or unless the context otherwise requires:

          (a)     the terms defined in this Article have the meanings assigned to them
in this Article and include the plural as well as the singular;

          (b)     all accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles in
the United States; and

          (c) the words “herein,” “hereof” and “hereunder” and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.

 

 

          “Act,” when used with respect to any Holder of a Security, has the meaning
specified in Section 1.4.

          “Additional Interest Amount” has the meaning specified in Section 11.1.

          “Additional Interest Payment Notice” has the meaning specified in Section
8.7.

          “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 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.

          “aggregate current market price” has the meaning specified in Section
9.4(e).

          “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, to the extent applicable to
such transaction and as in effect from time to time.

          “Authenticating Agent” means any Person authorized pursuant to Section
5.12 to act on behalf of the Trustee to authenticate Securities.

          “Average Sales Price Per Share” means, with respect to the Common Stock of
the Company, for any day, (1) the average of the high and low sales price per
share regular way on a national securities exchange or, (2) if the Common Stock
is not listed on a national securities exchange, the average of the high and
low sales price per share regular way on The Nasdaq Stock Market, or (3) if the
Common Stock is not quoted on The Nasdaq Stock Market or listed or admitted to
trading on any national securities exchange, the average of the high and low
sales prices in the over-the-counter market as furnished by any New York Stock
Exchange member firm selected from time to time by the Company for that
purpose.

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

          “Board Resolution” means a resolution duly adopted by the Board of
Directors, a copy of which, certified by the Secretary or an Assistant
Secretary of the Company to have been duly adopted by the Board of Directors
and to be in full force and effect on the date of such certification, shall
have been delivered to the Trustee.

          “Business Day,” when used with respect to any Place of Payment, Place of
Conversion or any other place, as the case may be, means each Monday, Tuesday,
Wednesday, Thursday and Friday that is not a day on which banking institutions
in such Place of Payment, Place of Conversion or other place, as the case may
be, are authorized or obligated by law or executive order to close; provided,
however, that a day on which banking institutions in New York, New York are
authorized or obligated by law or executive order to close shall not be a
Business Day for purposes of Section 9.4.

-2-

 

          “Cash Equivalents” means (1) securities issued or directly and fully
guaranteed or insured by the United States government or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States is pledged in support thereof) having maturities of not more than six
months from the date of acquisition, (2) certificates of deposit and eurodollar
time deposits with maturities of six months or less from the date of
acquisition, bankers’ acceptances with maturities not exceeding six months and
overnight bank deposits, in each case with any domestic commercial bank having
capital and surplus in excess of $500 million and a Thompson Bank Watch Rating
of “B” or better, (3) repurchase obligations with a term of not more than seven
days for underlying securities of the types described in clause (1) above
entered into with any financial institution meeting the qualifications
specified in clause (2) above, (4) commercial paper having the highest rating
obtainable from Moody’s Investors Service, Inc. or Standard & Poor’s Ratings
Services and in each case maturing within six months after the date of
acquisition and (5) money market funds at least 95% of the assets of which
constitute Cash Equivalents of the kinds described in clauses (1)-(4) of this
definition.

          “Change in Control” means the occurrence at any time, after the original
issuance of the Securities, of any of the following events:

		
	 	(1)     the acquisition by any Person (including any syndicated group
that would be 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 transactions, of shares of capital stock of the Company
entitling such Person to exercise more than 50% of the total voting
power of all shares of capital stock of the Company entitled to
vote generally in the elections of directors, other than any such
acquisition by the Company or any Subsidiary; or

		
	 	(2)     any Person shall succeed in having sufficient of its nominees
(who are not supported by a majority of the then current Board of
Directors of the Company) elected to the Board of Directors of the
Company such that such nominees, when added to any existing
directors remaining on the Board of Directors of the Company after
such election who are Affiliates of or acting in concert with any
such Person, shall constitute a majority of the Board of Directors
of the Company; or

		
	 	(3)     any consolidation or merger of the Company with or into any
other Person, or any merger of another Person with or into the
Company (other than (A)
a merger (i) that does not result in any reclassification,
conversion, exchange or cancellation of outstanding shares of the
Company’s capital stock and (ii) pursuant to which holders of
Common Stock immediately prior to such transaction have, directly
or indirectly, 50% or more of the total voting power of all shares
of capital stock or other ownership interests entitled to vote
generally in the election of directors of the continuing or
surviving Person immediately after such transaction and (B) any
merger that is effected solely to change the jurisdiction of
incorporation of the Company and results in a reclassification,
conversion or exchange of outstanding shares of Common Stock solely
into shares of common stock of the Company or another Person); or

-3-

 

		
	 	(4)     any conveyance, transfer, sale, lease or other disposition of
all or substantially all of the Company’s assets to another Person;

provided, however, that a Change in Control shall not be deemed to have
occurred if the Average Sales Price Per Share on any five Trading Days within
(A) the period of 10 consecutive Trading Days ending immediately after the
later of the date of the Change in Control or the date of the public
announcement of the Change in Control (in the case of a Change in Control under
clause (1) above but not clause (2) or (3) above) or (B) the period of 10
consecutive Trading Days ending immediately prior to the date of the Change in
Control (in the case of a Change in Control under clause (2) or (3) above)
shall, in either case, equal or exceed 105% of the Conversion Price of the
Securities in effect on each such Trading Day. For the purposes of this
definition, “beneficial owner,” has the meaning attributed to it in Rule 13d-3
under the Exchange Act, whether or not applicable.

          “Code” has the meaning specified in Section 2.1.

          “combined cash and tender amount” has the meaning specified in Section
9.4(e).

          “combined tender and cash amount” has the meaning specified in Section
9.4(f).

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

          “Common Stock” means the shares of the class designated as common stock,
par value $0.50 per share, of the Company at the date of this Indenture or as
such stock may be reconstituted from time to time. Subject to the provisions of
Section 9.11, shares issuable on conversion or repurchase of Securities shall
include only shares of Common Stock or shares of any class or classes of common
stock resulting from any reclassification or reclassifications thereof;
provided, however, that if at any time there shall be more than one such
resulting class, the shares so issuable on conversion of Securities shall
include shares of all such classes, and the  shares of each such class then so issuable shall be substantially in the
proportion that the total number of shares of such class resulting from all
such reclassifications bears to the total number of shares of all such classes
resulting from all such reclassifications.

          “Company” means the Person named as the “Company” in the first paragraph
of this instrument until a successor Person shall have become such pursuant to
the applicable provisions of this Indenture, and thereafter “Company” shall
mean such successor Person.

          “Company Notice” has the meaning specified in Section 12.3(a).

          “Company Request” or “Company Order” means a written request or order
signed in the name of the Company by its Chairman of the Board, its Vice
Chairman of the Board, its Chief Executive Officer, its President or a Vice
President, and by its principal financial

-4-

 

officer, Treasurer, an Assistant
Treasurer, its Secretary or an Assistant Secretary, and delivered to the
Trustee.

          “Completion Date” has the meaning specified in Section 9.4(f).

          “Constituent Person” has the meaning specified in Section 9.11.

          “Conversion Agent” means any Person authorized by the Company to convert
Securities in accordance with Article Ten. The Company has initially appointed
the Trustee as its Conversion Agent.

          “Conversion Price” means the amount equal to U.S. $1,000 divided by the
Conversion Rate.

          “Conversion Rate” has the meaning specified in Section 9.1.

          “Conversion Shares” has the meaning specified in Section 9.4(m).

          “Corporate Trust Office” means the office of the Trustee at which at any
particular time its corporate trust business shall be principally administered
(which at the date of this Indenture is located at 2 North LaSalle Street,
Suite 1020, Chicago, Illinois 60602.

          “Corporation” means a corporation, company, association, joint-stock
company or business trust.

          “Credit Facility” means the Revolving Note, dated as of May 31, 2003,
between the Company and LaSalle Bank National Association, as the same may be
amended, extended, supplemented or refinanced from time to time.

          “Defaulted Interest” has the meaning specified in Section 2.8.

          “Depositary” means, with respect to any Registered Securities, a clearing
agency that is registered as such under the Exchange Act and is designated by
the Company to act as
Depositary for such Registered Securities (or any successor securities
clearing agency so registered).

          “Designated Senior Debt” means (i) any indebtedness outstanding under the
Credit Facility, and (2) the Company’s obligations under any particular Senior
Debt in which the instrument creating or evidencing the same, or the assumption
or guarantee thereof, or related agreements or documents to which the Company
is a party, expressly provides that such indebtedness shall be “Designated
Senior Debt” for purposes of this Indenture (provided that such instrument,
agreement or other document may place limitations and conditions on the right
of such Senior Debt to exercise the rights of Designated Senior Debt).

          “Distribution Date” has the meaning specified in Section 9.4(m).

-5-

 

          “Dollar” or “U.S.$” means a dollar or other equivalent unit in such coin
or currency of the United States as at the time shall be legal tender for the
payment of public and private debts.

          “DTC” means The Depository Trust Company, a New York corporation.

          “Event of Default” has the meaning specified in Section 4.1.

          “Exchange Act” means the United States Securities Exchange Act of 1934 (or
any successor statute), as amended from time to time.

          “Global Security” means a Registered Security that is registered in the
Security Register in the name of a Depositary or a nominee thereof.

          “Holder” means the Person in whose name the Security is registered in the
Security Register.

          “Indenture” means this instrument as originally executed or as it may from
time to time be supplemented or amended by one or more indentures supplemental
hereto entered into pursuant to the applicable provisions hereof, including,
for all purposes of this instrument and any such supplemental indenture, the
provisions of the Trust Indenture Act that are deemed to be a part of and
govern this instrument and any such supplemental indenture, respectively.

          “Initial Purchaser” means CIBC World Markets Corp.

          “Interest Payment Date” means the Stated Maturity of an installment of
interest on the Securities.

          “Liquidated Damages” has the meaning specified in the Registration Rights
Agreement.

          “Maturity,” when used with respect to any Security, means the date on
which the principal of such Security becomes due and payable as therein or
herein provided, whether at the
Stated Maturity or by declaration of acceleration, exercise of the
repurchase right set forth in Article Twelve or otherwise.

          “Member” means any member of, or participant in, the Depositary.

          “Non-electing Share” has the meaning specified in Section 9.11.

          “Notice of Default” has the meaning specified in Section 4.1.

          “Officers’ Certificate” means a certificate signed by the Chairman of the
Board, a Vice Chairman of the Board, the Chief Executive Officer, the President
or a Vice President and by the principal financial officer, the Treasurer, an
Assistant Treasurer, the Secretary or an Assistant Secretary of the Company.

-6-

 

          “Opinion of Counsel” means a written opinion of counsel, who may be
counsel for or employed by the Company and who shall be acceptable to the
Trustee.

          “Outstanding,” when used with respect to Securities, means, as of the date
of determination, all Securities theretofore authenticated and delivered under
this Indenture, except:

		
	 	(1)     Securities theretofore cancelled by the Trustee or delivered to
the Trustee for cancellation;

		
	 	(2)     Securities for which money in the necessary amount for the
payment of has been theretofore deposited with the Trustee or any
Paying Agent (if other than the Company) in trust or set aside and
segregated in trust by the Company (if the Company shall act as its
own Paying Agent) for the Holders of such Securities; and

		
	 	(3)     Securities that have been paid pursuant to Section 2.7 or in
exchange for or in lieu of which other Securities have been
authenticated and delivered pursuant to this Indenture, other than
any such Securities in respect of which there shall have been
presented to the Trustee proof satisfactory to it that such
Securities are held by a bona fide purchaser in whose hands such
Securities are valid obligations of the Company;

provided, however, that in determining whether the Holders of the requisite
principal amount of Outstanding Securities are present at a meeting of Holders
of Securities for quorum purposes or have given any request, demand,
authorization, direction, notice, consent or waiver 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 determination as to the presence of a quorum or upon
any such request, demand, authorization, direction, notice, consent or waiver,
only Securities that a Responsible Officer of the Trustee actually knows to be
so owned shall be so disregarded. Securities so owned that have been pledged
in good faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee’s right so to act with respect to such
Securities and that the pledgee is not the Company or any other obligor upon
the Securities or any Affiliate of the Company or such other obligor.

          “Paying Agent” means any Person authorized by the Company to pay the
principal of or interest on any Securities on behalf of the Company and, except
as otherwise specifically set forth herein, such term shall include the Company
if it shall act as its own Paying Agent. The Company has initially appointed
the Trustee as its Paying Agent.

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

          “Place of Conversion” has the meaning specified in Section 2.2.

          “Place of Payment” has the meaning specified in Section 2.2.

-7-

 

          “Predecessor Security” of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 2.7 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.

          “Purchase Agreement” means the Purchase Agreement, dated as of June 20,
2003, between the Company and the Initial Purchaser, as such agreement may be
amended from time to time.

          “Purchased Shares” has the meaning specified in Section 9.4(f).

          “Record Date” means any Regular Record Date or Special Record Date.

          “Record Date Period” means the period from the close of business of any
Regular Record Date next preceding any Interest Payment Date to the opening of
business on such Interest Payment Date.

          “Registered Securities” has the meaning specified in Section 2.1.

          “Registrable Securities” has the meaning specified in the Registration
Rights Agreement.

          “Registration Default” has the meaning specified in the Registration
Rights Agreement.

          “Registration Rights Agreement” means the Registration Rights Agreement,
dated the date hereof, by and among the Company and the Initial Purchaser.

          “Regular Record Date” for interest payable in respect of any Registered
Security on any Interest Payment Date means the January 1 and the July 1
(whether or not a Business Day), as the case may be, next preceding such
Interest Payment Date.

          “Representative” means (1) the indenture trustee or other trustee, agent
or representative for any Designated Senior Debt or (2) with respect to
Designated Senior Debt that does not have any such trustee, agent or other
representative, (A) in the case of such Designated Senior Debt issued pursuant
to an agreement providing for voting arrangements as among the holders or
owners of such Designated Senior Debt, any holder or owner of such Designated
Senior Debt acting with the consent of the required Persons necessary to bind
such holders or owners of such Designated Senior Debt and (B) in the case of
all other such Designated Senior Debt, the holder or owner of such Designated
Senior Debt.

          “Repurchase Date” has the meaning specified in Section 12.1.

          “Repurchase Price” has the meaning specified in Section 12.1.

          “Responsible Officer,” when used with respect to the Trustee, means any
officer within the Corporate Trust Office, including without limitation any
vice president, assistant vice

-8-

 

president, assistant treasurer, corporate trust
officer or other employee of the Trustee customarily performing functions
similar to those performed by any of the above designated officers, and also
means, with respect to a particular corporate trust matter, any other officer
to whom such matter is referred because of his knowledge and familiarity with
the particular subject and who shall have direct responsibility for the
administration of this Indenture.

          “Restricted Global Security” has the meaning specified in Section 2.1.

          “Restricted Securities Legend” means, collectively, the legends
substantially in the forms of the legends required in the form of Security
attached hereto as Exhibit A to be placed upon each Security.

          “Rights Plan” has the meaning specified in Section 9.4(d).

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

          “Rule 144A Information” has the meaning specified in Section 8.6.

          “Securities” has the meaning ascribed to it in the first paragraph under
the caption “Recitals of the Company.”

          “Securities Act” means the United States Securities Act of 1933 (or any
successor statute), as amended from time to time.

          “Security Register” and “Security Registrar” have the respective meanings
specified in Section 2.6.

          “Senior Debt” means the principal of (and premium, if any) and interest
(including all interest accruing subsequent to the commencement of any
bankruptcy or similar proceeding, whether or not a claim for post-petition
interest is allowable as a claim in any such proceeding) on, and rent payable
on or in connection with, and all fees, costs, claims, expenses and other
amounts payable in connection with, the following, whether absolute or
contingent, secured or unsecured, due or to become due, outstanding on the date
of this Indenture or thereafter created, incurred or assumed: (1) all the
Company’s indebtedness evidenced by a credit or loan agreement, note, bond,
debenture, or other similar instrument whether or not the recourse of the
lender is to all of the Company’s assets or only to a portion, (2) all of the
Company’s indebtedness, obligations and other liabilities, contingent or
otherwise, for borrowed money, including, without limitation, overdrafts,
foreign exchange contracts, currency exchange agreements, interest rate
protection agreements and any loans or advances from banks, whether or not
evidenced by notes or similar instruments, or bonds, debentures, notes or
similar instruments, whether or not the recourse of the lender is to all of the
Company’s assets or only to a portion thereof, (3) all of the Company’s
obligations as lessee under leases required to be capitalized on the balance
sheet of the lessee under generally accepted accounting principles, (4) all of
the Company’s obligations as lessee under leases for facilities, equipment or
other assets entered into for financing purposes, whether or not capitalized,
(5) all of the Company’s obligations and other liabilities, contingent or
otherwise, under any lease or related document, including a purchase agreement,
in connection with the lease of real property or improvements,

-9-

 

or any personal
property included as part of any such lease, which provides that the Company is
contractually obligated to purchase or cause a third party to purchase the
leased property and thereby guarantee a residual value of leased property to
the lessor and all of the Company’s obligations under such lease or related
document to purchase or cause a third party to purchase the leased property,
whether or not such lease transaction is characterized as an operating lease or
capitalized lease in accordance with generally accepted accounting principles,
(6) all of the Company’s obligations under interest rate and currency swaps,
caps, floors, collars, hedge agreements, forward contracts, or similar
agreements or arrangements, (7) all of the Company’s obligations with respect
to letters of credit, bank guarantees, bankers’ acceptances and similar
facilities, including related reimbursement obligations, (8) all of the
Company’s obligations issued or assumed as the deferred purchase price of
property or services (but excluding trade accounts payable and accrued
liabilities arising in the ordinary course of business), (9) all of the
Company’s obligations of the type referred to in clauses (1) through (8) above
of another Person and all dividends of another Person, the payment of which, in
either case, the Company has assumed or guaranteed or for which the Company is
responsible or liable, directly or indirectly, jointly or severally, as
obligor, guarantor or otherwise or which is secured by a lien on the Company’s
property and (10) renewals, extensions, modifications, replacements,
restatements and refundings of, or any indebtedness or obligation issued in
exchange for, any such indebtedness or obligation described in clauses (1)
through (9) of this definition; provided, however, that Senior Debt shall not
include the Securities, any liability for federal, state, local or other taxes
owed or owing by the Company or any indebtedness or obligation if the terms of
such indebtedness or obligation (or the terms of the instrument under which
such indebtedness or obligation is issued) expressly provides that such
indebtedness or obligation is not superior in right of payment to the
Securities; and provided, further, that Senior Debt shall not include
accounts payable or other accrued liabilities or obligations incurred in
the ordinary course of business in connection with the obtaining of materials
or services and any indebtedness or obligation that the Company may owe to any
direct or indirect Subsidiary.

          “Shelf Registration Statement” has the meaning specified in the
Registration Rights Agreement.

          “Significant Subsidiary” means any Subsidiary that would be a “significant
subsidiary” as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Securities Act, as such regulation is in effect on the date
hereof.

          “Special Record Date” for the payment of any Defaulted Interest means a
date fixed by the Company pursuant to Section 2.8.

          “Stated Maturity,” when used with respect to any Security or any
installment of interest thereon, means the date specified in such Security as
the fixed date on which the principal of such Security or such installment of
interest is due and payable.

          “Subsidiary” means a corporation, or limited liability company, more than
50% of the outstanding voting stock of which is owned, directly or indirectly,
by the Company or by one or more other Subsidiaries, or by the Company and one
or more other Subsidiaries. For the purposes of this definition, “voting
stock” means stock or other similar interests in the corporation that
ordinarily has or have voting power for the election of directors or Persons

-10-

 

performing similar functions, whether at all times or only so long as no senior
class of stock or other interests has or have such voting power by reason of
any contingency.

          “Successor Security” of any particular Security means every Security
issued after, and evidencing all or a portion of the same debt as that
evidenced by, such particular Security; and, for the purposes of this
definition, any Security authenticated and delivered under Section 2.7 in
exchange for or in lieu of a mutilated, destroyed, lost or stolen Security
shall be deemed to evidence the same debt as the mutilated, destroyed, lost or
stolen Security.

          “Trading Days” means (1) if the Common Stock is listed or admitted for
trading on any national securities exchange, days on which such national
securities exchange is open for business; (2) if the Common Stock is quoted on
The Nasdaq Stock Market or any other system of automated dissemination of
quotations of securities prices, days on which trades may be effected through
such system; or (3) if the Common Stock is not listed or admitted for trading
on any national securities exchange or quoted on The Nasdaq Stock Market or any
other system of automated dissemination of quotation of securities prices, days
on which the Common Stock is traded regular way in the over-the-counter market
and for which a closing bid and a closing asked price for the Common Stock are
available.

          “Trust Indenture Act” means the Trust Indenture Act of 1939 as in force at
the date as of which this instrument was executed; provided, however, that in
the event the Trust Indenture Act of 1939 is amended after such date, “Trust Indenture Act”
means, to the extent required by any such amendment, the Trust Indenture Act of
1939 as so amended.

          “Trustee” means the Person named as the “Trustee” in the first paragraph
of this instrument until a successor Trustee shall have become such pursuant to
the applicable provisions of this Indenture, and thereafter “Trustee” shall
mean such successor Trustee.

          “United States” means the United States of America (including the several
States and the District of Columbia), its territories, its possessions and
other areas subject to its jurisdiction (its “possessions” including Puerto
Rico, the United States Virgin Islands, Guam, American Samoa, Wake Island and
the Northern Mariana Islands).

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

SECTION 1.2 Compliance Certificates and Opinions. 

          Upon any application or request by the Company to the Trustee to take any
action under any provision of this Indenture, the Company shall furnish to the
Trustee an Officers’ Certificate stating that all conditions precedent, if any,
provided for in this Indenture relating to the proposed action have been
complied with and, if required by the Trust Indenture Act, an Opinion of
Counsel stating that in the opinion of such counsel all such conditions
precedent, if any, have been complied with, except that in the case of any such
application or request as to which the furnishing of such documents is
specifically required by any provision of this Indenture relating to such
particular application or request, no additional certificate or opinion

-11-

 

need be
furnished. Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:

          (a)     a statement that each individual signing such certificate or opinion
has read such covenant or condition and the definitions herein relating
thereto;

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

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

          (d)     a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with; provided, however, with
respect to matters of fact, an Opinion of Counsel may rely on an Officers’
Certificate or certificates of public officials.

SECTION 1.3 Form of Documents Delivered to the Trustee.

          In any case where several matters are required to be certified
by, or covered by an opinion of, any specified Per son, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.

          Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which such certificate or opinion is based are
erroneous. Any such certificate or opinion of counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company or any other Person
stating that the information with respect to such factual matters is in the
possession of the Company or such other Person, unless such counsel knows, or
in the exercise of reasonable care should know, that the certificate or opinion
or representations with respect to such matters are erroneous.

          Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.

SECTION 1.4 Acts of Holders of Securities.

          (a)     Any request, demand, authorization, direction, notice, consent, waiver
or other action provided or permitted by this Indenture to be given or taken by
Holders of Securities 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 or proxy duly appointed in writing by such

-12-

 

Holders. Such action
shall become effective when such instrument or instruments is delivered to the
Trustee and, where it is hereby expressly required, to the Company. The
Trustee shall promptly deliver to the Company copies of all such instruments
delivered to the Trustee. Such instrument or instruments (and the action
embodied therein and evidenced thereby) are herein sometimes referred to as the
“Act” of the Holders of Securities signing such instrument or instruments.
Proof of execution of any such instrument or of a writing appointing any such
agent or proxy, or of the holding by any Person of a Security, shall be
sufficient for any purpose of this Indenture and (subject to Section 5.1)
conclusive in favor of the Trustee and the Company if made in the manner
provided in this Section 1.4.

          (b)     The fact and date of the execution by any Person of any such
instrument or writing may be pr
oved 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 him the execution
thereof. Where such execution is by a signer acting in a capacity other
than his individual capacity, such certificate or affidavit shall also
constitute sufficient proof of his authority.

          (c)     The principal amount and serial number of any Registered Security held
by any Person, and the date of his holding the same, shall be proved by the
Security Register.

          (d)     The fact and date of execution of any such instrument or writing and
the authority of the Person executing the same may also be proved in any other
manner that the Trust
ee deems sufficient; and the Trustee may in any instance
require further proof with respect to any of the matters referred to in this
Section 1.4.

          (e)     The Company may set any day as the record date for the purpose of
determining the Holders entitled to give or take an
action, or to vote
on any action, authorized or permitted by this Indenture to be given or taken
by Holders. Promptly and in any case not later than ten days after setting a
record date, the Company shall notify the Trustee and the Holders of such
record date. If not set by the Company prior to the first solicitation of a
Holder made by any Person in respect of any such action, or, in the case of any
such vote, prior to such vote, the record date for any such action or vote

shall be the thirtieth day (or, if later, the date of the most recent list of
Holders required to be provided pursuant to Section 13.1) prior to such first
solicitation or vote, as the case may be. With regard to any record date, the
Holders on such date (or their duly appointed agents or proxies), and only such
Persons, shall be entitled to give or take, or vote on, the relevant action,
whether or not such Holders remain Holders after such record date.
Notwithstanding the foregoing, the Company shall not set a record date for, and
the provisions of this paragraph shall not apply with respect to, any notice,
declaration or direction referred to in the next paragraph.

          Upon receipt by the Trustee from any Holder of (1) any notice of default
or breach referred to in Section 4.1(d), if such default or breach has occurred
and is continuing and the Trustee shall not have given such a notice to the
Company, (2) any declaration of acceleration referred to in Section 4.2, if an
Event of Default has occurred and is continuing and the Trustee shall not have
given such a declaration to the Company, or (3) any direction referred to in
Section 4.12, if the Trustee shall not have taken the action specified in such
direction, then,

-13-

 

with respect to clauses (2) and (3), a record date shall
automatically and without any action by the Company or the Trustee be set for
determining the Holders entitled to join in such declaration or direction,
which record date shall be the close of business on the tenth day (or, if such
day is not a Business Day, the next succeeding Business Day) following the day
on which the Trustee receives such declaration or direction, and, with respect
to clause (1), the Trustee may set any day as a record date for the purpose of
determining the Holders entitled to join in such notice of default. Promptly
after such receipt by the Trustee of any such declaration or direction referred
to in clause (2) or (3), and promptly after setting any record date with
respect to clause (1), and as soon as practicable thereafter, the Trustee shall
notify the Company and the Holders of any such record date so fixed. The
Holders on such record date (or their duly appointed agents or proxies), and
only such Persons, shall be entitled to join in such notice, declaration or
direction, whether or not such Holders remain Holders after such record date;
provided, however, that,
unless such notice, declaration or direction shall have become effective
by virtue of Holders of the requisite principal amount of Securities on such
record date (or their duly appointed agents or proxies) having joined therein
on or prior to the ninetieth day after such record date, such notice,
declaration or direction shall automatically and without any action by any
Person be cancelled and of no further effect. Nothing in this paragraph shall
be construed to prevent a Holder (or a duly appointed agent or proxy thereof)
from giving, before or after the expiration of such 90-day period, a notice,
declaration or direction contrary to or different from, or, after the
expiration of such period, identical to, the notice, declaration or direction
to which such record date relates, in which event a new record date in respect
thereof shall be set pursuant to this paragraph. In addition, nothing in this
paragraph shall be construed to render ineffective any notice, declaration or
direction of the type referred to in this paragraph given at any time to the
Trustee and the Company by Holders (or their duly appointed agents or proxies)
of the requisite principal amount of Securities on the date such notice,
declaration or direction is so given.

          (f)     Except as provided in Sections 4.2 and 4.13, any request, demand,
authorization, direction, notice, consent, election, 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.

SECTION 1.5 Notices, Etc., to Trustee and Company.

          Any request, demand, authorization, direction, notice, consent, election,
waiver or other Act of Holders of Securities or other document provided or
permitted by this Indenture to be made upon, given or furnished to, or filed
with,

          (a)     the Trustee by any Holder of Securities or by the Company shall be
sufficient for every purpose hereunder if made, given, furnished or filed in
writing (which may be via facsimile) to or with the Trustee and received at the
Corporate Trust Office, Attention: Corporate Trust Department, and shall be
deemed given when received,

          (b)     the Company by the Trustee or by any Holder of Securities shall be
sufficient for every purpose hereunder (unless otherwise herein expressly
provided) if in writing, mailed, first-class postage prepaid, or telecopied and
confirmed by mail, first-class postage

-14-

 

prepaid, or delivered by hand or
overnight courier, addressed to the Company at 800 South Northpoint Blvd.,
Waukegan, Illinois 60685, Attention: General Counsel (telecopy no.: (847)
785-3058) or at any other address previously furnished in writing to the
Trustee by the Company, and shall be deemed given when received.

          Any request, demand, authorization, direction, notice, consent, election
or waiver required or permitted under this Indenture shall be in the English
language, except that any published notice may be in an official language of
the country of publication.

SECTION 1.6 Notice to Holders of Securities; Waiver.

          Except as otherwise expressly provided herein, where this Indenture
provides for notice to Holders of Securities of any event, such notice shall be
sufficiently given to Holders if in writing and mailed, first-class postage
prepaid, to each Holder of a Security affected by such event, at the address of
such Holder as it appears in the Security Register, not earlier than the
earliest date and not later than the latest date prescribed for the giving of
such notice.

          Neither the failure to mail such notice, nor any defect in any notice so
mailed, to any particular Holder of a Registered Security shall affect the
sufficiency of such notice with respect to other Holders of Registered
Securities. In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by
mail, then such notification to Holders of Registered Securities as shall be
made with the approval of the Trustee, which approval shall not be unreasonably
withheld or delayed, shall constitute a sufficient notification to such Holders
for every purpose hereunder.

          Such notice shall be deemed to have been given when such notice is mailed.

          Where this Indenture provides for notice in any manner, such notice may be
waived in writing by the Person entitled to receive such notice, either before
or after the event, and such waiver shall be the equivalent of such notice.
Waivers of notice by Holders of Securities shall be filed with the Trustee, but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.

SECTION 1.7 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.

SECTION 1.8 Successors and Assigns.

          All covenants and agreements in this Indenture by the Company and by the
Trustee shall bind its successors and assigns, whether so expressed or not.

SECTION 1.9 Separability Clause.

          In case any provision in this Indenture or 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.

-15-

 

SECTION 1.10 Benefits of Indenture.

          Except as provided in the next sentence, nothing in this Indenture or in
the Securities, express or implied, shall give to any Person, other than the
parties hereto and their successors and assigns hereunder and the Holders of
Securities, any benefit or legal or equitable
right, remedy or claim under this Indenture. The provisions of Article
Twelve are intended to be for the benefit of, and shall be enforceable directly
by, the holders of Senior Debt.

SECTION 1.11 Governing Law.

          THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, THE UNITED STATES OF
AMERICA, INCLUDING, WITHOUT LIMITATION, THE NEW YORK GENERAL OBLIGATIONS LAW
§5-1401.

SECTION 1.12 Legal Holidays.

          In any case where any Interest Payment Date, Repurchase Date or Stated
Maturity of any Security or the last day on which a Holder of a Security has a
right to convert his Security shall not be a Business Day at a Place of Payment
or Place of Conversion, as the case may be, then (notwithstanding any other
provision of this Indenture or of the Securities) payment of principal of,
premium, if any, or interest on, or the payment of the Repurchase Price
(whether the same is payable in cash or in shares of Common Stock) with respect
to, or delivery for conversion of, such Security need not be made at such Place
of Payment or Place of Conversion, as the case may be, on or by such day, but
may be made on or by the next succeeding Business Day at such Place of Payment
or Place of Conversion, as the case may be, with the same force and effect as
if made on the Interest Payment Date or Repurchase Date, or at the Stated
Maturity or by such last day for conversion; provided, however, that in the
case that payment is made on such succeeding Business Day, no interest shall
accrue on the amount so payable for the period from and after such Interest
Payment Date, Repurchase Date, Stated Maturity or last day for conversion, as
the case may be.

