Document:

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                                                                   EXHIBIT 10.2
                                                                 CONFORMED COPY

                            AESOP FUNDING II L.L.C.,
                                    as Issuer

                                       and

                              THE BANK OF NEW YORK,
                       as Trustee and Series 2003-4 Agent

                                   ----------

                            SERIES 2003-4 SUPPLEMENT
                            dated as of June 19, 2003

                                       to

                       AMENDED AND RESTATED BASE INDENTURE
                            dated as of July 30, 1997

                                   ----------

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                                TABLE OF CONTENTS

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ARTICLE I DEFINITIONS.............................................................................................2

ARTICLE II SERIES 2003-4 ALLOCATIONS.............................................................................23

         Section 2.1  Establishment of Series 2003-4 Collection Account, Series 2003-4 Excess Collection
                       Account and Series 2003-4 Accrued Interest Account........................................23
         Section 2.2  Allocations with Respect to the Series 2003-4 Notes........................................23
         Section 2.3  Payments to Noteholders and Each Series 2003-4 Interest Rate Swap Counterparty.............27
         Section 2.4  Payment of Note Interest...................................................................31
         Section 2.5  Payment of Note Principal..................................................................31
         Section 2.6  Administrator's Failure to Instruct the Trustee to Make a Deposit or Payment...............35
         Section 2.7  Series-2003-4 Reserve Account..............................................................36
         Section 2.8  Series 2003-4 Letters of Credit and Series 2003-4 Cash Collateral Account..................38
         Section 2.9  Series 2003-4 Distribution Account.........................................................42
         Section 2.10  Series 2003-4 Interest Rate Swaps.........................................................44
         Section 2.11  Series 2003-4 Accounts Permitted Investments..............................................45
         Section 2.12  Series 2003-4 Demand Notes Constitute Additional Collateral for Series 2003-4 Notes.......45

ARTICLE III AMORTIZATION EVENTS..................................................................................46

ARTICLE IV RIGHT TO WAIVE PURCHASE RESTRICTIONS..................................................................47

ARTICLE V FORM OF SERIES 2003-4 NOTES............................................................................49

         Section 5.1  Restricted Global Series 2003-4 Notes......................................................49
         Section 5.2  Temporary Global Series 2003-4 Notes; Permanent Global Series 2003-4 Notes.................49

ARTICLE VI GENERAL...............................................................................................50

         Section 6.1  Optional Repurchase........................................................................50
         Section 6.2  Information................................................................................50
         Section 6.3  Exhibits...................................................................................50
         Section 6.4  Ratification of Base Indenture.............................................................51
         Section 6.5  Counterparts...............................................................................51
         Section 6.6  Governing Law..............................................................................51
         Section 6.7  Amendments.................................................................................51
         Section 6.8  Discharge of Indenture.....................................................................52
         Section 6.9  Notice to Surety Provider and Rating Agencies..............................................52
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                                TABLE OF CONTENTS
                                   (continued)

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         Section 6.10 Certain Rights of Surety Provider..........................................................52
         Section 6.11 Surety Provider Deemed Noteholder and Secured Party........................................52
         Section 6.12 Capitalization of AFC-II...................................................................52
         Section 6.13 Series 2003-4 Required Non-Program Enhancement Percentage..................................53
         Section 6.14 Third Party Beneficiary....................................................................53
         Section 6.15 Prior Notice by Trustee to Surety Provider.................................................53
         Section 6.16 Effect of Payments by the Surety Provider..................................................53
         Section 6.17 Series 2003-4 Demand Notes.................................................................54
         Section 6.18 Subrogation................................................................................54
         Section 6.19 Termination of Supplement..................................................................54
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          SERIES 2003-4 SUPPLEMENT, dated as of June 19, 2003 (this
"SUPPLEMENT"), among AESOP FUNDING II L.L.C., a special purpose limited
liability company established under the laws of Delaware ("AFC-II"), THE BANK OF
NEW YORK, a New York banking corporation, as successor in interest to the
corporate trust administration of Harris Trust and Savings Bank, as trustee
(together with its successors in trust thereunder as provided in the Base
Indenture referred to below, the "TRUSTEE"), and THE BANK OF NEW YORK, a New
York banking corporation, as agent for the benefit of the Series 2003-4
Noteholders, each Series 2003-4 Interest Rate Swap Counterparty and the Surety
Provider (the "SERIES 2003-4 AGENT"), to the Amended and Restated Base
Indenture, dated as of July 30, 1997, between AFC-II and the Trustee (as
amended, modified or supplemented from time to time, exclusive of Supplements
creating a new Series of Notes, the "BASE INDENTURE").

                              PRELIMINARY STATEMENT

          WHEREAS, Sections 2.2 and 12.1 of the Base Indenture provide, among
other things, that AFC-II and the Trustee may at any time and from time to time
enter into a supplement to the Base Indenture for the purpose of authorizing the
issuance of one or more Series of Notes;

          NOW, THEREFORE, the parties hereto agree as follows:

                                   DESIGNATION

          There is hereby created a Series of Notes of four classes to be issued
pursuant to the Base Indenture and this Supplement and such Series of Notes
shall be designated generally as Series 2003-4 Rental Car Asset Backed Notes.

          The Series 2003-4 Notes will be issued in four classes: one of which
shall be designated as the Series 2003-4 Floating Rate Rental Car Asset Backed
Notes, Class A-1, one of which shall be designated as the Series 2003-4 2.86%
Rental Car Asset Backed Notes, Class A-2, one of which shall be designated as
the Series 2003-4 Floating Rate Rental Car Asset Backed Notes, Class A-3, and
one of which shall be designated as the Series 2003-4 Floating Rate Rental Car
Asset Backed Notes, Class A-4.

          The proceeds from the sale of the Series 2003-4 Notes shall be
deposited in the Collection Account and shall be paid to AFC-II and used to make
Loans under the Loan Agreements to the extent that the Borrowers have requested
Loans thereunder and Eligible Vehicles are available for acquisition or
refinancing thereunder on the date hereof. Any such portion of proceeds not so
used to make Loans shall be deemed to be Principal Collections.

          The Series 2003-4 Notes are a non-Segregated Series of Notes (as more
fully described in the Base Indenture). Accordingly, all references in this
Supplement to "all" Series of Notes (and all references in this Supplement to
terms defined in the Base Indenture that contain references to "all" Series of
Notes) shall refer to all Series of Notes other than Segregated Series of Notes.

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                                    ARTICLE I

                                   DEFINITIONS

          (a)    All capitalized terms not otherwise defined herein are defined
in the Definitions List attached to the Base Indenture as Schedule I thereto.
All Article, Section or Subsection references herein shall refer to Articles,
Sections or Subsections of this Supplement, except as otherwise provided herein.
Unless otherwise stated herein, as the context otherwise requires or if such
term is otherwise defined in the Base Indenture, each capitalized term used or
defined herein shall relate only to the Series 2003-4 Notes and not to any other
Series of Notes issued by AFC-II.

          (b)    The following words and phrases shall have the following
meanings with respect to the Series 2003-4 Notes and the definitions of such
terms are applicable to the singular as well as the plural form of such terms
and to the masculine as well as the feminine and neuter genders of such terms:

          "AGH" means Avis Group Holdings, Inc., a Delaware corporation.

          "AUTHORIZED NEWSPAPER" means the LUXEMBURGER WORT or other daily
newspaper of general circulation in Luxembourg (or if publication is not
practical in Luxembourg, in Europe).

          "BUSINESS DAY" means any day other than (a) a Saturday or a Sunday or
(b) a day on which the Surety Provider or banking institutions in New York City
or in the city in which the corporate trust office of the Trustee is located are
authorized or obligated by law or executive order to close.

          "CERTIFICATE OF LEASE DEFICIT DEMAND" means a certificate in the form
of ANNEX A to the Series 2003-4 Letters of Credit.

          "CERTIFICATE OF TERMINATION DATE DEMAND" means a certificate in the
form of ANNEX D to the Series 2003-4 Letters of Credit.

          "CERTIFICATE OF TERMINATION DEMAND" means a certificate in the form of
ANNEX C to the Series 2003-4 Letters of Credit.

          "CERTIFICATE OF UNPAID DEMAND NOTE DEMAND" means a certificate in the
form of ANNEX B to the Series 2003-4 Letters of Credit.

          "CLASS" means a class of the Series 2003-4 Notes, which may be the
Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes or the Class A-4
Notes.

          "CLASS A-1 CARRYOVER CONTROLLED AMORTIZATION AMOUNT" means, with
respect to any Related Month during the Class A-1 Controlled Amortization
Period, the amount, if any, by which the Monthly Total Principal Allocation for
the previous Related Month was less than the Class A-1 Controlled Distribution
Amount for the previous Related Month; PROVIDED, HOWEVER,

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that for the first Related Month in the Class A-1 Controlled Amortization
Period, the Class A-1 Carryover Controlled Amortization Amount shall be zero.

          "CLASS A-1 CONTROLLED AMORTIZATION AMOUNT" means with respect to any
Related Month during the Class A-1 Controlled Amortization Period $25,000,000.

          "CLASS A-1 CONTROLLED AMORTIZATION PERIOD" means the period commencing
at the opening of business on February 1, 2006 (or, if such day is not a
Business Day, the Business Day immediately preceding such day) and continuing to
the earliest of (i) the commencement of the Series 2003-4 Rapid Amortization
Period, (ii) the date on which the Class A-1 Notes are fully paid and (iii) the
termination of the Indenture.

          "CLASS A-1 CONTROLLED DISTRIBUTION AMOUNT" means, with respect to any
Related Month during the Class A-1 Controlled Amortization Period, an amount
equal to the sum of the Class A-1 Controlled Amortization Amount and any Class
A-1 Carryover Controlled Amortization Amount for such Related Month.

          "CLASS A-1 EXPECTED FINAL DISTRIBUTION DATE" means the August 2006
Distribution Date.