SECTION 1.13 Conflict with Trust Indenture Act.

          If any provision hereof limits, qualifies or conflicts with a provision of
the Trust Indenture Act that is required under such act to be a part of and
govern this Indenture, the latter provision shall control. If any provision of
this Indenture modifies or excludes any provision of the Trust Indenture Act
that may be so modified or excluded, the latter provision shall be deemed to
apply to this Indenture as so modified or to be excluded, as the case may be.
Until such time as this Indenture shall be qualified under the Trust Indenture
Act, this Indenture, the Company and the Trustee shall be deemed for all
purposes hereof to be subject to and governed by the Trust Indenture Act to the
same extent as would be the case if this Indenture were so qualified on the
date hereof.

-16-

 

SECTION 1.14 Counterparts. 

          This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.

ARTICLE TWO 

THE SECURITIES 

SECTION 2.1 Form Generally. 

          The Securities and the Trustee’s Certificate of Authentication shall be in
substantially the form set forth in Exhibit A hereto, which Exhibit is a part
of this Indenture, with such appropriate insertions, omissions, substitutions
and other variations as are required or permitted by this Indenture, and may
have such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of any
securities exchange or the Internal Revenue Code of l986, as amended, and
regulations thereunder (the “Code”), or as may, consistently herewith, be
determined by the officers executing such Securities, as evidenced by their
execution thereof. All Securities shall be issued in registered form, as
opposed to bearer form, and shall sometimes be referred to as the “Registered
Securities.”

          The Securities shall be printed, lithographed, typewritten or engraved or
produced by any combination of these methods on steel engraved borders, if so
required by any securities exchange upon which the Securities may be listed, or
may be produced in any other manner permitted by the rules of any such
securities exchange, or, if the Securities are not listed on a securities
exchange, in any other manner approved by the Company, all as determined by the
officers executing such Securities, as evidenced by their execution thereof.

          Upon their original issuance, Securities shall be issued in the form of
one or more Global Securities without interest coupons and shall be registered
in the name of DTC, as Depositary, or its nominee and deposited with the
Trustee, as custodian for DTC, for credit by DTC to the respective accounts of
beneficial owners of the Securities represented thereby (or such other accounts
as they may direct). Such Global Security, together with its Successor
Securities that are Global Securities, are collectively herein called the
“Restricted Global Security.”

SECTION 2.2 Title and Terms. 

          The aggregate principal amount of Securities that may be authenticated and
delivered from time to time under this Indenture is limited to U.S.$100,000,000
(or such greater amount necessary to reflect exercise of the Initial
Purchaser’s over-allotment option in compliance with the Purchase Agreement,
but not in excess of U.S.$115,000,000), except for Securities authenticated and
delivered in exchange for, or in lieu of, other Securities pursuant to Section
2.5, 2.6, 2.7, 7.5, 9.2 or 12.3(e).

-17-

 

          The Securities shall be known and designated as the “2.75% Convertible
Subordinated Notes due 2010” of the Company. Their Stated Maturity shall be
July 15, 2010 and they shall bear interest on their principal amount from June
25, 2003, payable semiannually in arrears on January 15 and July 15 in each
year, commencing January 15, 2004, at the rate of
2.75% per annum until the principal thereof is due and at the rate then in
effect on any overdue principal and, to the extent permitted by law, on any
overdue interest; provided, however, that payments shall only be made on
Business Days as provided in Section 1.12.

          The principal of, premium, if any, and interest on the Securities shall be
payable as provided in the form of Securities attached hereto as Exhibit A, and
the Repurchase Price, whether payable in cash or in shares of Common Stock,
shall be payable at such places as are identified in the Company Notice given
pursuant to Section 12.3 (any city in which any Paying Agent is located being
herein called a “Place of Payment”).

          The Registrable Securities are entitled to the benefits of a Registration
Rights Agreement as provided by the form of Securities attached hereto as
Exhibit A. The Securities are entitled to the payment of Liquidated Damages as
provided in the Registration Rights Agreement.

          The Securities shall be convertible as provided in Article Nine (any city
in which any Conversion Agent is located being herein called a “Place of
Conversion”).

          The Securities shall be subordinated in right of payment to Senior Debt of
the Company as provided in Article Ten.

          The Securities shall be subject to repurchase by the Company at the option
of the Holders as provided in Article Twelve.

SECTION 2.3 Denominations. 

          The Securities shall be issuable only in registered form, without coupons,
in denominations of U.S.$1,000 and integral multiples thereof.

SECTION 2.4 Execution, Authentication, Delivery and Dating. 

          The Securities shall be executed on behalf of the Company by its Chairman
of the Board, its Vice Chairman of the Board, its Chief Executive Officer, its
President, one of its Vice Presidents, its Chief Financial Officer, its
Treasurer or its Controller and attested by its Secretary or one of its
Assistant Secretaries. Any such signature may be manual or facsimile.

          Securities bearing the manual or facsimile signature of individuals who
were at any time the proper officers of the Company 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 such Securities.

          At any time and from time to time after the execution and delivery of this
Indenture, the Company may deliver Securities executed by the Company to the
Trustee or to its order for authentication, together with a Company Order for
the authentication and delivery of

-18-

 

such Securities, and the Trustee in
accordance with such Company Order shall authenticate and make available for
delivery such Securities as provided in this Indenture and not otherwise.

          Each Security shall be dated the date of its authentication.

          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
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.

SECTION 2.5 Global Securities; Temporary Securities.

		
	 	     (a)     Global Securities

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

		
	 	(2)     Notwithstanding any other provision in this Indenture, no
Global Security may be exchanged in whole or in part for Securities
registered, and no transfer of a Global Security in whole or in
part may be registered, in the name of any Person other than the
Depositary for such Global Security or a nominee thereof unless (A)
such Depositary (i) has notified the Company that it is unwilling
or unable to continue as Depositary for such Global Security or
(ii) has ceased to be a clearing agency registered as such under
the Exchange Act or announces an intention permanently to cease
business or does in fact do so or (B) there shall have occurred and
be continuing an Event of Default with respect to such Global
Security.

		
	 	(3)     If any Global Security is to be exchanged for other Securities
or cancelled in whole, it shall be surrendered by or on behalf of
the Depositary or its nominee to the Trustee, as Security
Registrar, for exchange or cancellation, as provided in this
Article Two. If any Global Security is to be exchanged for other
Securities or cancelled in part, or if another Security is to be
exchanged in whole or in part for a beneficial interest in any
Global Security, in each case, as provided in Section 2.6, then
either (A) such Global Security shall be so surrendered for
exchange or cancellation, as provided in this Article Two, or (B)
the principal amount thereof shall be reduced or increased by an
amount equal to the portion thereof to be so exchanged or cancelled
or equal to the principal amount of such other Security to be so
exchanged for a beneficial interest therein, as the case may be, by
means of an appropriate adjustment made on the records of the
Trustee, as Security Registrar, whereupon the Trustee, in
accordance with the Applicable Procedures, shall instruct the
Depositary or its authorized representative to make a corresponding
adjustment to its records. Upon any such surrender or adjustment

-19-

 

		
	 	of a Global Security, the Trustee shall, subject to Section 2.6(c)
and as otherwise
provided in this Article Two, authenticate and make available for
delivery any Securities issuable in exchange for such Global
Security (or any portion thereof) to or upon the order of, and
registered in such names as may be directed by, the Depositary or
its authorized representative. Upon the request of the Trustee in
connection with the occurrence of any of the events specified in
the preceding paragraph, the Company shall promptly make available
to the Trustee a reasonable supply of Securities that are not in
the form of Global Securities. The Trustee shall be entitled to
rely upon any order, direction or request of the Depositary or its
authorized representative which is given or made pursuant to this
Article Two.

		
	 	(4)     Every Security authenticated and delivered upon registration of
transfer of, or in exchange for or in lieu of, a Global Security or
any portion thereof, whether pursuant to this Article Two or
otherwise, shall be authenticated and delivered in the form of, and
shall be, a registered Global Security, unless such Security is
registered in the name of a Person other than the Depositary for
such Global Security or a nominee thereof, in which case such
Registered Security shall be authenticated and delivered in
definitive, fully registered form, without interest coupons.

		
	 	(5)     The Depositary or its nominee, as registered owner of a Global
Security, shall be the Holder of such Global Security for all
purposes under the Indenture and the Registered Securities, and
owners of beneficial interests in a Global Security shall hold such
interests pursuant to the Applicable Procedures. Accordingly, any
such owner’s beneficial interest in a Global Security shall be
shown only on, and the transfer of such interest shall be effected
only through, records maintained by the Depositary or its nominee
or its Agent Members, and such owners of beneficial interests in a
Global Security shall not be considered the owners or holders
thereof.

	
	          (b)     Temporary Securities

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

          If temporary Securities are issued, the Company shall 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 any office
or agency of the Company designated pursuant to Section 8.2, 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 make available for

-20-

 

delivery 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 2.6 Registration, Registration of Transfer and Exchange; Restrictions on Transfer.

          (a)     The Company shall cause to be kept at the Corporate Trust Office a
register (the register maintained in such office and in any other office or
agency of the Company designated pursuant to Section 8.2 being herein sometimes
collectively referred to as the “Security Register”) in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Registered Securities and of transfers of Registered
Securities. The Trustee is hereby appointed “Security Registrar” for the
purpose of registering Registered Securities and transfers and exchanges of
Registered Securities as herein provided.

          Upon surrender for registration of transfer of any Security at an office
or agency of the Company designated pursuant to Section 8.2 for such purpose,
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 denominations and of a like aggregate principal
amount and bearing such restrictive legends as may be required by this
Indenture.

          At the option of the Holder, and subject to the other provisions of this
Section 2.6, Securities may be exchanged for other Securities of any authorized
denomination and of a like aggregate principal amount, upon surrender of the
Securities to be exchanged at any such office or agency. Whenever any
Securities are so surrendered for exchange, and subject to the other provisions
of this Section 2.6, the Company shall execute, and the Trustee shall
authenticate and make available for delivery, the Securities the Holder making
the exchange is entitled to receive. Every Security presented or surrendered
for registration of transfer or for exchange shall (if so required by the
Company or the Security Registrar) be duly endorsed, or be accompanied by a
written instrument of transfer in form satisfactory to the Company and the
Security Registrar, duly executed by the Holder thereof or his attorney duly
authorized in writing.

          All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the same
debt, subject to the other provisions of this Section 2.6, and entitled to the
same benefits under this Indenture, as the Securities surrendered upon such
registration of transfer or exchange.

          No service charge shall be made for any registration of transfer or
exchange of Securities except as provided in Section 2.7, but the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of transfer or
exchange of Securities, other than exchanges pursuant to Section 2.5, 7.5, 9.2
or 12.3(e) (other than where the shares of Common Stock are to be issued or
delivered in a name other than that of the Holder of the Security) not
involving any transfer and other than any stamp and other duties, if any, that
may be imposed in connection with any such
transfer or exchange by the United States or any political subdivision
thereof or therein, which shall be paid by the Company.

-21-

 

          (b)     Restricted Securities Legends. All Securities shall bear the
applicable Restricted Securities Legend subject to the following:

		
	 	(1)     subject to the following clauses of this Section 2.6(b), a
Security or any portion thereof that is exchanged, upon transfer or
otherwise, for a Global Security or any portion thereof shall bear
the Restricted Securities Legend borne by such Global Security
while represented thereby;

		
	 	(2)     subject to the following clauses of this Section 2.6(b), a new
Security that is not a Global Security and is issued in exchange
for another Security (including a Global Security) or any portion
thereof, upon transfer or otherwise, shall bear the Restricted
Securities Legend borne by such other Security;

		
	 	(3)     any Securities that are sold or otherwise disposed of pursuant
to an effective registration statement under the Securities Act
(including the Shelf Registration Statement), together with their
Successor Securities, shall not bear a Restricted Securities
Legend; the Company shall inform the Trustee in writing of the
effective date of any such registration statement registering the
Securities under the Securities Act and shall notify the Trustee at
any time when prospectuses may not be delivered with respect to
Securities to be sold pursuant to such registration statement. 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
registration statement;

		
	 	(4)     at any time after the Securities may be freely transferred
without registration under the Securities Act or without being
subject to transfer restrictions pursuant to the Securities Act, a
new Security that does not bear a Restricted Securities Legend may
be issued in exchange for or in lieu of a Security (other than a
Global Security) or any portion thereof that bears such a legend if
the Trustee has received a certificate regarding the unrestricted
nature of the Securities, satisfactory to the Trustee and duly
executed by the Holder of such legended Security or his attorney
duly authorized in writing, and after such date and receipt of such
certificate, the Trustee shall authenticate and make available for
delivery such a new Security in exchange for or in lieu of such
other Security as provided in this Article Two;

		
	 	(5)     a new Security that does not bear a Restricted Securities
Legend may be issued in exchange for or in lieu of a Security
(other than a Global Security) or any portion thereof that bears
such a legend if, in the Company’s judgment, placing such a legend
upon such new Security is not necessary to ensure compliance with
the registration requirements of the Securities Act, and the
Trustee, at the direction of the Company, shall authenticate and
make available for delivery such a new Security as provided in this
Article Two; and

		
	 	(6)     notwithstanding the foregoing provisions of this Section
2.6(b), a Successor Security of a Security that does not bear a
particular form of Restricted Securities Legend shall not bear such
form of legend unless the Company has 

-22-

 

		
	 	reasonable cause to believe
that such Successor Security is a “restricted security” within the
meaning of Rule 144, in which case the Trustee, at the direction of
the Company, shall authenticate and make available for delivery a
new Security bearing a Restricted Securities Legend in exchange for
such Successor Security as provided in this Article Two.

          (c)     Neither the Trustee, the Paying Agent nor any of their agents shall
(1) have any duty to monitor compliance with or with respect to any federal or
state or other securities or tax laws or (2) have any duty to obtain
documentation on any transfers or exchanges other than as specifically required
hereunder.

SECTION 2.7 Mutilated, Destroyed, Lost or Stolen Securities.

          If any mutilated Security is surrendered to the Trustee, the Company shall
execute and the Trustee shall authenticate and make available for delivery in
exchange therefor a new Security of like tenor and principal amount and bearing
a number not contemporaneously outstanding.

          If there be delivered to the Company and to the Trustee:

          (a)     evidence to their satisfaction of the destruction, loss or theft of
any Security, and

          (b)     such security or indemnity as may be satisfactory to the Company and
the Trustee to save each of them and any agent of either of them harmless,

then, in the absence of actual notice to the Company or the Trustee that such
Security has been acquired by a bona fide purchaser, the Company shall execute
and the Trustee shall authenticate and make available for delivery, in lieu of
any such destroyed, lost or stolen Security, a new Security of like tenor and
principal amount and bearing a number not contemporaneously outstanding.

          In case any such mutilated, destroyed, lost or stolen Security has become
or is about to become due and payable, the Company in its discretion, but
subject to any conversion rights, may, instead of issuing a new Security, pay
such Security, upon satisfaction of the conditions set forth in the preceding
paragraph.

          Upon the issuance of any new Security under this Section 2.7, the Company
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto (other than any
stamp and other duties, if any, that may be
imposed in connection therewith by the United States or any political
subdivision thereof or therein, which shall be paid by the Company) and any
other expenses (including the fees and expenses of the Trustee) connected
therewith.

          Every new Security issued pursuant to this Section 2.7 in lieu of any
mutilated, destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company, whether or not the mutilated,
destroyed, lost or stolen Security shall be at any time

-23-

 

enforceable by anyone,
and such new Security shall be entitled to all the benefits of this Indenture
equally and proportionately with any and all other Securities duly issued
hereunder.

          The provisions of this Section 2.7 are exclusive and shall preclude (to
the extent lawful) all other rights and remedies of any Holder with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Securities.

SECTION 2.8 Payment of Interest; Interest Rights Preserved. 

          Interest on any Security that is payable, and is punctually paid or duly
provided for, on any Interest Payment Date shall be paid to the Person in whose
name that Security (or one or more Predecessor Securities) is registered at the
close of business on the Regular Record Date for such interest.

          Any interest on any Security that is payable, but is not punctually paid
or duly provided for, on any Interest Payment Date (“Defaulted Interest”) shall
forthwith cease to be payable to the Holder on the relevant Regular Record Date
by virtue of having been such Holder, and such Defaulted Interest may be paid
by the Company, at its election in each case, as provided in clause (a) or (b)
below:

          (a)     The Company may elect to make payment of any Defaulted Interest to the
Persons in whose names the Securities (or their respective Predecessor
Securities) are registered at the close of business on a Special Record Date
for the payment of such Defaulted Interest, which shall be fixed in the
following manner. The Company shall notify the Trustee in writing of the
amount of Defaulted Interest proposed to be paid on each Security, the date of
the proposed payment and the Special Record Date, and at the same time the
Company shall deposit with the Trustee an amount of money equal to the
aggregate amount proposed to be paid in respect of such Defaulted Interest or
shall make arrangements satisfactory to the Trustee for such deposit prior to
the date of the proposed payment, such money when deposited to be held in trust
for the benefit of the Persons entitled to such Defaulted Interest as provided
in this clause. The Special Record Date for the payment of such Defaulted
Interest shall be not more than 15 days and not less than 10 days prior to the
date of the proposed payment and not less than 15 days after the receipt by the
Trustee of the notice of the proposed payment. The Trustee, in the name and at
the expense of the Company, shall cause notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor to be mailed,
first-class postage prepaid, to each Holder at such Holder’s address as it
appears in the Security Register, not less than 10 days prior to such Special
Record Date. Notice of the proposed payment of such Defaulted Interest and the
Special Record Date therefor having been so mailed, such Defaulted Interest
shall be paid to the Persons in whose names the Securities (or their
respective Predecessor Securities) are registered at the close of business on
such Special Record Date and shall no longer be payable pursuant to the
following clause (b).

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

-24-

 

          Subject to the foregoing provisions of this Section 2.8 and Section 2.6,
each Security delivered under this Indenture upon registration of transfer of
or in exchange for or in lieu of any other Security shall carry the rights to
interest accrued and unpaid, and to accrue, that were carried by such other
Security.

          Interest on any Security that is converted in accordance with Section 9.2
during a Record Date Period shall be payable in accordance with the provisions
of Section 9.2.

SECTION 2.9 Persons Deemed Owners.

          Prior to due presentment of a Security for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name such Security is registered as the owner of such Security
for the purpose of receiving payment of principal of, premium, if any, and
(subject to Section 2.8) interest on such Security 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 2.10 Cancellation.

          All Securities surrendered for payment, repurchase, registration of
transfer or exchange or conversion shall, if surrendered to any Person other
than the Trustee, be delivered to the Trustee. All Securities so delivered to
the Trustee shall be cancelled promptly by the Trustee. No Securities shall be
authenticated in lieu of or in exchange for any Securities cancelled as
provided in this Section 2.10. The Trustee shall dispose of all cancelled
Securities in accordance with applicable law and its customary practices in
effect from time to time.

SECTION 2.11 Computation of Interest.

          Interest, excluding Additional Interest Amounts, on the Securities shall
be computed on the basis of a 360-day year of twelve 30-day months.

SECTION 2.12 CUSIP Numbers.

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

-25-

 

ARTICLE THREE

SATISFACTION AND DISCHARGE

SECTION 3.1 Satisfaction and Discharge of Indenture.

          This Indenture shall upon Company Request cease to be of further effect
(except as to any surviving rights of conversion, or registration of transfer
or exchange, or replacement of Securities herein expressly provided for and any
right to receive Additional Interest Amounts or Liquidated Damages as provided
in the form of Securities attached hereto as Exhibit A and the Company’s
obligations to the Trustee pursuant to Section 5.7), and the Trustee, at the
expense of the Company, shall execute proper instruments in form and substance
satisfactory to the Trustee acknowledging satisfaction and discharge of this
Indenture, when

	 	 	(a)     either
	 
	 	 	(1)     all Securities theretofore authenticated and delivered (other
than (A) Securities that have been destroyed, lost or stolen and
that have been replaced or paid as provided in Section 2.7 and (B)
Securities for whose payment money has theretofore been irrevocably
deposited in trust or segregated and held in trust by the Company
and thereafter repaid to the Company or discharged from such trust,
as provided in Section 8.3) have been delivered to the Trustee for
cancellation; or
	 
	 	 	(2)     all such Securities not theretofore delivered to the Trustee or
its agent for cancellation (other than Securities referred to in
clauses (A) and (B) of clause (a)(1) above)

		
	 	     (i)     have become due and payable, or
	 
	 	     (ii)     will have become due and payable at their Stated
Maturity within one year,

	 	 	and the Company, in the case of clause (i) or (ii) above, has irrevocably
deposited or caused to be irrevocably deposited with the Trustee as trust
funds (immediately available to the Holders in the case of clause (i)
above) an amount sufficient to pay and discharge the entire principal,
premium, if any, interest, including Additional Interest Amounts, if any,
and Liquidated Damages, if any, on such Securities not theretofore
delivered to the Trustee for cancellation, to the date of such deposit (in the case of
Securities that have become due and payable) or to the Stated Maturity;

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

          (c)     the Company has delivered to the Trustee an Officers’ Certificate
stating that all conditions precedent herein provided for relating to the
satisfaction and discharge of this Indenture have been complied with.

-26-

 

          Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 5.7, the obligations of
the Company to any Authenticating Agent under Section 5.12, the obligation of
the Company to pay Liquidated Damages, if money shall have been deposited with
the Trustee pursuant to clause (a)(2) of this Section 3.1, the obligations of
the Trustee under Section 3.2 and the last paragraph of Section 8.3, and the
obligations of the Company and the Trustee under Section 2.6 and Article Nine
shall survive such satisfaction and discharge. Funds held in trust pursuant to
this Section 3.1 are not subject to the provisions of Article Ten.

          In the event that the Company is required to pay Liquidated Damages to the
Holders pursuant to the Registration Rights Agreement, the Company will provide
written notice (“Liquidated Damages Notice”) to the Trustee of its obligation
to pay Liquidated Damages no later than 15 days prior to the proposed payment
date for the Liquidated Damages, and the Liquidated Damages Notice shall set
forth the amount of Liquidated Damages to be paid by the Company on such
payment date. The Trustee shall not at any time be under any duty or
responsibility to any Holder to determine the Liquidated Damages or with
respect to the nature, extent or calculation of the amount of Liquidated
Damages when made, or with respect to the method employed in such calculation
of the Liquidated Damages. Unless the Trustee receives a Liquidated Damages
Notice from the Company within the time period specified above or otherwise
from a Holder of the Securities, the Trustee is entitled to assume that no
Liquidated Damages are due and payable.

SECTION 3.2 Application of Trust Money.

          Subject to the provisions of the last paragraph of Section 8.3, all money
deposited with the Trustee pursuant to Section 3.1 shall be held in trust and
applied by it, in accordance with the provisions of the Securities and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent), to the Persons entitled
thereto, of the principal, premium, if any, Liquidated Damages, if any, and
interest for whose payment such money has been deposited with the Trustee.

          All moneys deposited with the Trustee pursuant to Section 3.1 (and held by
it or any Paying Agent) for the payment of Securities subsequently converted
shall be returned to the Company upon Company Request.

ARTICLE FOUR

REMEDIES

SECTION 4.1 Events of Default.

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

-27-

 

          (a)     default in the payment of the principal of or premium, if any, on any
Security at its Maturity, whether or not the such payment is prohibited by the
subordination provisions of this Indenture; or

          (b)     default in the payment of any interest if any (including Liquidated
Damages and Additional Interest Amounts, if any), upon any Security when it
becomes due and payable, and continuance of such default for a period of 30
days, whether or not such payment is prohibited by the subordination provisions
of this Indenture; or

          (c)     failure by the Company to give the Company Notice in accordance with
Section 12.3, whether or not such notice is prohibited by the subordination
provisions of this Indenture; or

          (d)     default in the performance, or breach, of any covenant of the Company
in this Indenture (other than a covenant a default in the performance or breach
of which is specifically dealt with elsewhere in this Section 4.1), and
continuance of such default or breach for a period of 60 days after there has
been given, by registered or certified mail, to the Company by the Trustee or
to the Company and the Trustee by the Holders of at least 25% in aggregate
principal amount of the Outstanding Securities, a written notice specifying
such default or breach and requiring it to be remedied and stating that such
notice is a “Notice of Default” hereunder; or

          (e)     default in the payment by the end of any applicable grace period, if
any, after maturity of the principal of any indebtedness under any bond,
debenture, note or other evidence of indebtedness for money borrowed by the
Company or any Significant Subsidiary with a principal amount then outstanding
in excess of U.S. $5,000,000, whether such indebtedness now exists or shall
hereafter be created, if the indebtedness is not discharged, or if such
indebtedness has been accelerated, such acceleration is not rescinded or
annulled, within a period of 30 days after there shall have been given, by
registered or certified mail, to the Company by the Trustee or to the Company
and the Trustee by the Holders of at least 25% in principal amount of the
Outstanding Securities a written notice specifying such default and requiring
the Company to cause such indebtedness to be discharged or such acceleration to
be rescinded or annulled and stating that such notice is a “Notice of Default”
hereunder; or

          (f)     the entry by a court having jurisdiction in the premises of (1) a
decree or order for relief in respect of the Company or any Significant
Subsidiary in an involuntary case or proceeding under any applicable federal or
state bankruptcy, insolvency, reorganization or other similar law or (2) a
decree or order adjudging the Company or any Significant Subsidiary a 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
Significant Subsidiary under any applicable federal or state law, or appointing
a custodian, receiver, liquidator, assignee, trustee, sequestrator or other
similar official of the Company or any Significant Subsidiary 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

-28-

 

          (g)     the commencement by the Company or any Significant Subsidiary of a
voluntary case or proceeding under any applicable federal or state 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 it to
the entry of a decree or order for relief in respect of the Company or any
Significant Subsidiary in an involuntary case or proceeding under any
applicable federal or state bankruptcy, insolvency, reorganization or other
similar law or to the commencement of any bankruptcy or insolvency case or
proceeding against it, or the filing by it of a petition or answer or consent
seeking reorganization or similar relief under any applicable federal or state
law, or the consent by it to the filing of such petition or to the appointment
of or taking possession by a custodian, receiver, liquidator, assignee,
trustee, sequestrator or other similar official of the Company or any
Significant Subsidiary or of any substantial part of its property, or the
making by it of an assignment for the benefit of creditors, or the admission by
it 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 Significant Subsidiary
in furtherance of any such action; or

          (h)     failure by the Company to deliver Conversion Shares, together with
cash in lieu of fractional shares, when such Conversion Shares or cash in lieu
of fractional shares are required to be delivered upon conversion of a
security, and such failure continues for 10 days after such required delivery
date.

SECTION 4.2 Acceleration of Maturity; Rescission and Annulment.

          If an Event of Default (other than an Event of Default specified in
Section 4.1(f) or 4.1(g)) occurs and is continuing, then in every such case the
Trustee or the Holders of not less than 25% in principal amount of the
Outstanding Securities may declare the principal of all the Securities to be
due and payable immediately, by a notice in writing to the Company (and to the
Trustee if given by the Holders), and upon any such declaration, such principal
and all accrued interest thereon shall become immediately due and payable. If
an Event of Default specified in Section 4.1(f) or 4.1(g) occurs, the principal
of, and accrued interest on, all the Securities shall ipso facto become
immediately due and payable without any declaration or other Act of the Holder
or any act on the part of the Trustee.

          At any time after such declaration of acceleration has been made and
before a judgment or decree for payment of the money due has been obtained by
the Trustee as hereinafter in this Article Four provided, the Holders of a
majority in principal amount of the Outstanding Securities, by written notice
to the Company and the Trustee, may rescind and annul such declaration and its
consequences if:

          (a)     the Company has paid or irrevocably deposited with the Trustee a sum
sufficient to pay

	 	 	(1)     all overdue interest and Liquidated Damages, if any, on all
Securities,
	 
	 	 	(2)     the principal of and premium, if any, on any Securities that
have become due otherwise than by such declaration of acceleration
and any interest thereon at the rate borne by the Securities,

-29-

 

	 	 	(3)     to the extent permitted by applicable law, interest upon
overdue interest at the rate then in effect, and
	 
	 	 	(4)     all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and its counsel; and

          (b) all Events of Default, other than the non-payment of the principal of,
and any premium and interest on, Securities that have become due solely by such
declaration of acceleration, have been cured or waived as provided in Section
4.13.

          No rescission or annulment referred to above shall affect any subsequent
default or impair any right consequent thereon.

SECTION 4.3 Collection of Indebtedness and Suits for Enforcement by Trustee.

          The Company covenants that if:

          (a)     default is made in the payment of any interest or Liquidated Damages
on any Security when it becomes due and payable and such default continues for
a period of 30 days, or

          (b)     default is made in the payment of the principal of or premium, if any,
on any Security at the Maturity thereof,

          the Company will upon demand of the Trustee pay to it, for the benefit of the
Holders of such Securities, the whole amount then due and payable on such
Securities for principal, premium, if any, Liquidated Damages, if any, and
interest on any overdue principal, premium, if any, Liquidated Damages, if any,
and, to the extent permitted by applicable law, on any overdue interest at the
rate then in effect, and in addition thereto, such further amount as shall be
sufficient to cover the reasonable costs and expenses of collection, including
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and its counsel.

          If the Company fails to pay such amounts forthwith upon such demand, the
Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree and may enforce the same
against the Company or any other obligor upon the Securities and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of
the property of the Company or any other obligor upon the Securities, wherever
situated.

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

-30-

 

SECTION 4.4 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 relating to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or the
creditors of either, the Trustee (whether or not the principal of, and any
interest on, the Securities shall then be due and payable as therein expressed
or by declaration or otherwise and whether or not the Trustee shall have made
any demand on the Company for the payment of overdue principal or interest)
shall be entitled and empowered, by intervention in such proceeding or
otherwise,

          (a)     to file and prove a claim for the whole amount of principal, premium,
if any, Liquidated Damages, if any, and interest owing and unpaid in respect of
the Securities and take such other actions, including participating as a
member, voting or otherwise, of any official committee of creditors appointed
in such matter, and to file such other papers or documents, in each of the
foregoing cases, 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 its counsel) and of
the Holders of Securities allowed in such judicial proceeding, and

          (b)     to collect and receive any moneys or other property payable or
deliverable on any such claim and to distribute the same; and any custodian,
receiver, assignee, trustee, liquidator, sequestrator or other similar official
in any such judicial proceeding is hereby authorized by each Holder of
Securities 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 of
Securities, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and its counsel and any other amounts due the Trustee under Section 5.7.

          Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder of a
Security 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 of a Security in any
such proceeding; provided, however, that the Trustee may, on behalf of such
Holders, vote for the election of a trustee in bankruptcy or similar official.

SECTION 4.5 Trustee May Enforce Claims without Possession of Securities.

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

-31-

 

SECTION 4.6 Application of Money Collected.

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

          FIRST: To the payment of all amounts due the Trustee under Section 5.7;

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

          THIRD: Any remaining amounts shall be repaid to the Company.

SECTION 4.7 Limitation on Suits.

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

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

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

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

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

          (e)     the Trustee has not received any direction inconsistent with such
written request from the Holders of a majority of the aggregate principal
amount of the Outstanding Securities during the 60 day period referred to in
(d) above;

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

-32-

 

SECTION 4.8 Unconditional Right of Holders to Receive Principal, Premium and
Interest and to Convert.

          Notwithstanding any other provision in this Indenture, the Holder of any
Security shall have the right, which is absolute and unconditional, to receive
payment of the principal of, premium, if any, and (subject to Section 2.8)
interest (and Liquidated Damages, if any) on such Security on the respective
Stated Maturities expressed in such Security (or, in the case of repurchase, on
the Repurchase Date), and to convert such Security in accordance with Article
Nine, and to institute suit for the enforcement of any such payment and right
to convert, and such rights shall not be impaired without the consent of such
Holder.

SECTION 4.9 Restoration of Rights and Remedies.

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

SECTION 4.10 Rights and Remedies Cumulative.

          Except as otherwise provided with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Securities in the last paragraph of
Section 2.7, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders
of Securities is intended to be exclusive of any other right or remedy, and
every right and remedy shall, to the extent permitted by law, be cumulative and
in addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.

SECTION 4.11 Delay or Omission Not Waiver.

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

SECTION 4.12 Control by Holders of Securities.

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

-33-

 

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

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

SECTION 4.13 Waiver of Past Defaults.

          The Holders, either (a) through the written consent of not less than a
majority in principal amount of the Outstanding Securities or (b) by the
adoption of a resolution, at a meeting of Holders of the Outstanding Securities
at which a quorum is present, by the Holders of at least a majority in
principal amount of the Outstanding Securities represented at such meeting, may
on behalf of the Holders of all the Securities waive any past default hereunder
and its consequences, except a default (1) in the payment of the principal of,
premium, if any, interest, including any Additional Interest Amounts, if any,
the Repurchase Price or Liquidated Damages, if any, on any Security or (2) in
respect of a covenant or provision hereof that under Article Seven cannot be
modified or amended without the consent of the Holder of each Outstanding
Security affected.

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

SECTION 4.14 Undertaking for Costs.

          All parties to this Indenture agree, and each Holder of any Security by
his acceptance thereof shall be deemed to have agreed, that any court may in
its discretion require, in any suit for the enforcement of any right or remedy
under this Indenture, or in any suit against the Trustee for any action taken,
suffered or omitted by it as Trustee, the filing by any party litigant in such
suit of an undertaking to pay the costs of such suit, and that such court may
in its discretion assess reasonable costs, including reasonable attorneys’ fees
and expenses, against any party litigant in such suit, having due regard to the
merits and good faith of the claims or defenses made by such party litigant;
but the provisions of this Section 4.14 shall not apply to any suit instituted
by the Company, to any suit instituted by the Trustee, to any suit instituted
by any Holder, or group of Holders, holding in the aggregate more than 10% in
principal amount of the Outstanding Securities, or to any suit instituted by
any Holder of any Security for the enforcement of the payment of the principal
of, premium, if any, Liquidated Damages, if any, or interest on any Security on
or after the respective Stated Maturity or Maturities expressed in such
Security (or, in the case of repurchase, on or after the Repurchase Date) or
for the enforcement of the right to convert any Security in accordance with
Article Nine.

SECTION 4.15 Waiver of Stay, Usury or Extension 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, usury or extension law wherever
enacted, now or at any time hereafter in force, that may affect the covenants
or the performance of this Indenture; and the Company (to

-34-

 

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 by reason of
such law 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 FIVE

THE TRUSTEE

SECTION 5.1 Certain Duties and Responsibilities.

	 	 	(a)     Except during the continuance of an Event of Default,
	 
	 	 	(1)     the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture, and no
implied covenants or obligations shall be read into this Indenture
against the Trustee; and
	 
	 	 	(2)     in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee pursuant to the requirements of
this Indenture; but in the case of any such certificates or
opinions that by any provision hereof are specifically required to be
furnished to the Trustee, the Trustee shall be under a duty to
examine the same to determine whether or not they conform to the
procedural requirements of this Indenture but not to verify the
contents thereof.

          (b)     In case an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.

          (c)     No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct, except that

	 	 	(1)     this paragraph (c) shall not be construed to limit the effect
of paragraph (a) of this Section 5.1;
	 
	 	 	(2)     the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer, unless it shall be proved
that the Trustee was negligent in ascertaining the pertinent facts;
	 
	 	 	(3)     the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with
the direction of the Holders of a majority in principal amount of
the Outstanding Securities relating to the time, method and place
of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon the
Trustee, under this Indenture; and

-35-

 

	 	 	(4)     no provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in
the exercise of any of its rights or powers, if it shall have
reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably
assured to it.

          (d) Whether or not therein expressly so provided, every provision of this
Indenture relating to the conduct or affecting the liability of or affording
protection to the Trustee shall be subject to the provisions of this Section
5.1.

SECTION 5.2 Notice of Defaults.

          Within 90 days after the occurrence of any default hereunder as to which a
Responsible Officer of the Trustee has actually received written notice, the
Trustee shall give to all Holders of Securities, in the manner provided in
Section 1.6, notice of such default, unless such default shall have been cured
or waived; provided, however, that, except in the case of a default in the
payment of the principal of, premium, if any, or interest on any Security, the
Trustee shall be protected in withholding such notice if and so long as the
board of directors, the executive committee or a trust committee of directors or Responsible
Officers of the Trustee in good faith determine that the withholding of such
notice is in the interest of the Holders. For the purpose of this Section 5.2,
the term “default” means any event that is, or after notice or lapse of time or
both would become, an Event of Default.

SECTION 5.3 Certain Rights of Trustee.

	 	 	(a)     Subject to the provisions of Section 5.1:
	 
	 	 	(1)     the Trustee may conclusively rely and shall be fully protected
in acting or refraining from acting upon any resolution, Officers’
Certificate, other certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond,
debenture, note, coupon, other evidence of indebtedness or other
paper or document (whether in its original or facsimile form)
believed by it to be genuine and to have been signed or presented
by the proper party or parties;
	 
	 	 	(2)     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 shall be sufficiently
evidenced by a Board Resolution;
	 
	 	 	(3)     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, rely upon an
Officers’ Certificate;
	 
	 	 	(4)     the Trustee may consult with counsel of its selection and the
advice of such counsel or any Opinion of Counsel shall be full and
complete authorization

-36-

 

	 	 	and protection in respect of any action
taken, suffered or omitted by it hereunder in good faith and in
reliance thereon;
	 
	 	 	(5)     the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or
direction of any of the Holders of Securities pursuant to this
Indenture, unless such Holders shall have offered to the Trustee
reasonable security or indemnity satisfactory to it against the
costs, expenses and liabilities that might be incurred by it in
compliance with such request or direction;
	 
	 	 	(6)     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, coupon, other evidence of
indebtedness or other paper or document, but the Trustee 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 expense of the
Company and shall incur no liability of any kind by reason of such
inquiry or investigation; and

          (b)     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.

SECTION 5.4 Not Responsible for Recitals or Issuance of Securities.

          The recitals contained herein and in the Securities (except the Trustee’s
certificates of authentication) shall be taken as the statements of the
Company, and the Trustee assumes no responsibility for their correctness. The
Trustee makes no representations as to the validity or sufficiency of this
Indenture, of the Securities or of the Common Stock issuable upon the
conversion of the Securities. The Trustee shall not be accountable for the use
or application by the Company of Securities or the proceeds thereof.

SECTION 5.5 May Hold Securities, Act as Trustee under Other Indentures.

          The Trustee, any Authenticating Agent, any Paying Agent, any Conversion
Agent or any other agent of the Company or the Trustee, in its individual or
any other capacity, may become the owner or pledgee of Securities and may
otherwise deal with the Company with the same rights it would have if it were
not Trustee, Authenticating Agent, Paying Agent, Conversion Agent or such other
agent.

          The Trustee may become and act as trustee under other indentures under
which other securities, or certificates of interest or participation in other
securities, of the Company are outstanding in the same manner as if it were not
Trustee hereunder.

-37-

 

SECTION 5.6 Money Held in Trust.

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

SECTION 5.7 Compensation and Reimbursement.

          The Company agrees

          (a)     to pay to the Trustee from time to time such reasonable 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 by
any provision of law in regard to the compensation of a trustee of an express
trust);

          (b)     Except as otherwise expressly provided herein, 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 and
disbursements of its agents and counsel), except any such expense, disbursement
or advance shall be determined to have been caused by its negligence or willful
misconduct; and

          (c)     to fully indemnify the Trustee (and its directors, officers, employees
and agents) for, and to hold it harmless against, any and all loss, damage,
claim, liability or expense, including taxes (other than taxes based on the
income of the Trustee) and counsel fees and expenses, incurred without
negligence, bad faith or willful misconduct on its part, arising out of or in
connection with the acceptance or administration of this trust, including the
reasonable costs, expenses and reasonable attorneys’ fees of defending itself
against any claim or liability in connection with the exercise or performance
of any of its powers or duties hereunder.

          When the Trustee incurs expenses or renders services in connection with an
Event of Default specified in Section 4.1(f) or Section 4.1(g) with respect to
the Company, the expenses (including the reasonable charges of its counsel) and
the compensation for the services are intended to constitute expenses of the
administration under any applicable federal or state bankruptcy, insolvency or
other similar law.

          The Trustee shall have a lien prior to the Securities as to all property
and funds held by it hereunder for any amount owing it or any predecessor
Trustee pursuant to this Section 5.7, except with respect to funds held in
trust for the benefit of the Holders of particular Securities.

          The provisions of this Section 5.7 shall survive the termination of this
Indenture or the earlier resignation or removal of the Trustee.

SECTION 5.8 Corporate Trustee Required; Eligibility.

          There shall at all times be a Trustee hereunder which shall be a Person
that is eligible pursuant to the Trust Indenture Act to act as such, having a
combined capital and surplus

-38-

 

(or for such purposes, the combined capital and
surplus of any parent holding company) of at least U.S. $25,000,000, subject to
supervision or examination by federal or state authority, in good standing and
having an established place of business or agency in the Borough of Manhattan,
The City of New York. If such corporation publishes reports of condition at
least annually, pursuant to law or to the requirements of said supervising or
examining authority, then for the purposes of this Section 5.8, the combined
capital and surplus of such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time the Trustee shall cease to be eligible in accordance
with the provisions of this Section 5.8, it shall resign immediately in the
manner and with the effect hereinafter specified in this Article and a
successor shall be appointed pursuant to Section 5.9.

SECTION 5.9 Resignation and Removal; Appointment of Successor.

          (a)     No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 5.10.

          (b)     The Trustee may resign at any time by giving written notice thereof to
the Company. If the instrument of acceptance by a successor Trustee required
by Section 5.10 shall not have been delivered to the Trustee within 30 days
after the giving of such notice of resignation, the resigning Trustee or the
Company may petition at the expense of the Company any court of competent
jurisdiction for the appointment of a successor Trustee.

          (c)     The Trustee may be removed at any time by Act of the Holders of a
majority in principal amount of the Outstanding Securities, delivered to the
Trustee and the Company. If the instrument of acceptance by a successor
Trustee required by Section 5.10 shall not have been delivered to the Trustee
within 30 days after the giving of such notice of removal, the removed Trustee
or the Company may petition at the expense of the Company any court of
competent jurisdiction for the appointment of a successor Trustee.

          (d)     If at any time:

	 	 	(1)     the Trustee shall cease to be eligible under Section 5.8 and
shall fail to resign after written request therefor by the Company
or by any Holder of a Security who has been a bona fide Holder of a
Security for at least six months, or
	 
	 	 	(2)     the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of
its property shall be appointed or any public officer shall take
charge or control of the Trustee or of its property or affairs for
the purpose of rehabilitation, conservation or liquidation,

then, (i) in any such case the Company may remove the Trustee, or (ii) in the
case of clause (d)(1) above only and subject to Section 4.14, any Holder of a
Security who has been a bona fide Holder of a Security for at least six months
may, on behalf of himself and all others similarly situated, petition any court
of competent jurisdiction for the removal of the Trustee and the appointment of
a successor Trustee.

-39-

 

          (e)     If the Trustee shall resign, be removed or become incapable of acting,
or if a vacancy shall occur in the office of Trustee for any cause, the Company
shall promptly appoint a successor Trustee and shall comply with the applicable
requirements of this Section 5.9 and Section 5.10. If, within one year after
such resignation, removal or incapability, or occurrence of such vacancy, a
successor Trustee shall be appointed by Act of the Holders of a majority in
principal amount of the Outstanding Securities delivered to the Company and the
retiring Trustee, the successor Trustee so appointed shall, forthwith upon its
acceptance of such appointment in accordance with the applicable requirements
of Section 5.10, become the successor Trustee and supersede the successor Trustee appointed by the
Company. If no successor Trustee shall have been so appointed by the Company
or the Holders of Securities and accepted appointment in the manner required by
this Section 5.9 and Section 5.10, any Holder of a Security who has been a bona
fide Holder of a Security for at least six months may, on behalf of himself and
all others similarly situated, petition any court of competent jurisdiction for
the appointment of a successor Trustee.

          (f)     The successor Trustee shall give notice of each resignation and each
removal of the Trustee and each appointment of a successor Trustee to all
Holders of Securities in the manner provided in Section 1.6. Each notice shall
include the name of the successor Trustee and the address of its Corporate
Trust Office.

SECTION 5.10 Acceptance of Appointment by Successor.

          Every successor Trustee appointed hereunder shall execute, acknowledge and
deliver to the Company and to the retiring Trustee an instrument accepting such
appointment, and thereupon the resignation or removal of the retiring Trustee
shall become effective and such successor Trustee, without any further act,
deed or conveyance, shall become vested with all the rights, powers, trusts and
duties of the retiring Trustee. Such retiring Trustee shall, upon payment of
its charges, promptly execute and deliver an instrument transferring to such
successor Trustee all the rights, powers and trusts of the retiring Trustee and
shall duly assign, transfer and deliver to such successor Trustee all property
and money held by such retiring Trustee hereunder. Upon request of any such
successor Trustee, the Company shall execute any and all instruments for more
fully and certainly vesting in and confirming to such successor Trustee all
such rights, powers and trusts.

          No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor Trustee shall be eligible under this Article.

SECTION 5.11 Merger, Conversion, Consolidation or Succession to Business.

          Any corporation or association into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation or
association resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any corporation or association succeeding to all
or substantially all of the corporate trust business of the Trustee, shall be
the successor of the Trustee hereunder (provided such corporation or
association shall be otherwise eligible under this Article), without the
execution or filing of any paper or any further act on the part of any of the
parties hereto. In case any Securities shall have been authenticated, but not
delivered, by the Trustee then in office, any successor by merger, conversion
or

-40-

 

consolidation to such authenticating Trustee may adopt such authentication
and deliver the Securities so authenticated with the same effect as if such
successor Trustee had itself authenticated such Securities.

SECTION 5.12 Authenticating Agents.

          The Trustee may, with the consent of the Company, appoint an
Authenticating Agent or Agents acceptable to the Company with respect to the
Securities, which shall be authorized to act on behalf of the Trustee to
authenticate Securities issued upon exchange or substitution pursuant to this
Indenture.

          Securities authenticated by an Authenticating Agent shall be entitled to
the benefits of this Indenture and shall be valid and obligatory for all
purposes as if authenticated by the Trustee hereunder, and every reference in
this Indenture to the authentication and delivery of Securities by the Trustee
or the Trustee’s certificate of authentication shall be deemed to include
authentication and delivery on behalf of the Trustee by an Authenticating Agent
and a certificate of authentication executed on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent shall be subject to acceptance
by the Company and shall at all times be a corporation or association organized
and doing business under the laws of the United States of America, any state
thereof or the District of Columbia, authorized under such laws to act as
Authenticating Agent and subject to supervision or examination by government or
other fiscal authority. If at any time an Authenticating Agent shall cease to
be eligible in accordance with the provisions of this Section 5.12, such
Authenticating Agent shall resign immediately in the manner and with the effect
specified in this Section 5.12.

          Any corporation or association into which an Authenticating Agent may be
merged or converted or with which it may be consolidated, or any corporation or
association resulting from any merger, conversion or consolidation to which
such Authenticating Agent shall be a party, or any corporation or association
succeeding to the corporate agency or corporate trust business of an
Authenticating Agent, shall continue to be an Authenticating Agent (provided
such corporation or association shall be otherwise eligible under this Section
5.12), without the execution or filing of any paper or any further act on the
part of the Trustee or the Authenticating Agent.

          An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Company. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice
thereof to such Authenticating Agent and to the Company. Upon receiving such a
notice of resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section 5.12, the Trustee may appoint a successor
Authenticating Agent, which shall be subject to acceptance by the Company. Any
successor Authenticating Agent, upon acceptance of its appointment hereunder,
shall become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an Authenticating Agent.
No successor Authenticating Agent shall be appointed unless eligible under the
provisions of this Section 5.12.

-41-

 

          The Company agrees to pay to each Authenticating Agent from time to time
reasonable compensation for its services under this Section 5.12.

          If an Authenticating Agent is appointed with respect to the Securities
pursuant to this Section 5.12, the Securities may have endorsed thereon, in
addition to or in lieu of the Trustee’s certification of authentication, an
alternative certificate of authentication in the following form:

          This is one of the Securities referred to in the within-mentioned
Indenture.

	 	 	 	 	 	 	 
	 	 	
By:
	 	[_________________]	 	 
	 	 	 	 	as Authenticating Agent	 	 
	 	 	 	 	 	 	 
	 	 	
By	 	 	 	 
	 	 	 	 	
	 	 
	 	 	 	 	Authorized Signature	 	 

SECTION 5.13 Disqualification; Conflicting Interests.

               If the Trustee has or shall acquire a conflicting interest within the
meaning of the Trust Indenture Act, the Trustee shall either eliminate such
interest or resign as Trustee hereunder, to the extent and in the manner
provided by, and subject to the provisions of, the Trust Indenture Act and this
Indenture.

SECTION 5.14 Preferential Collection of Claims Against Company.

               If and when the Trustee shall be or become a creditor of the Company (or
any other obligor upon the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims
against the Company (or any such other obligor).

ARTICLE SIX

CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE

SECTION 6.1 Company May Consolidate, Etc., Only on Certain Terms.

               The Company shall not consolidate with or merge into any other Person or
convey, transfer, sell or lease its properties and assets substantially as an
entirety to any Person, and the Company shall not permit any Person to
consolidate with or merge into it or convey, transfer, sell or lease such
Person’s properties and assets substantially as an entirety to it, unless:

               (a)     the Person formed by such consolidation or into or with which the
Company is merged, or the Person to which the Company’s properties and assets
are conveyed, transferred, sold or leased, shall be a corporation, limited
liability company, partnership or trust organized and validly existing under
the laws of the United States of America, any state thereof or the District of
Columbia and, if other than the Company, shall expressly assume, by an
indenture supplemental hereto, executed and delivered to the Trustee, in form
satisfactory to the

-42-

 

Trustee, the due and punctual payment of the principal of,
premium, if any, Liquidated Damages, if any, and interest on all of the Securities as applicable, and the
performance or observance of every covenant of this Indenture on the part of
the Company to be performed or observed;

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

          (c)     the Company has delivered to the Trustee an Officers’ Certificate and
an Opinion of Counsel, each stating that such consolidation, merger,
conveyance, transfer or lease and, if a supplemental indenture is required in
connection with such transaction, such supplemental indenture, comply with this
Article and that all conditions precedent herein provided for relating to such
transaction have been complied with, together with any documents required under
Section 7.3.

SECTION 6.2 Successor Substituted.

          Upon any consolidation of the Company with, or merger of the Company into,
any other Person or any conveyance, transfer or lease of all or substantially
all the properties and assets of the Company in accordance with Section 6.1,
the successor Person formed by such consolidation or into or with which the
Company is merged or to which such conveyance, transfer or lease is made shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company under this Indenture with the same effect as if such successor
Person had been named as the Company herein, and thereafter, except in the case
of a lease, the predecessor Person shall be relieved of all obligations and
covenants under this Indenture and the Securities.

ARTICLE SEVEN

SUPPLEMENTAL INDENTURES

SECTION 7.1 Supplemental Indentures without Consent of Holders of Securities.

          Without the consent of any Holders of Securities, the Company, when
authorized by a Board Resolution, and the Trustee, at any time and from time to
time, may enter into one or more indentures supplemental hereto for any of the
following purposes:

          (a)     to evidence the succession of another Person to the Company and the
assumption by any such successor of the covenants and obligations of the
Company herein and in the Securities as permitted by this Indenture; or

          (b)     to add to the covenants of the Company for the benefit of the Holders
of Securities or to surrender any right or power herein conferred upon the
Company; or

          (c)     to secure the Securities; or

          (d)     to make provision with respect to the conversion rights of Holders of
Securities pursuant to Section 9.11; or

-43-

 

          (e)     to make any changes or modifications to this Indenture necessary in
connection with the registration of any Registrable Securities under the
Securities Act as contemplated by the Registration Rights Agreement (provided
such action pursuant to this clause (e) shall not adversely affect the
interests of the Holders of Securities in any material respect); or

          (f)     to comply with the requirements of the Trust Indenture Act or the
rules and regulations of the Commission thereunder in order to effect or
maintain the qualification of this Indenture under the Trust Indenture Act, as
contemplated by this Indenture or otherwise; or

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

          (h)     to cure any ambiguity, to correct or supplement any provision herein
that may be inconsistent with any other provision herein or that is otherwise
defective, or to make any other provisions with respect to matters or questions
arising under this Indenture as the Company and the Trustee may deem necessary
or desirable (provided such action pursuant to this clause (h) shall not
adversely affect the interests of the Holders of Securities in any material
respect).

          Upon Company Request accompanied by a Board Resolution authorizing the
execution of any such supplemental indenture, and subject to and upon receipt
by the Trustee of the documents described in Section 7.3 hereof, the Trustee
shall join with the Company in the execution of any supplemental indenture
authorized or permitted by the terms of this Indenture and to make any further
appropriate agreements and stipulations that may be therein contained.

SECTION 7.2 Supplemental Indentures with Consent of Holders of Securities.

          With either (a) the written consent of the Holders of not less than a
majority in principal amount of the Outstanding Securities, by the Act of said
Holders delivered to the Company and the Trustee, or (b) by the adoption of a
resolution, at a meeting of Holders of the Outstanding Securities at which a
quorum is present, by the Holders of a majority in principal amount of the
Outstanding Securities represented at such meeting, the Company, when
authorized by a Board Resolution, and the Trustee may enter into an indenture
or indentures supplemental hereto for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions of this
Indenture or of modifying in any manner the rights of the Holders of Securities
under this Indenture; provided, however, that no such supplemental indenture
shall, without the consent or affirmative vote of the Holder of each
Outstanding Security affected thereby,

	 	 	(1)     change the Stated Maturity of the principal of, or any
installment of interest on, any Security, or reduce the principal
amount, any premium or the rate of interest payable thereon,
including any Additional Interest Amounts, or change
the place at which or the coin or currency in which any Security or
the interest or any premium thereon or any other amount in respect
thereof is payable; or
	 
	 	 	(2)     impair the right to institute suit for the enforcement of any
payment or conversion in respect of any Security on or after the
Stated Maturity thereof (or, in the case of any repurchase, on or
after the Repurchase Date); or

-44-

 

	 	 	(3)     except as permitted by Section 9.11, adversely affect the right
to convert any Security as provided in Article Nine; or
	 
	 	 	(4)     modify the provisions of this Indenture with respect to the
subordination of the Securities in a manner adverse to the Holders
of any Securities; or
	 
	 	 	(5)     reduce the percentage in principal amount of the Outstanding
Securities the consent of whose Holders is required for any
supplemental indenture to modify or amend any provision of this
Indenture or the consent of whose Holders is required for any
waiver (of compliance with certain provisions of this Indenture or
certain defaults hereunder and their consequences) provided for in
this Indenture; or
	 
	 	 	(6)     modify any of the provisions of this Section 7.2 except to
increase any percentage contained herein or therein or 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
	 
	 	 	(7)     amend or modify the provisions of Article Twelve in a manner
adverse to the Holders after the Holder’s right to require the
Company to repurchase the Securities upon a Change in Control
arises.

          It shall not be necessary for any Act of Holders of Securities under this
Section 7.2 to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such Act shall approve the substance
thereof.

          The quorum at any meeting called to adopt a resolution shall be Holders
representing a majority in aggregate principal amount of Securities at the time
Outstanding.

SECTION 7.3 Execution of Supplemental Indentures.

          In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby
of the trusts created by this Indenture, the Trustee shall be provided with,
and (subject to Sections 5.1 and 5.3) shall be fully protected in relying upon,
an Opinion of Counsel stating that the execution of such supplemental indenture
is authorized or permitted by this Indenture and that such supplemental
indenture has been duly authorized, executed and delivered by the Company and
constitutes a valid and legally binding obligation of the Company enforceable
against the Company in accordance with its terms. The Trustee may, but shall
not be obligated to, enter into any such supplemental indenture that affects the Trustee’s own rights, duties or immunities
under this Indenture or otherwise.

SECTION 7.4 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 appertaining thereto shall be bound thereby.

-45-

 

SECTION 7.5 Reference in Securities to Supplemental Indentures.

          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
Company and the Trustee, to any such supplemental indenture may be prepared and
executed by the Company and authenticated and delivered by the Trustee in
exchange for Outstanding Securities.

SECTION 7.6 Notice of Supplemental Indentures.

          Promptly after the execution by the Company and the Trustee of any
supplemental indenture pursuant to the provisions of Section 7.2, the Company
shall give notice to all Holders of Securities of such fact, setting forth in
general terms the substance of such supplemental indenture, in the manner
provided in Section 1.6. Any failure of the Company to give such notice, or
any defect therein, shall not in any way impair or affect the validity of any
such supplemental indenture.

ARTICLE EIGHT

COVENANTS

SECTION 8.1 Payment of Principal, Premium and Interest.

          The Company covenants and agrees that it will duly and punctually pay the
principal of and premium, if any, and interest (including Additional Interest
Amounts, if any) on the Securities in accordance with the terms of the
Securities and this Indenture. The Company shall deposit or cause to be
deposited with the Trustee, no later than 12:00 noon Eastern time on the date
of the Stated Maturity of any Security or no later than 12:00 noon Eastern time
on the due date for any installment of interest (including Additional Interest
Amounts, if any), all payments so due, which payments shall be in immediately
available funds on the date of such Stated Maturity or due date, as the case
may be.

SECTION 8.2 Maintenance of Offices or Agencies.

          The Company hereby appoints the Corporate Trust Office or such other
office or agency of the Trustee as its agent in the Borough of Manhattan, The
City of New York, where Securities may be presented or surrendered for payment,
where Securities may be surrendered for registration of transfer or exchange,
where Securities may be surrendered for conversion, and where notices and
demands to or upon the Company in respect of the Securities and this Indenture
may be served.

          The Company may at any time and from time to time vary or terminate the
appointment of any such agent or appoint any additional agents for any or all
of such purposes; provided, however, that until all of the Securities have been
delivered to the Trustee for cancellation, or moneys sufficient to pay the
principal of, premium, if any, and interest on the Securities have been made
available for payment and either paid or returned to the Company

-46-

 

pursuant to the provisions of Section 8.3, the Company shall maintain in the Borough of
Manhattan, The City of New York, an office or agency where Securities may be
presented or surrendered for payment and conversion, where Securities may be
surrendered for registration of transfer or exchange and where notices and
demands to or upon the Company in respect of the Securities and this Indenture
may be served. The Company shall give prompt written notice to the Trustee, and
notice to the Holders in accordance with Section 1.6, of the appointment or
termination of any such agents and of the location and any change in the
location of any such office or agency.

          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,
presentations and surrenders may be made and notices and demands may be served
on the Corporate Trust Office.

SECTION 8.3 Money for Security Payments to Be Held in Trust.

          If the Company will act as its own Paying Agent, it shall, on or before
each due date of the principal of, premium, if any, or interest on any of the
Securities, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum sufficient to pay the principal, premium, if any, or interest so
becoming due until such sums shall be paid to such Persons or otherwise
disposed of as herein provided, and the Company will promptly notify the
Trustee of its action or failure so to act.

          Whenever the Company shall have one or more Paying Agents, it will, no
later than 12:00 noon Eastern time on each due date of the principal of,
premium, if any, or interest on any Securities, deposit with the Trustee a sum
sufficient to pay the principal, premium, if any, or interest so becoming due,
such sum to be held for the benefit of the Persons entitled to such principal,
premium, if any, or interest, and (unless such Paying Agent is the Trustee) the
Company will promptly notify the Trustee of any failure so to act.

          The Company will cause each Paying Agent other than the Trustee to execute
and deliver to the Trustee an instrument in which such Paying Agent shall agree
with the Trustee, subject to the provisions of this Section 8.3, that such
Paying Agent will:

          (a)     hold all sums held by it for the payment of the principal of, premium,
if any, or interest on Securities for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise disposed of
as herein provided;

          (b)     give the Trustee notice of any default by the Company (or any other
obligor upon the Securities) in the making of any payment of principal,
premium, if any, or interest; and

          (c)     at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so held
by such Paying Agent.

          The Company may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, pay, or by Company
Order direct any Paying Agent to pay, to the Trustee all sums held in trust by
the Company or such Paying Agent, such sums to be held by the Trustee upon the
same trusts as those upon which such sums were

-47-

 

held by the Company or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with respect to such
money.

          Anything contained herein to the contrary notwithstanding, any money held
by the Trustee or any Paying Agent in trust for the payment and discharge of
the principal of, premium, if any, Liquidated Damages, if any, or interest on
any Security that remains unclaimed for two years after the date when each
payment of such principal, premium, Liquidated Damages, if any, or interest has
become payable shall, upon the request of the Company, be repaid by the Trustee
to the Company as its absolute property free from trust, and the Trustee shall
thereupon be released and discharged with respect thereto and the Holders shall
look only to the Company for the payment of the principal, premium or interest
on such Security. The Trustee shall not be liable to the Company or any Holder
for interest on funds held by it for the payment and discharge of the
principal, premium or interest on any of the Securities to any Holder. The
Company shall not be liable for any interest on the sums paid to it pursuant to
this paragraph and shall not be regarded as a trustee of such money.

SECTION 8.4 Existence.

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

SECTION 8.5 Statement by Officers as to Default.

          The Company shall deliver to the Trustee, within 120 days after the end of
each fiscal year of the Company ending after the date hereof, an Officers’
Certificate (one of the signers of which shall be the Company’s principal
executive, principal financial or principal accounting officer), stating
whether or not to the best knowledge of the signers thereof the Company is in
default in the performance and observance of any of the terms, provisions and
conditions of this Indenture (without regard to any period of grace or
requirement of notice provided hereunder) and, if the Company shall be in
default, specifying all such defaults and the nature and status thereof of
which they have knowledge.

          The Company will deliver to the Trustee, forthwith upon becoming aware of
any default in the performance or observance of any covenant, agreement or
condition contained in this Indenture, or any Event of Default, an Officers’
Certificate specifying with particularity such default or Event of Default and
further stating what action the Company has taken, is taking or proposes to
take with respect thereto.

          Any notice required to be given under this Section 8.5 shall be delivered
to the Trustee at the Corporate Trust Office.

-48-

 

SECTION 8.6 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 of a Security or the holder of
shares of Common Stock issued upon conversion thereof, the Company will
promptly furnish or cause to be furnished Rule 144A Information to such Holder
of Securities or such holder of shares of Common Stock issued upon conversion
of Securities, or to a prospective purchaser of any such security designated by
any such Holder or 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 (or
any successor provision thereto) in connection with the resale of any such
security; provided, however, that the Company shall not be required to furnish
such information in connection with any request made on or after the date that
is two years from the later of (a) the date such a security (or any such
predecessor security) was last acquired from the Company or (b) the date such a
security (or any such predecessor security) was last acquired from an
“affiliate” of the Company within the meaning of Rule 144 under the Securities
Act (or any successor provision thereto). “Rule 144A Information” shall be
such information as is specified pursuant to Rule 144A(d) (4) under the
Securities Act (or any successor provision thereto).