          "CLASS A-1 FINAL DISTRIBUTION DATE" means the August 2007 Distribution
Date.

          "CLASS A-1 INITIAL INVESTED AMOUNT" means the aggregate initial
principal amount of the Class A-1 Notes, which is $150,000,000.

          "CLASS A-1 INVESTED AMOUNT" means, when used with respect to any date,
an amount equal to the Class A-1 Outstanding Principal Amount PLUS the sum of
(a) the amount of any principal payments made to the Class A-1 Noteholders on or
prior to such date with the proceeds of a demand on the Surety Bond and (b) the
amount of any principal payments made to Class A-1 Noteholders that have been
rescinded or otherwise returned by the Class A-1 Noteholders for any reason.

          "CLASS A-1 MONTHLY INTEREST" means, with respect to any Series 2003-4
Interest Period, an amount equal to the product of (A) the Class A-1 Invested
Amount on the first day of such Series 2003-4 Interest Period, after giving
effect to any principal payments made on such date, (B) the Class A-1 Note Rate
for such Series 2003-4 Interest Period and (C) the number of days in such Series
2003-4 Interest Period divided by 360.

          "CLASS A-1 NOTEHOLDER" means the Person in whose name a Class A-1 Note
is registered in the Note Register.

          "CLASS A-1 NOTE RATE" means, for (i) the initial Series 2003-4
Interest Period, 1.3225% per annum and (ii) any other Series 2003-4 Interest
Period, the sum of 0.23% PLUS LIBOR for such Series 2003-4 Interest Period.

          "CLASS A-1 NOTES" means any one of the Series 2003-4 Floating Rate
Rental Car Asset Backed Notes, Class A-1, executed by AFC-II and authenticated
by or on behalf of the Trustee, substantially in the form of EXHIBIT A-1-1,
EXHIBIT A-1-2 or EXHIBIT A-1-3. Definitive

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Class A-1 Notes shall have such insertions and deletions as are necessary to
give effect to the provisions of Section 2.18 of the Base Indenture.

          "CLASS A-1 OUTSTANDING PRINCIPAL AMOUNT" means, when used with respect
to any date, an amount equal to (a) the Class A-1 Initial Invested Amount MINUS
(b) the amount of principal payments made to Class A-1 Noteholders on or prior
to such date.

          "CLASS A-2 CARRYOVER CONTROLLED AMORTIZATION AMOUNT" means, with
respect to any Related Month during the Five-Year Notes Controlled Amortization
Period, the amount, if any, by which the portion of the Monthly Total Principal
Allocation paid to the Class A-2 Noteholders pursuant to Section 2.5(e) for the
previous Related Month was less than the Class A-2 Controlled Distribution
Amount for the previous Related Month; PROVIDED, HOWEVER, that for the first
Related Month in the Five-Year Notes Controlled Amortization Period, the Class
A-2 Carryover Controlled Amortization Amount shall be zero.

          "CLASS A-2 CONTROLLED AMORTIZATION AMOUNT" means (i) with respect to
any Related Month other than the last Related Month during the Five-Year Notes
Controlled Amortization Period, $20,833,333.33 and (ii) with respect to the last
Related Month during the Five-Year Notes Controlled Amortization Period,
$20,833,333,35.

          "CLASS A-2 CONTROLLED DISTRIBUTION AMOUNT" means, with respect to any
Related Month during the Five-Year Notes Controlled Amortization Period, an
amount equal to the sum of the Class A-2 Controlled Amortization Amount and any
Class A-2 Carryover Controlled Amortization Amount for such Related Month.

          "CLASS A-2 INITIAL INVESTED AMOUNT" means the aggregate initial
principal amount of the Class A-2 Notes, which is $125,000,000.

          "CLASS A-2 INVESTED AMOUNT" means, when used with respect to any date,
an amount equal to the Class A-2 Outstanding Principal Amount PLUS the sum of
(a) the amount of any principal payments made to the Class A-2 Noteholders on or
prior to such date with the proceeds of a demand on the Surety Bond and (b) the
amount of any principal payments made to Class A-2 Noteholders that have been
rescinded or otherwise returned by the Class A-2 Noteholders for any reason.

          "CLASS A-2 MONTHLY INTEREST" means, with respect to (i) the initial
Series 2003-4 Interest Period, an amount equal to $307,847.22 and (ii) any other
Series 2003-4 Interest Period, an amount equal to the product of (A) one-twelfth
of the Class A-2 Note Rate and (B) the Class A-2 Invested Amount on the first
day of such Series 2003-4 Interest Period, after giving effect to any principal
payments made on such date.

          "CLASS A-2 NOTEHOLDER" means the Person in whose name a Class A-2 Note
is registered in the Note Register.

          "CLASS A-2 NOTE RATE" means 2.86% per annum.

          "CLASS A-2 NOTES" means any one of the Series 2003-4 2.86% Rental Car
Asset Backed Notes, Class A-2, executed by AFC-II and authenticated by or on
behalf of the Trustee,

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substantially in the form of EXHIBIT A-2-1, EXHIBIT A-2-2 or EXHIBIT A-2-3.
Definitive Class A-2 Notes shall have such insertions and deletions as are
necessary to give effect to the provisions of Section 2.18 of the Base
Indenture.

          "CLASS A-2 OUTSTANDING PRINCIPAL AMOUNT" means, when used with respect
to any date, an amount equal to (a) the Class A-2 Initial Invested Amount MINUS
(b) the amount of principal payments made to Class A-2 Noteholders on or prior
to such date.

          "CLASS A-3 CARRYOVER CONTROLLED AMORTIZATION AMOUNT" means, with
respect to any Related Month during the Five-Year Notes Controlled Amortization
Period, the amount, if any, by which the portion of the Monthly Total Principal
Allocation paid to the Class A-3 Noteholders pursuant to Section 2.5(e) for the
previous Related Month was less than the Class A-3 Controlled Distribution
Amount for the previous Related Month; PROVIDED, HOWEVER, that for the first
Related Month in the Five-Year Notes Controlled Amortization Period, the Class
A-3 Carryover Controlled Amortization Amount shall be zero.

          "CLASS A-3 CONTROLLED AMORTIZATION AMOUNT" means (i) with respect to
any Related Month other than the last Related Month during the Five-Year Notes
Controlled Amortization Period, $16,666,666.66 and (ii) with respect to the last
Related Month during the Five-Year Notes Controlled Amortization Period,
$16,666,666.70.

          "CLASS A-3 CONTROLLED DISTRIBUTION AMOUNT" means, with respect to any
Related Month during the Five-Year Notes Controlled Amortization Period, an
amount equal to the sum of the Class A-3 Controlled Amortization Amount and any
Class A-3 Carryover Controlled Amortization Amount for such Related Month.

          "CLASS A-3 INITIAL INVESTED AMOUNT" means the aggregate initial
principal amount of the Class A-3 Notes, which is $100,000,000.

          "CLASS A-3 INVESTED AMOUNT" means, when used with respect to any date,
an amount equal to the Class A-3 Outstanding Principal Amount PLUS the sum of
(a) the amount of any principal payments made to the Class A-3 Noteholders on or
prior to such date with the proceeds of a demand on the Surety Bond and (b) the
amount of any principal payments made to Class A-3 Noteholders that have been
rescinded or otherwise returned by the Class A-3 Noteholders for any reason.

          "CLASS A-3 MONTHLY INTEREST" means, with respect to any Series 2003-4
Interest Period, an amount equal to the product of (A) the Class A-3 Invested
Amount on the first day of such Series 2003-4 Interest Period, after giving
effect to any principal payments made on such date, (B) the Class A-3 Note Rate
for such Series 2003-4 Interest Period and (C) the number of days in such Series
2003-4 Interest Period divided by 360.

          "CLASS A-3 NOTEHOLDER" means the Person in whose name a Class A-3 Note
is registered in the Note Register.

          "CLASS A-3 NOTE RATE" means, for (i) the initial Series 2003-4
Interest Period, 1.4425% per annum and (ii) any other Series 2003-4 Interest
Period, the sum of 0.35% PLUS LIBOR for such Series 2003-4 Interest Period.

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          "CLASS A-3 NOTES" means any one of the Series 2003-4 Floating Rate
Rental Car Asset Backed Notes, Class A-3, executed by AFC-II and authenticated
by or on behalf of the Trustee, substantially in the form of EXHIBIT A-3-1,
EXHIBIT A-3-2 or EXHIBIT A-3-3. Definitive Class A-3 Notes shall have such
insertions and deletions as are necessary to give effect to the provisions of
Section 2.18 of the Base Indenture.

          "CLASS A-3 OUTSTANDING PRINCIPAL AMOUNT" means, when used with respect
to any date, an amount equal to (a) the Class A-3 Initial Invested Amount MINUS
(b) the amount of principal payments made to Class A-3 Noteholders on or prior
to such date.

          "CLASS A-4 CARRYOVER CONTROLLED AMORTIZATION AMOUNT" means, with
respect to any Related Month during the Class A-4 Controlled Amortization
Period, the amount, if any, by which the portion of the Monthly Total Principal
Allocation paid to the Class A-4 Noteholders pursuant to Section 2.5(e) for the
previous Related Month was less than the Class A-4 Controlled Distribution
Amount for the previous Related Month; PROVIDED, HOWEVER, that for the first
Related Month in the Class A-4 Controlled Amortization Period, the Class A-4
Carryover Controlled Amortization Amount shall be zero.

          "CLASS A-4 CONTROLLED AMORTIZATION AMOUNT" means (i) with respect to
any Related Month other than the last Related Month during the Class A-4
Controlled Amortization Period, $20,833,333.33 and (ii) with respect to the last
Related Month during the Class A-4 Controlled Amortization Period,
$20,833,333.35.

          "CLASS A-4 CONTROLLED AMORTIZATION PERIOD" means the period commencing
at the opening of business on February 1, 2010 (or, if such day is not a
Business Day, the Business Day immediately preceding such day) and continuing to
the earliest of (i) the commencement of the Series 2003-4 Rapid Amortization
Period, (ii) the date on which the Class A-4 Notes are fully paid and the Surety
Provider has been paid all Surety Provider Fees and all other Surety Provider
Reimbursement Amounts then due, (iii) the Series 2003-4 Termination Date and
(iv) the termination of the Indenture.

          "CLASS A-4 CONTROLLED DISTRIBUTION AMOUNT" means, with respect to any
Related Month during the Class A-4 Controlled Amortization Period, an amount
equal to the sum of the Class A-4 Controlled Amortization Amount and any Class
A-4 Carryover Controlled Amortization Amount for such Related Month.

          "CLASS A-4 EXPECTED FINAL DISTRIBUTION DATE" means the August 2010
Distribution Date.

          "CLASS A-4 FINAL DISTRIBUTION DATE" means the August 2011 Distribution
Date.

          "CLASS A-4 INITIAL INVESTED AMOUNT" means the aggregate initial
principal amount of the Class A-4 Notes, which is $125,000,000.

          "CLASS A-4 INVESTED AMOUNT" means, when used with respect to any date,
an amount equal to the Class A-4 Outstanding Principal Amount PLUS the sum of
(a) the amount of any principal payments made to the Class A-4 Noteholders on or
prior to such date with the proceeds of a demand on the Surety Bond and (b) the
amount of any principal payments made to

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Class A-4 Noteholders that have been rescinded or otherwise returned by the
Class A-4 Noteholders for any reason.

          "CLASS A-4 MONTHLY INTEREST" means, with respect to any Series 2003-4
Interest Period, an amount equal to the product of (A) the Class A-4 Invested
Amount on the first day of such Series 2003-4 Interest Period, after giving
effect to any principal payments made on such date, (B) the Class A-4 Note Rate
for such Series 2003-4 Interest Period and (C) the number of days in such Series
2003-4 Interest Period divided by 360.

          "CLASS A-4 NOTEHOLDER" means the Person in whose name a Class A-4 Note
is registered in the Note Register.

          "CLASS A-4 NOTE RATE" means, for (i) the initial Series 2003-4
Interest Period, 1.6725% per annum and (ii) any other Series 2003-4 Interest
Period, the sum of 0.58% PLUS LIBOR for such Series 2003-4 Interest Period.

          "CLASS A-4 NOTES" means any one of the Series 2003-4 Floating Rate
Rental Car Asset Backed Notes, Class A-4, executed by AFC-II and authenticated
by or on behalf of the Trustee, substantially in the form of EXHIBIT A-4-1,
EXHIBIT A-4-2 or EXHIBIT A-4-3. Definitive Class A-4 Notes shall have such
insertions and deletions as are necessary to give effect to the provisions of
Section 2.18 of the Base Indenture.

          "CLASS A-4 OUTSTANDING PRINCIPAL AMOUNT" means, when used with respect
to any date, an amount equal to (a) the Class A-4 Initial Invested Amount MINUS
(b) the amount of principal payments made to Class A-4 Noteholders on or prior
to such date.

          "CLEARSTREAM" is defined in Section 5.2.

          "CONSENT" is defined in Article IV.

          "CONSENT PERIOD EXPIRATION DATE" is defined in Article IV.

          "DEMAND NOTE ISSUER" means each issuer of a Series 2003-4 Demand Note.

          "DESIGNATED AMOUNTS" is defined in Article IV.

          "DISBURSEMENT" means any Lease Deficit Disbursement, any Unpaid Demand
Note Disbursement, any Termination Date Disbursement or any Termination
Disbursement under a Series 2003-4 Letter of Credit, or any combination thereof,
as the context may require.

          "EXCESS COLLECTIONS" is defined in Section 2.3(f)(i).

          "EUROCLEAR" is defined in Section 5.2.

          "FIXED RATE PAYMENT" means, for any Distribution Date, the amount, if
any, payable by AFC-II as the "Fixed Amount" under any Series 2003-4 Interest
Rate Swap after the netting of payments due to AFC-II as the "Floating Amount"
from the Series 2003-4 Interest Rate Swap Counterparty under such Series 2003-4
Interest Rate Swap on such Distribution Date.

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          "FIVE-YEAR NOTES CONTROLLED AMORTIZATION PERIOD" means the period
commencing at the opening of business on February 1, 2008 (or, if such day is
not a Business Day, the Business Day immediately preceding such day) and
continuing to the earliest of (i) the commencement of the Series 2003-4 Rapid
Amortization Period, (ii) the date on which the Class A-2 Notes and the Class
A-3 Notes are fully paid and (iii) the termination of the Indenture.

          "FIVE-YEAR NOTES EXPECTED FINAL DISTRIBUTION DATE" means the August
2008 Distribution Date.

          "FIVE-YEAR NOTES FINAL DISTRIBUTION DATE" means the August 2009
Distribution Date.

          "INSURANCE AGREEMENT" means the Insurance Agreement, dated as of June
19, 2003, among the Surety Provider, the Trustee and AFC-II, which shall
constitute an "Enhancement Agreement" with respect to the Series 2003-4 Notes
for all purposes under the Indenture.

          "INSURED PRINCIPAL DEFICIT AMOUNT" means, with respect to any
Distribution Date, the excess, if any, of (a) the Series 2003-4 Outstanding
Principal Amount on such Distribution Date (after giving effect to the
distribution of the Monthly Total Principal Allocation for the Related Month)
over (b) the sum of the Series 2003-4 Available Reserve Account Amount on such
Distribution Date, the Series 2003-4 Letter of Credit Amount on such
Distribution Date and the Series 2003-4 AESOP I Operating Lease Loan Agreement
Borrowing Base on such Distribution Date.

          "LEASE DEFICIT DISBURSEMENT" means an amount drawn under a Series
2003-4 Letter of Credit pursuant to a Certificate of Lease Deficit Demand.

          "LIBOR" means, with respect to each Series 2003-4 Interest Period, a
rate per annum to be determined by the Trustee as follows:

          (i)    On each LIBOR Determination Date, the Trustee will determine
     the London interbank offered rate for U.S. dollar deposits for one month
     that appears on Telerate Page 3750 as it relates to U.S. dollars as of
     11:00 a.m., London time, on such LIBOR Determination Date:

          (ii)   If, on any LIBOR Determination Date, such rate does not appear
     on Telerate Page 3750, the Trustee will request that the principal London
     offices of each of four major banks in the London interbank market selected
     by the Trustee provide the Trustee with offered quotations for deposits in
     U.S. dollars for a period of one month, commencing on the first day of such
     Series 2003-4 Interest Period, to prime banks in the London interbank
     market at approximately 11:00 a.m., London time, on such LIBOR
     Determination Date and in a principal amount equal to an amount of not less
     than $250,000 that is representative of a single transaction in such market
     at such time. If at least two such quotations are provided, "LIBOR" for
     such Series 2003-4 Interest Period will be the arithmetic mean of such
     quotations; or

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          (iii)  If fewer than two such quotations are provided, "LIBOR" for
     such Series 2003-4 Interest Period will be the arithmetic mean of rates
     quoted by three major banks in the City of New York selected by the Trustee
     at approximately 11:00 a.m., New York City time, on such LIBOR
     Determination Date for loans in U.S. dollars to leading European banks, for
     a period of one month, commencing on the first day of such Series 2003-4
     Interest Period, and in a principal amount equal to an amount of not less
     than $250,000 that is representative of a single transaction in such market
     at such time; PROVIDED, HOWEVER, that if the banks selected as aforesaid by
     such Trustee are not quoting rates as mentioned in this sentence, "LIBOR"
     for such Series 2003-4 Interest Period will be the same as "LIBOR" for the
     immediately preceding Series 2003-4 Interest Period.

          "LIBOR DETERMINATION DATE" means, with respect to any Series 2003-4
Interest Period, the second London Banking Day preceding the first day of such
Series 2003-4 Interest Period.

          "LONDON BANKING DAY" means any business day on which dealings in
deposits in United States dollars are transacted in the London interbank market.

          "MONTHLY TOTAL PRINCIPAL ALLOCATION" means for any Related Month the
sum of all Series 2003-4 Principal Allocations with respect to such Related
Month.

          "MOODY'S" means Moody's Investors Service.

          "PAST DUE RENT PAYMENT" is defined in Section 2.2(g).

          "PERMANENT GLOBAL CLASS A-1 NOTE" is defined in Section 5.2.

          "PERMANENT GLOBAL CLASS A-2 NOTE" is defined in Section 5.2.

          "PERMANENT GLOBAL CLASS A-3 NOTE" is defined in Section 5.2.

          "PERMANENT GLOBAL CLASS A-4 NOTE" is defined in Section 5.2.

          "PRE-PREFERENCE PERIOD DEMAND NOTE PAYMENTS" means, as of any date of
determination, the aggregate amount of all proceeds of demands made on the
Series 2003-4 Demand Notes included in the Series 2003-4 Demand Note Payment
Amount as of the Series 2003-4 Letter of Credit Termination Date that were paid
by the Demand Note Issuers more than one year before such date of determination;
PROVIDED, HOWEVER, that if an Event of Bankruptcy (or the occurrence of an event
described in clause (a) of the definition thereof, without the lapse of a period
of 60 consecutive days) with respect to a Demand Note Issuer occurs during such
one year period, (x) the Pre-Preference Period Demand Note Payments as of any
date during the period from and including the date of the occurrence of such
Event of Bankruptcy to and including the conclusion or dismissal of the
proceedings giving rise to such Event of Bankruptcy without continuing
jurisdiction by the court in such proceedings shall equal the Pre-Preference
Period Demand Note Payments as of the date of such occurrence for all Demand
Note Issuers and (y) the Pre-Preference Period Demand Note Payments as of any
date after the conclusion or dismissal of such proceedings shall equal the
Series 2003-4 Demand Note Payment Amount as of the date of the conclusion or
dismissal of such proceedings.