SECTION 8.7 Additional Interest Notice. 

          In the event the Company is required to pay Additional Interest Amounts
pursuant to Section 11.1 hereof, the Company shall provide a notice (an
“Additional Interest Payment Notice”) to the Trustee of its obligation to pay
an Additional Interest Amount no later than fifteen days prior to the payment
date for the Additional Interest Amount, and the Additional Interest Payment
notice shall set forth the dividend per share of Common Stock to be paid by the
Company on the Common Stock, the record date for the payment of such dividend
and the related dividend payment date. The Trustee shall not at any time be
under a duty or owe a responsibility to any holder of the Securities to
determine the amount of the Additional Interest Amount, or with respect to the
nature, extent or calculation of the amount of Additional Interest Amounts when
made, or with respect to the method employed in such calculation of the
Additional Interest Amounts.

ARTICLE NINE 

CONVERSION OF SECURITIES 

SECTION 9.1 Conversion Privilege and Conversion Rate. 

          Subject to and upon compliance with the provisions of this Article, at the
option of the Holder thereof, any Security or any portion of the principal
amount thereof that is U.S.$l,000 or an integral multiple of U.S.$1,000 may be
converted into fully paid and nonassessable shares (calculated as to each
conversion to the nearest 1/100th of a share) of Common Stock of the Company at
the Conversion Rate, determined as hereinafter provided, in effect at the time
of conversion. Such conversion right shall commence upon the original issuance
of the Securities and expire at the close of business on July 15, 2010, unless
the Security has been previously repurchased, subject, in the case of
conversion of any Global Security, to any Applicable Procedures. In case the
Holder of a security exercises his right to

-49-

 

require the Company to repurchase the Security, such conversion right in respect of the Security, or portion
thereof so called, shall expire at the close of business on the Business Day
immediately preceding the Repurchase Date, unless the Company defaults in
making the payment due upon repurchase (in each case subject, as aforesaid, to
any Applicable Procedures with respect to any Global Security).

          The rate at which shares of Common Stock shall be delivered upon
conversion (herein called the “Conversion Rate”) shall be initially 50.5561
shares of Common Stock for each U.S.$l,000 principal amount of Securities. The
Conversion Rate shall be adjusted in certain instances as provided in this
Article Nine.

SECTION 9.2 Exercise of Conversion Privilege. 

          In order to exercise the conversion privilege, the Holder of any Security
to be converted shall surrender such Security, duly endorsed or assigned to the
Company or in blank, at any office or agency of the Company maintained for that
purpose pursuant to Section 8.2, accompanied by a duly signed and completed
conversion notice substantially in the form attached hereto as Exhibit C
stating that the Holder elects to convert such Security or, if less than the
entire principal amount thereof is to be converted, the portion thereof to be
converted. Each Security surrendered for conversion (in whole or in part)
during the period from the close of business on any Regular Record Date next
preceding any Interest Payment Date to the opening of business on such Interest
Payment Date shall (except in the case of any Security or portion thereof that
is to be repurchased on a Repurchase Date, with the consequence that the
conversion right of such Security would terminate between such Regular Record Date
and the close of business on such Interest Payment Date) be accompanied by
payment in New York Clearing House funds or other funds acceptable to the
Company of an amount equal to the interest and Liquidated Damages, if any,
payable on such Interest Payment Date on the principal amount of such Security
(or part thereof, as the case may be) being surrendered for conversion. The
interest and Liquidated Damages, if any, so payable on such Interest Payment
Date, with respect to any Security (or portion thereof, if applicable) that is
surrendered for conversion during the period from the close of business on any
Record Date next preceding any Interest Payment Date to the opening of business
on such Interest Payment Date, shall be paid to the Holder of such Security as
of such Regular Record Date. Interest and Liquidated Damages, if any, payable
in respect of any Security surrendered for conversion on or after an Interest
Payment Date shall be paid to the Holder of such Security as of the next
preceding Regular Record Date, notwithstanding the exercise of the right of
conversion. Except as provided in this paragraph and subject to the last
paragraph of Section 2.8, no cash payment or adjustment shall be made upon any
conversion on account of any interest accrued from the Interest Payment Date
next preceding the conversion date, in respect of any Security (or part
thereof, as the case may be) surrendered for conversion, or on account of any
dividends on the Common Stock issued upon conversion. The Company’s delivery
to the Holder of the number of shares of Common Stock (and cash in lieu of
fractions thereof, as provided in this Indenture) into which a Security is
convertible and any rights and warrants pursuant to Section 9.4(m) will be
deemed to satisfy the Company’s obligation to pay the principal amount of the
Security.

          Securities shall be deemed to have been converted on the day of surrender
of such Securities for conversion in accordance with the foregoing provisions,
and at such time the rights

-50-

 

of the Holders of such Securities as Holders shall cease, and the Person or Persons entitled to receive the Common Stock issuable
upon conversion shall be treated for all purposes as the record holder or
holders of such Common Stock at such time. As promptly as practicable on or
after the conversion date, the Company shall issue and deliver to the Trustee,
for delivery to the Holder, a certificate or certificates for the number of
full shares of Common Stock issuable upon conversion, together with payment in
lieu of any fraction of a share, as provided in Section 10.3.

          All shares of Common Stock delivered upon such conversion of Securities
shall bear restrictive legends substantially in the form of the legends
required to be set forth on the Securities pursuant to Section 2.6 and shall be
subject to the restrictions on transfer provided in such legends. Neither the
Trustee nor any agent maintained for the purpose of such conversion shall have
any responsibility for the inclusion or content of any such restrictive legends
on such Common Stock; provided, however, that the Trustee or any agent
maintained for the purpose of such conversion shall have provided to the
Company or to the Company’s transfer agent for such Common Stock, prior to or
concurrently with a request to the Company to deliver such Common Stock,
written notice that the Securities delivered for conversion are Securities.

          In the case of any Security that is converted in part only, upon such
conversion the Company shall execute and the Trustee shall authenticate and
make available for delivery to the Holder thereof, at the expense of the
Company, a new Registered Security or Securities of authorized denominations in
an aggregate principal amount equal to the unconverted portion of the principal amount of such Security. A Security may be converted in
part, but only if the principal amount of such Security to be converted is any
integral multiple of U.S.$1,000 and the principal amount of such security to
remain Outstanding after such conversion is equal to U.S.$l,000 or any integral
multiple of U.S.$l,000 in excess thereof.

SECTION 9.3 Fractions of Shares.

          No fractional shares of Common Stock shall be issued upon conversion of
any Security or Securities. If more than one Security shall be surrendered for
conversion at one time by the same Holder, the number of full shares that shall
be issuable upon conversion thereof shall be computed on the basis of the
aggregate principal amount of the Securities (or specified portions thereof) so
surrendered. Instead of any fractional share of Common Stock that would
otherwise be issuable upon conversion of any Security or Securities (or
specified portions thereof), the Company shall calculate and pay a cash
adjustment in respect of such fraction (calculated to the nearest 1/100th of a
share) in an amount equal to the same fraction of the closing sales price of
our Common Stock on the New York Stock Exchange (or, if not listed on the New
York Stock Exchange, such other national securities exchange or otherwise in
the over-the-counter market, as applicable) at the close of business on the day
of conversion.

SECTION 9.4 Adjustment of Conversion Rate.

          The Conversion Rate shall be subject to adjustments from time to time as
follows:

          (a)     In case the Company shall pay or make a dividend or other distribution
on any class of capital stock of the Company payable in shares of Common Stock,
the Conversion Rate in effect at the opening of business on the day following
the date fixed for the determination

-51-

 

of stockholders entitled to receive such dividend or other distribution shall be increased by dividing such Conversion
Rate by a fraction of which the numerator shall be the number of shares of
Common Stock outstanding at the close of business on the date fixed for such
determination and the denominator shall be the sum of such number of shares and
the total number of shares constituting such dividend or other distribution,
such increase to become effective (subject to paragraph (l) of this Section
9.4) immediately after the opening of business on the day following the date
fixed for such determination. For the purposes of this paragraph (a), the
number of shares of Common Stock at any time outstanding shall not include
shares held in the treasury of the Company but shall include shares issuable in
respect of scrip certificates issued in lieu of fractions of shares of Common
Stock. The Company will not pay any dividend or make any distribution on
shares of Common Stock held in the treasury of the Company.

          (b)     In case the Company shall issue rights, options or warrants to all
holders of its Common Stock entitling them to subscribe for or purchase shares
of Common Stock at a price per share less than the current market price per
share (determined as provided in paragraph (h) of this Section 9.4) of the
Common Stock on the date fixed for the determination of stockholders entitled
to receive such rights, options or warrants (other than any rights, options or
warrants (1) that by their terms will also be issued to any Holder upon
conversion of a Security into shares of Common Stock without any action
required by the Company or any other Person or (2) that are only exercisable upon the occurrence of specified
triggering event and such triggering event has not occurred), the Conversion
Rate in effect at the opening of business on the day following the date fixed
for such determination shall be increased by dividing such Conversion Rate by a
fraction of which the numerator shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed for such determination
plus the number of shares of Common Stock which the aggregate of the offering
price of the total number of shares of Common Stock so offered for subscription
or purchase would purchase at such current market price and the denominator
shall be the number of shares of Common Stock outstanding at the close of
business on the date fixed for such determination plus the number of shares of
Common Stock so offered for subscription or purchase, such increase to become
effective (subject to paragraph (l) of this Section 9.4) immediately after the
opening of business on the day following the date fixed for such determination.
For the purposes of this paragraph (b), the number of shares of Common Stock
at any time outstanding shall not include shares held in the treasury of the
Company but shall include shares issuable in respect of scrip certificates
issued in lieu of fractions of shares of Common Stock. The Company will not
issue any rights, options or warrants in respect of shares of Common Stock held
in the treasury of the Company.

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

-52-

 

          (d)     In case the Company shall, by dividend or otherwise, distribute to all
holders of its Common Stock evidences of its indebtedness, shares of any class
of capital stock, or other property (including cash or assets or securities,
but excluding (1) any rights, options or warrants referred to in paragraph (b)
of this Section 9.4 and the distribution of rights to all holders of Common
Stock pursuant to the adoption of a stockholders’ rights plan or the detachment
of such rights under the terms of such stockholders’ rights plan, (2) any
dividend or distribution paid in cash, except as set forth in paragraphs (e)
and (f) of this Section 9.4, (3) any dividend or distribution referred to in
paragraph (a) of this Section 9.4 and (4) any merger or consolidation to which
Section 9.11 applies), the Conversion Rate shall be adjusted so that the same
shall equal the rate determined by dividing the Conversion Rate in effect
immediately prior to the close of business on the date fixed for the
determination of stockholders entitled to receive such distribution by a
fraction of which the numerator shall be the current market price per share
(determined as provided in paragraph (h) of this Section 9.4) of the Common
Stock on the date fixed for such determination less the then fair market value
(as determined by the Board of Directors, whose determination shall be
conclusive and described in a Board Resolution) of the portion of the assets,
shares or evidences of indebtedness so distributed applicable to one share of
Common Stock and the denominator shall be such current market price per share
of the Common Stock, such adjustment to become effective (subject to paragraph
(l) of this Section 9.4) immediately prior to the opening of business on the day following the date
fixed for the determination of stockholders entitled to receive such
distribution.

          In addition, for so long as the Company maintains a rights plan (“Rights
Plan”), the Company will provide under such Rights Plan that the Holders of the
Securities will receive, in addition to the Common Stock, the rights under the
Rights Plan (whether or not the rights under the Rights Plan have separated
from the Common Stock at the time of conversion), subject to any limitations
set forth in the Rights Plan.

          (e)     In case the Company shall, by dividend or otherwise, distribute to all
holders of its Common Stock cash (excluding cash portions of distribution
referred to in Section 9.4(d) and any cash that is distributed upon a merger or
consolidation to which Section 9.11 applies) in an aggregate amount that,
combined together with (1) the aggregate amount of any other cash distributions
to all holders of its Common Stock made exclusively in cash within the 365-day
period preceding the date of payment of such distribution and in respect of
which no adjustment pursuant to this paragraph (e) has been made and (2) the
aggregate of any cash plus the fair market value (as determined by the Board of
Directors, whose determination shall be conclusive and described in a Board
Resolution) of consideration payable in respect of any tender offer by the
Company or any Subsidiary for all or any portion of the Common Stock concluded
within the 365-day period preceding the date of payment of such distribution
and in respect of which no adjustment pursuant to paragraph (f) of this Section
9.4 has been made (the “combined cash and tender amount”) exceeds 10% of the
product of the current market price per share (determined as provided in
paragraph (h) of this Section 9.4) of the Common Stock on the date for the
determination of holders of shares of Common Stock entitled to receive such
distribution times the number of shares of Common Stock outstanding on such
date (the “aggregate current market price”), then, and in each such case,
immediately after the close of business on such date for determination, subject
to paragraph (l) of Section 9.4, the Conversion Rate shall be adjusted so that
the same shall equal the rate determined by dividing the Conversion Rate in
effect immediately prior to the close of business on the date

-53-

 

fixed for determination of the stockholders entitled to receive such distribution by a
fraction (A) the numerator of which shall be equal to the current market price
per share (determined as provided in paragraph (h) of this Section 9.4) of the
Common Stock on the date fixed for such determination less an amount equal to
the quotient of (i) the excess of such combined cash and tender amount over 10%
of such aggregate current market price divided by (ii) the number of shares of
Common Stock outstanding on such date fixed for determination and (B) the
denominator of which shall be equal to the current market price per share
(determined as provided in paragraph (h) of this Section 9.4) of the Common
Stock on such date fixed for determination.

          (f)     In case a tender offer made by the Company or any Subsidiary for all
or any portion of the Common Stock shall be completed for an aggregate
consideration consisting of cash and/or property having a fair market value (as
determined by the Board of Directors, whose determination shall be conclusive
and described in a Board Resolution) that combined together with (1) the
aggregate of the cash plus the fair market value (as determined by the Board of
Directors, whose determination shall be conclusive and described in a Board
Resolution), of consideration payable in respect of any other tender offer by the Company
or any Subsidiary for all or any portion of the Common Stock concluded within
the 365-day period preceding the completion of such tender offer and in respect
of which no adjustment pursuant to this paragraph (f) has been made and (2) the
aggregate amount of any distributions to all holders of the Company’s Common
Stock made exclusively in cash within the 365-day period preceding the
completion of such tender offer and in respect of which no adjustment pursuant
to paragraph (e) of this Section 9.4 has been made (the “combined tender and
cash amount”) exceeds 10% of the product of the current market price per share
of the Common Stock (determined as provided in paragraph (h) of this Section
9.4) as of the completion of such tender offer (the “Completion Date”) times
the number of shares of Common Stock outstanding (including any tendered
shares) as of the Completion Date, then, and in each such case, immediately
prior to the opening of business on the day after the date of the Completion
Date, the Conversion Rate shall be adjusted so that the same shall equal the
rate determined by dividing the Conversion Rate immediately prior to close of
business on the Completion Date by a fraction (A) the numerator of which shall
be equal to (i) the product of (x) the current market price per share of the
Common Stock (determined as provided in paragraph (h) of this Section 9.4) on
the Completion Date multiplied by (y) the number of shares of Common Stock
outstanding (including any tendered shares) on the Completion Date less (ii)
the combined tender and cash amount, and (B) the denominator of which shall be
equal to the product of (x) the current market price per share of the Common
Stock (determined as provided in paragraph (h) of this Section 9.4) as of the
Completion Date multiplied by (y) the number of shares of Common Stock
outstanding (including any tendered shares) as of the Completion Date less the
number of all shares validly tendered and not withdrawn as of the Completion
Date (the shares deemed so accepted up to any such maximum, being referred to
as the “Purchased Shares”).

          (g)     The reclassification of Common Stock into securities including other
than Common Stock (other than any reclassification upon a consolidation or
merger to which Section 9.11 applies) shall be deemed to involve (1) a
distribution of such securities other than Common Stock to all holders of
Common Stock (and the effective date of such reclassification shall be deemed
to be “the date fixed for the determination of stockholders entitled to receive
such distribution” and “the date fixed for such determination” within the
meaning of paragraph (d) of

-54-

 

this Section 9.4), and (2) a subdivision or combination, as the case may be, of the number of shares of Common Stock
outstanding immediately prior to such reclassification into the number of
shares of Common Stock outstanding immediately thereafter (and the effective
date of such reclassification shall be deemed to be “the day upon which such
subdivision becomes effective” or “the day upon which such combination becomes
effective”, as the case may be, and “the day upon which such subdivision or
combination becomes effective” within the meaning of paragraph (c) of this
Section 9.4).

          (h)     For the purpose of any computation under paragraphs (b), (d), (e) or
(f) of this Section 9.4, the current market price per share of Common Stock on
any date shall be calculated by the Company and be deemed to be the average of
the daily Average Sales Prices Per Share for the five consecutive Trading Days
selected by the Company commencing not more than 10 Trading Days before, and
ending not later than, the earlier of the day in question and the day before
the “ex date” with respect to the issuance or distribution requiring such
computation. For purposes of this paragraph, the term “ex date,” when used with respect
to any issuance or distribution, means the first date on which the Common Stock
trades regular way in the applicable securities market or on the applicable
securities exchange without the right to receive such issuance or distribution.

          (i)     No adjustment in the Conversion Rate shall be required unless such
adjustment (plus any adjustments not previously made by reason of this
paragraph (i)) would require an increase or decrease of at least one percent in
such rate; provided, however, that any adjustments which by reason of this
paragraph (i) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under this Article
shall be made to the nearest cent or to the nearest one-hundredth of a share,
as the case may be.

          (j)     The Company may make such increases in the Conversion Rate, for the
remaining term of the Securities or any shorter term, in addition to those
required by paragraphs (a), (b), (c), (d), (e) and (f) of this Section 9.4, as
it considers to be advisable in order to avoid or diminish any income tax
liability to any holders of shares of Common Stock resulting from any dividend
or distribution of Common Stock or issuance of rights or warrants to purchase
or subscribe for Common Stock or from any event treated as such for income tax
purposes.

          To the extent permitted by applicable law, the Company from time to time
may increase the Conversion Rate by any amount for any period of time if the
period is at least twenty (20) days and the Board of Directors shall have made
a determination that such increase would be in the best interests of the
Company, which determination shall be conclusive; provided, however, that such
increase shall not be taken into account for purposes of determining whether
the Average Sales Price Per Share of the Common Stock exceeds the Conversion
Price by 105% in connection with an event which would otherwise be a Change in
Control. Whenever the Conversion Rate is increased pursuant to the preceding
sentence, the Company shall give notice of the increase to the Holders of
Securities in the manner provided in Section 1.6 at least fifteen (15) days
prior to the date the increased Conversion Rate takes effect, and such notice
shall state the increased Conversion Rate and the period during which it will
be in effect.

          (k)     Notwithstanding the foregoing provisions of this Section 9.4, no
adjustment of the Conversion Rate shall be required to be made (1) upon the
issuance of shares

-55-

 

of Common Stock pursuant to any present or future plan for
the reinvestment of dividends, (2) because of a tender or exchange offer of the
character described in Rule 13e-4(h) (5) under the Exchange Act or any
successor rule thereto or (3) as a result of a rights plan or poison pill
implemented by the Company.

          (l)     In any case in which this Section 9.4 shall require that an adjustment
be made immediately following a record date, the Company may elect to defer the
effectiveness of such adjustment (but in no event until a date later than the
effective time of the event giving rise to such adjustment), in which case the
Company shall, with respect to any Security converted after such record date
and on and before such adjustment shall have become effective (1) defer paying
any cash payment pursuant to Section 9.3 hereof or issuing to the Holder of
such Security the number of shares of Common Stock issuable upon such
conversion in excess of the number of shares of Common Stock issuable thereupon only on the basis of the
Conversion Rate prior to adjustment, and (2) not later than five Business Days
after such adjustment shall have become effective, pay to such Holder the
appropriate cash payment pursuant to Section 9.3 hereof and issue to such
Holder the additional shares of Common Stock issuable on such conversion.
Notwithstanding the foregoing, no adjustment of the Conversion Rate shall be
made if the event giving rise to such adjustment does not occur.

          (m)     In the event that the Company distributes rights or warrants (other
than those referred to in paragraph (b) above) pro rata to holders of Common
Stock, so long as any such rights or warrants have not expired or been redeemed
by the Company, the Company shall make proper provision so that the Holder of
any Security surrendered for conversion will be entitled to receive upon such
conversion, in addition to the Common Stock issuable upon conversion of the
Securities (the “Conversion Shares”), a number of rights and warrants to be
determined as follows: (i) if such conversion occurs on or prior to the date
for the distribution to the holders of rights or warrants of separate
certificates evidencing such rights or warrants (the “Distribution Date”), the
same number of rights or warrants to which a holder of a number of shares of
Common Stock equal to the number of Conversion Shares is entitled at the time
of such conversion in accordance with the terms and provisions of and
applicable to the rights or warrants, and (ii) if such conversion occurs after
such Distribution Date, the same number of rights or warrants to which a holder
of the number of shares of Common Stock into which the principal amount of such
Security so converted was convertible immediately prior to such Distribution
Date would have been entitled on such Distribution Date in accordance with the
terms and provisions of and applicable to the rights or warrants.

SECTION 9.5 Notice of Adjustments of Conversion Ratio 

     Whenever the Conversion Rate is adjusted as herein provided:

          (a)     the Company shall compute the adjusted Conversion Rate in accordance
with Section 9.4 and shall prepare a certificate signed by the Chief Financial
Officer of the Company setting forth the adjusted Conversion Rate and showing
in reasonable detail the facts upon which such adjustment is based, and such
certificate shall promptly be filed with the Trustee and with the Conversion
Agent; and

-56-

 

          (b)     upon each such adjustment, a notice stating that the Conversion Rate
has been adjusted and setting forth the adjusted Conversion Rate shall be
required, and as soon as practicable after it is required, such notice shall be
provided by the Company to all Holders in accordance with Section 1.6.

Neither the Trustee nor the Conversion Agent shall be under any duty or
responsibility with respect to any such certificate or the information and
calculations contained therein, except to exhibit the same to any Holder of
Securities desiring inspection thereof at its office during normal business
hours. Unless and until a Responsible Officer of the Trustee and Conversion
Agent receive notice of an adjusted Conversion Rate, the Trustee and the
Conversion Agent may rely without inquiry on the Conversion Rate most recently
in effect.

SECTION 9.6 Notice of Certain Corporate Action.

          In case:

          (a)     the Company shall declare a dividend (or any other distribution) on
its Common Stock payable (i) otherwise than exclusively in cash or (ii)
exclusively in cash in an amount that would require any adjustment pursuant to
Section 9.4; or

          (b)     the Company shall authorize the granting to the holders of its Common
Stock of rights, options or warrants to subscribe for or purchase any shares of
capital stock of any class or of any other rights; or

          (c)     of any reclassification of the Common Stock of the Company, or of any
consolidation, merger or share exchange to which the Company is a party and for
which approval of any stockholders of the Company is required, or of the
conveyance, sale, transfer or lease of all or substantially all of the assets
of the Company; or

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

then the Company shall cause to be filed at each office or agency maintained
for the purpose of conversion of Securities pursuant to Section 8.2, and shall
cause to be provided to all Holders in accordance with Section 1.6, at least 20
days (or 10 days in any case specified in clause (a) or (b) above) prior to the
applicable record or effective date hereinafter specified, a notice stating (1)
the date on which a record is to be taken for the purpose of such dividend,
distribution, rights, options or warrants, or, if a record is not to be taken,
the date as of which the holders of Common Stock of record to be entitled to
such dividend, distribution, rights, options or warrants are to be determined
or (2) the date on which such reclassification, consolidation, merger,
conveyance, transfer, sale, lease, dissolution, liquidation or winding up 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 shares of
Common Stock for securities, cash or other property deliverable upon such
reclassification, consolidation, merger, conveyance, transfer, sale, lease,
dissolution, liquidation or winding up. Neither the failure to give such
notice or the notice referred to in the following paragraph nor any defect
therein shall affect the legality or validity of the proceedings described in
clauses (a) through (d) of this Section 9.6. If at the time the Trustee shall
not be the

-57-

 

Conversion Agent, a copy of such notice shall also forthwith be
filed by the Company with the Trustee.

          The Company shall cause to be filed at each office or agency maintained
for the purpose of conversion of Securities pursuant to Section 8.2, and shall
cause to be provided to all Holders in accordance with Section 1.6, notice of
any tender offer by the Company or any Subsidiary for all or any portion of the
Common Stock at or about the time that such notice of tender offer is provided
to the public generally.

SECTION 9.7 Company to Reserve Common Stock.

          The Company shall at all times reserve and keep available, free from
preemptive rights, out of its authorized but unissued Common Stock, for the
purpose of effecting the conversion of Securities, the full number of shares of
Common Stock then issuable upon the conversion of all Outstanding Securities.

SECTION 9.8 Taxes on Conversions.

          Except as provided in the next sentence, the Company will pay any and all
transfer, stamp, documentary and other similar taxes and duties 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 tax or duty which may be payable in respect of any transfer
involved in the issue and delivery of shares of Common Stock in a name other
than that of the Holder of the Security or Securities to be converted, 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 any such tax or duty or has
established to the satisfaction of the Company that such tax or duty has been
paid.

SECTION 9.9 Covenant as to Common Stock.

          The Company agrees that all shares of Common Stock that may be delivered
upon conversion of Securities, upon such delivery, will be newly issued shares
and will have been duly authorized and validly issued and will be fully paid
and nonassessable and, except as provided in Section 9.8, the Company will pay
all taxes, liens and charges with respect to the issue thereof.

SECTION 9.10 Cancellation of Converted Securities.

          All Securities delivered for conversion shall be delivered to the Trustee
or its agent to be cancelled by or at the direction of the Trustee, which shall
dispose of the same as provided in Section 2.10.

SECTION 9.11 Provision in Case of Consolidation, Merger or Sale of Assets.

          In case of any consolidation or merger of the Company with or into any
other Person, any merger of another Person with or into the Company (other than
a merger that does not result in any reclassification, conversion, exchange or
cancellation of outstanding shares of Common Stock of the Company) or any
conveyance, sale, transfer or lease of all or substantially

-58-

 

all of the assets of the Company, the Person formed by such consolidation or resulting from such
merger or that acquires such assets, as the case may be, shall execute and
deliver to the Trustee a supplemental indenture providing that the Holder of
each Security then Outstanding shall have the right thereafter, during the
period such Security shall be convertible as specified in Section 12.1, to
convert such Security only into the kind and amount of securities, cash and
other property receivable upon such consolidation, merger, conveyance, sale,
transfer or lease by a holder of the number of shares of Common Stock of the
Company into which such Security might have been converted immediately prior to such consolidation, merger,
conveyance, sale, transfer or lease, assuming such holder of Common Stock of
the Company (a) is not a Person with which the Company consolidated or merged
with or into or that merged into or with the Company or to which such
conveyance, sale, transfer or lease was made, as the case may be (a
“Constituent Person”), or an Affiliate of a Constituent Person and (b) failed
to exercise his rights of election, if any, as to the kind or amount of
securities, cash and other property receivable upon such consolidation, merger,
conveyance, sale, transfer or lease (provided that if the kind or amount of
securities, cash and other property receivable upon such consolidation, merger,
conveyance, sale, transfer, or lease is not the same for each share of Common
Stock of the Company held immediately prior to such consolidation, merger,
conveyance, sale, transfer or lease by others than a Constituent Person or an
Affiliate thereof and in respect of which such rights of election shall not
have been exercised (“Non-electing Share”), then for the purpose of this
Section 9.11 the kind and amount of securities, cash and other property
receivable upon such consolidation, merger, conveyance, sale, transfer or lease
by the holders of each Non-electing Share shall be deemed to be the kind and
amount so receivable per share by a plurality of the Non-electing Shares).
Such supplemental indenture shall provide for adjustments that, for events
subsequent to the effective date of such supplemental indenture, shall be as
nearly equivalent as may be practicable to the adjustments provided for in this
Article. The above provisions of this Section 9.11 shall similarly apply to
successive consolidations, mergers, conveyances, sales, transfers or leases.
Notice of the execution of such a supplemental indenture shall be given by the
Company to the Holder of each Security as provided in Section 1.6 promptly upon
such execution.

          Neither the Trustee nor the Conversion Agent shall be under any
responsibility to determine the correctness of any provisions contained in any
such supplemental indenture relating either to the kind or amount of shares of
stock or other securities or property or cash receivable by Holders of
Securities upon the conversion of their Securities after any such
consolidation, merger, conveyance, transfer, sale or lease or to any such
adjustment but may accept as conclusive evidence of the correctness of any such
provisions, and shall be protected in relying upon, an Officers Certificate or
an Opinion of Counsel with respect thereto, which the Company shall cause to be
furnished to the Trustee upon request.

SECTION 9.12 Responsibility of Trustee for Conversion Provisions. 

          The Trustee, subject to the provisions of Section 5.1, and any Conversion
Agent shall not at any time be under any duty or responsibility to any Holder
of Securities to determine whether any facts exist that may require any
adjustment of the Conversion Rate, or with respect to the nature or extent of
any such adjustment when made, or with respect to the method employed, or
herein or in any supplemental indenture provided to be employed, in making the
same, or whether a supplemental indenture need be entered into. Neither the
Trustee, subject to the provisions of Section 5.1, nor any Conversion Agent
shall be accountable with respect to the validity or value (or the kind or
amount) of any Common Stock, or of any other securities or property or cash,
that may at any time be issued or delivered upon the conversion of any
Security; and it or they do not make any representation with respect thereto.
Neither the Trustee, subject to

-59-

 

the provisions of Section 5.1, nor any Conversion Agent shall be responsible for any
failure of the Company to make or calculate any cash payment or to issue,
transfer or deliver any shares of Common Stock or share certificates or other
securities or property or cash upon the surrender of any Security for the
purpose of conversion; and the Trustee, subject to the provisions of Section
5.1, and any Conversion Agent shall not be responsible for any failure of the
Company to comply with any of the covenants of the Company contained in this
Article.

ARTICLE TEN 

SUBORDINATION OF SECURITIES 

SECTION 10.1 Securities Subordinate to Senior Debt. 

          The Company covenants and agrees, and each Holder of a Security by his
acceptance thereof likewise covenants and agrees, that to the extent and in the
manner hereinafter set forth in this Article (subject to the provisions of
Article Three) the indebtedness represented by the Securities and the payment
of the principal of (and premium, if any) and interest on, and any payment of
the Repurchase Price with respect to, each and all of the Securities are hereby
expressly made subordinate and subject in right of payment to the prior payment
in full in cash or Cash Equivalents of all Senior Debt.

SECTION 10.2 No Payments in Certain Circumstances; Payment Over of Proceeds
Upon Dissolution, Etc.

          No payment on account of principal of, premium, if any, or interest (and
Liquidated Damages, if any) on, or repurchase of, the Securities shall be made
if, at the time of such payment: (a) a default in the payment of principal,
premium, if any, or interest or other amounts due on or in connection with any
Senior Debt, including any default under any redemption or repurchase
obligation, occurs and is continuing (or, in the case of Senior Debt for which
there is a period of grace, in the event of such a default that continues
beyond the period of grace, if any, specified in the instrument or lease
evidencing such Senior Debt), unless and until such default shall have been
cured or waived or shall have ceased to exist; or (b) a default, other than a
payment default, on Designated Senior Debt occurs and is continuing that then
permits holders of such Designated Senior Debt to accelerate its maturity and
the Trustee receives a notice of the default (a “Payment Blockage Notice”) from
the Company, a holder of Designated Senior Debt or a Representative.
Notwithstanding the foregoing, the Company may make, and the Trustee may
receive and shall apply, any payment in respect of the Securities (for
principal, premium, if any, or interest (and Liquidated Damages, if any) or
repurchase) if such payment was made prior to the occurrence of any of the
contingencies specified in clauses (a) and (b) above.

          If the Trustee receives any Payment Blockage Notice pursuant to clause (b)
above, no subsequent Payment Blockage Notice shall be effective for purposes of
this Section

-60-

 

10.2 unless and until (1) at least 365 days shall have elapsed
since the effectiveness of the immediately prior Payment Blockage Notice and
(2) all scheduled payments of principal, premium, if any, interest and
Liquidated Damages, if any, on the Securities that have come due
have been paid in full in cash. No nonpayment default that existed or was
continuing on the date of delivery of any Payment Blockage Notice to the
Trustee shall be, or be made, the basis for a subsequent Payment Blockage
Notice unless such existing nonpayment default has been cured for a period of
at least 90 days.

          The Company may and shall resume payments on and distributions in respect
of the Securities (including missed payments, if any) upon the earlier of: (A)
the date upon which the default is cured or waived, or (B) in the case of a
default referred to in clause (b) of the second preceding paragraph, 179 days
after notice is received if the maturity of such Designated Senior Debt has not
been accelerated such that such debt is then presently payable, unless this
Indenture otherwise prohibits the payment or distribution at the time of such
payment or distribution.

          Upon (i) any acceleration of the principal amount due on the Securities or
(ii) any payment or distribution of assets of the Company of any kind or
character, whether in cash, property or securities, to creditors upon any
dissolution, winding up or total or partial liquidation or reorganization of
the Company, whether voluntary or involuntary, or in bankruptcy, insolvency,
receivership or other proceedings, all principal of, premium, if any, sinking
fund and interest or other amounts due, or to become due, upon or in connection
with all Senior Debt shall first be paid in full in cash or Cash Equivalents,
or payment thereof provided for in cash or Cash Equivalents in accordance with
its terms, before any payment is made on account of the principal of, premium,
if any, or interest (and Liquidated Damages, if any) on, or repurchase of, the
indebtedness evidenced by the Securities, and upon any such dissolution or
winding up or liquidation or reorganization any payment or distribution of
assets of the Company of any kind or character, whether in cash, property or
securities, to which the Holders of the Securities or the Trustee under this
Indenture would be entitled, except for the provisions hereof, shall be paid by
the Company or by any receiver, trustee in bankruptcy, liquidating trustee,
agent or other Person making such payment or distribution, or by the Holders of
the Securities or by the Trustee under this Indenture if received by them or
it, as the case may be, directly to the holders of Senior Debt (pro rata to
each such holder on the basis of the respective amounts of Senior Debt held by
such holder) or their representatives, to the extent necessary to pay all
Senior Debt in full, in cash or Cash Equivalents, after giving effect to any
concurrent payment or distribution to or for the holders of Senior Debt, before
any payment or distribution is made to the Holders of the Securities or to the
Trustee under this Indenture.

          In the event that, contrary to the foregoing, any payment or distribution
of assets of the Company of any kind or character, whether in cash, property or
securities (other than junior securities, as defined in Section 10.11), shall
be received by the Trustee or the Holders of the Securities before all Senior
Debt is paid in full in cash or Cash Equivalents or provision made for such
payment in accordance with its terms, such payment or distribution shall be
paid over or delivered to the holders of such Senior Debt or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any of such Senior Debt
have been issued, as their respective interests may appear, for application to
the payment of all Senior Debt remaining unpaid to the extent necessary to pay
all such Senior Debt

-61-

 

in full in cash or Cash Equivalents in accordance with its terms, after
giving effect to any concurrent payment or distribution to or for the holders
of such Senior Debt.

          Subject to the payment in full in cash or Cash Equivalents of all Senior
Debt, the Holders of the Securities (together with the holders of any other
indebtedness of the Company that is subordinated in right of payment to the
payment in full of all Senior Debt that is not subordinated in right of payment
to the Securities and that by its terms grants such right of subrogation to the
holders thereof) shall be subrogated to the rights of the holders of Senior
Debt to receive payments or distribution of assets of the Company made on the
Senior Debt until the principal of, premium, if any, and interest on, or
amounts payable upon repurchase of, the Securities shall be paid in full; and,
for the purposes of such subrogation, no payments or distributions to the
holders of Senior Debt of any cash, property or securities to which the Holders
of the Securities or the Trustee would be entitled except for the provisions of
this Article, and no payment over pursuant to the provisions of this Article to
the holders of Senior Debt by the Holders of the Securities or the Trustee,
shall, as between the Company, its creditors other than the holders of Senior
Debt, and the Holders of Securities, be deemed to be a payment by the Company
to the holders of or on account of Senior Debt, it being understood that the
provisions of this Article are and are intended solely for the purpose of
defining the relative rights of the Holders of the Securities, on the one hand,
and the holders of Senior Debt, on the other hand.

SECTION 10.3 Trustee to Effectuate Subordination.

          Each Holder of a Security by his acceptance thereof authorizes and directs
the Trustee on his behalf to take such action as may be necessary or
appropriate to effectuate the subordination provided in this Article and
appoints the Trustee his attorney-in-fact for any and all such purposes.

SECTION 10.4 No Waiver of Subordination Provisions.

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

          Without in any way limiting the generality of the foregoing paragraph, the
holders of Senior Debt may, at any time and from time to time, without the
consent of or notice to the Trustee or the Holders of the Securities, without
incurring responsibility to the Holders of the Securities and without impairing
or releasing the subordination provided in this Article or the obligations
hereunder of the Holders of the Securities to the holders of Senior Debt, do
any one or more of the following: (a) change the manner, place or terms of
payment or extend the time of payment of, or renew or alter, Senior Debt or
otherwise amend or supplement in any manner Senior Debt or any instrument
evidencing the same or any agreement under which Senior Debt is
outstanding; (b) sell, exchange, release or otherwise deal with any
property pledged, mortgaged or otherwise securing Senior Debt; (c) release any
Person liable in any manner for the collection

-62-

 

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

SECTION 10.5 Notice to Trustee.

          The Company shall give prompt written notice to the Trustee of any fact
known to the Company that would prohibit the making of any payment to or by the
Trustee in respect of the Securities. Notwithstanding the provisions of this
Article or any other provision of this Indenture, the Trustee shall not be
charged with knowledge of the existence of any facts that would prohibit the
making of any payment to or by the Trustee in respect of the Securities, unless
and until a Responsible Officer of the Trustee shall have received written
notice thereof from the Company or a holder of Senior Debt or from any trustee,
agent or representative therefor; and, prior to the receipt of any such written
notice, the Trustee, subject to the provisions of Section 5.1, shall be
entitled in all respects to assume that no such facts exist; provided, however,
that if the Trustee shall not have received the notice provided for in this
Section 10.5 prior to the date upon which by the terms hereof any money may
become payable for any purpose (including without limitation the payment of the
principal of (and premium, if any) or interest on any Security), then, anything
herein contained to the contrary notwithstanding, the Trustee shall have full
power and authority to receive such money and to apply the same to the purpose
for which such money was received and shall not be affected by any notice to
the contrary that may be received by it within two Business Days prior to such
date.

          Subject to the provisions of Section 5.1, the Trustee shall be entitled to
rely on the delivery to it of a written notice by a Person representing himself
to be a holder of Senior Debt (or a trustee, agent or representative therefor)
to establish that such notice has been given by a holder of Senior Debt (or a
trustee, agent or representative therefor). In the event that the Trustee
determines in good faith that further evidence is required with respect to the
right of any Person as a holder of Senior Debt to participate in any payment or
distribution pursuant to this Article Ten, the Trustee may request such Person
to furnish evidence to the reasonable satisfaction of the Trustee as to the
amount of Senior Debt held by such Person, the extent to which such Person is
entitled to participate in such payment or distribution and any other facts
pertinent to the rights of such Person under this Article Ten, and if such
evidence is not furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment.

SECTION 10.6 Reliance on Judicial Order or Certificate of Liquidating Agent.

          Upon any payment or distribution of assets of the Company referred to in
this Article, the Trustee, subject to the provisions of Section 5.1, and the
Holders of the Securities shall be entitled to rely upon any order or decree
entered by any court of competent jurisdiction in which such insolvency,
bankruptcy, receivership, liquidation, reorganization, dissolution, winding up
or similar case or proceeding is pending, or a certificate of the trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit
of creditors, agent or other Person making such payment or distribution, delivered to the Trustee or to the
Holders of Securities, for the purpose of ascertaining the Persons entitled to
participate in such payment or distribution, the holders of the Senior Debt and
other indebtedness of the Company, the amount thereof or

-63-

 

payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article.

SECTION 10.7 Trustee Not Fiduciary for Holders of Senior Debt.

          The Trustee shall not be deemed to owe any fiduciary duty to the holders
of Senior Debt and shall not be liable to any such holders if it shall in good
faith mistakenly pay over or distribute to Holders of Securities or to the
Company or to any other Person cash, property or securities to which any
holders of Senior Debt shall be entitled by virtue of this Article or
otherwise. With respect to the holders of Senior Debt, the Trustee undertakes
to perform or to observe only such of its covenants or obligations as are
specifically set forth in this Article Ten, and no implied covenants or
obligations with respect to holders of Senior Debt shall be read into this
Indenture against the Trustee.

SECTION 10.8 Reliance by Holders of Senior Debt on Subordination Provisions.

          Each Holder by accepting a Security acknowledges and agrees that the
foregoing subordination provisions are, and are intended to be, an inducement
and a consideration to each holder of any Senior Debt, whether such Senior Debt
was created or acquired before or after the issuance of the Securities, to
acquire and continue to hold, or to continue to hold, such Senior Debt, and
such holder of Senior Debt shall be deemed conclusively to have relied on such
subordination provisions in acquiring and continuing to hold, or in continuing
to hold, such Senior Debt. Such holders of the Company’s Senior Debt are
intended by the parties to the Indenture to be third party creditor
beneficiaries under this Indenture for the purposes of enforcing the provisions
of this Article Ten.

SECTION 10.9 Rights of Trustee as Holder of Senior Debt; Preservation of
Trustee’s Rights.

          The Trustee in its individual capacity shall be entitled to all the rights
set forth in this Article Ten with respect to any Senior Debt that may at any
time be held by it, to the same extent as any other holder of Senior Debt, and
nothing in this Indenture shall deprive the Trustee of any of its rights as
such holder.

          Nothing in this Article Ten shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 5.7.

SECTION 10.10 Article Applicable to Paying Agents.

          In case at any time any Paying Agent other than the Trustee shall have
been appointed by the Company and be then acting hereunder, the term “Trustee”
as used in this Article shall in such case (unless the context otherwise
requires) be construed as extending to and including such Paying Agent within
its meaning as fully for all intents and purposes as if
such Paying Agent were named in this Article Ten in addition to or in
place of the Trustee; provided, however, that Section 10.9 shall not apply to
the Company or any Affiliate of the Company if it or such Affiliate acts as
Paying Agent.

-64-

 

SECTION 10.11 Certain Conversions and Repurchases Deemed Payment.

          For the purposes of this Article Ten only, (a) the issuance and delivery
of junior securities upon conversion of Securities in accordance with Article
Nine or upon the repurchase of Securities in accordance with Article Twelve
shall not be deemed to constitute a payment or distribution on account of the
principal of or premium or interest or Liquidated Damages on Securities or on
account of the purchase or other acquisition of Securities, and (b) the
payment, issuance or delivery of cash, property or securities (other than
junior securities) upon conversion of a Security shall be deemed to constitute
payment on account of the principal of such Security. For the purposes of this
Section 10.11, the term “junior securities” means (1) shares of any stock of
any class of the Company and any cash, property or securities into which the
Securities are convertible pursuant to Article Nine and (2) securities of the
Company that are subordinated in right of payment to all Senior Debt that may
be outstanding at the time of issuance or delivery of such securities to
substantially the same extent as, or to a greater extent than, the Securities
are so subordinated as provided in this Article Ten. Nothing contained in this
Article Ten or elsewhere in this Indenture or in the Securities is intended to
or shall impair, as among the Company, its creditors other than holders of
Senior Debt and the Holders of the Securities, the right, which is absolute and
unconditional, of the Holder of any Security to convert such Security in
accordance with Article Nine or to exchange such Security for Common Stock in
accordance with Article Twelve if the Company elects to satisfy the obligations
under Article Twelve by the delivery of Common Stock.

ARTICLE ELEVEN

SECTION 11.1 Additional Interest Amounts.

          In the event the Company declares a cash dividend on its Common Stock, the
Company shall pay to each Holder of record as of the record date for such
dividend an amount equal to the product of (i) such per share dividend declared
by the Company multiplied by (ii) the number of shares of Common Stock such
Holder would possess had such Holder converted its Securities into shares of
Common Stock at the Conversion Rate in effect as of the record date for such
dividend (each such payment an “Additional Interest Amount” and, collectively
the “Additional Interest Amounts”); provided, however, that such amount shall
not be due and no payment with respect thereto shall be made with respect to
the Securities unless such cash dividend is actually paid to holders of Common
Stock. The payment date for an Additional Interest Amount shall be the same as
the payment date for the dividend to which the Additional Interest Amount
relates. Holders of Securities shall not be entitled to receive any Additional
Interest Amount with respect to any dividend that causes an adjustment to the
Conversion Rate.

-65-

 

ARTICLE TWELVE 

REPURCHASE OF SECURITIES AT THE OPTION OF THE HOLDER UPON A CHANGE IN CONTROL 

SECTION 12.1 Right to Require Repurchase. 

          In the event that a Change in Control shall occur, then each Holder shall
have the right, at the Holder’s option, but subject to the provisions of
Section 12.2, to require the Company to repurchase, and upon the exercise of
such right the Company shall repurchase, all of such Holder’s Securities, or
any portion of the principal amount thereof that is equal to U.S.$1,000 or any
greater integral multiple of U.S.$1,000, on the date (the “Repurchase Date”)
that is fixed by the Company at a cash purchase price equal to 100% of the
principal amount of the Securities to be repurchased plus interest accrued to
the Repurchase Date (the “Repurchase Price”); provided, however, that
installments of interest and Liquidated Damages, if any, on Securities whose
Stated Maturity is on or prior to the Repurchase Date shall be payable to the
Holders of such Securities, or one or more Predecessor Securities, registered
as such on the relevant Record Date according to their terms and the provisions
of Section 2.8. The Repurchase Date will be determined by the Company in the
following manner: (i) the Company will give notice of the Change in Control as
contemplated in Section 13.3(a); (ii) each Holder electing to exercise the
repurchase right must deliver, on or before the thirtieth (30th) day (or such
greater period as may be required by applicable law) after the date of the
Company’s notice provided in provision (i) above: (A) irrevocable written
notice to the trustee of such Holder’s exercise of its repurchase right, and
(B) the Securities with respect to which such repurchase right is being
exercised; and (iii) the Company will make the repurchase on a date that is no
later than 45 days after the Holder has delivered the notice provided in
proviso (ii) above. Such right to require the repurchase of the Securities
shall not continue after a discharge of the Company from its obligations with
respect to the Securities in accordance with Article Three unless a Change in
Control shall have occurred prior to such discharge. At the option of the
Company, the Repurchase Price may be paid in cash or, subject to the
fulfillment by the Company of the conditions set forth Section 12.2, by
delivery of shares of Common Stock or in a combination of cash and Common Stock
having a fair market value equal to the Repurchase Price. Whenever in this
Indenture (including Sections 2.2, 4.1(a) and 4.8) there is a reference, in any
context, to the principal of any Security as of any time, such reference shall
be deemed to include reference to the Repurchase Price that has become and
remains payable in respect of such Security to the extent that such Repurchase
Price is, was or would be so payable at such time, and express mention of the
Repurchase Price in any provision of this Indenture shall not be construed as
excluding the Repurchase Price in those provisions of this Indenture when such
express mention is not made; provided, however, that for the purposes of
Article Twelve such reference shall be deemed to include reference to the
Repurchase Price only to the extent the Repurchase Price is payable in cash.

          For purposes of this Section 12.1, the fair market value of shares of
Common Stock shall be determined by the Company and shall be equal to 95% of
the average of the high and low sales price per share of the Common Stock on
the New York Stock Exchange (or, if not listed on the New York Stock Exchange, such other national securities
exchange or otherwise in the over-the-counter market, as applicable) for each
of the five consecutive Trading Days immediately preceding and including the
third Trading Day prior to the Repurchase Date.

-66-

 

SECTION 1.1 Conditions to the Company’s Election to Pay the Repurchase Price in Common Stock.

          The Company may elect to pay the Repurchase Price by delivery of shares of
Common Stock pursuant to Section 12.1 if and only if the following conditions
shall have been satisfied:

          (a)     As to each Holder, the Repurchase Price shall be paid only in cash in
the event any shares of Common Stock to be issued to such Holder upon
repurchase of Securities hereunder (1) require registration under any federal
securities law before such shares may be freely transferable without being
subject to any transfer restrictions under the Securities Act upon repurchase
and if such registration is not completed or does not become effective prior to
the Repurchase Date or (2) require registration with or approval of any
governmental authority under any state law or any other federal law before such
shares may be validly issued or delivered upon repurchase and if such
registration is not completed or does not become effective or such approval is
not obtained prior to the Repurchase Date;

          (b)     Payment of the Repurchase Price may not be made in Common Stock unless
such stock is, or shall have been, approved for listing on The New York Stock
Exchange or listed or quoted on a national securities exchange or other
quotation system, in either case, prior to the Repurchase Date; and

          (c)     All shares of Common Stock that may be issued upon repurchase of
Securities will be issued out of the Company’s authorized but unissued Common
Stock and will, upon issue, be duly and validly issued and fully paid and
non-assessable and free of any preemptive rights.

          If all of the conditions set forth in this Section 12.2 are not satisfied
in accordance with the terms thereof, the Repurchase Price shall be paid by the
Company only in cash.

SECTION 1.2 Notices; Method of Exercising Repurchase Right, Etc. 

          (a)     On or before the thirtieth day after the occurrence of a Change in
Control, the Company or, at the request and expense of the Company on or before
the thirtieth day after such occurrence, the Trustee, shall give to all Holders
of Securities, in the manner provided in Section 1.6, notice (the “Company
Notice”) of the occurrence of the Change in Control and of the repurchase right
set forth herein arising as a result thereof. The Company shall also deliver a
copy of such notice of a repurchase right to the Trustee.

          Each notice of a repurchase right shall state:

		
	 	(1)     the Repurchase Date,

		
	 	(2)     the date by which the repurchase right must be exercised,

		
	 	(3)     the Repurchase Price, and whether the Repurchase Price shall be
paid by the Company in cash or by delivery of shares of Common
Stock,

-67-

 

		
	 	(4)     a description of the procedure that a Holder must follow to
exercise a repurchase right, and the place or places where such
Securities are to be surrendered for payment of the Repurchase
Price and accrued interest and Liquidated Damages, if any,

		
	 	(5)     that on the Repurchase Date, the Repurchase Price, and accrued
interest and Liquidated Damages, if any, will become due and
payable upon each such Security designated by the Holder to be
repurchased and that interest thereon shall cease to accrue on and
after said date,

		
	 	(6)     the Conversion Rate then in effect, the date on which the right
to convert the principal amount of the Securities to be repurchased
will terminate and the place or places where such Securities may be
surrendered for conversion,

		
	 	(7)     the place or places that the Notice of Election of Holder to
Require Repurchase attached hereto as Exhibit B, shall be
delivered, and the form of such notice, and

		
	 	(8)     the CUSIP number or numbers of such Securities.

          No failure of the Company to give the foregoing notices or defect therein
shall limit any Holder’s right to exercise a repurchase right or affect the
validity of the proceedings for the repurchase of Securities.

          If any of the foregoing provisions or other provisions of this Article
Twelve are inconsistent with applicable law, such law shall govern.

          (b)     To exercise a repurchase right, a Holder shall deliver to the Trustee
on or before the thirtieth day (or such greater period as may be required by
applicable law) after the date of the Company Notice (1) written notice of the
Holder’s exercise of such right, which notice shall set forth the name of the
Holder, the principal amount of the Securities to be repurchased (and, if any
Security is to be repurchased in part, the serial number thereof, the portion
of the principal amount thereof to be repurchased and the name of the Person in
which the portion thereof to remain Outstanding after such repurchase is to be
registered) and a statement that an election to exercise the repurchase right
is being made thereby, and, in the event that the Repurchase Price shall be
paid in shares of Common Stock, the name or names (with addresses) in which the
certificate or certificates for shares of Common Stock shall be issued, and (2)
the Securities with respect to which the repurchase right is being exercised.
Such written notice shall be irrevocable, except that the right of the Holder
to convert the Securities with respect to which the repurchase right is being
exercised shall continue until the close of business on the Business Day
immediately preceding the Repurchase Date.

          (c)     In the event a repurchase right shall be exercised in accordance with
the terms hereof, the Company shall pay or cause to be paid to the Trustee the
Repurchase Price in cash or shares of Common Stock, as provided above, for
payment to the Holder on the Repurchase Date or, if shares of Common Stock are
to be paid, as promptly after the Repurchase Date as practicable, together with
accrued and unpaid interest and Liquidated Damages, if any, to the Repurchase
Date payable with respect to the Securities as to which the purchase right has

-68-

 

           been exercised; provided, however, that installments of interest that
mature on or prior to the Repurchase Date shall be payable in cash to the
Holders of such Securities, or one or more Predecessor Securities, registered
as such at the close of business on the relevant Regular Record Date.

          (d)     If any Security (or portion thereof) surrendered for repurchase shall
not be paid on the Repurchase Date as provided in clause (c) above, the
principal amount of such Security (or portion thereof, as the case may be)
shall, until paid, bear interest to the extent permitted by applicable law from
the Repurchase Date at the rate then in effect per annum, and each Security
shall remain convertible into Common Stock until the principal of such Security
(or portion thereof, as the case may be) shall have been paid or duly provided
for pursuant to clause (c).

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

          (f)     Any issuance of shares of Common Stock in respect of the Repurchase
Price shall be deemed to have been effected immediately prior to the close of
business on the Repurchase Date and the Person or Persons in whose name or
names any certificate or certificates for shares of Common Stock shall be
issuable upon such repurchase shall be deemed to have become on the Repurchase
Date the holder or holders of record of the shares represented thereby;
provided, however, that any surrender for repurchase on a date when the stock
transfer books of the Company shall be closed shall constitute the Person or
Persons in whose name or names the certificate or certificates for such shares
are to be issued as the record holder or holders thereof for all purposes at
the opening of business on the next succeeding day on which such stock transfer
books are open. No payment or adjustment shall be made for dividends or
distributions on any Common Stock issued upon repurchase of any Security
declared prior to the Repurchase Date.

          (g)     No fractions of shares shall be issued upon repurchase of Securities.
If more than one Security shall be repurchased from the same Holder and the
Repurchase Price shall be payable in shares of Common Stock, the number of full
shares that shall be issuable upon such repurchase shall be computed on the
basis of the aggregate principal amount of the Securities so repurchased.
Instead of any fractional share of Common Stock that would otherwise be
issuable on the repurchase of any Security or Securities, the Company will
deliver to the applicable Holder its check for the current market value of such
fractional share. The current market value of a fraction of a share is
determined by multiplying the current market price of a full share by the
fraction and rounding the result to the nearest cent. For purposes of this
Section 12.3, the current market price of a share of Common Stock is the
average of the high and low sales price per Share of the Common Stock on the
Trading Day immediately preceding the Repurchase Date.

-69-

 

          (h)     Any issuance and delivery of certificates for shares of Common Stock
on repurchase of Securities shall be made without charge to the Holder of
Securities being repurchased for such certificates or for any tax or duty in
respect of the issuance or delivery of such certificates or the securities
represented thereby; provided, however, that the Company shall not be required
to pay any tax or duty that may be payable in respect of (1) income of the
Holder or (2) any transfer involved in the issuance or delivery of certificates
for shares of Common Stock in a name other than that of the Holder of the
Securities being repurchased, and no such issuance or delivery shall be made
unless and until the Person requesting such issuance or delivery has paid to
the Company the amount of any such tax or duty or has established, to the
satisfaction of the Company, that such tax or duty has been paid.

          (i)     All Securities delivered for repurchase shall be delivered to the
Trustee to be canceled at the direction of the Trustee, which shall dispose of
the same as provided in Section 2.10.

ARTICLE TWO

HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY; NON-RECOURSE

SECTION 2.1 Company to Furnish Trustee Names and Addresses of Holders.

          The Company will furnish or cause to be furnished to the Trustee:

          (a)     semi-annually, not more than 15 days after the Regular Record Date, a
list, in such form as the Trustee may reasonably require, of the names and
addresses of the Holders of Securities as of such Regular Record Date, and

          (b)     at such other times as the Trustee may reasonably request in writing,
within 30 days after the receipt by the Company of any such request, a list of
similar form and content as of a date not more than 15 days prior to the time
such list is furnished;

provided, however, that no such list need be furnished so long as the Trustee
is acting as Security Registrar.

SECTION 2.2 Preservation of Information.

          (a)     The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 13.1 and the names and
addresses of Holders received by the Trustee in its capacity as Security
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 13.1 upon receipt of a new list so furnished.

          (b)     After this Indenture has been qualified under the Trust Indenture Act,
the rights of Holders to communicate with other Holders with respect to their
rights under this Indenture or under the Securities, and the corresponding
rights and duties of the Trustee, shall be as provided by the Trust Indenture
Act.

-70-

 

          (c)     Every Holder of Securities, by receiving and holding the same, agrees
with the Company and the Trustee that neither the Company nor the Trustee nor
any agent of either of them shall be held accountable by reason of any
disclosure of information as to names and addresses of Holders made pursuant to
the Trust Indenture Act.

SECTION 2.3 No Recourse Against Others.

          An incorporator or any past, present or future 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 Holder shall waive and release all
such liability. Such waiver and release shall be part of the consideration for
the issue of the Securities.

SECTION 2.4 Reports by Trustee.

          (a)     After this Indenture has been qualified under the Trust Indenture Act,
the Trustee shall transmit to Holders such reports concerning the Trustee and
its actions under this Indenture as may be required pursuant to the Trust
Indenture Act at the times and in the manner provided therein. If required by
Section 313(a) of the Trust Indenture Act, the Trustee shall, within 60 days
after each May 15 following the date of this Indenture, deliver to Holders a
brief report, dated as of such May 15, that complies with the provisions of
such Section 313(a).

          (b)     After this Indenture has been qualified under the Trust Indenture Act,
a copy of each such report shall, at the time of such transmission to Holders,
be filed by the Trustee with each stock exchange upon which the Securities are
listed, with the Commission and with the Company. The Company will promptly
notify the Trustee when the Securities are listed on any stock exchange.

SECTION 2.5 Reports by Company.

          After this Indenture has been qualified under the Trust Indenture Act, the
Company shall file with the Trustee and the Commission, and transmit to
Holders, such information, documents and other reports, and such summaries
thereof, as may be required pursuant to the Trust Indenture Act at the times
and in the manner provided therein; provided, however, that any such
information, documents or reports required to be filed with the Commission
pursuant to Section 13 or 15(d) of the Exchange Act shall be filed with the
Trustee within 15 days after the same is so required to be filed with the
Commission.

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

-71-

 

          IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, all as of the day and year first above written.

	 	 	 	 	 
	 	 	WMS Industries Inc.
	 	 	
By
	 	/s/ Scott D. Schweinfurth
	 	 	 	 	

	 	 	
Name:
	 	Scott D. Schweinfurth
	 	 	
Title:
	 	Executive Vice President, Chief
	 	 	 	 	Financial Officer and Treasurer
	 	 	 	 	 
	 	 	BNY Midwest Trust Company, as Trustee
	 	 	
By
	 	/s/ Linda Garcia
	 	 	 	 	

	 	 	
Name:
	 	Linda Garcia
	 	 	
Title:
	 	Assistant Treasurer

 

 

EXHIBIT A

[FORM OF FACE]

[THE FOLLOWING LEGEND SHALL APPEAR ON THE FACE OF EACH RESTRICTED SECURITY
OTHER THAN ANY RESTRICTED GLOBAL SECURITY:

          THIS NOTE AND ANY COMMON STOCK ISSUABLE UPON THE CONVERSION OF THIS NOTE
HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE
OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF
THIS NOTE IS HEREBY NOTIFIED THAT THE SELLER OF THIS NOTE MAY BE RELYING ON THE
EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY
RULE 144A THEREUNDER.

          THIS NOTE AND ANY COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE MAY
NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A)(1) TO A
PERSON WHO THE TRANSFEROR REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL
BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT ACQUIRING FOR
ITS OWN ACCOUNT OR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (2) PURSUANT TO AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF
AVAILABLE), (3) TO AN INSTITUTIONAL INVESTOR THAT IS AN ACCREDITED INVESTOR
WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE
SECURITIES ACT THAT PRIOR TO SUCH TRANSFER PROVIDES TO THE TRUSTEE FOR THE
NOTES A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE RESTRICTIONS ON TRANSFER OF THE NOTES (THE FORM OF THE LETTER
CAN BE OBTAINED FROM THE TRUSTEE OF THE NOTES), (4) PURSUANT TO ANOTHER
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT (IF AVAILABLE) (AND BASED
UPON AN OPINION OF COUNSEL ACCEPTABLE TO WMS INDUSTRIES INC.) OR (5) PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, AND (B) IN
ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED
STATES AND OTHER JURISDICTIONS.

          THIS NOTE, ANY SHARES OF COMMON STOCK ISSUABLE UPON ITS CONVERSION AND ANY
RELATED DOCUMENTATION MAY BE AMENDED OR SUPPLEMENTED FROM TIME TO TIME TO
MODIFY THE RESTRICTIONS ON RESALES AND OTHER TRANSFERS OF THIS NOTE AND ANY
SUCH SHARES TO REFLECT ANY CHANGE IN APPLICABLE LAW OR REGULATION (OR THE
INTERPRETATION THEREOF) OR IN PRACTICES RELATING TO THE RESALE OR TRANSFER OF
RESTRICTED SECURITIES GENERALLY. THE HOLDER OF THIS NOTE AND SUCH SHARES SHALL
BE DEEMED BY THE ACCEPTANCE OF

 

 

           THIS NOTE AND ANY SUCH SHARES TO HAVE AGREED TO ANY SUCH AMENDMENT OR
SUPPLEMENT.]

[THE FOLLOWING LEGEND SHALL APPEAR ON THE FACE OF EACH RESTRICTED GLOBAL
SECURITY:

          THIS NOTE AND ANY COMMON SHARES ISSUABLE UPON THE CONVERSION OF
THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE
EXEMPTION THEREFROM. EACH PURCHASER OF THIS NOTE IS HEREBY NOTIFIED
THAT THE SELLER OF THIS NOTE MAY BE RELYING ON THE EXEMPTION FROM THE
PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A
THEREUNDER.

          THIS NOTE AND ANY COMMON SHARES ISSUABLE UPON CONVERSION OF THIS
NOTE MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT
(A)(1) TO A PERSON THAT THE TRANSFEROR REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE
SECURITIES ACT ACQUIRING FOR ITS OWN ACCOUNT OR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS
OF RULE 144A, (2) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), (3) TO AN
INSTITUTIONAL INVESTOR THAT IS AN ACCREDITED INVESTOR WITHIN THE MEANING
OF RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES
ACT THAT PRIOR TO SUCH TRANSFER PROVIDES TO THE TRUSTEE FOR THE NOTES A
SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING
TO THE RESTRICTIONS ON TRANSFER OF THE NOTES (THE FORM OF THE LETTER CAN
BE OBTAINED FROM THE TRUSTEE FOR THE NOTES), (4) PURSUANT TO ANOTHER
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT (IF AVAILABLE) (AND
BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO WMS INDUSTRIES INC.) OR
(5) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT, AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE
STATES OF THE UNITED STATES AND OTHER JURISDICTIONS.