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          "PRINCIPAL DEFICIT AMOUNT" means, as of any date of determination, the
excess, if any, of (i) the Series 2003-4 Invested Amount on such date (after
giving effect to the distribution of the Monthly Total Principal Allocation for
the Related Month if such date is a Distribution Date) over (ii) the Series
2003-4 AESOP I Operating Lease Loan Agreement Borrowing Base on such date;
PROVIDED, HOWEVER the Principal Deficit Amount on any date occurring during the
period commencing on and including the date of the filing by any of the Lessees
of a petition for relief under Chapter 11 of the Bankruptcy Code to but
excluding the date on which each of the Lessees shall have resumed making all
payments of the portion of Monthly Base Rent relating to Loan Interest required
to be made under the AESOP I Operating Lease, shall mean the excess, if any, of
(x) the Series 2003-4 Invested Amount on such date (after giving effect to the
distribution of Monthly Total Principal Allocation for the Related Month if such
date is a Distribution Date) over (y) the sum of (1) the Series 2003-4 AESOP I
Operating Lease Loan Agreement Borrowing Base on such date and (2) the lesser of
(a) the Series 2003-4 Liquidity Amount on such date and (b) the Series 2003-4
Required Liquidity Amount on such date.

          "PRO RATA SHARE" means, with respect to any Series 2003-4 Letter of
Credit Provider as of any date, the fraction (expressed as a percentage)
obtained by dividing (A) the available amount under such Series 2003-4 Letter of
Credit Provider's Series 2003-4 Letter of Credit as of such date by (B) an
amount equal to the aggregate available amount under all Series 2003-4 Letters
of Credit as of such date; PROVIDED, that only for purposes of calculating the
Pro Rata Share with respect to any Series 2003-4 Letter of Credit Provider as of
any date, if such Series 2003-4 Letter of Credit Provider has not complied with
its obligation to pay the Trustee the amount of any draw under its Series 2003-4
Letter of Credit made prior to such date, the available amount under such Series
2003-4 Letter of Credit Provider's Series 2003-4 Letter of Credit as of such
date shall be treated as reduced (for calculation purposes only) by the amount
of such unpaid demand and shall not be reinstated for purposes of such
calculation unless and until the date as of which such Series 2003-4 Letter of
Credit Provider has paid such amount to the Trustee and been reimbursed by the
Lessee or the applicable Demand Note Issuer, as the case may be, for such amount
(PROVIDED that the foregoing calculation shall not in any manner reduce the
undersigned's actual liability in respect of any failure to pay any demand under
its Series 2003-4 Letter of Credit).

          "QUALIFIED INTEREST RATE SWAP COUNTERPARTY" means a counterparty to
any Series 2003-4 Interest Rate Swap who is acceptable to the Surety Provider
and who is a bank or other financial institution, which has (i) a short-term
senior and unsecured debt (or the equivalent thereof from Standard & Poor's
and/or Moody's, as the case may be) rating of at least "A-1" from Standard &
Poor's and of at least "P-1" from Moody's and (ii) (a) on the date such Series
2003-4 Interest Rate Swap is executed, a long-term senior and unsecured debt (or
the equivalent thereof from Standard & Poor's and/or Moody's, as the case may
be) rating of at least "AA-" from Standard & Poor's (or is otherwise acceptable
to Standard & Poor's) and of at least "Aa3" from Moody's and (b) on any other
date, a long-term senior and unsecured debt (or the equivalent thereof from
Standard & Poor's and/or Moody's, as the case may be) rating of at least "A+"
from Standard & Poor's and of at least "A1" from Moody's.

          "REQUISITE NOTEHOLDERS" means Series 2003-4 Noteholders holding more
than 50% of the Series 2003-4 Invested Amount.

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          "RESTRICTED GLOBAL CLASS A-1 NOTE" is defined in Section 5.1.

          "RESTRICTED GLOBAL CLASS A-2 NOTE" is defined in Section 5.1.

          "RESTRICTED GLOBAL CLASS A-3 NOTE" is defined in Section 5.1.

          "RESTRICTED GLOBAL CLASS A-4 NOTE" is defined in Section 5.1.

          "SERIES 1998-1 NOTES" means the Series of Notes designated as the
Series 1998-1 Notes.

          "SERIES 2000-1 NOTES" means the Series of Notes designated as the
Series 2000-1 Notes.

          "SERIES 2000-2 NOTES" means the Series of Notes designated as the
Series 2000-2 Notes.

          "SERIES 2000-3 NOTES" means the Series of Notes designated as the
Series 2000-3 Notes.

          "SERIES 2000-4 NOTES" means the Series of Notes designated as the
Series 2000-4 Notes.

          "SERIES 2001-1 NOTES" means the Series of Notes designated as the
Series 2001-1 Notes.

          "SERIES 2001-2 NOTES" means the Series of Notes designated as the
Series 2001-2 Notes.

          "SERIES 2002-1 NOTES" means the Series of Notes designated as the
Series 2002-1 Notes.

          "SERIES 2002-2 NOTES" means the Series of Notes designated as the
Series 2002-2 Notes.

          "SERIES 2002-3 NOTES" means the Series of Notes designated as the
Series 2002-3 Notes.

          "SERIES 2002-4 NOTES" means the Series of Notes designated as the
Series 2002-4 Notes.

          "SERIES 2003-1 NOTES" means the Series of Notes designated as the
Series 2003-1 Notes.

          "SERIES 2003-2 NOTES" means the Series of Notes designated as the
Series 2003-2 Notes.

          "SERIES 2003-3 NOTES" means the Series of Notes designated as the
Series 2003-3 Notes.

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          "SERIES 2003-4 ACCOUNTS" means each of the Series 2003-4 Distribution
Account, the Series 2003-4 Reserve Account, the Series 2003-4 Collection
Account, the Series 2003-4 Excess Collection Account and the Series 2003-4
Accrued Interest Account.

          "SERIES 2003-4 ACCRUED INTEREST ACCOUNT" is defined in Section 2.1(b).

          "SERIES 2003-4 ADJUSTED MONTHLY INTEREST" means (a) for the initial
Distribution Date, an amount equal to $782,911.46 and (b) for any other
Distribution Date, the sum of (i) the sum of (A) for the Series 2003-4 Interest
Period ending on the day preceding such Distribution Date, an amount equal to
the product of (1) the Class A-1 Note Rate for such Series 2003-4 Interest
Period, (2) the Class A-1 Outstanding Principal Amount on the first day of such
Series 2003-4 Interest Period, and (3) a fraction, the numerator of which is the
number of days in such Series 2003-4 Interest Period and the denominator of
which is 360, (B) an amount equal to the product of (1) the Class A-2 Note Rate
and (2) the Class A-2 Outstanding Principal Amount on the first day of such
Series 2003-4 Interest Period, divided by twelve, (C) an amount equal to the
product of (1) the Class A-3 Note Rate for such Series 2003-4 Interest Period,
(2) the Class A-3 Outstanding Principal Amount on the first day of such Series
2003-4 Interest Period, and (3) a fraction, the numerator of which is the number
of days in such Series 2003-4 Interest Period and the denominator of which is
360 and (D) an amount equal to the product of (1) the Class A-4 Note Rate for
such Series 2003-4 Interest Period, (2) the Class A-4 Outstanding Principal
Amount on the first day of such Series 2003-4 Interest Period, and (3) a
fraction, the numerator of which is the number of days in such Series 2003-4
Interest Period and the denominator of which is 360 and (ii) any amount
described in clause (b)(i) with respect to a prior Distribution Date that
remains unpaid as of such Distribution Date (together with any accrued interest
on such amount).

          "SERIES 2003-4 AGENT" is defined in the recitals hereto.

          "SERIES 2003-4 AESOP I OPERATING LEASE LOAN AGREEMENT BORROWING BASE"
means, as of any date of determination, the product of (a) the Series 2003-4
AESOP I Operating Lease Vehicle Percentage as of such date and (b) the AESOP I
Operating Lease Loan Agreement Borrowing Base as of such date.

          "SERIES 2003-4 AESOP I OPERATING LEASE VEHICLE PERCENTAGE" means, as
of any date of determination, a fraction, expressed as a percentage (which
percentage shall never exceed 100%), the numerator of which is the Series 2003-4
Required AESOP I Operating Lease Vehicle Amount as of such date and the
denominator of which is the sum of the Required AESOP I Operating Lease Vehicle
Amounts for all Series of Notes as of such date.

          "SERIES 2003-4 AVAILABLE CASH COLLATERAL ACCOUNT AMOUNT" means, as of
any date of determination, the amount on deposit in the Series 2003-4 Cash
Collateral Account (after giving effect to any deposits thereto and withdrawals
and releases therefrom on such date).

          "SERIES-2003-4 AVAILABLE RESERVE ACCOUNT AMOUNT" means, as of any date
of determination, the amount on deposit in the Series 2003-4 Reserve Account
(after giving effect to any deposits thereto and withdrawals and releases
therefrom on such date).

          "SERIES 2003-4 CASH COLLATERAL ACCOUNT" is defined in Section 2.8(f).

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          "SERIES 2003-4 CASH COLLATERAL ACCOUNT COLLATERAL" is defined in
Section 2.8(a).

          "SERIES 2003-4 CASH COLLATERAL ACCOUNT SURPLUS" means, with respect to
any Distribution Date, the lesser of (a) the Series 2003-4 Available Cash
Collateral Account Amount and (b) the lesser of (A) the excess, if any, of the
Series 2003-4 Liquidity Amount (after giving effect to any withdrawal from the
Series 2003-4 Reserve Account on such Distribution Date) over the Series 2003-4
Required Liquidity Amount on such Distribution Date and (B) the excess, if any,
of the Series 2003-4 Enhancement Amount (after giving effect to any withdrawal
from the Series 2003-4 Reserve Account on such Distribution Date) over the
Series 2003-4 Required Enhancement Amount on such Distribution Date; PROVIDED,
HOWEVER that, on any date after the Series 2003-4 Letter of Credit Termination
Date, the Series 2003-4 Cash Collateral Account Surplus shall mean the excess,
if any, of (x) the Series 2003-4 Available Cash Collateral Account Amount over
(y) the Series 2003-4 Demand Note Payment Amount MINUS the Pre-Preference Period
Demand Note Payments as of such date.