          THIS NOTE, ANY COMMON SHARES ISSUABLE UPON ITS CONVERSION AND ANY RELATED
DOCUMENTATION MAY BE AMENDED OR SUPPLEMENTED FROM TIME TO TIME TO MODIFY THE
RESTRICTIONS ON RESALES AND OTHER TRANSFERS OF THIS NOTE AND ANY SUCH SHARES TO
REFLECT ANY CHANGE IN APPLICABLE LAW OR REGULATION (OR THE INTERPRETATION
THEREOF) OR IN PRACTICES RELATING TO THE RESALE OR TRANSFER OF RESTRICTED
SECURITIES GENERALLY. THE HOLDER OF THIS

A-2

 

          NOTE AND SUCH SHARES SHALL BE DEEMED BY THE ACCEPTANCE OF THIS NOTE AND ANY
SUCH SHARES TO HAVE AGREED TO ANY SUCH AMENDMENT OR SUPPLEMENT.]

[THE FOLLOWING LEGEND SHALL APPEAR ON THE FACE OF EACH GLOBAL SECURITY:

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

[THE FOLLOWING LEGEND SHALL APPEAR ON THE FACE OF EACH GLOBAL SECURITY FOR
WHICH THE DEPOSITORY TRUST COMPANY IS TO BE THE DEPOSITARY:

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

A-3

 

WMS INDUSTRIES INC.

2.75% CONVERTIBLE SUBORDINATED NOTE DUE JULY 15, 2010

No.                 U.S. $                

CUSIP No. 929297 AC3

     WMS Industries Inc., a corporation duly organized and existing under the
laws of the State of Delaware (herein called the “Company,” which term includes
any successor Person under the Indenture referred to on the reverse hereof),
for value received, hereby promises to pay to Cede & Co., or registered
assigns, the principal sum of                 United States Dollars (U.S.$               )
[if this Security is a Global Security, then insert — (which
principal amount may from time to time be increased or decreased to such other
principal amounts (which, taken together with the principal amounts of all
other Outstanding Securities, shall not exceed $                in the aggregate
at any time, unless the Initial Purchaser exercises its over-allotment right,
in which case the principal amount of the Outstanding Securities shall not
exceed U.S. $               ) by adjustments made on the records of the Trustee
hereinafter referred to in accordance with the Indenture)] on July 15, 2010,
unless repurchased on an earlier date, and to pay interest thereon, from June
25, 2003, or from the most recent Interest Payment Date (as defined below) to
which interest has been paid or duly provided for, semiannually in arrears on
January 15 and July 15 in each year (each, an “Interest Payment Date”),
commencing January 15, 2004, at the rate of 2.75% per annum, until the
principal hereof is due, and at the rate then in effect on any overdue
principal and premium, if any, and, to the extent permitted by law, on any
overdue interest. The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in the Indenture,
be paid to the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest, which shall be the January 1 and July 1 (whether or not a
Business Day), as the case may be, next preceding such Interest Payment Date.
Except as otherwise provided in the Indenture, any such interest not so
punctually paid or duly provided for will forthwith cease to be payable to the
Holder on such Regular Record Date and may either be paid to the Person in
whose name this Security (or one or more Predecessor Securities) is registered
at the close of business on a Special Record Date for the payment of such
Defaulted Interest to be fixed by the Company, notice whereof shall be given to
Holders of Registered Securities not less than ten days prior to such Special
Record Date, or be paid at any time in any other lawful manner not inconsistent
with the requirements of any securities exchange on which the Securities may be
listed, and upon such notice as may be required by such exchange, all as more
fully provided in the Indenture. Payments of principal shall be made upon the
surrender of this Security at the option of the Holder at the Corporate Trust
Office or at such other office or agency of the Company as may be designated by
it for such purpose in the Borough of Manhattan, The City of New York, in such
coin or currency of the United States of America as at the time of payment
shall be legal tender for the payment of public and private debts, or at such
other offices or agencies as the Company may designate, by United States Dollar
check drawn on, or wire transfer to, a United States Dollar account (such a
wire transfer to be made only to a Holder of an aggregate principal amount of
Registered Securities in excess of U.S.$2,000,000 and only if such Holder shall
have furnished wire instructions in writing to the Trustee no later than 15
days prior to the relevant payment date)

A-4

 

 maintained by the payee. Payment of interest on this Security may be made
by United States Dollar check mailed to the address of the Person entitled
thereto as such address shall appear in the Security Register or, upon written
application by the Holder to the Security Registrar setting forth wire
instructions not later than the relevant Record Date, by wire transfer to a
United States dollar account (such a wire transfer to be made only to a Holder
of an aggregate principal amount of Registered Securities in excess of
U.S.$2,000,000 and only if such Holder shall have furnished wire instructions
in writing to the Trustee no later than 15 days prior to the relevant payment
date) maintained by the payee.

     Except as specifically provided herein and in the Indenture, the Company
shall not be required to make any payment with respect to any tax, assessment
or other governmental charge imposed by any government or any political
subdivision or taxing authority thereof or therein.

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

     Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof or an Authenticating Agent by the
manual signature of one of their respective authorized signatories, this
Security shall not be entitled to any benefit under the Indenture or be valid
or obligatory for any purpose.

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

	 	 	 	 	 
	 	 	WMS INDUSTRIES INC.
	 	 	 	 	 
	 	 	By:	 	 
	 	 	 	 	

	 	 	 	 	Name:
	 	 	 	 	Title:

Attest:

Name:

Dated: June   , 2003

     This is one of the Securities referred to in the within-mentioned
Indenture.

BNY Midwest Trust Company,

as Trustee

	 	 	 
	By:	 	

Authorized Signatory

A-5

 

[FORM OF REVERSE]

     This Security is one of a duly authorized issue of securities of the
Company designated as its “2.75% Convertible Subordinated Notes due July 15,
2010” (herein called the “Securities”), limited in aggregate principal amount
to U.S.$100,000,000 (U.S.$115,000,000 if the over-allotment is fully
exercised), issued and to be issued under an Indenture, dated as of June 25,
2003 (herein called the “Indenture”), between the Company and BNY Midwest Trust
Company, as Trustee (herein called the “Trustee,” which term includes any
successor trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights, limitations of rights, duties and immunities thereunder of the Company,
the Trustee, the holders of Senior Debt and the Holders of the Securities and
of the terms upon which the Securities are, and are to be, authenticated and
delivered. As provided in the Indenture and subject to certain limitations set
forth therein, Registered Securities are exchangeable for a like aggregate
principal amount of Registered Securities of any authorized denominations as
requested by the Holder surrendering the same upon surrender of the Registered
Security or Registered Securities to be exchanged at the Corporate Trust
Office. The Trustee upon such surrender by the Holder will issue the new
Registered Securities in the requested denominations.

     No sinking fund is provided for the Securities.

     Subject to certain limitations in the Indenture, at any time when the
Company is not subject to Section 13 or 15(d) of the United States Securities
Exchange Act of 1934, as amended, upon the request of a Holder of a Security or
the holder 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 of Securities or such holder of shares of
Common Stock issued upon conversion of Securities, or to a prospective
purchaser of any such security designated by any such Holder or 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 of 1933, as amended (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 (or any successor provision thereto).

     The Holder of this Security [if this Security is a Global Security, then
insert—(including any Person that has a beneficial interest in this Security)]
and the Common Stock issuable upon conversion hereof is entitled to the
benefits of a Registration Rights Agreement, dated as of June 25, 2003 (the
“Registration Rights Agreement”), executed by the Company. Pursuant to the
Registration Rights Agreement, the Company has agreed for the benefit of the
Holders from time to time of Registered Securities and the Common Stock
issuable upon conversion thereof, in each case, that are Registrable
Securities, at the Company’s expense, (a) to file on or before 90 days after
the first date of original issuance of the Securities, a shelf registration
statement (the “Shelf Registration Statement”) with the Commission with respect
to resales of the Registrable Securities, (b) thereafter to use its reasonable
best efforts to cause such Shelf Registration

A-6

 

 Statement to be declared effective by the Commission on or before 180 days
after the first date of original issuance of the Securities, subject to the
Company’s right to postpone having the Shelf Registration Statement declared
effective for an additional 60 days in limited circumstances described in the
Registration Rights Agreement, and (c) to use its reasonable best efforts to
maintain such Shelf Registration Statement continuously effective under the
Securities Act until the earlier of (1) the sale under the Shelf Registration
Statement of all the Registrable Securities registered thereunder and (2) the
expiration of the holding period applicable to such Registrable Securities held
by persons that are not affiliates of the Company under Rule 144(k) under the
Securities Act or any successor previously subject to specific permitted
exceptions. The Company is required to pay Liquidated Damages to holders of
Registrable Securities for failure to comply with the foregoing registration
obligations, all as more fully set forth in the Registration Rights Agreement.

     Whenever in this Security there is a reference, in any context, to the
payment of the principal of, premium, if any, or interest on, or in respect of,
any Security such mention shall be deemed to include mention of the payment of
Liquidated Damages payable as described in the Registration Rights Agreement to
the extent that, in such context, Liquidated Damages are, were or would be
payable in respect of this Security pursuant to the Registration Rights
Agreement, and an express mention of the payment of Liquidated Damages (if
applicable) in any provisions of this Security shall not be construed as
excluding Liquidated Damages in those provisions of this Security where such
express mention is not made. If the Holder of this Security [if this Security
is a Global Security, then insert— (including any Person that has a beneficial
interest in this Security)] elects to sell this Security pursuant to the Shelf
Registration Statement then, by its acceptance hereof, such Holder of this
Security agrees to be bound by the terms of the Registration Rights Agreement
relating to the Registrable Securities which are the subject of such election.

     In the event the Company declares a dividend on its Common Stock, the
Company shall pay to each Holder of record as of the record date for such
dividend an amount equal to the product of (i) such per share dividend declared
by the Company multiplied by (ii) the number of shares of Common Stock such
Holder would possess had such Holder converted its Securities into shares of
Common Stock at the Conversion Rate in effect as of the record date for such
dividend (each such payment an “Additional Interest Amount” and collectively
the “Additional Interest Amounts”); provided, however, that such amount shall
not be due and no payment with respect thereto shall be made with respect to
the Securities unless such dividend is paid to holders of Common Stock. The
payment date for an Additional Interest Amount shall be the same as the payment
date for the dividend to which the Additional Interest Amount relates. Holders
of Securities shall not be entitled to receive any Additional Interest Amount
with respect to any dividend that causes an adjustment to the Conversion Rate.
Whenever in this Security there is a reference, in any context, to the payment
of the principal of, premium, if any, or interest on, or in respect of, any
Security such mention shall be deemed to include mention of the payment of
Additional Interest Amounts payable as described in the Indenture to the extent
that, in such context, Additional Interest Amounts are, were or would be
payable in respect of this

A-7

 

 Security pursuant to the Indenture, and an express mention of the payment
of Additional Interest Amounts (if applicable) in any provisions of this
Security shall not be construed as excluding Additional Interest Amounts in
those provisions of this Security where such express mention is not made.

     If a Change in Control occurs, the Holder of this Security, at the
Holder’s option, shall have the right, in accordance with the provisions of the
Indenture, to require the Company to repurchase this Security (or any portion
of the principal amount hereof that is equal to U.S.$1,000 or any greater
integral multiple of U.S.$1,000) for cash at a Repurchase Price equal to 100%
of the principal amount thereof plus interest accrued to, but excluding, the
Repurchase Date. At the option of the Company, the Repurchase Price may be
paid in cash or, subject to the conditions provided in the Indenture, by
delivery of shares of Common Stock or in a combination of cash and Common
Stock, having a fair market value equal to the Repurchase Price. For purposes
of this paragraph, the fair market value of shares of Common Stock shall be
determined by the Company and shall be equal to 95% of the average of the high
and low sales price per share for the five consecutive Trading Days immediately
preceding and including the third Trading Day prior to the Repurchase Date.
Whenever in this Security there is a reference, in any context, to the
principal of any Security as of any time, such reference shall be deemed to
include reference to the Repurchase Price payable in respect of such Security
to the extent that such Repurchase Price is, was or would be so payable at such
time, and express mention of the Repurchase Price in any provision of this
Security shall not be construed as excluding the Repurchase Price so payable in
those provisions of this Security when such express mention is not made;
provided, however, that, for the purposes of the paragraph below concerning the
consequences of an Event of Default, such reference shall be deemed to include
reference to the Repurchase Price only to the extent the Repurchase Price is
payable in cash.

     [The following paragraph shall appear in each Registered Security that is
not a Global Security:

     In the event of repurchase or conversion of this Security in part only, a
new Registered Security or Registered Securities for the unredeemed,
unrepurchased or unconverted portion hereof will be issued in the name of the
Holder hereof.]

     [The following paragraph shall appear in each Global Security:

     In the event of a deposit or withdrawal of an interest in this Security,
including an exchange, transfer, repurchase or conversion of this Security in
part only, the Trustee, as custodian of the Depositary, shall make an
adjustment on its records to reflect such deposit or withdrawal in accordance
with the Applicable Procedures.]

     The indebtedness evidenced by this Security is, to the extent and in the
manner provided in the Indenture, subordinate and subject in right of payment
to the prior payment in full in cash or Cash Equivalents of all Senior Debt of
the Company, and this Security is issued subject to

A-8

 

 such provisions of the Indenture with respect thereto. Each Holder of
this Security, by accepting the same,

	 	(a)	 	agrees to and shall be bound by such provisions,
	 
	 	(b)	 	authorizes and directs the Trustee on his behalf to take such action
as may be necessary or appropriate to effectuate the subordination so provided
and
	 
	 	(c)	 	appoints the Trustee his attorney-in-fact for any and all such
purposes.

     If an Event of Default shall occur and be continuing, the principal of all
the Securities, together with accrued interest to the date of declaration, may
be declared due and payable in the manner and with the effect provided in the
Indenture. Upon payment (i) of the amount of principal so declared due and
payable, together with accrued interest to the date of declaration, and (ii) of
interest on any overdue principal and, to the extent permitted by applicable
law, overdue interest, all of the Company’s obligations in respect of the
payment of the principal of and interest on the Securities shall terminate.

     The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities under the Indenture at
any time by the Company and the Trustee with the written consent of the Holders
of a majority in principal amount of the Securities at the time Outstanding.
The Indenture also contains provisions permitting the Holders of specified
percentages in principal amount of the Securities at the time Outstanding, on
behalf of the Holders of all the Securities, to waive compliance by the Company
with certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder of
this Security shall be conclusive and binding upon such Holder and upon all
future Holders of this Security and of any Security issued in exchange herefor
or in lieu hereof, whether or not notation of such consent or waiver is made
upon this Security or such other Security.

     As provided in and subject to the provisions of the Indenture, the Holder
of this Security shall not have the right to institute any proceeding with
respect to the Indenture or for the appointment of a receiver or trustee or for
any other remedy thereunder, unless such Holder shall have previously given the
Trustee written notice of a continuing Event of Default, the Holders of not
less than 25% in principal amount of the Outstanding Securities shall have made
written request to the Trustee to institute proceedings in respect of such
Event of Default as Trustee and offered the Trustee reasonable indemnity, the
Trustee shall have failed to institute any such proceeding for 60 days after
receipt of such notice, request and offer of indemnity, and the Trustee has not
received any direction inconsistent with such written request from the Holders
of a majority of the aggregate principal amount of the Outstanding Securities
during such 60 day period. The foregoing shall not apply to any suit
instituted by the Holder of this Security for the enforcement of any payment of
principal hereof, premium, if any, Liquidated Damages, if any, or interest,
including Additional Interest Amounts, if any, hereon on or after the
respective due

A-9

 

 dates expressed herein or for the enforcement of the right to convert this
Security as provided in the Indenture.

     No reference herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of, premium, if any,
Liquidated Damages, if any, and interest, including Additional Interest
Amounts, if any, on this Security at the times, places and rate, and in the
coin or currency, herein prescribed or to convert this Security as provided in
the Indenture.

     As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of Registered Securities is registrable on the Security
Register upon surrender of a Registered Security for registration of transfer
at the Corporate Trust Office of the Trustee or at such other office or agency
of the Company as may be designated by it for such purpose in the Borough of
Manhattan, The City of New York, or at such other offices or agencies as the
Company may designate, duly endorsed by, or accompanied by a written instrument
of transfer in form satisfactory to the Company and the Security Registrar duly
executed by, the Holder thereof or his attorney duly authorized in writing, and
thereupon one or more new Registered Securities, of authorized denominations
and for the same aggregate principal amount, will be issued to the designated
transferee or transferees by the Registrar. No service charge shall be made
for any such registration of transfer or exchange, but the Company may require
payment of a sum sufficient to recover any tax or other governmental charge
payable in connection therewith.

     Prior to due presentation of a Registered Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name such Registered Security is registered as
the owner thereof for all purposes, whether or not such Security be overdue,
and neither the Company, the Trustee nor any such agent shall be affected by
notice to the contrary.

     Interest on the Securities shall be computed on the basis of a 360-day
year of twelve 30-day months. The Indenture and this Security shall be governed
by and construed in accordance with the laws of the State of New York, United
States of America, including, without limitation, Section 5-1401 of the New
York General Obligations Law.

     All terms used in this Security which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.

A-10

 

EXHIBIT B

ELECTION OF HOLDER TO REQUIRE REPURCHASE

1.          Pursuant to Section 12.1 of the Indenture, the undersigned hereby elects to
have this Security repurchased by the Company.

2.          The undersigned hereby directs the Trustee or the Company to pay it or     
an amount in cash equal to 100% of the principal amount to
be repurchased (as set forth below), plus interest accrued to the Repurchase
Date or, at the Company’s election, Common Stock, valued as set forth in the
Indenture.

	 	 
	Dated: 	

	

Signature
	
Signature Guaranteed

Principal amount to be repurchased:

(must be equal to U.S.$1,000 or any

greater integral multiple of U.S.$1,000):

Remaining principal amount following such repurchase:

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

 

 

EXHIBIT C

CONVERSION NOTICE

     The undersigned Holder of this Security hereby irrevocably exercises the
option to convert this Security, or any portion of the principal amount hereof
(which is an integral multiple of U.S.$1,000) below designated, into shares of
Common Stock in accordance with the terms of the Indenture referred to in this
Security and directs that such shares, together with a check in payment for any
fractional share and any Securities representing any unconverted principal
amount hereof, be delivered to and be registered in the name of the undersigned
unless a different name has been indicated below. If shares of Common Stock or
Securities are to be registered in the name of a Person other than the
undersigned, the undersigned will pay all transfer taxes payable with respect
thereto. Any amount required to be paid by the undersigned on account of
interest accompanies this Security.

	 	 	 	 	 	 
	Dated: 	 	 	 	 	 
	 	
	 	

	 	 	 	Signature
	 	 	 	 	 	 
	If shares or Registered
Securities are to be registered in the name of
a Person other than the
Holder, please print such
Person’s name and address:	 	
If only a portion of the Securities is to be
converted, please indicate:
		 	1.	Principal amount to be converted:
	 	 	 	 	 	 
	 	 	 	 	
U.S.$
	
	 	 	

	 	 	 	 	
(any integral multiple of U.S. $1,000)
	 	 	 	 	 	 
	

Address	 	a2.	
Principal amount and denomination of
Registered Securities representing unconverted
principal amount to be issued:
	 	 	 	 	 	 
	

Social Security or other
Taxpayer Identification
Number, if any	 	 	 	 
	 	 	 	 	
Amount: U.S.$
	
	 	 	 	

	[Signature Guaranteed]Purchase Agreement, dated June 20, 2003

 

Exhibit 10.1

WMS INDUSTRIES INC.

$100,000,000

Principal Amount

2.75% Convertible Subordinated Notes due 2010

Purchase Agreement

June 20, 2003

CIBC WORLD MARKETS CORP.

 

 

2.75% Convertible Subordinated Notes due 2010 

of WMS INDUSTRIES INC. 

CIBC WORLD MARKETS CORP. 

June 20, 2003

CIBC World Markets Corp.

417 5th Avenue, 2nd Floor

New York, New York 10016

Dear Sirs and Madams:

          WMS Industries Inc., a Delaware corporation (the “Company”), proposes to
issue and sell to CIBC World Markets Corp. (“CIBC” or the “Initial Purchaser”),
an aggregate of $100,000,000 in principal amount of its 2.75% Convertible
Subordinated Notes due July 15, 2010 (the “Firm Notes”), subject to the terms
and conditions set forth herein. The Company also proposes to issue and sell
to the Initial Purchaser not more than an additional $15,000,000 aggregate
principal amount of its 2.75% Convertible Subordinated Notes due July 15, 2010
(the “Additional Notes”), if requested by the Initial Purchaser as provided in
Section 2 hereof. The Firm Notes and the Additional Notes are herein
collectively referred to as the “Notes.” The Notes are to be issued pursuant
to the provisions of an indenture (the “Indenture”), to be dated as of the
Closing Date (as hereinafter defined), between the Company, and BNY Midwest
Trust Company, as trustee (the “Trustee”), pursuant to which the Notes, as
provided therein, will be convertible at the option of the holders thereof into
shares of the Company’s common stock, $0.50 par value per share (the “Common
Stock”). The Notes and the Common Stock issuable upon conversion thereof are
herein collectively referred to as the “Securities.” The Securities and the
Indenture are more fully described in the Offering Circular (as hereinafter
defined). Capitalized terms used but not defined herein shall have the
meanings given to such terms in the Indenture.

     1.     Offering Circular. The Notes will be offered and sold to the Initial
Purchaser pursuant to one or more exemptions from the registration requirements
under the Securities Act of 1933, as amended (the “Act”). As used in this
Agreement, “Offering Circular” means, collectively, the preliminary offering
circular dated as of June 19, 2003 and the final offering circular, dated June
20, 2003, each as amended or supplemented by the Company. All references to
the Offering Circular shall include the information incorporated by reference
therein (the “Incorporated Documents”)

 

 

        Upon original issuance thereof, and until such time as the same is no
longer required pursuant to the Indenture, the Notes (and all securities issued
in exchange therefor, in substitution thereof or upon conversion thereof) shall
bear the following legend:

	 	 	“THIS NOTE AND ANY COMMON STOCK ISSUABLE UPON THE CONVERSION OF
THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE SOLD OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS NOTE IS
HEREBY NOTIFIED THAT THE SELLER OF THIS NOTE MAY BE RELYING ON THE
EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT
PROVIDED BY RULE 144A THEREUNDER.
	 
	 	 	THIS NOTE AND ANY COMMON STOCK ISSUABLE UPON CONVERSION OF THIS
NOTE MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
EXCEPT (A)(1) TO A PERSON WHO THE TRANSFEROR REASONABLY BELIEVES
IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A
UNDER THE SECURITIES ACT ACQUIRING FOR ITS OWN ACCOUNT OR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (2) PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY
RULE 144 THEREUNDER (IF AVAILABLE), (3) TO AN INSTITUTIONAL
INVESTOR THAT IS AN ACCREDITED INVESTOR WITHIN THE MEANING OF RULE
501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES
ACT THAT PRIOR TO SUCH TRANSFER PROVIDES TO THE TRUSTEE FOR THE
NOTES A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND
AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THE NOTES
(THE FORM OF THE LETTER CAN BE OBTAINED FROM THE TRUSTEE FOR THE
NOTES), (4) PURSUANT TO ANOTHER EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT (IF AVAILABLE) (AND BASED UPON AN OPINION OF
COUNSEL ACCEPTABLE TO WMS INDUSTRIES INC.) OR (5) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, AND (B)
IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF
THE UNITED STATES AND OTHER JURISDICTIONS.
	 
	 	 	THIS NOTE, ANY SHARES OF COMMON STOCK ISSUABLE UPON ITS CONVERSION
AND ANY RELATED DOCUMENTATION MAY BE AMENDED OR SUPPLEMENTED FROM
TIME TO TIME TO MODIFY THE RESTRICTIONS ON RESALES AND OTHER
TRANSFERS OF THIS NOTE AND ANY SUCH SHARES TO REFLECT ANY CHANGE
IN APPLICABLE

 

 

	 	 	LAW OR REGULATION (OR THE INTERPRETATION THEREOF) OR IN PRACTICES
RELATING TO THE RESALE OR TRANSFER OF RESTRICTED SECURITIES
GENERALLY. THE HOLDER OF THIS NOTE AND SUCH SHARES SHALL BE
DEEMED BY THE ACCEPTANCE OF THIS NOTE AND ANY SUCH SHARES TO HAVE
AGREED TO ANY SUCH AMENDMENT OR SUPPLEMENT.”

     2.     Agreements to Sell and Purchase. 

          (a)     On the basis of the representations, warranties and covenants
contained in this Purchase Agreement (this “Agreement”), and subject to the
terms and conditions contained herein, the Company agrees to issue and sell to
the Initial Purchaser, and the Initial Purchaser agrees to purchase from the
Company, all of the Firm Notes at a purchase price equal to 96.75% of the
principal amount thereof (the “Purchase Price”).

          (b)     On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, (i) the Company agrees to
issue and sell the Additional Notes and (ii) the Initial Purchaser shall have a
right, but not the obligation, to purchase the Additional Notes, from the
Company at the Purchase Price. Additional Notes may be purchased solely for
the purpose of covering over-allotments made in connection with the offering of
the Firm Notes. The Initial Purchaser may exercise its right to purchase
Additional Notes in whole or in part from time to time by giving written notice
thereof to the Company at any time within 30 days after the date of this
Agreement. Such notice shall specify the aggregate principal amount of
Additional Notes to be purchased pursuant to such exercise and the date for
payment and delivery thereof. The date specified in any such notice shall be a
business day (i) no earlier than the Closing Date, (ii) no later than ten
business days after such notice has been given and (iii) no earlier than two
business days after such notice has been given.

     3.     Terms of Offering. The Initial Purchaser has advised the Company that
the Initial Purchaser will make offers (the “Exempt Resales”) of the Notes
purchased hereunder on the terms set forth in the Offering Circular, as amended
or supplemented, solely to persons whom the Initial Purchaser reasonably
believes to be “qualified institutional buyers” as defined in Rule 144A under
the Act (“QIBs”). The Initial Purchaser will offer the Notes to QIBs initially
at a price equal to 100% of the principal amount thereof. Such price may be
changed at any time without notice.

     Holders (including subsequent transferees) of the Securities will have the
registration rights set forth in the registration rights agreement (the
“Registration Rights Agreement”), to be dated the Closing Date, in
substantially the form of Exhibit A hereto, for so long as such Securities
constitute “Restricted Securities” (as defined in the Registration Rights
Agreement). Pursuant to the Registration Rights Agreement, the Company will
agree to file with the Securities and Exchange Commission (the “Commission”),
under the circumstances set forth therein, a shelf registration statement
pursuant to Rule 415 under the Act (the “Registration Statement”) relating to
the resale by certain holders of the Securities and to use all reasonable best
efforts to cause such Registration Statements to be declared and remain
effective and usable for the periods specified in the Registration Rights
Agreement. This Agreement, the Indenture,

 

 

the Notes, and the Registration Rights Agreement are hereinafter sometimes
referred to collectively as the “Operative Documents.”

     4.          Delivery and Payment.

          (a)     Delivery of, and payment of the Purchase Price for, the Firm Notes
shall be made at the offices of Morgan, Lewis & Bockius, LLP, 101 Park Avenue,
New York, New York 10178, or such other location as may be mutually acceptable.
Such delivery and payment shall be made at 10:00 a.m., New York City time, on
June 25, 2003 or at such other time on the same date or such other date as the
Initial Purchaser and the Company shall agree in writing. The time and date of
such delivery and the payment for the Firm Notes are herein called the “Closing
Date.”

          (b)     Delivery of, and payment for, any Additional Notes to be purchased by
the Initial Purchaser shall be made at the offices of Morgan, Lewis & Bockius,
LLP, 101 Park Avenue, New York, New York 10178 at 10:00 a.m., New York City
time, on the date specified in the exercise notice given by CIBC pursuant to
Section 2(b) or such other time on the same or such other date as the Initial
Purchaser and the Company shall agree in writing. The time and date of
delivery and payment for any Additional Notes are hereinafter referred to as an
“Option Closing Date.”

          (c)     One or more of the Notes in definitive global form, registered in the
name of Cede & Co., as nominee of the Depository Trust Company (“DTC”), having
an aggregate principal amount corresponding to the aggregate principal amount
of the Notes (collectively, the “Global Note”), shall be delivered by the
Company to the Initial Purchaser (or as the Initial Purchaser directs) in each
case with any transfer taxes thereon duly paid by the Company against payment
by the Initial Purchaser of the Purchase Price thereof by wire transfer in same
day funds to the order of the Company. The Global Note shall be made available
to the Initial Purchaser for inspection not later than 9:30 a.m., New York City
time, on the business day immediately preceding the Closing Date.

     5.          Agreements of the Company. The Company hereby agrees with the Initial
Purchaser as follows:

          (a)     To advise the Initial Purchaser promptly and, if requested by the
Initial Purchaser, to confirm such advice in writing of (i) the issuance by any
state securities commission of any stop order suspending the qualification or
exemption from qualification of any Securities for offering or sale in any
jurisdiction designated by the Initial Purchaser pursuant to Section 5(e)
below, or the initiation of any proceeding by any state securities commission
or any other federal or state regulatory authority for such purpose and (ii)
the happening of any event during the period referred to in Section 5(c) below
that makes any statement of a material fact made in the Offering Circular
untrue or that requires any additions to or changes in the Offering Circular in
order to make the statements therein not misleading. The Company shall use its
reasonable best efforts to prevent the issuance of any stop order or order
suspending the qualification or exemption of any Securities under any state
securities or Blue Sky laws and, if at any time any state securities commission
or other federal or state regulatory authority shall issue

 

 

an order suspending the qualification or exemption of any Securities under
any state securities or Blue Sky laws, the Company shall use its best efforts
to obtain the withdrawal or lifting of such order at the earliest possible
time.

          (b)     To furnish the Initial Purchaser and those persons identified by the
Initial Purchaser to the Company, without charge, as many copies of the
Offering Circular, any documents incorporated by reference therein, and any
amendments or supplements thereto, as the Initial Purchaser may reasonably
request for the time period specified in Section 5(c). Subject to the Initial
Purchaser’s compliance with its representations and warranties and agreements
set forth in Section 7 hereof, the Company consents to the use of the Offering
Circular, any documents incorporated by reference therein, and any amendments
and supplements thereto required pursuant hereto, by the Initial Purchaser in
connection with Exempt Resales.

          (c)     During such period as in the reasonable opinion of counsel for the
Initial Purchaser an Offering Circular is required by law to be delivered in
connection with Exempt Resales by the Initial Purchaser, (i) not to make any
amendment or supplement to the Offering Circular of which the Initial Purchaser
shall not previously have been advised or to which the Initial Purchaser shall
reasonably object after being so advised and (ii) to prepare promptly upon the
Initial Purchaser’s reasonable request any amendment or supplement to the
Offering Circular that may be necessary or advisable in connection with such
Exempt Resales.

          (d)     If, during the period referred to in Section 5(c) above, any event
shall occur or condition shall exist as a result of which, in the opinion of
counsel to the Initial Purchaser, it becomes necessary to amend or supplement
the Offering Circular in order to make the statements therein, in the light of
the circumstances when the Offering Circular is delivered to a QIB, not
misleading, or if, in the opinion of counsel to the Initial Purchaser, it is
necessary to amend or supplement the Offering Circular to comply with any
applicable law, forthwith to prepare an appropriate amendment or supplement to
the Offering Circular so that the statements therein, as so amended or
supplemented, will not, in the light of the circumstances when it is so
delivered, be misleading, or so that the Offering Circular will comply with
applicable law, and to furnish to the Initial Purchaser and such other persons
as the Initial Purchaser may designate such number of copies thereof as the
Initial Purchaser may reasonably request.

          (e)     Prior to the sale of all Notes pursuant to Exempt Resales as
contemplated hereby, to cooperate with the Initial Purchaser and counsel to the
Initial Purchaser in connection with the registration or qualification of the
Notes for offer and sale to the Initial Purchaser and pursuant to Exempt
Resales under the securities or Blue Sky laws of such jurisdictions as the
Initial Purchaser may request and to continue such registration or
qualification in effect so long as required for Exempt Resales and to file such
consents to service of process or other documents as may be necessary in order
to effect such registration or qualification; provided, however, that the
Company shall not be required in connection therewith to qualify as a foreign
corporation in any jurisdiction in which it is not now so qualified or to take
any action that would subject it to general consent to service of process or
taxation, other than as to matters and transactions relating to the Offering
Circular or Exempt Resales, in any jurisdiction in which it is not now so
subject.

 

 

          (f)     So long as the Notes are outstanding, (i) to mail and make generally
available as soon as practicable after the end of each fiscal year to the
record holders of the Notes a financial report of the Company and its
subsidiaries on a consolidated basis (and a similar financial report of all
unconsolidated subsidiaries, if any), it being agreed that all such financial
reports will include a consolidated balance sheet, a consolidated statement of
operations, a consolidated statement of cash flows and a consolidated statement
of stockholders’ equity as of the end of and for such fiscal year, together
with comparable information as of the end of and for the preceding year,
certified by the Company’s independent public accountants and (ii) to mail and
make generally available as soon as practicable after the end of each quarterly
period (except for the last quarterly period of each fiscal year) to such
holders, a consolidated balance sheet, a consolidated statement of operations
and a consolidated statement of cash flows (and similar financial reports of
all unconsolidated subsidiaries, if any) as of the end of and for such period,
and for the period from the beginning of such year to the close of such
quarterly period, together with comparable information for the corresponding
periods of the preceding year.

          (g)     So long as the Notes are outstanding, to furnish to the Initial
Purchaser as soon as available copies of all reports or other communications
furnished by the Company to its security holders or furnished to or filed with
the Commission or any national securities exchange on which any class of
securities of the Company is listed and such other publicly available
information concerning the Company and/or its subsidiaries as the Initial
Purchaser may reasonably request.

          (h)     So long as any of the Notes remain outstanding and during any period
in which the Company is not subject to Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), to make available to any
holder of Securities in connection with any sale thereof and any prospective
purchaser of such Securities from such holder the information (“Rule 144A
Information”) required by Rule 144A(d)(4) under the Act or the information
(“Rule 144 Information”) required by Rule 144(c)(2) under the Act, as
applicable.

          (i)     Whether or not the transactions contemplated in this Agreement are
consummated or this Agreement is terminated, to pay or cause to be paid all
expenses incident to the performance of the obligations of the Company under
this Agreement, including: (i) the fees, disbursements and expenses of counsel
to the Company and accountants of the Company in connection with the sale and
delivery of the Notes to the Initial Purchaser and pursuant to Exempt Resales,
and all other fees and expenses in connection with the preparation, printing,
filing and distribution of the Offering Circular, any documents incorporated by
reference and all amendments and supplements to any of the foregoing (including
financial statements), including the mailing and delivering of copies thereof
to the Initial Purchaser and persons designated by it in the quantities
specified herein, (ii) all costs and expenses related to the transfer and
delivery of the Notes to the Initial Purchaser and pursuant to Exempt Resales,
including any transfer or other taxes payable thereon, (iii) all costs of
printing or producing this Agreement, the other Operative Documents and any
other agreements or documents in connection with the offering, purchase, sale
or delivery of the Securities, (iv) all expenses in connection with the
registration or qualification of the Securities for offer and sale under the
securities or Blue Sky laws of the several states and all costs of printing or
producing any preliminary and supplemental Blue Sky memoranda in connection
therewith (including the filing fees and fees and disbursements of

 

 

counsel for the Initial Purchaser in connection with such registration or
qualification and memoranda relating thereto), (v) the cost of printing
certificates representing the Securities, (vi) all expenses and listing fees in
connection with the application for quotation of the Notes in The PORTAL Market
of the National Association of Securities Dealers, Inc. (“PORTAL”), (vii) the
fees and expenses of the Trustee and the Trustee’s counsel in connection with
the Indenture and the Notes, (viii) the costs and charges of any transfer
agent, registrar and/or depositary (including DTC), (ix) any fees charged by
rating agencies for the rating of the Notes, (x) all costs and expenses of the
Registration Statement, as set forth in the Registration Rights Agreement, (xi)
all expenses and listing fees in connection with the application for listing
the Common Stock issuable upon conversion of the Notes on the New York Stock
Exchange (the “NYSE”) and (xii) and all other costs and expenses incident to
the performance of the obligations of the Company hereunder for which a
provision is not otherwise made in this Section.

          (j)     To use its best efforts to effect the inclusion of the Notes in PORTAL
and to maintain the listing of the Notes on PORTAL for so long as the Notes are
outstanding.

          (k)     To obtain the approval of DTC for “book-entry” transfer of the Notes,
and to comply with all of its agreements set forth in the representation
letters of the Company to DTC relating to the approval of the Notes by DTC for
“book-entry” transfer.

          (l)     To cause the Common Stock issuable upon conversion of the Notes to be
duly included for quotation on the NYSE prior to the Closing Date, subject to
notice of official issuance. The Company will ensure that such Common Stock
remain included for quotation on the NYSE or any other national securities
exchange following the Closing Date for so long as any shares of Common Stock
remain registered under the Exchange Act.

          (m)     The Company will reserve and keep available at all times, free of
preemptive rights, the shares of Common Stock for the purpose of enabling the
Company to satisfy its obligations to issue the Common Stock upon conversion of
the Notes.

          (n)     The Company shall not offer, pledge, sell, contract to sell, sell any
option or contract to purchase, purchase any option or contract to sell, grant
any option, right or warrant to purchase, or otherwise transfer or dispose of,
directly or indirectly, any shares of Common Stock (other than the issuance of
Common Stock upon conversion of the Notes) or any securities convertible into
or exercisable or exchangeable for Common Stock, for a period of 90 days after
the date hereof without the prior written consent of CIBC. Notwithstanding the
foregoing, during such period (i) the Company may grant securities convertible
into or exercisable or exchangeable for Common Stock pursuant to the Company’s
existing stock option, stock purchase or 401(k) plans, (ii) the Company may
issue shares of Common Stock upon the conversion or exchange of a convertible
or exchangeable security outstanding on the date hereof, and (iii) the Company
may create and issue up to $15,000,000 aggregate principal amount of Additional
Notes. The Company shall, prior to or concurrently with the execution of this
Agreement, deliver an agreement executed by each of the directors and executive
officers of the Company to the effect that such person will not, during the
period commencing on the date such person signs such agreement and ending 90
days after the date hereof, without the prior written consent of CIBC, (i)
engage in any of the transactions described in the first sentence of this

 

 

paragraph (whether such shares or any such securities are now owned by
such individual or are hereafter acquired) or (ii) enter into any swap or other
arrangement that transfers to another, in whole or in part, any of the economic
consequences associated with the ownership of any Common Stock (whether any
such transactions described in clause (i) or (ii) is to be settled by the
delivery of Common Stock or such other securities, in cash or otherwise).
Notwithstanding the foregoing, Messrs. Sheinfeld and McKenna will each retain
the right to sell, transfer or otherwise dispose of up to 62,955 shares of
Common Stock in connection with the exercise of options. In addition, in such
agreement each of the directors and executive officers of the Company will have
agreed not to make any demand for or exercise any registration rights for a
period of 90 days after the date hereof without the prior written consent of
CIBC.

          (o)     Not to sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in the Act) that would be
integrated with the sale of the Notes to the Initial Purchaser or pursuant to
Exempt Resales in a manner that would require the registration of any such sale
of the Notes under the Act.

          (p)     During the period of two years after the Closing Date, the Company
will not, and will not permit any of its affiliates (as defined in Rule 144
under the Securities Act) to, resell any of the Securities that have been
reacquired by any of them.

          (q)     In connection with the offering, until CIBC shall have notified the
Company of the completion of the resale of the Securities, neither the Company
nor any of its subsidiaries or affiliates has or will, either alone or with one
or more other persons bid for or purchase for any account in which it or any of
its subsidiaries or affiliates has a beneficial interest any Securities or
attempt to induce any person to purchase any Securities; and neither it nor any
of its subsidiaries or affiliates will make bids or purchases for the purpose
of creating actual, or apparent, active trading in, or of raising the price of,
the Securities.

          (r)     Not to voluntarily claim, and to actively resist any attempts to
claim, the benefit of any usury laws against the holders of any Notes.

          (s)     To comply with all of its agreements set forth in the Registration
Rights Agreement.

          (t)     To use the net proceeds received by it from the sale of the Securities
in the manner specified in the Offering Circular under the caption “Use of
Proceeds.”

          (u)     To use its best efforts to do and perform all things required or
necessary to be done and performed under this Agreement by it prior to the
Closing Date and to satisfy all conditions precedent to the delivery of the
Notes.

          (v)     To maintain such controls and other procedures, including without
limitation those required by Section 302 of the Sarbanes-Oxley Act and the
applicable regulations thereunder, that are reasonably designed to ensure that
information required to be disclosed by the Company in the reports that it
files or submits under the 1934 Act is recorded, processed, summarized and
reported within the time periods specified in the Commission’s rules and forms,
including without limitation, controls and procedures reasonably reasonably
designed

 

 

to ensure that information required to be disclosed by the Company in the
reports that it files or submits under the 1934 Act is accumulated and
communicated to the Company’s management, including its Chief Executive Officer
and its Principal Financial Officer, or persons performing similar functions,
as appropriate to allow timely decisions regarding required disclosure, to
ensure that material information relating to Company, including its
subsidiaries, is made known to them by others within those entities.

          (w)     To comply, in all material respects, with all effective applicable
provisions of the Sarbanes-Oxley Act.

          (x)     The Company will not, and will cause its subsidiaries not to, solicit
any offer to buy or offer to sell the Securities by means of any form of
general solicitation or general advertising (as defined in Regulation D under
the Act) or in any manner involving a public offering within the meaning of
Section 4(2) of the Act.

     6.     Representations, Warranties and Agreements of the Company. As of the
date hereof, the Company represents and warrants to, and agrees with, the
Initial Purchaser that:

          (a)     The Offering Circular (including the Incorporated Documents) does not,
and any supplement or amendment to it will not, contain any untrue statement of
a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except that the
representations and warranties contained in this paragraph (a) shall not apply
to statements in or omissions from the Offering Circular (or any supplement or
amendment thereto) based upon information relating to the Initial Purchaser
furnished to the Company in writing by the Initial Purchaser expressly for use
therein. None of the Incorporated Documents as of the time they were filed
contained an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading. No stop order preventing the use of the Offering Circular, or
any amendment or supplement thereto, or any order asserting that any of the
transactions contemplated by this Agreement are subject to the registration
requirements of the Act, has been issued. The Incorporated Documents, at the
time they were or hereafter are filed or last amended, as the case may be, with
the Commission, complied and will comply in all material respects with the
requirements of the Exchange Act.

          (b)     Each of the Company and its subsidiaries has been duly incorporated,
is validly existing as a corporation in good standing under the laws of its
jurisdiction of incorporation and has the corporate power and authority to
carry on its business as described in the Offering Circular and to own, lease
and operate its properties, and each is duly qualified and is in good standing
as a foreign corporation authorized to do business in each jurisdiction in
which the nature of its business or its ownership or leasing of property
requires such qualification, except where the failure to be so qualified would
not have a material adverse effect on the business, prospects, financial
condition or results of operations of the Company and its subsidiaries, taken
as a whole (a “Material Adverse Effect”).

          (c)     All of the issued and outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are fully paid,
non-assessable and not subject to any preemptive or similar rights, and there
are no restrictions upon the voting or transfer of the

 

 

Common Stock pursuant to the Company’s charter or by-laws or other
governing documents or, except as described in the Company’s Proxy Statement
for the annual meeting held on November 14, 2002, any agreement or other
instrument to which the Company is a party or by which it may be bound. The
Company has the authorized, issued and outstanding capital stock as set forth
in the Offering Circular, and there have been no changes in the outstanding
capital stock of the Company since the date set forth under the heading
“Capitalization” in the Offering Circular, except to the extent that certain
outstanding options and warrants set forth in the Offering Circular may have
been exercised and shares were repurchased as described in the Incorporated
Documents.

          (d)     The entities listed on Schedule A hereto are the only subsidiaries,
direct or indirect, of the Company. All of the outstanding shares of capital
stock of each of the Company’s subsidiaries have been duly authorized and
validly issued and are fully paid and non-assessable, and are owned by the
Company, directly or indirectly through one or more subsidiaries, free and
clear of any security interest, claim, lien, encumbrance or adverse interest of
any nature (each, a “Lien”).

          (e)     This Agreement has been duly authorized, executed and delivered by the
Company, enforceable in accordance with its terms except as the enforceability
thereof may be limited by bankruptcy, insolvency or similar laws affecting
creditors’ rights generally.

          (f)     The Indenture has been duly authorized by the Company and, when duly
executed and delivered by the Company and duly authorized, executed and
delivered by the Trustee, will be a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms except as (i) the
enforceability thereof may be limited by bankruptcy, insolvency or similar laws
affecting creditors’ rights generally and (ii) rights of acceleration and the
availability of equitable remedies may be limited by equitable principles of
general applicability. On the Closing Date, the Indenture will conform in all
material respects to the requirements of the Trust Indenture Act of 1939, as
amended (the “TIA” or “Trust Indenture Act”), and the rules and regulations of
the Commission applicable to an indenture which is qualified thereunder.

          (g)     The Notes have been duly authorized and, when duly executed, delivered
and authenticated in accordance with the provisions of the Indenture and when
delivered to and paid for by the Initial Purchaser in accordance with the terms
of this Agreement, the Notes will be entitled to the benefits of the Indenture
and will be valid and binding obligations of the Company, enforceable in
accordance with their terms except as (i) the enforceability thereof may be
limited by bankruptcy, insolvency or similar laws affecting creditors’ rights
generally and (ii) rights of acceleration and the availability of equitable
remedies may be limited by equitable principles of general applicability. On
the Closing Date, the Notes will conform as to legal matters to the description
thereof contained in the Offering Circular.

          (h)     The Notes are convertible into Common Stock in accordance with the
terms of the Indenture; the shares of Common Stock initially issuable upon
conversion of the Notes have been duly authorized and reserved for issuance
upon such conversion and, when issued upon such conversion, will be validly
issued, fully paid and nonassessable, will conform

 

 

to the description thereof contained in the Offering Circular and will be
duly authorized for listing on the NYSE, subject to notice of official
issuance. No stockholder approval is required for the Company to issue the
Notes. The stockholders of the Company or other holders of the Company’s
securities have no pre-emptive or similar rights with respect to the Notes or
the Common Stock issuable upon conversion of the Notes. The certificates
evidencing the Common Stock issuable upon conversion of the Notes will be in
due and proper legal form.

          (i)     The Registration Rights Agreement has been duly authorized by the
Company and, when duly executed and delivered by the Company, and assuming the
due execution and delivery by the Initial Purchaser, will be a valid and
binding agreement of the Company, enforceable against the Company in accordance
with its terms except as (i) the enforceability thereof may be limited by
bankruptcy, insolvency or similar laws affecting creditors’ rights generally
and (ii) rights of acceleration and the availability of equitable remedies may
be limited by equitable principles of general applicability. On the Closing
Date, the Registration Rights Agreement will conform as to legal matters to the
description thereof contained in the Offering Circular.

          (j)     Neither the Company nor any of its subsidiaries is (i) in violation of
its respective charter or by-laws (ii) in default in the performance of any
obligation, agreement, covenant or condition contained in any indenture, loan
agreement, mortgage, lease or other agreement or instrument that is material to
the Company and its subsidiaries, taken as a whole, to which the Company or any
of its subsidiaries is a party or by which the Company or any of its
subsidiaries or their respective property is bound or (iii) in violation of any
franchise, license, permit, judgment, decree, order, statute, rule or
regulation where the consequences of such violation would have a Material
Adverse Effect.

          (k)     No statute, rule, regulation or order that has been enacted, adopted
or issued by any governmental agency, and no injunction, restraining order or
order of any nature by a Federal or state court of competent jurisdiction, to
which either the Company or any of its subsidiaries is subject, that has been
issued or is pending, (i) could interfere with or adversely affect the issuance
of the Securities, or (ii) could in any manner draw into question the validity
of any of the Operative Documents.

          (l)     The execution, delivery and performance of this Agreement and the
other Operative Documents by the Company, compliance by the Company with all
provisions hereof and thereof and the consummation of the transactions
contemplated hereby and thereby will not (i) require any consent, approval,
authorization or other order of, or qualification with, any court or
governmental body or governmental agency (except such as may be required under
the securities or Blue Sky laws of the various states) other than those which
have been obtained or made, (ii) conflict with or constitute a breach of any of
the terms or provisions of, or a default under, the charter or by-laws of the
Company or any of its subsidiaries or any indenture, loan agreement, mortgage,
lease, license agreement or other agreement or instrument that is material to
the Company and its subsidiaries, taken as a whole, (iii) violate or conflict
with any applicable law or any rule, regulation, judgment, order or decree of
any court or any governmental body or agency having jurisdiction over the
Company, any of its subsidiaries or their respective property, (iv) result in
the imposition or creation of (or the obligation to create or impose) a Lien
under,

 

 

any agreement or instrument to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries or
their respective property is bound, or (v) result in the termination,
suspension or revocation of any Authorization (as defined below) of the Company
or any of its subsidiaries or result in any other impairment of the rights of
the holder of any such Authorization.

          (m)     Except as disclosed in the Offering Circular, there are no legal or
governmental proceedings pending or, to the Company’s knowledge, threatened to
which the Company or any of its subsidiaries is or could be a party or to which
any of their respective property is or could be subject that might result,
singly or in the aggregate, in a Material Adverse Effect or could materially
and adversely affect the ability of the Company to perform its obligations
under any of the Operative Documents, or which are otherwise material in the
context of the sale of the Securities.

          (n)     Each of the Company and its subsidiaries is in compliance in all
material respects with all rules, laws and regulations relating to the use,
treatment, storage and disposal of toxic substances and the protection of
health or the environment (“Environmental Law”) which are applicable to its
business; (ii) neither the Company nor any of its subsidiaries has received any
written notice from any governmental authority or third party of an asserted
claim under Environmental Laws; (iii) each of the Company and its subsidiaries
has received all permits, licenses and other approvals required of it under
applicable Environmental Laws to conduct its business and is in compliance with
all terms and conditions of any such permit, license or approval; (iv) to the
Company’s knowledge, no facts currently exist that will require the Company or
its subsidiaries to make future material capital expenditures to comply with
Environmental Laws; and (v) no property which is or has been owned, leased or
occupied by the Company or its subsidiaries has been designated as a Superfund
site pursuant to the Comprehensive Environmental Response, Compensation of
Liability Act of 1980 (“CERCLA”), as amended (42 U.S.C. Section 9601, et seq.)
or otherwise designated as a contaminated site under applicable state or local
law. Neither the Company nor any of its subsidiaries has been named as a
“potentially responsible party” under the CERCLA. In the ordinary course of
its business, the Company periodically reviews the effect of Environmental Laws
on the business, operations and properties of the Company and its subsidiaries,
in the course of which the Company identifies and evaluates associated costs
and liabilities (including, without limitation, any capital or operating
expenditures required for clean-up, closure of properties or compliance with
Environmental Laws, or any permit, license or approval, any related constraints
on operating activities and any potential liabilities to third parties). On
the basis of such review, the Company has reasonably concluded that such
associated costs and liabilities would not, singly or in the aggregate, have a
Material Adverse Effect.

          (o)     The Company is not, nor will it be, as a result of or after giving
effect to the issuance of the Securities and the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated thereby, (i) insolvent, (ii) left with an unreasonably small
capital with which to engage in its existing and anticipated businesses or
(iii) incurring debts beyond its ability to pay such debts as they mature. The
Company is not issuing the Securities in anticipation of insolvency.

 

 

          (p)     Neither the Company nor any of its subsidiaries has violated any
provisions of the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”), or any provisions of the Foreign Corrupt Practices Act or the rules
and regulations promulgated thereunder, except for such violations which,
singly or in the aggregate, would not have a Material Adverse Effect. None of
the Company, its subsidiaries or any director, officer or employee of the
Company or its subsidiaries has, in the course of such person’s actions for, or
on behalf of, the Company or its subsidiaries, used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expense relating
to political activity or made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate funds; and
none of the Company, its subsidiaries, or to the Company’s knowledge, any
director, officer, employee, agent or other person acting on behalf of the
Company or its subsidiaries, has, in the course of such person’s actions for,
or on behalf of, the Company or its subsidiaries made any bribe, rebate,
payoff, influence payment, kickback or other unlawful payment.

          (q)     Each of the Company and its subsidiaries has such permits, licenses,
consents, exemptions, franchises, authorizations and other approvals (each, an
“Authorization”) of, and has made all filings with and given all notices to,
all governmental or regulatory authorities and self-regulatory organizations
and all courts and other tribunals, including without limitation under any
applicable gaming laws and Environmental Laws, as are necessary to own, lease,
license and operate its respective properties and to conduct its business,
except where the failure to have any such Authorization or to make any such
filing or notice would not, singly or in the aggregate, have a Material Adverse
Effect. Each such Authorization is valid and in full force and effect and each
of the Company and its subsidiaries is in compliance with all the terms and
conditions thereof and with the rules and regulations of the authorities and
governing bodies having jurisdiction with respect thereto; and no event has
occurred (including without limitation the receipt of any notice from any
authority or governing body) that allows or, after notice or lapse of time or
both, would allow, revocation, suspension or termination of any such
Authorization or results or, after notice or lapse of time or both, would
result in any other impairment of the rights of the holder of any such
Authorization; and such Authorizations contain no restrictions that are
burdensome to the Company or any of its subsidiaries; except where such failure
to be valid and in full force and effect or to be in compliance, the occurrence
of any such event or the presence of any such restriction would not, singly or
in the aggregate, have a Material Adverse Effect.

          (r)     The Company and its subsidiaries have good and marketable title in fee
simple to all real property and good and marketable title to all personal
property owned by them that is material to the business of the Company and its
subsidiaries, in each case free and clear of all Liens and defects, except such
as are described in the Offering Circular or such as do not materially affect
the value of such property and do not interfere with the use made and proposed
to be made of such property by the Company and its subsidiaries; and any real
property and buildings held under lease by the Company and its subsidiaries are
held by them under valid, subsisting and enforceable leases with such
exceptions as are not material and do not interfere with the use made and
proposed to be made of such property and buildings by the Company and its
subsidiaries, in each case except as described in the Offering Circular.

 

 

          (s)     The Company and its subsidiaries own or license, free and clear of all
liens or encumbrances, or can acquire or license, free and clear of all liens
and encumbrances, on reasonable terms, all patents, patent rights, licenses,
inventions, copyrights, know-how (including trade secrets, designs and other
unpatented and/or unpatentable designs, technologies, inventions and
innovations and proprietary or confidential information, systems or
procedures), rights to use names and likenesses, trademarks, service marks,
domain names and trade names (“Intellectual Property”) currently employed by
them in connection with the business now operated by them or currently used in
any products, advertising or other materials distributed by them, except where
the failure to own or license or otherwise to be able to acquire or license,
free and clear of all liens and encumbrances, such Intellectual Property would
not, singly or in the aggregate, have a Material Adverse Effect; and neither
the Company nor any of its subsidiaries has received any notice of infringement
of or conflict with asserted rights of others with respect to any Intellectual
Property or rights of privacy that, singly or in the aggregate, if the subject
of an unfavorable decision, ruling or finding, would have a Material Adverse
Effect, in each case except as described in the Offering Circular.

          (t)     Each agreement described in the Offering Circular or the Incorporated
Documents is in full force and effect and is valid and enforceable by the
Company or its subsidiary, as applicable, in accordance with its terms,
assuming the due authorization, execution and delivery thereof by each of the
other parties thereto except as (i) the enforceability thereof may be limited
by bankruptcy, insolvency or similar laws affecting creditors’ rights generally
and (ii) to the extent that rights to indemnity or contribution thereunder may
be limited by federal and state securities laws or the public policy underlying
such laws. None of the Company, any of its subsidiaries, or to the Company’s
knowledge, any other party is in default in the observance or performance of
any term or obligation to be performed by it under such agreement, and no event
has occurred that with notice or lapse of time or both would constitute such a
default, in any such case where such default or event would have Material
Adverse Effect. No default exists, and no event has occurred that with notice
or lapse of time or both would constitute a default, in the due performance and
observance of any term, covenant or condition, by the Company or any of its
subsidiaries of any other agreement or instrument to which the Company or any
of its subsidiaries is a party or by which any of them or their respective
properties or business may be bound or affected where such default or event
would have a Material Adverse Effect.

          (u)     Except as disclosed in the Offering Circular, no relationship, direct
or indirect, exists between or among the Company or any of its subsidiaries on
the one hand, and the directors, officers, stockholders, customers or suppliers
of the Company or any of its subsidiaries on the other hand, that would be
required by the Act to be described in the Offering Circular if the Offering
Circular were a prospectus included in a registration statement on Form S-1
filed with the Commission.

          (v)     There is no (i) significant labor practice complaint, grievance or
arbitration proceeding pending or, to the Company’s knowledge, threatened
against the Company or any of its subsidiaries before the National Labor
Relations Board or any state or local labor relations board, (ii) strike, labor
dispute, slowdown or stoppage pending or threatened against the Company or any
of its subsidiaries or (iii) union representation question existing with

 

 

respect to the employees of the Company or any of its subsidiaries, except in
the case of clauses (i), (ii) and
(iii) for such actions that singly or in the aggregate, would not have a
Material Adverse Effect. To the knowledge of the Company, no collective
bargaining organizing activities are taking place with respect to the Company
or any of its subsidiaries.

          (w)     All material tax returns required to be filed by the Company and each
of its subsidiaries in any jurisdiction have been filed, other than those
filings being contested in good faith, and all material taxes, including
withholding taxes, penalties and interest, assessments, fees and other charges
due pursuant to such returns or pursuant to any assessment received by the
Company or any of its subsidiaries have been paid, other than those being
contested in good faith and for which adequate reserves have been provided.

          (x)     The accountants, Ernst & Young LLP, that have certified the financial
statements and supporting schedules included in the Offering Circular are
independent public accountants with respect to the Company, as required by the
Act and the Exchange Act and such accountants are not in violation of the
auditor independence requirements of the Sarbanes-Oxley Act. The historical
financial statements, together with related schedules and notes, set forth in
the Offering Circular comply as to form in all material respects with the
requirements applicable to registration statements on Form S-1 under the Act.

          (y)     The historical financial statements, together with related schedules
and notes forming part of the Offering Circular (and any amendment or
supplement thereto), present fairly the consolidated financial position,
results of operations and changes in financial position of the Company and its
subsidiaries on the basis stated or incorporated by reference in the Offering
Circular at the respective dates or for the respective periods to which they
apply; such statements and related schedules and notes have been prepared in
accordance with generally accepted accounting principles consistently applied
throughout the periods involved, except as disclosed therein; and the other
financial and statistical information and data set forth or incorporated by
reference in the Offering Circular (and any amendment or supplement thereto)
are, in all material respects, accurately presented and prepared on a basis
consistent with such financial statements and the books and records of the
Company. The Company’s ratio of earnings to fixed charges set forth in the
Offering Circular have been calculated in compliance with Item 503(d) of
Regulation S-K under the Act.

          (z)     The Company is not and, after giving effect to the offering and sale
of the Notes and the application of the net proceeds thereof as described in
the Offering Circular, will not be, an “investment company,” as such term is
defined in the Investment Company Act of 1940, as amended.

          (aa)     Except as disclosed in the Offering Circular or other than has been
waived, there are no contracts, agreements or understandings between the
Company and any person granting such person the right to require the Company to
file a registration statement under the Act with respect to any securities of
the Company or to require the Company to include such securities with the Notes
registered pursuant to any registration statement.

          (bb)     Neither the Company nor any of its subsidiaries nor any agent thereof
acting on the behalf of any of them has taken, and none of them will take, any
action that might

 

 

cause this Agreement or the issuance or sale of the Notes to
violate Section 7 of the Exchange
Act, or any regulation promulgated thereunder, including without
limitation, Regulation T (12 C.F.R. Part 220), Regulation U (12 C.F.R. Part
221) or Regulation X (12 C.F.R. Part 224) of the Board of Governors of the
Federal Reserve System.

          (cc)     No “nationally recognized statistical rating organization” as such
term is defined for the purpose of Rule 436(g)(2) under the Act (i) has imposed
(or has informed the Company that it is considering imposing) any condition
(financial or otherwise) on the Company’s retaining any rating assigned to the
Company or any securities of the Company or (ii) has indicated to the Company
that it is considering (A) the downgrading, suspension, or withdrawal of, or
any review for a possible change that does not indicate the direction of the
possible change in, any rating so assigned or (B) any change in the outlook for
any rating of the Company or any securities of the Company.

          (dd)     Since the respective dates as of which information is given in the
Offering Circular, other than as set forth in the Offering Circular (exclusive
of any amendments or supplements thereto subsequent to the date of this
Agreement), (i) there has not occurred any material adverse change in the
condition, financial or otherwise, or the earnings, business, management or
operations of the Company and its subsidiaries, taken as a whole, (ii) there
has not been any material adverse change in the capital stock or in the
long-term debt of the Company or any of its subsidiaries, (iii) neither the
Company nor any of its subsidiaries has incurred any material liability or
obligation, direct or contingent except in the ordinary course of business,
(iv) neither the Company nor any of its subsidiaries has sustained any material
loss or interference with their respective assets, businesses or properties
(whether owned or leased) from fire, explosion, earthquake, flood or other
calamity, whether or not covered by insurance, or from any labor dispute or any
court or legislative or other governmental action, order or decree that would
have a Material Adverse Effect; and (v) since the date of the latest
consolidated balance sheet included in the Offering Circular, except as
reflected therein, neither the Company nor any of its subsidiaries has (A)
issued any securities other than the issuance of securities pursuant to the
exercise of options granted under stock option plans or agreements existing
prior to the date of the latest consolidated balance sheet included in the
Offering Circular, (B) entered into any material transaction not in the
ordinary course of business or (C) declared or paid any dividend or made any
distribution on any shares of its capital stock or redeemed, purchased or
otherwise acquired or agreed to redeem, purchase or otherwise acquire any
shares of its capital stock.

          (ee)     The books, records and accounts of the Company and each of its
subsidiaries accurately and fairly reflect, in reasonable detail, the
transactions in, and dispositions of, the assets of, and the results of
operations of, the Company and its subsidiaries, as applicable. The Company
and each of its subsidiaries maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed
in accordance with management’s general or specific authorization, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles and to
maintain asset accountability, (iii) access to assets is permitted only in
accordance with management’s general or specific authorization and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.

 

 

          (ff)     When the Notes are issued and delivered pursuant to this Agreement,
the Notes will not be of the same class (within the meaning of Rule 144A under
the Act) as any security of the Company that is listed on a national securities
exchange registered under Section 6 of the Exchange Act or that is quoted in a
United States automated inter-dealer quotation system.