          "SERIES 2003-4 CASH COLLATERAL PERCENTAGE" means, as of any date of
determination, the percentage equivalent of a fraction, the numerator of which
is the Series 2003-4 Available Cash Collateral Amount as of such date and the
denominator of which is the Series 2003-4 Letter of Credit Liquidity Amount as
of such date.

          "SERIES 2003-4 CLOSING DATE" means June 19, 2003.

          "SERIES 2003-4 COLLATERAL" means the Collateral, each Series 2003-4
Letter of Credit, each Series 2003-4 Demand Note, the Series 2003-4 Distribution
Account Collateral, the Series 2003-4 Interest Rate Swap Collateral, the Series
2003-4 Cash Collateral Account Collateral and the Series 2003-4 Reserve Account
Collateral.

          "SERIES 2003-4 COLLECTION ACCOUNT" is defined in Section 2.1(b).

          "SERIES 2003-4 CONTROLLED AMORTIZATION PERIOD" means the Class A-1
Controlled Amortization Period, the Five-Year Notes Controlled Amortization
Period and/or the Class A-4 Controlled Amortization Period, as the case may be.

          "SERIES 2003-4 DEMAND NOTE" means each demand note made by a Demand
Note Issuer, substantially in the form of EXHIBIT C to this Supplement, as
amended, modified or restated from time to time.

          "SERIES 2003-4 DEMAND NOTE PAYMENT AMOUNT" means, as of the Series
2003-4 Letter of Credit Termination Date, the aggregate amount of all proceeds
of demands made on the Series 2003-4 Demand Notes pursuant to Section 2.5(b) or
(c) that were deposited into the Series 2003-4 Distribution Account and paid to
the Series 2003-4 Noteholders during the one year period ending on the Series
2003-4 Letter of Credit Termination Date; PROVIDED, HOWEVER, that if an Event of
Bankruptcy (or the occurrence of an event described in clause (a) of the
definition thereof, without the lapse of a period of 60 consecutive days) with
respect to a Demand Note Issuer shall have occurred during such one year period,
the Series 2003-4 Demand Note Payment Amount as of the Series 2003-4 Letter of
Credit Termination Date shall equal the Series 2003-4 Demand Note Payment Amount
as if it were calculated as of the date of such occurrence.

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          "SERIES 2003-4 DEPOSIT DATE" is defined in Section 2.2.

          "SERIES 2003-4 DISTRIBUTION ACCOUNT" is defined in Section 2.9(a).

          "SERIES 2003-4 DISTRIBUTION ACCOUNT COLLATERAL" is defined in Section
2.9(d).

          "SERIES 2003-4 ELIGIBLE LETTER OF CREDIT PROVIDER" means a person
satisfactory to ARAC, the Demand Note Issuers and the Surety Provider and
having, at the time of the issuance of the related Series 2003-4 Letter of
Credit, a long-term senior unsecured debt rating (or the equivalent thereof in
the case of Moody's or Standard & Poor's, as applicable) of at least "A+" from
Standard & Poor's and at least "Al" from Moody's and a short-term senior
unsecured debt rating of at least "A-1" from Standard & Poor's and "P-1" from
Moody's that is (a) a commercial bank having total assets in excess of
$500,000,000, (b) a finance company, insurance company or other financial
institution that in the ordinary course of business issues letters of credit and
has total assets in excess of $200,000,000 or (c) any other financial
institution; PROVIDED, HOWEVER, that if a person is not a Series 2003-4 Letter
of Credit Provider (or a letter of credit provider under the Supplement for any
other Series of Notes), then such person shall not be a Series 2003-4 Eligible
Letter of Credit Provider until AFC-II has provided 10 days' prior notice to the
Rating Agencies that such person has been proposed as a Series 2003-4 Letter of
Credit Provider.

          "SERIES 2003-4 ENHANCEMENT" means the Series 2003-4 Cash Collateral
Account Collateral, the Series 2003-4 Letters of Credit, the Series 2003-4
Demand Notes, the Series 2003-4 Overcollateralization Amount and the Series
2003-4 Reserve Account Amount.

          "SERIES 2003-4 ENHANCEMENT AMOUNT" means, as of any date of
determination, the sum of (i) the Series 2003-4 Overcollateralization Amount as
of such date, (ii) the Series 2003-4 Letter of Credit Amount as of such date,
(iii) the Series 2003-4 Available Reserve Account Amount as of such date and
(iv) the amount of cash and Permitted Investments on deposit in the Series
2003-4 Collection Account (not including amounts allocable to the Series 2003-4
Accrued Interest Account) and the Series 2003-4 Excess Collection Account as of
such date.

          "SERIES 2003-4 ENHANCEMENT DEFICIENCY" means, on any date of
determination, the amount by which the Series 2003-4 Enhancement Amount is less
than the Series 2003-4 Required Enhancement Amount as of such date.

          "SERIES 2003-4 EXCESS COLLECTION ACCOUNT" is defined in Section
2.1(b).

          "SERIES 2003-4 FINAL DISTRIBUTION DATE" means the Class A-1 Final
Distribution Date, the Five-Year Notes Final Distribution Date or the Class A-4
Final Distribution Date.

          "SERIES 2003-4 INITIAL INVESTED AMOUNT" means the sum of the Class A-1
Initial Invested Amount, the Class A-2 Initial Invested Amount, the Class A-3
Initial Invested Amount and the Class A-4 Initial Invested Amount.

          "SERIES 2003-4 INTEREST PERIOD" means a period commencing on and
including a Distribution Date and ending on and including the day preceding the
next succeeding

                                      -14-
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Distribution Date; PROVIDED, HOWEVER that the initial Series 2003-4 Interest
Period shall commence on and include the Series 2003-4 Closing Date and end on
and include July 20, 2003.

          "SERIES 2003-4 INTEREST RATE SWAP" is defined in Section 2.10(a).

          "SERIES 2003-4 INTEREST RATE SWAP COLLATERAL" is defined in Section
2.10(d).

          "SERIES 2003-4 INTEREST RATE SWAP COUNTERPARTY" means AFC-II's
counterparty under any Series 2003-4 Interest Rate Swap.

          "SERIES 2003-4 INTEREST RATE SWAP PROCEEDS" means the amounts received
by the Trustee from a Series 2003-4 Interest Rate Swap Counterparty from time to
time in respect of any Series 2003-4 Interest Rate Swap (including amounts
received from a guarantor or from collateral).

          "SERIES 2003-4 INVESTED AMOUNT" means, as of any date of
determination, the sum of the Class A-1 Invested Amount as of such date, the
Class A-2 Invested Amount as of such date, the Class A-3 Invested Amount as of
such date and the Class A-4 Invested Amount as of such date.

          "SERIES 2003-4 INVESTED PERCENTAGE" means as of any date of
determination:

          (a)    when used with respect to Principal Collections, the percentage
     equivalent (which percentage shall never exceed 100%) of a fraction the
     numerator of which shall be equal to the sum of the Series 2003-4 Invested
     Amount and the Series 2003-4 Overcollateralization Amount, determined
     during the Series 2003-4 Revolving Period as of the end of the Related
     Month (or, until the end of the initial Related Month, on the Series 2003-4
     Closing Date), or, during the Series 2003-4 Controlled Amortization Period
     and the Series 2003-4 Rapid Amortization Period, as of the end of the
     Series 2003-4 Revolving Period, and the denominator of which shall be the
     greater of (I) the Aggregate Asset Amount as of the end of the Related
     Month or, until the end of the initial Related Month, as of the Series
     2003-4 Closing Date, and (II) as of the same date as in clause (I), the sum
     of the numerators used to determine (i) invested percentages for
     allocations with respect to Principal Collections (for all Series of Notes
     and all classes of such Series of Notes) and (ii) overcollateralization
     percentages for allocations with respect to Principal Collections (for all
     Series of Notes that provide for credit enhancement in the form of
     overcollateralization); and

          (b)    when used with respect to Interest Collections, the percentage
     equivalent (which percentage shall never exceed 100%) of a fraction the
     numerator of which shall be the Accrued Amounts with respect to the Series
     2003-4 Notes on such date of determination, and the denominator of which
     shall be the aggregate Accrued Amounts with respect to all Series of Notes
     on such date of determination.

          "SERIES 2003-4 LEASE INTEREST PAYMENT DEFICIT" means on any
Distribution Date an amount equal to the excess, if any, of (a) the aggregate
amount of Interest Collections which pursuant to Section 2.2(a), (b), (c) or (d)
would have been allocated to the Series 2003-4 Accrued Interest Account if all
payments of Monthly Base Rent required to have been made under the

                                      -15-
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Leases from and excluding the preceding Distribution Date to and including such
Distribution Date were made in full over (b) the aggregate amount of Interest
Collections which pursuant to Section 2.2(a), (b), (c) or (d) have been
allocated to the Series 2003-4 Accrued Interest Account (excluding any amounts
paid into the Series 2003-4 Accrued Interest Account pursuant to the proviso in
Sections 2.2(c)(ii) and/or 2.2(d)(ii)) from and excluding the preceding
Distribution Date to and including such Distribution Date.

          "SERIES 2003-4 LEASE PAYMENT DEFICIT" means either a Series 2003-4
Lease Interest Payment Deficit or a Series 2003-4 Lease Principal Payment
Deficit.

          "SERIES 2003-4 LEASE PRINCIPAL PAYMENT CARRYOVER DEFICIT" means (a)
for the initial Distribution Date, zero and (b) for any other Distribution Date,
the excess of (x) the Series 2003-4 Lease Principal Payment Deficit, if any, on
the preceding Distribution Date OVER (y) the amount deposited in the
Distribution Account on such preceding Distribution Date pursuant to Section
2.5(b) on account of such Series 2003-4 Lease Principal Payment Deficit.

          "SERIES 2003-4 LEASE PRINCIPAL PAYMENT DEFICIT" means on any
Distribution Date the sum of (a) the Series 2003-4 Monthly Lease Principal
Payment Deficit for such Distribution Date and (b) the Series 2003-4 Lease
Principal Payment Carryover Deficit for such Distribution Date.

          "SERIES 2003-4 LETTER OF CREDIT" means an irrevocable letter of
credit, if any, substantially in the form of EXHIBIT D to this Supplement issued
by a Series 2003-4 Eligible Letter of Credit Provider in favor of the Trustee
for the benefit of the Series 2003-4 Noteholders, each Series 2003-4 Interest
Rate Swap Counterparty and the Surety Provider in form and substance
satisfactory to the Surety Provider.

          "SERIES 2003-4 LETTER OF CREDIT AMOUNT" means, as of any date of
determination, the lesser of (a) the sum of (i) the aggregate amount available
to be drawn on such date under each Series 2003-4 Letter of Credit, as specified
therein, and (ii) if the Series 2003-4 Cash Collateral Account has been
established and funded pursuant to Section 2.8, the Series 2003-4 Available Cash
Collateral Account Amount on such date and (b) the aggregate outstanding
principal amount of the Series 2003-4 Demand Notes on such date.

          "SERIES 2003-4 LETTER OF CREDIT EXPIRATION DATE" means, with respect
to any Series 2003-4 Letter of Credit, the expiration date set forth in such
Series 2003-4 Letter of Credit, as such date may be extended in accordance with
the terms of such Series 2003-4 Letter of Credit.

          "SERIES 2003-4 LETTER OF CREDIT LIQUIDITY AMOUNT" means, as of any
date of determination, the sum of (a) the aggregate amount available to be drawn
on such date under each Series 2003-4 Letter of Credit, as specified therein,
and (b) if the Series 2003-4 Cash Collateral Account has been established and
funded pursuant to Section 2.8, the Series 2003-4 Available Cash Collateral
Account Amount on such date.

          "SERIES 2003-4 LETTER OF CREDIT PROVIDER" means the issuer of a Series
2003-4 Letter of Credit.

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          "SERIES 2003-4 LETTER OF CREDIT TERMINATION DATE" means the first to
occur of (a) the date on which the Series 2003-4 Notes are fully paid and the
Surety Provider has been paid all Surety Provider Fees and all other Surety
Provider Reimbursement Amounts then due, (b) the Series 2003-4 Termination Date
and (c) such earlier date consented to by the Surety Provider and the Rating
Agencies which consent by the Surety Provider shall be in writing.

          "SERIES 2003-4 LIMITED LIQUIDATION EVENT OF DEFAULT" means, so long as
such event or condition continues, any event or condition of the type specified
in clauses (a) through (j) of Article III; PROVIDED, HOWEVER, that any event or
condition of the type specified in clauses (a) through (e) and (h) through (j)
of Article III shall not constitute a Series 2003-4 Limited Liquidation Event of
Default if (i) within such thirty (30) day period, such Amortization Event shall
have been cured and, after such cure of such Amortization Event is provided for,
the Trustee shall have received the written consent of the Surety Provider
waiving the occurrence of such Series 2003-4 Limited Liquidation Event of
Default or (ii) the Trustee shall have received the written consent of the
Surety Provider waiving the occurrence of such Series 2003-4 Limited Liquidation
Event of Default.

          "SERIES 2003-4 LIQUIDITY AMOUNT" means, as of any date of
determination, the sum of (a) the Series 2003-4 Letter of Credit Liquidity
Amount on such date and (b) the Series 2003-4 Available Reserve Account Amount
on such date.

          "SERIES 2003-4 MAXIMUM AGGREGATE KIA/ISUZU/SUBARU/HYUNDAI/SUZUKI
AMOUNT" means, as of any day, with respect to Kia, Isuzu, Subaru, Hyundai and
Suzuki, in the aggregate, an amount equal to 15% of the aggregate Net Book Value
of all Vehicles leased under the Leases on such day or such lesser percentage as
may be agreed to in writing by AFC-II and the Surety Provider of the aggregate
Net Book Value of all Vehicles leased under the Leases on such day.

          "SERIES 2003-4 MAXIMUM AMOUNT" means any of the Series 2003-4 Maximum
Manufacturer Amounts, the Series 2003-4 Maximum Non-Eligible Manufacturer
Amount, the Series 2003-4 Maximum Non-Program Vehicle Amount or the Series
2003-4 Maximum Specified States Amount.

          "SERIES 2003-4 MAXIMUM INDIVIDUAL KIA/ISUZU/SUBARU/HYUNDAI/SUZUKI
AMOUNT" means, as of any day, with respect to Kia, Isuzu, Subaru, Hyundai or
Suzuki, individually, an amount equal to 5% of the aggregate Net Book Value of
all Vehicles leased under the Leases on such day.

          "SERIES 2003-4 MAXIMUM MANUFACTURER AMOUNT" means, as of any day, any
of the Series 2003-4 Maximum Mitsubishi Amount, the Series 2003-4 Maximum
Individual Kia/Isuzu/Subaru/Hyundai/Suzuki Amount or the Series 2003-4 Maximum
Aggregate Kia/Isuzu/Subaru/Hyundai/Suzuki Amount.

          "SERIES 2003-4 MAXIMUM MITSUBISHI AMOUNT" means, as of any day, an
amount equal to 10% of the aggregate Net Book Value of all Vehicles leased under
the Leases on such day.

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          "SERIES 2003-4 MAXIMUM NON-ELIGIBLE MANUFACTURER AMOUNT" means, as of
any day, an amount equal to 3% of the aggregate Net Book Value of all Vehicles
leased under the Leases on such day.

          "SERIES 2003-4 MAXIMUM NON-PROGRAM VEHICLE AMOUNT" means, as of any
day, an amount equal to the Series 2003-4 Maximum Non-Program Vehicle Percentage
of the aggregate Net Book Value of all Vehicles leased under the Leases on such
day.

          "SERIES 2003-4 MAXIMUM NON-PROGRAM VEHICLE PERCENTAGE" means 25% or
such lesser percentage as may be agreed to in writing by AFC-II and the Surety
Provider on or after the Series 2003-4 Closing Date, with prompt written notice
thereof delivered by AFC-II to the Trustee.

          "SERIES 2003-4 MAXIMUM SPECIFIED STATES AMOUNT" means, as of any day,
an amount equal to 7.5% of the aggregate Net Book Value of all Vehicles leased
under the Leases on such day.

          "SERIES 2003-4 MONTHLY INTEREST" means, with respect to any Series
2003-4 Interest Period, the sum of the Class A-1 Monthly Interest, the Class A-2
Monthly Interest, the Class A-3 Monthly Interest and the Class A-4 Monthly
Interest with respect to such Series 2003-4 Interest Period.

          "SERIES 2003-4 MONTHLY LEASE PRINCIPAL PAYMENT DEFICIT" means, on any
Distribution Date, an amount equal to the excess, if any, of (a) the aggregate
amount of Principal Collections which pursuant to Section 2.2(a), (b), (c) or
(d) would have been allocated to the Series 2003-4 Collection Account if all
payments required to have been made under the Leases from and excluding the
preceding Distribution Date to and including such Distribution Date were made in
full over (b) the aggregate amount of Principal Collections which pursuant to
Section 2.2(a), (b), (c) or (d) have been allocated to the Series 2003-4
Collection Account (without giving effect to any amounts paid into the Series
2003-4 Accrued Interest Account pursuant to the proviso in Sections 2.2(c)(ii)
and/or 2.2(d)(ii)) from and excluding the preceding Distribution Date to and
including such Distribution Date.

          "SERIES 2003-4 NON-PROGRAM VEHICLE PERCENTAGE" means, as of any date
of determination, a fraction, expressed as a percentage, the numerator of which
is the aggregate Net Book Value of all Non-Program Vehicles leased under the
AESOP I Operating Lease as of such date and the denominator of which is the
aggregate Net Book Value of all Vehicles leased under the AESOP I Operating
Lease as of such date.

          "SERIES 2003-4 NOTE RATE" means, the Class A-1 Note Rate, the Class
A-2 Note Rate, the Class A-3 Note Rate or the Class A-4 Note Rate, as the
context may require.

          "SERIES 2003-4 NOTEHOLDER" means any Class A-1 Noteholder, any Class
A-2 Noteholder, any Class A-3 Noteholder or any Class A-4 Noteholder.

          "SERIES 2003-4 NOTES" means, collectively, the Class A-1 Notes, the
Class A-2 Notes, the Class A-3 Notes and the Class A-4 Notes.

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          "SERIES 2003-4 OUTSTANDING PRINCIPAL AMOUNT" means, as of any date of
determination, the sum of the Class A-1 Outstanding Principal Amount, the Class
A-2 Outstanding Principal Amount, the Class A-3 Outstanding Principal Amount and
the Class A-4 Outstanding Principal Amount.

          "SERIES 2003-4 OVERCOLLATERALIZATION AMOUNT" means (i) as of any date
on which no AESOP I Operating Lease Vehicle Deficiency exists, the Series 2003-4
Required Overcollateralization Amount as of such date and (ii) as of any date on
which an AESOP I Operating Lease Vehicle Deficiency exists, the excess, if any,
of (x) the Series 2003-4 AESOP I Operating Lease Loan Agreement Borrowing Base
as of such date over (y) the Series 2003-4 Invested Amount as of such date.

          "SERIES 2003-4 PAST DUE RENT PAYMENT" is defined in Section 2.2(g).