          (gg)     No form of general solicitation or general advertising (as defined in
Regulation D under the Act) was used by the Company, or any of its
representatives (other than the Initial Purchaser, as to whom the Company makes
no representation) in connection with the offer and sale of the Notes
contemplated hereby, including without limitation articles, notices or other
communications published in any newspaper, magazine, or similar medium or
broadcast over television or radio, or any seminar or meeting whose attendees
have been invited by any general solicitation or general advertising. No
securities of the same class as the Notes have been issued and sold by the
Company within the six-month period immediately prior to the date hereof.

          (hh)     Except as permitted by the Securities Act, neither the Company nor
any of its subsidiaries has distributed and, prior to the completion of the
initial distribution of the Notes (which includes the sale by the Initial
Purchaser), neither will distribute, any offering materials in connection with
the offering and sale of the Notes other than the Offering Circular.

          (ii)     The Company has not taken, nor will it take, directly or indirectly,
any action designed to or that might reasonably be expected to cause or result
in, or that has constituted or that might reasonably be expect to constitute,
the stabilization or manipulation of the price of the Common Stock or the
Notes.

          (jj)     Prior to the effectiveness of any Registration Statement, the
Indenture is not required to be qualified under the TIA.

          (kk)     No registration under the Act of the Securities is required for the
sale of the Securities to the Initial Purchaser as contemplated hereby or for
the Exempt Resales assuming the accuracy of the Initial Purchaser’s
representations and warranties and agreements set forth in Section 7 hereof.

          (ll)     Each certificate signed by any officer of the Company and delivered
to the Initial Purchaser or counsel for the Initial Purchaser shall be deemed
to be a representation and warranty by the Company to the Initial Purchaser as
to the matters covered thereby.

          (mm)     The Company is subject to Section 13 or 15(d) the Exchange Act.

          (nn)     Except as disclosed in the Offering Circular, there are no contracts,
agreements or understandings between the Company and any person that would give
rise to a valid claim against the Company or any Initial Purchaser for a
brokerage commission, finder’s fee or other like payment in connection with the
sale of the Securities.

          (oo)     Each of the Company and its subsidiaries are insured by recognized,
financially sound and reputable institutions with policies in such amounts and
with such

 

 

deductibles and covering such risks as are generally deemed adequate and
customary for their businesses, including, but not limited to, policies
covering real and personal property, owned or leased by the Company and its
subsidiaries against theft, damage, destruction or vandalism and earthquakes.
The Company has no reason to believe that it or any subsidiary will not be able
to (i) renew its existing insurance coverage as and when such policies expire
or (ii) to obtain comparable coverage from similar institutions as may be
necessary or appropriate to conduct its business as now conducted and at a cost
that would not result in a Material Adverse Effect. Neither of the Company nor
any subsidiary has been denied any insurance coverage which it has sought or
for which it has applied.

          (pp)     Neither the Company nor any of its subsidiaries nor, to the best of
the Company’s knowledge, any employee or agent of the Company or any
subsidiary, has made any contribution or other payment to any official of, or
candidate for, any federal, state or foreign office in violation of any law.

          (qq)     The Company is not a U.S. Real Property Holding Company within the
meaning of Section 897(c)(2) of the Code.

     The Company acknowledges that the Initial Purchaser and, for purposes of
the opinions to be delivered to the Initial Purchaser pursuant to Section 9
hereof, counsel to the Company and counsel to the Initial Purchaser will rely
upon the accuracy and truth of the foregoing representations and hereby
consents to such reliance.

     7.     Initial Purchaser’s Representations and Warranties. The Initial
Purchaser represents and warrants to, and agrees with, the Company:

          (a)     The Initial Purchaser is a QIB, or is an accredited investor within
the meaning of Regulation D under the Act with such knowledge and experience in
financial and business matters as is necessary in order to evaluate the merits
and risks of an investment in the Notes.

          (b)     The Initial Purchaser is not acquiring the Securities with a view to
any public distribution thereof or with any present intention of offering or
selling any of the Securities in a transaction that would violate the Act or
the securities laws of any state of the United States or any other applicable
jurisdiction.

          (c)     The Initial Purchaser agrees that no form of general solicitation or
general advertising (within the meaning of Regulation D under the Act) has been
or will be used by such Initial Purchaser or any of its representatives in
connection with the offer and sale of the Securities pursuant hereto, including
without limitation articles, notices or other communications published in any
newspaper, magazine or similar medium or broadcast over television or radio, or
any seminar or meeting whose attendees have been invited by any general
solicitation or general advertising.

          (d)     The Initial Purchaser has not offered or sold, and will not offer to
sell, the Securities except to persons whom they reasonably believe to be QIBs.

 

 

          (e)     The Initial Purchaser acknowledges that the Company, for purposes of
the opinions to be delivered to the Initial Purchaser pursuant to Section 9
hereof, counsel to the Company and counsel to the Initial Purchaser will rely
upon the accuracy and truth of the foregoing representations and the Initial
Purchaser hereby consents to such reliance.

     8.          Indemnification.

          (a)     The Company agrees to indemnify and hold harmless the Initial
Purchaser, its directors, its officers and each person, if any, who controls
the Initial Purchaser (within the meaning of Section 15 of the Act or Section
20 of the Exchange Act), from and against any and all losses, claims, damages,
liabilities and judgments (including without limitation any legal or other
expenses incurred in connection with investigating or defending any matter,
including any action that could give rise to any such losses, claims, damages,
liabilities or judgments) caused by any untrue statement or alleged untrue
statement of a material fact contained in the Offering Circular (or any
amendment or supplement thereto) or any Rule 144 Information or Rule 144A
Information provided by the Company to any holder or prospective purchaser of
Securities pursuant to Section 5(h) or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as such
losses, claims, damages, liabilities or judgments are caused by any such untrue
statement or omission or alleged untrue statement or omission based upon
information relating to the Initial Purchaser furnished in writing to the
Company by the Initial Purchaser.

          (b)     The Initial Purchaser agrees to indemnify and hold harmless the
Company and its directors and officers and each person, if any, who controls
(within the meaning of Section 15 of the Act or Section 20 of the Exchange Act)
the Company to the same extent as the foregoing indemnity from the Company to
the Initial Purchaser but only with reference to information relating to the
Initial Purchaser furnished in writing to the Company by the Initial Purchaser
expressly for use in the Offering Circular.

          (c)     In case any action shall be commenced involving any person in respect
of which indemnity may be sought pursuant to Section 8(a) or 8(b) (the
“indemnified party”), the indemnified party shall promptly notify the person
against whom such indemnity may be sought (the “indemnifying party”) in writing
and the indemnifying party shall assume the defense of such action, including
the employment of counsel reasonably satisfactory to the indemnified party and
the payment of all fees and expenses of such counsel, as they are incurred
(except that in the case of any action in respect of which indemnity may be
sought pursuant to both Sections 8(a) and 8(b), the Initial Purchaser shall not
be required to assume the defense of such action pursuant to this Section 8(c)
but may employ separate counsel and participate in the defense thereof, but the
fees and expenses of such counsel, except as provided below, shall be at the
expense of the Initial Purchaser). Any indemnified party shall have the right
to employ separate counsel in any such action and participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
the indemnified party unless (i) the employment of such counsel shall have been
specifically authorized in writing by the indemnifying party, (ii) the
indemnifying party shall have failed to assume the defense of such action or
employ counsel reasonably satisfactory to the indemnified party or (iii) the
named parties to any such action (including any impleaded parties) include both
the indemnified party and the indemnifying party,

 

 

and the indemnified party shall have been advised by such counsel that
there may be one or more legal defenses available to it that are different from
or additional to those available to the indemnifying party (in which case the
indemnifying party shall not have the right to assume the defense of such
action on behalf of the indemnified party). In any such case, the indemnifying
party shall not, in connection with any one action or separate but
substantially similar or related actions in the same jurisdiction arising out
of the same general allegations or circumstances, be liable for the fees and
expenses of more than one separate firm of attorneys (in addition to any local
counsel) for all indemnified parties, and all such fees and expenses shall be
reimbursed as they are incurred. Such firm shall be designated in writing by
CIBC, in the case of the parties indemnified pursuant to Section 8(a), and by
the Company, in the case of parties indemnified pursuant to Section 8(b). The
indemnifying party shall indemnify and hold harmless the indemnified party from
and against any and all losses, claims, damages, liabilities and judgments by
reason of any settlement of any action (i) effected with its written consent or
(ii) effected without its written consent if the settlement is entered into
more than twenty business days after the indemnifying party shall have received
a request from the indemnified party for reimbursement for the fees and
expenses of counsel (in any case where such fees and expenses are at the
expense of the indemnifying party) and, prior to the date of such settlement,
the indemnifying party shall have failed to comply with such reimbursement
request. No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement or compromise of, or consent to
the entry of judgment with respect to, any pending or threatened action in
respect of which the indemnified party is or could have been a party and
indemnity or contribution may be or could have been sought hereunder by the
indemnified party, unless such settlement, compromise or judgment (i) includes
an unconditional release of the indemnified party from all liability on claims
that are or could have been the subject matter of such action and (ii) does not
include a statement as to or an admission of fault, culpability or a failure to
act by or on behalf of the indemnified party.

          (d)     To the extent the indemnification provided for in this Section 8 is
unavailable to an indemnified party or insufficient in respect of any losses,
claims, damages, liabilities or judgments referred to therein, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities and judgments (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company, on the one hand, and the Initial Purchaser, on the other hand, from
the offering of the Securities or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Company, on the one hand, and the Initial
Purchaser, on the other hand, in connection with the statements or omissions
that resulted in such losses, claims, damages, liabilities or judgments, as
well as any other relevant equitable considerations. The relative benefits
received by the Company, on the one hand, and the Initial Purchaser, on the
other hand, shall be deemed to be in the same proportion as the total net
proceeds from the offering of the Securities (after Initial Purchaser’s
discounts or commissions, but before deducting expenses) received by the
Company, and the total discounts and commissions received by the Initial
Purchaser bear to the total price to investors of the Securities, in each case
as set forth on the cover page of the Offering Circular. The relative fault of
the Company, on the one hand, and the Initial Purchaser, on the other hand,
shall be determined by reference to, among other things,

 

 

whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company, on the one hand, or the Initial Purchaser, on the
other hand, and the parties’ relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.

     The Company and the Initial Purchaser agree that it would not be just and
equitable if contribution pursuant to this Section 8(d) were determined by pro
rata allocation or by any other method of allocation that does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified party as a result of
the losses, claims, damages, liabilities or judgments referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses incurred by such
indemnified party in connection with investigating or defending any matter,
including any action, that could have given rise to such losses, claims,
damages, liabilities or judgments. Notwithstanding the provisions of this
Section 8, the Initial Purchaser shall not be required to contribute any amount
in excess of the amount by which the total discounts and commissions received
by the Initial Purchaser exceeds the amount of any damages that the Initial
Purchaser has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.

          (e)     The remedies provided for in this Section 8 are not exclusive and
shall not limit any rights or remedies that may otherwise be available to any
indemnified party at law or in equity.

     9.     Conditions of the Initial Purchaser’s Obligations. The obligations of
the Initial Purchaser to purchase the Firm Notes under this Agreement on the
Closing Date and the Additional Notes, if any, on any Option Closing Date are
subject to the satisfaction of each of the following conditions.

          (a)     All the representations and warranties of the Company contained in
this Agreement shall be true and correct on the Closing Date, or on each Option
Closing Date, if any, with the same force and effect as if made on and as of
the Closing Date or on each Option Closing Date, if any.

          (b)     On or after the date hereof, (i) there shall not have occurred any
downgrading, suspension or withdrawal of, nor shall any notice have been given
of any potential or intended downgrading, suspension or withdrawal of, or of
any review (or of any potential or intended review) for a possible change that
does not indicate the direction of the possible change in, any rating of the
Company or any securities of the Company (including without limitation the
placing of any of the foregoing ratings on credit watch with negative or
developing implications or under review with an uncertain direction) by any
“nationally recognized statistical rating organization” as such term is defined
for the purpose of Rule 436(g)(2) under the Act, (ii) there shall not have
occurred any change, nor shall any notice have been given of any potential or
intended change, in the outlook for any rating of the Company or any securities
of the Company by any such rating organization and (iii) no such rating
organization shall have given notice that

 

 

it has assigned (or is considering assigning) a lower rating to the Notes
than that on which the Notes were marketed.

          (c)     Since the respective dates as of which information is given in the
Offering Circular, other than as set forth in the Offering Circular (exclusive
of any amendments or supplements thereto after the date of this Agreement), (i)
there shall not have occurred any change or any development involving a
prospective change in the condition, financial or otherwise, or the earnings,
business, management or operations of the Company and its subsidiaries, taken
as a whole, (ii) there shall not have been any change or any development
involving a prospective change in the capital stock or in the long-term debt of
the Company or any of its subsidiaries except in the ordinary course of
business, (iii) neither the Company nor any of its subsidiaries shall have
incurred any liability or obligation, direct or contingent except in the
ordinary course of business, and (iv) neither the Company nor any of its
subsidiaries shall have sustained any loss or interference with their
respective assets, businesses or properties (whether owned or leased) from
fire, explosion, earthquake, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or any court or legislative or other
governmental action, order or decree, the effect of which, in case of any event
described in the foregoing clause (i), (ii), (iii) or (iv), in the judgment of
the Initial Purchaser, is material and adverse and makes it impracticable to
market the Securities on the terms and in the manner contemplated in the
Offering Circular.

          (d)     You shall have received on the Closing Date a certificate, dated the
Closing Date, and on an Option Closing Date, if any, dated such Option Closing
Date, signed by the President and the Chief Financial Officer of the Company,
confirming the matters set forth in Sections 6(dd), 9(a) and 9(b) and stating
that the Company has complied with all the agreements and satisfied all of the
conditions herein contained and required to be complied with or satisfied on or
prior to the Closing Date or Option Closing Date, as the case may be.

          (e)     You shall have received on the Closing Date and each Option Closing
Date, if any, an opinion, dated the Closing Date or such Option Closing Date,
as the case may be, of Shack Siegel Katz & Flaherty P.C., counsel for the
Company, to the effect that:

               (i)     The Company has been duly incorporated and is validly existing as a
corporation under the laws of the State of Delaware and has corporate power and
authority to own, lease and operate its properties and to conduct its business
as described in the Offering Circular.

               (ii)     The Company has the requisite corporate power to enter into, deliver
and perform its obligations under the Purchase Agreement and to issue and sell
the Securities.

               (iii)     Each subsidiary of the Company incorporated under a state of the
United States has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation and has corporate power and authority to own, lease and operate
its properties and to conduct its business as described in the Offering
Circular.

 

 

               (iv)     All of the outstanding shares of Common Stock have been duly
authorized and validly issued and are fully paid and nonassessable.

               (v)     The Notes have been duly authorized by the Company and, when executed
and authenticated in accordance with the provisions of the Indenture, assuming
due authentication thereof by the Trustee, and delivered to and paid for by the
Initial Purchaser in accordance with the terms of the Purchase Agreement, will
be valid and binding obligations of the Company, enforceable against the
Company in accordance with their terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws affecting the enforcement of
creditors’ rights generally and by general equitable principles, and will be
entitled to the benefits of the Indenture.

               (vi)     The Incorporated Documents, on the respective dates they were filed,
complied in all material respects with the requirements as to form under the
Exchange Act and the related rules and regulations in effect at the respective
dates of their filing.

               (vii)     The shares of Common Stock to be issued upon conversion of the Notes
have been duly authorized and reserved and, when issued upon conversion of the
Notes in accordance with the terms of the Notes and the Indenture, will be
validly issued, fully paid and non-assessable, and the issuance of the Common
Stock will not be subject to any preemptive rights arising by operation of law
or under the Company’s Certificate of Incorporation or Bylaws or, to such
counsel’s knowledge, similar rights under any other agreements of the Company.

               (viii)     All necessary corporate action has been duly and validly taken by
the Company to authorize the execution, delivery and performance of the
Purchase Agreement and the issuance and sale of the Notes and, upon conversion
thereof, the issuance of the Common Stock. The Purchase Agreement has been duly
and validly authorized, executed and delivered by the Company and the Purchase
Agreement constitutes the legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms except as such
enforceability may be limited by applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws affecting the
enforcement of creditors’ rights generally and by general equitable principles
and except to the extent that rights to indemnity or contribution under the
Purchase Agreement may be limited by Federal or state securities laws or the
public policy underlying such laws.

               (ix)     Neither the execution and delivery by the Company of, nor the
performance by the Company of its obligations under the Purchase Agreement, the
Indenture, the Registration Rights Agreement and the Securities (including,
without limitation, the issuance and sale by the Company of the Notes and, upon
conversion thereof, the Common Stock) will (a) give rise to a right to
terminate or accelerate the due date of any payment due under, or result in the
breach of any term or provision of, or constitute a default (or any event which
with notice or lapse of time, or both, would constitute a default) under, or
require consent or waiver under, or result in the execution or imposition of
any lien, charge, claim, security interest or encumbrance upon any properties
or assets of the Company pursuant to the terms of any indenture, mortgage, deed
trust, note or other agreement or instrument to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries or
any of the assets or properties or

 

 

businesses of the Company or any of its subsidiaries are bound and which
is listed as an exhibit to the Incorporated Documents, (b) to such counsel’s
knowledge, violate any existing obligations of the Company or any of its
subsidiaries under the terms of any judgment, decree, or order of any court or
arbitrator or governmental agency or body, which names the Company or any of
its subsidiaries and is specifically directed to them or their properties, (c)
violate any applicable statute, rule or regulation of the Federal laws of the
United States of America and the laws of the States of Delaware and New York
(excluding any gaming laws, rules or regulations) or (d) violate any provision
of the charter or by-laws of the Company or any of its subsidiaries, except for
such consents, waivers, approvals and authorizations which have been obtained
prior to the Closing Date.

               (x)     No consent, approval, authorization, license, registration, or
qualification or order of any federal, Delaware or New York court or
governmental agency or regulatory body (excluding any gaming regulatory
authorities) is required for the due authorization, execution, delivery or
performance by the Company of its obligations under the Purchase Agreement, the
Indenture, the Registration Rights Agreement or the Securities except such as
may be required by the securities or Blue Sky laws of the various states in
connection with the offer and sale of the Securities (except, other than as set
forth in paragraph (xiv) below, we give no opinion as to registration of the
Securities under the Act and the qualification of the Indenture under the Trust
Indenture Act of 1939, as amended).

               (xi)     To such counsel’s knowledge, there is no litigation or governmental
proceeding or investigation, before any court or before or by any public body
or board pending or threatened in writing against, or involving the assets,
properties or businesses of, the Company or any of its subsidiaries which would
have a Material Adverse Effect.

               (xii)     Each of the Indenture and the Registration Rights Agreement has been
duly authorized, executed and delivered by, and is a valid and binding
agreement of, the Company, enforceable against the Company in accordance with
its terms except as such enforceability may be limited by applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws affecting the enforcement of creditors’ rights generally and
by general equitable principles.

               (xiii)     The Company is not an “investment company” or an entity controlled
by an “investment company” as such terms are defined in the Investment Company
Act of 1940, as amended.

               (xiv)     The statements in the Offering Circular under the caption
“Description of the Notes” insofar as such statements constitute a summary of
documents referred to therein fairly summarize in all material respects such
documents and matters.

               (xv)     The capital stock of the Company conforms in all material respects to
the description thereof contained in the Offering Circular under the caption
“Description of Share Capital.”

               (xvi)     Assuming (i) each Initial Purchaser is a “qualified institutional
buyer” within the meaning of Rule 144A of the Act and (ii) the accuracy of the
representations

 

 

and warranties and compliance with the agreements of the Initial Purchaser
in Section 7 of the Purchase Agreement, it is not necessary in connection with
the offer, sale and delivery of the Securities to the Initial Purchaser under
the Purchase Agreement or in connection with the initial resale of the
Securities by the Initial Purchaser in accordance with Section 7 of the
Purchase Agreement and the Offering Circular to register the Securities under
the Act, or to qualify the Indenture under the Trust Indenture Act of 1939, as
amended, it being understood that no opinion is expressed as to any subsequent
resale of any of the Notes or the Common Stock issuable upon conversion of any
of the Notes.

     Such counsel is called upon to opine as to factual matters, and the
character of determinations involved in the process is such that it is not
passing upon and does not need to assume any responsibility for the accuracy,
completeness or fairness of the information included in the Offering Circular.
Such counsel may assume the correctness and completeness of the information
included in the Offering Circular, and such counsel may make no independent
investigation or verification of that information. Such counsel can advise,
however, that in and on the basis of its review of the Offering Circular and
its participation in its preparation, nothing has come to such counsel’s
attention that causes it to believe that the Offering Circular, as of its date
or as of the date hereof, contained or contains an untrue statement of a
material fact or omitted or omits to state a material fact necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading. Such counsel is not called upon to express an
opinion with respect to, and the preceding paragraph does not address, the
financial statements and related notes and schedules, and other financial,
accounting, and statistical information, included in, incorporated by reference
in, or omitted from the Offering Circular, or any further amendment or
supplement thereto. Such counsel is also not called upon to express any
opinion with respect to any mater relating to compliance with financial
covenants or financial requirements.

          (f)     You shall have received on the Closing Date and each Option Closing
Date, if any, an opinion of Kathleen McJohn, Vice President and General Counsel
to the Company, to the effect that:

               (i)     The Company and WMS Gaming Inc., Lenc-Smith Inc. and Williams
Electronics Games, Inc. are duly qualified to transact business and are in good
standing as a foreign corporation in the State of Illinois.

               (ii)     Neither the execution and delivery by the Company of, nor the
performance by the Company of its obligations under the Purchase Agreement, the
Indenture, the Registration Rights Agreement and the Securities (including,
without limitation, the issuance and sale by the Company of the Notes and, upon
conversion thereof, the Common Stock) will violate any applicable statute, rule
or regulation of the laws of the State of Illinois (excluding any gaming laws,
rules or regulations).

               (iii)     No consent, approval, authorization, license, registration or
qualification or order of any Illinois court or governmental agency or
regulatory body (excluding any gaming regulatory authorities) is required for
the due authorization, execution, delivery or performance by the Company of its
obligations under the Purchase Agreement, the Indenture, the Registration
Rights Agreement or the Securities.

 

 

               (iv)     To such counsel’s knowledge, there is no litigation or governmental
proceeding or investigation, before any court or before or by any public body
or board pending or threatened in writing against or involving the assets,
properties or businesses of, the Company or any of its subsidiaries which would
have a Material Adverse Effect.

               (v)     All of the issued and outstanding capital stock of each subsidiary of
the Company has been duly authorized and validly issued, is fully paid and
non-assessable and is owned by the Company, directly or through subsidiaries,
free and clear of any security interest, mortgage, pledge, lien, encumbrance or
claim.

          (g)     You shall have received on the Closing Date and each Option Closing
Date, if any, an opinion of Hogan & Hartson, tax counsel for the Company, to
the effect that the statements in the Offering Circular under the caption
“Certain United States Federal Income Tax Consequences,” insofar as such
statements constitute a summary of the United States federal tax laws referred
to therein, fairly summarize the matters referred to therein in all material
respects.

          (h)     You shall have received on the Closing Date and each Option Closing
Date, if any, an opinion dated the Closing Date or such Option Closing Date, as
the case may be, of Daurean Sloan, in-house regulatory counsel for the Company,
to the effect that:

               (i)     The statements contained in the Offering Circular and/or Form 10-K
under the captions “Government Regulation” and “Risk
Factors – Our gaming
machine business is heavily regulated, and we must obtain and maintain our
gaming licenses and regulatory approvals for our games to operate our business”
insofar as such statements constitute a summary of matters of law, are fair
summaries in all material respects.

               (ii)     The Company and each of its subsidiaries is currently in possession
of and in compliance in all material respects with all permits, licenses and
other approvals necessary to carry on its business.

               (iii)     No consent, approval, exemption, authorization, designation,
declaration or filing by or with any governmental agency or regulatory body is
required for the execution, delivery or performance of the Purchase Agreement
by the Company or the consummation of the transactions contemplated thereby,
including the use of proceeds from the sale of the Notes and the conversion of
the Notes in accordance with their terms, other than those obtained or made.

               (iv)     Neither the execution and delivery by the Company of, nor the
performance by the Company of its obligations under the Purchase Agreement, the
Indenture, the Registration Rights Agreements and the Securities (including,
without limitation, the issuance and sale by the Company of the Notes and, upon
conversion thereof, the Common Stock) will violate any gaming laws, rules or
regulations.

          (i)     The Initial Purchaser shall have received on the Closing Date and on
each Option Closing Date, an opinion, dated the Closing Date, of Morgan, Lewis
& Bockius LLP, counsel for the Initial Purchaser, in form and substance
reasonably satisfactory to the Initial Purchaser.

 

 

          (j)     The Initial Purchaser shall have received, at the time this Agreement
is executed and at the Closing Date and each Option Closing Date, if any,
letters dated the date hereof or the Closing Date or an Option Closing Date, as
the case may be, from Ernst & Young LLP, independent public accountants, in
form and substance satisfactory to the Initial Purchaser containing the
information and statements of the type ordinarily included in accountants’
“comfort letters” with respect to the financial statements and certain
financial information contained in the Offering Circular.

          (k)     The Notes shall have been approved by the National Association of
Securities Dealers, Inc. for trading and duly listed in PORTAL.

          (l)     The Initial Purchaser shall have received a counterpart, conformed as
executed, of the Indenture which shall have been entered into by the Company
and the Trustee.

          (m)     The Company shall have executed the Registration Rights Agreement, and
the Initial Purchaser shall have received an original copy thereof, duly
executed by the Company.

          (n)     The Company shall not have failed at or prior to the Closing Date or
each Option Closing Date, if any, as the case may be, to perform or comply with
all of the agreements contained herein and required to be performed or complied
with by the Company at or prior to the Closing Date or Option Closing Date, as
the case may be.

     10.     Effectiveness of Agreement and Termination. This Agreement may be
terminated at any time on or prior to the Closing Date by the Initial Purchaser
by written notice to the Company if any of the following has occurred: (i) any
significant attack on or significant acts of terrorism involving the United
States, outbreak or escalation of hostilities excluding current hostilities in
Iraq, declaration by the United States of a national emergency or war or other
calamity or crisis or any change or development involving a prospective change
in United States or international, political, financial or economic conditions
which has a material adverse effect on financial markets so as to make it, in
your sole judgment, impracticable or inadvisable to proceed with the offering
or delivery of the Securities as contemplated by the Offering Circular, (ii)
the suspension or material limitation of trading in securities or other
instruments on the New York Stock Exchange, the American Stock Exchange, the
Chicago Board of Options Exchange, the Chicago Mercantile Exchange, the Chicago
Board of Trade or the Nasdaq National Market or limitation on prices for
securities or other instruments on any such exchange or the Nasdaq National
Market, (iii) the suspension of trading of any securities of the Company on any
exchange or in the over-the-counter market, (iv) the enactment, publication,
decree or other promulgation of any federal or state statute, regulation, rule
or order of any court or other governmental authority that in your judgment has
had, or will have, a Material Adverse Effect, (v) the declaration of a banking
moratorium by either federal or New York state authorities, (vi) any major
disruption of settlements of securities, (vii) the taking of any action by any
federal, state or local government or agency in respect of its monetary or
fiscal affairs that in your judgment has a material adverse effect on the
financial markets in the United States, (viii) in your judgment there shall
have occurred any Material Adverse Effect or (ix) there shall be any failure or
refusal on the part of the Company to comply with the terms or to fulfill any
of the conditions of this Agreement.

 

 

     11.     Miscellaneous.

          (a)     Notices given pursuant to any provision of this Agreement shall be
addressed as follows: (i) if to the Company to WMS Industries Inc., 800 South
Northpoint Boulevard, Waukegan, IL 60085, Attention Kathleen McJohn, General
Counsel, with a copy to Jeffrey Siegel, Shack Siegel Katz & Flaherty P.C., 530
South Fifth Avenue, New York, New York 10036 and (ii) if to the Initial
Purchaser, c/o CIBC World Markets Corp., 417 5th Avenue, 2nd Floor, New York,
New York 10016 Attention: David Berman, with a copy to Howard Shecter, Morgan,
Lewis & Bockius LLP, 101 Park Avenue, New York, New York 10178, in any case to
such other address as the person to be notified may have requested in writing.

          (b)     The respective indemnities, contribution agreements, representations,
warranties and other statements of the Company and the Initial Purchaser set
forth in or made pursuant to this Agreement shall remain operative and in full
force and effect and will survive delivery of and payment for the Securities
regardless of (i) any investigation, or statement as to the results thereof,
made by or on behalf of the Initial Purchaser, the officers or directors of the
Initial Purchaser, any person controlling the Initial Purchaser, the Company,
the officers or directors of the Company, or any person controlling the
Company, (ii) acceptance of the Securities and payment for them hereunder and
(iii) termination of the Agreement.

          (c)     If for any reason the Notes are not delivered by or on behalf of the
Company as provided herein as a result of any termination of this Agreement
pursuant to Section 10, clauses (iii), (viii) or (ix), the Company agrees to
reimburse the Initial Purchaser for all out-of-pocket expenses (including the
fees and disbursements of counsel) incurred by it. Notwithstanding any
termination of this Agreement, the Company shall be liable for all expenses
which it has agreed to pay pursuant to Section 5(i). The Company also agrees
to reimburse the Initial Purchaser and the officers, directors and each person,
if any, who controls the Initial Purchaser within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act for any and all fees and expenses
(including without limitation the fees and expenses of counsel) incurred by
them in connection with enforcing their rights under this Agreement (including
without limitation its rights under Section 8).

          (d)     Except as otherwise provided, this Agreement has been and is made
solely for the benefit of and shall be binding upon the Company, the Initial
Purchaser, the Initial Purchaser’s directors and officers, any controlling
persons referred to herein, the directors of the Company and their respective
successors and assigns, all as and to the extent provided in this Agreement,
and no other person shall acquire or have any right under or by virtue of this
Agreement. The term “successors and assigns” shall not include a purchaser of
any of the Securities from the Initial Purchaser merely because of such
purchase.

          (e)     This Agreement shall be governed and construed in accordance with the
laws of the State of New York, including without limitation, Section 5-1401 of
the New York General Obligations Law.

          (f)     This Agreement may be signed in various counterparts, which together
shall constitute one and the same instrument.

 

 

          Please confirm that the foregoing correctly sets forth the agreement
between the Company and the Initial Purchaser by signing in the space provided
below.

	 	 	 	 	 
	 	 	Very truly yours,
	 	 	 	 	 
	 	 	WMS INDUSTRIES INC.
	 	 	
By:
	 	      /s/ Scott D. Schweinfurth
	 	 	 	 	

	 	 	 	 	Name: Scott D. Schweinfurth
	 	 	 	 	Title:   Executive Vice President, Chief
	 	 	 	 	            Financial Officer and Treasurer

	 	 	 
	
CIBC WORLD MARKETS CORP.
	By:	 	
       /s/ Andrew McInnes
	 	 	

	 	 	
Name:  Andrew McInnes
	 	 	
Title:     Managing Director

 

 

SCHEDULE A

Subsidiaries

WMS Gaming Inc.

Lenc-Smith Inc.

Williams Electronics Games, Inc.

WMS Finance Inc.

WMS Gaming International S.L.

WMS Gaming Australia Pty Ltd.

WMS Gaming Africa (Pty) Ltd.

Big Foot Software Research and Development

WMS Gaming (Canada) Ltd.

WMS Gaming do Brasil Ltda., dissolution in process

 

 

EXHIBIT A

Form of Registration Rights Agreement

[conformed copy filed separately]

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00053-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00053-of-00352.parquet"}]]