          "SERIES 2003-4 PERCENTAGE" means, as of any date of determination, a
fraction, expressed as a percentage, the numerator of which is the Series 2003-4
Invested Amount as of such date and the denominator of which is the Aggregate
Invested Amount as of such date.

          "SERIES 2003-4 PRINCIPAL ALLOCATION" is defined in Section 2.2(a)(ii).

          "SERIES 2003-4 PROGRAM VEHICLE PERCENTAGE" means, as of any date of
determination, 100% MINUS the Series 2003-4 Non-Program Vehicle Percentage.

          "SERIES 2003-4 RAPID AMORTIZATION PERIOD" means the period beginning
at the close of business on the Business Day immediately preceding the day on
which an Amortization Event is deemed to have occurred with respect to the
Series 2003-4 Notes and ending upon the earliest to occur of (i) the date on
which the Series 2003-4 Notes are fully paid and the Surety Provider has been
paid all Surety Provider Fees, all other Surety Provider Reimbursement Amounts
then due and the Series 2003-4 Interest Rate Swaps have been terminated and
there are no amounts due and owing thereunder, (ii) the Series 2003-4
Termination Date and (iii) the termination of the Indenture.

          "SERIES 2003-4 REIMBURSEMENT AGREEMENT" means any and each agreement
providing for the reimbursement of a Series 2003-4 Letter of Credit Provider for
draws under its Series 2003-4 Letter of Credit as the same may be amended,
supplemented, restated or otherwise modified from time to time.

          "SERIES 2003-4 REPURCHASE AMOUNT" is defined in Section 6.1.

          "SERIES 2003-4 REQUIRED AESOP I OPERATING LEASE VEHICLE AMOUNT" means,
as of any date of determination, the sum of the Series 2003-4 Invested Amount
and the Series 2003-4 Required Overcollateralization Amount as of such date.

          "SERIES 2003-4 REQUIRED ENHANCEMENT AMOUNT" means, as of any date of
determination, the sum of (i) the product of the Series 2003-4 Required
Enhancement Percentage as of such date and the Series 2003-4 Invested Amount as
of such date, (ii) the Series 2003-4 AESOP I Operating Lease Vehicle Percentage
as of the immediately preceding Business Day of the excess, if any, of the
Non-Program Vehicle Amount as of such date over the Series 2003-4

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Maximum Non-Program Vehicle Amount as of such date, (iii) the Series 2003-4
AESOP I Operating Lease Vehicle Percentage as of the immediately preceding
Business Day of the excess, if any, of the aggregate Net Book Value of all
Vehicles manufactured by Mitsubishi and leased under the Leases as of such date
over the Series 2003-4 Maximum Mitsubishi Amount as of such date, (iv) the
Series 2003-4 AESOP I Operating Lease Vehicle Percentage as of the immediately
preceding Business Day of the excess, if any, of the aggregate Net Book Value of
all Vehicles manufactured by Kia, Isuzu, Subaru, Hyundai or Suzuki,
individually, and leased under the Leases as of such date over the Series 2003-4
Maximum Individual Kia/Isuzu/Subaru/ Hyundai/Suzuki Amount as of such date, (v)
the Series 2003-4 AESOP I Operating Lease Vehicle Percentage as of the
immediately preceding Business Day of the excess, if any, of the aggregate Net
Book Value of all Vehicles manufactured by Kia, Isuzu, Subaru, Hyundai or
Suzuki, in the aggregate, and leased under the Leases as of such date over the
Series 2003-4 Maximum Aggregate Kia/Isuzu/Subaru/Hyundai/Suzuki Amount as of
such date, (vi) the Series 2003-4 AESOP I Operating Lease Vehicle Percentage as
of the immediately preceding Business Day of the excess, if any, of the
Specified States Amount as of such date over the Series 2003-4 Maximum Specified
States Amount as of such date and (vii) the Series 2003-4 AESOP I Operating
Lease Vehicle Percentage as of the immediately preceding Business Day of the
excess, if any, of the Non-Eligible Manufacturer Amount as of such date over the
Series 2003-4 Maximum Non-Eligible Manufacturer Amount as of such date.

          "SERIES 2003-4 REQUIRED ENHANCEMENT PERCENTAGE" means, as of any date
of determination, the sum of (i) the product of (A) 13.9% times (B) the Series
2003-4 Program Vehicle Percentage as of such date and (ii) the product of (A)
the Series 2003-4 Required Non-Program Enhancement Percentage as of such date
times (B) the Series 2003-4 Non-Program Vehicle Percentage as of such date.

          "SERIES 2003-4 REQUIRED LIQUIDITY AMOUNT" means, with respect to any
Distribution Date, an amount equal to 2.5% of the Series 2003-4 Invested Amount
on such Distribution Date (after giving effect to any payments of principal to
be made on the Series 2003-4 Notes on such Distribution Date).

          "SERIES 2003-4 REQUIRED NON-PROGRAM ENHANCEMENT PERCENTAGE" means, as
of any date of determination, the greater of (a) 19.5% and (b) the sum of (i)
19.5% and (ii) the highest, for any calendar month within the preceding twelve
calendar months, of the greater of (x) an amount (not less than zero) equal to
100% MINUS the Measurement Month Average for the immediately preceding
Measurement Month and (y) an amount (not less than zero) equal to 100% MINUS the
Market Value Average as of the Determination Date within such calendar month
(excluding the Market Value Average for any Determination Date which has not yet
occurred).

          "SERIES 2003-4 REQUIRED OVERCOLLATERALIZATION AMOUNT" means, as of any
date of determination, the excess, if any, of the Series 2003-4 Required
Enhancement Amount over the sum of (i) the Series 2003-4 Letter of Credit Amount
as of such date, (ii) the Series 2003-4 Available Reserve Account Amount on such
date and (iii) the amount of cash and Permitted Investments on deposit in the
Series 2003-4 Collection Account (not including amounts allocable to the Series
2003-4 Accrued Interest Account) and the Series 2003-4 Excess Collection Account
on such date.

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          "SERIES 2003-4 REQUIRED RESERVE ACCOUNT AMOUNT" means, with respect to
any Distribution Date, an amount equal to the greater of (a) the excess, if any,
of the Series 2003-4 Required Liquidity Amount on such Distribution Date over
the Series 2003-4 Letter of Credit Liquidity Amount on such Distribution Date
(after giving effect to any payments of principal to be made on the Series
2003-4 Notes on such Distribution Date) and (b) the excess, if any, of the
Series 2003-4 Required Enhancement Amount over the Series 2003-4 Enhancement
Amount (excluding therefrom the Series 2003-4 Available Reserve Account Amount
and calculated after giving effect to any payments of principal to be made on
the Series 2003-4 Notes) on such Distribution Date.

          "SERIES 2003-4 RESERVE ACCOUNT" is defined in Section 2.7(a).

          "SERIES 2003-4 RESERVE ACCOUNT COLLATERAL" is defined in Section
2.7(d).

          "SERIES 2003-4 RESERVE ACCOUNT SURPLUS" means, with respect to any
Distribution Date, the excess, if any, of the Series 2003-4 Available Reserve
Account Amount over the Series 2003-4 Required Reserve Account Amount on such
Distribution Date.

          "SERIES 2003-4 REVOLVING PERIOD" means, the period from and including
the Series 2003-4 Closing Date to the earlier of (i) the commencement of the
Class A-1 Controlled Amortization Period and (ii) the commencement of the Series
2003-4 Rapid Amortization Period; provided that if the Class A-1 Notes are paid
in full on or prior to the August 2006 Distribution Date, then the Series 2003-4
Revolving Period shall also include the period from and including the first day
of the calendar month during which the Distribution Date on which the Class A-1
Notes are paid in full occurs to the earlier of (i) the commencement of the
Five-Year Notes Controlled Amortization Period and (ii) the commencement of the
Series 2003-4 Rapid Amortization Period; provided that if the Five-Year Notes
are paid in full on or prior to the August 2008 Distribution Date, then the
Series 2003-4 Revolving Period shall also include the period from and including
the first day of the calendar month during which the Distribution Date on which
the Five-Year Notes are paid in full occurs to the earlier of (i) the
commencement of the Class A-4 Controlled Amortization Period and (ii) the
commencement of the Series 2003-4 Rapid Amortization Period.

          "SERIES 2003-4 SHORTFALL" is defined in Section 2.3(g).

          "SERIES 2003-4 TERMINATION DATE" means the August 2011 Distribution
Date.

          "SERIES 2003-4 UNPAID DEMAND AMOUNT" means, with respect to any single
draw pursuant to Section 2.5(c) or (d) on the Series 2003-4 Letters of Credit,
the aggregate amount drawn by the Trustee on all Series 2003-4 Letters of
Credit.

          "SHADOW RATING" means the rating of the Series 2003-4 Notes by
Standard & Poor's or Moody's, as applicable, without giving effect to the Surety
Bond.

          "STANDARD & POOR'S" means Standard & Poor's Ratings Services, a
division of The McGraw-Hill Companies, Inc.

          "SUPPLEMENT" is defined in the preamble hereto.

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          "SURETY BOND" means the Note Guaranty Insurance Policy No. CA00590A,
dated June 19, 2003, issued by the Surety Provider.

          "SURETY DEFAULT" means (i) the occurrence and continuance of any
failure by the Surety Provider to pay upon a demand for payment in accordance
with the requirements of the Surety Bond or (ii) the occurrence of an Event of
Bankruptcy with respect to the Surety Provider.

          "SURETY PROVIDER" means XL Capital Assurance Inc., a New York
corporation. The Surety Provider shall constitute an "Enhancement Provider" with
respect to the Series 2003-4 Notes for all purposes under the Indenture and the
other Related Documents.

          "SURETY PROVIDER FEE" is defined in the Insurance Agreement.

          "SURETY PROVIDER REIMBURSEMENT AMOUNTS" means, as of any date of
determination, (i) an amount equal to the aggregate of any amounts due as of
such date to the Surety Provider pursuant to the Insurance Agreement in respect
of unreimbursed draws under the Surety Bond, including interest thereon
determined in accordance with the Insurance Agreement, and (ii) an amount equal
to the aggregate of any other amounts due as of such date to the Surety Provider
pursuant to the Insurance Agreement.

          "TELERATE PAGE 3750" means the display page currently so designated on
the Moneyline Telerate Service (or such other page as may replace that page on
that service for the purpose of displaying comparable rates or prices).

          "TEMPORARY GLOBAL CLASS A-1 NOTE" is defined in Section 5.2.

          "TEMPORARY GLOBAL CLASS A-2 NOTE" is defined in Section 5.2.

          "TEMPORARY GLOBAL CLASS A-3 NOTE" is defined in Section 5.2.

          "TEMPORARY GLOBAL CLASS A-4 NOTE" is defined in Section 5.2.

          "TERMINATION DATE DISBURSEMENT" means an amount drawn under a Series
2003-4 Letter of Credit pursuant to a Certificate of Termination Date Demand.

          "TERMINATION DISBURSEMENT" means an amount drawn under a Series 2003-4
Letter of Credit pursuant to a Certificate of Termination Demand.

          "TRUSTEE" is defined in the recitals hereto.

          "UNPAID DEMAND NOTE DISBURSEMENT" means an amount drawn under a Series
2003-4 Letter of Credit pursuant to a Certificate of Unpaid Demand Note Demand.

          "WAIVABLE AMOUNT" is defined in Article IV.

          "WAIVER EVENT" means the occurrence of the delivery of a Waiver
Request and the subsequent waiver of any Series 2003-4 Maximum Amount.

          "WAIVER REQUEST" is defined in Article IV.

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                                   ARTICLE II

                            SERIES 2003-4 ALLOCATIONS

          With respect to the Series 2003-4 Notes, the following shall apply:

          Section 2.1 ESTABLISHMENT OF SERIES 2003-4 COLLECTION ACCOUNT, SERIES
2003-4 EXCESS COLLECTION ACCOUNT AND SERIES 2003-4 ACCRUED INTEREST ACCOUNT. (a)
All Collections allocable to the Series 2003-4 Notes shall be allocated to the
Collection Account.

          (b)    The Trustee will create three administrative subaccounts within
the Collection Account for the benefit of the Series 2003-4 Noteholders, each
Series 2003-4 Interest Rate Swap Counterparty and the Surety Provider: the
Series 2003-4 Collection Account (such sub-account, the "SERIES 2003-4
COLLECTION ACCOUNT"), the Series 2003-4 Excess Collection Account (such
sub-account, the "SERIES 2003-4 EXCESS COLLECTION ACCOUNT") and the Series
2003-4 Accrued Interest Account (such sub-account, the "SERIES 2003-4 ACCRUED
INTEREST ACCOUNT").

          Section 2.2 ALLOCATIONS WITH RESPECT TO THE SERIES 2003-4 NOTES. The
net proceeds from the initial sale of the Series 2003-4 Notes will be deposited
into the Collection Account. On each Business Day on which Collections are
deposited into the Collection Account (each such date, a "SERIES 2003-4 DEPOSIT
DATE"), the Administrator will direct the Trustee in writing pursuant to the
Administration Agreement to allocate all amounts deposited into the Collection
Account in accordance with the provisions of this Section 2.2:

          (a)    ALLOCATIONS OF COLLECTIONS DURING THE SERIES 2003-4 REVOLVING
     PERIOD. During the Series 2003-4 Revolving Period, the Administrator will
     direct the Trustee in writing pursuant to the Administration Agreement to
     allocate on each day, prior to 11:00 a.m. (New York City time) on each
     Series 2003-4 Deposit Date, all amounts deposited into the Collection
     Account as set forth below:

                 (i)    allocate to the Series 2003-4 Collection Account an
          amount equal to the sum of (A) the Series 2003-4 Invested Percentage
          (as of such day) of the aggregate amount of Interest Collections on
          such day and (B) any amounts received by the Trustee on such day in
          respect of the Series 2003-4 Interest Rate Swaps. All such amounts
          allocated to the Series 2003-4 Collection Account shall be further
          allocated to the Series 2003-4 Accrued Interest Account; and

                 (ii)   allocate to the Series 2003-4 Excess Collection Account
          an amount equal to the Series 2003-4 Invested Percentage (as of such
          day) of the aggregate amount of Principal Collections on such day (for
          any such day, the "SERIES 2003-4 PRINCIPAL ALLOCATION"); PROVIDED,
          HOWEVER, if a Waiver Event shall have occurred, then such allocation
          shall be modified as provided in Article IV.

          (b)    ALLOCATIONS OF COLLECTIONS DURING ANY SERIES 2003-4 CONTROLLED
     AMORTIZATION PERIOD. With respect to any Series 2003-4 Controlled
     Amortization Period, the Administrator will direct the Trustee in writing
     pursuant to the Administration

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     Agreement to allocate, prior to 11:00 a.m. (New York City time) on any
     Series 2003-4 Deposit Date, all amounts deposited into the Collection
     Account as set forth below:

                 (i)    allocate to the Series 2003-4 Collection Account an
          amount determined as set forth in Section 2.2(a)(i) above for such
          day, which amount shall be further allocated to the Series 2003-4
          Accrued Interest Account; and

                 (ii)   (A) with respect to the Class A-1 Controlled
          Amortization Period, allocate to the Series 2003-4 Collection Account
          an amount equal to the Series 2003-4 Principal Allocation for such
          day, which amount shall be used to make principal payments in respect
          of the Class A-1 Notes; PROVIDED, HOWEVER, that if the Monthly Total
          Principal Allocation exceeds the Class A-1 Controlled Distribution
          Amount, then the amount of such excess shall be allocated to the
          Series 2003-4 Excess Collection Account; and PROVIDED, FURTHER, that
          if a Waiver Event shall have occurred, then such allocation shall be
          modified as provided in Article IV, (B) with respect to the Five-Year
          Notes Controlled Amortization Period, allocate to the Series 2003-4
          Collection Account an amount equal to the Series 2003-4 Principal
          Allocation for such day, which amount shall be used to make principal
          payments in respect of the Class A-2 Notes and the Class A-3 Notes;
          PROVIDED, HOWEVER, that if the Monthly Total Principal Allocation
          exceeds the sum of the Class A-2 Controlled Distribution Amount and
          the Class A-3 Controlled Distribution Amount, then the amount of such
          excess shall be allocated to the Series 2003-4 Excess Collection
          Account; and PROVIDED, FURTHER, that if a Waiver Event shall have
          occurred, then such allocation shall be modified as provided in
          Article IV and (C) with respect to the Class A-4 Controlled
          Amortization Period, allocate to the Series 2003-4 Collection Account
          an amount equal to the Series 2003-4 Principal Allocation for such
          day, which amount shall be used to make principal payments in respect
          of the Class A-4 Notes; PROVIDED, HOWEVER, that if the Monthly Total
          Principal Allocation exceeds the Class A-4 Controlled Distribution
          Amount, then the amount of such excess shall be allocated to the
          Series 2003-4 Excess Collection Account; and PROVIDED, FURTHER, that
          if a Waiver Event shall have occurred, then such allocation shall be
          modified as provided in Article IV.

          (c)    ALLOCATIONS OF COLLECTIONS DURING THE SERIES 2003-4 RAPID
     AMORTIZATION PERIOD. With respect to the Series 2003-4 Rapid Amortization
     Period, other than after the occurrence of an Event of Bankruptcy with
     respect to ARAC, any other Lessee or AGH, the Administrator will direct the
     Trustee in writing pursuant to the Administration Agreement to allocate,
     prior to 11:00 a.m. (New York City time) on any Series 2003-4 Deposit Date,
     all amounts deposited into the Collection Account as set forth below:

                 (i)    allocate to the Series 2003-4 Collection Account an
          amount determined as set forth in Section 2.2(a)(i) above for such
          day, which amount shall be further allocated to the Series 2003-4
          Accrued Interest Account; and

                 (ii)   allocate to the Series 2003-4 Collection Account an
          amount equal to the Series 2003-4 Principal Allocation for such day,
          which amount shall be

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          used to make principal payments in respect of the Class A-1 Notes, the
          Class A-2 Notes, the Class A-3 Notes and the Class A-4 Notes, ratably,
          without preference or priority of any kind, until the Series 2003-4
          Invested Amount is paid in full; PROVIDED that if on any Determination
          Date (A) the Administrator determines that the amount anticipated to
          be available from Interest Collections allocable to the Series 2003-4
          Notes, any amounts payable to the Trustee in respect of the Series
          2003-4 Interest Rate Swaps and other amounts available pursuant to
          Section 2.3 to pay Series 2003-4 Adjusted Monthly Interest and the
          Fixed Rate Payments on the next succeeding Distribution Date will be
          less than the sum of the Series 2003-4 Adjusted Monthly Interest and
          the Fixed Rate Payments for such Distribution Date and (B) the Series
          2003-4 Enhancement Amount is greater than zero, then the Administrator
          shall direct the Trustee in writing to reallocate a portion of the
          Principal Collections allocated to the Series 2003-4 Notes during the
          Related Month equal to the lesser of such insufficiency and the Series
          2003-4 Enhancement Amount to the Series 2003-4 Accrued Interest
          Account to be treated as Interest Collections on such Distribution
          Date.

          (d)    ALLOCATIONS OF COLLECTIONS AFTER THE OCCURRENCE OF AN EVENT OF
     BANKRUPTCY. After the occurrence of an Event of Bankruptcy with respect to
     ARAC, any other Lessee or AGH, the Administrator will direct the Trustee in
     writing pursuant to the Administration Agreement to allocate, prior to
     11:00 a.m. (New York City time) on any Series 2003-4 Deposit Date, all
     amounts attributable to the AESOP I Operating Lease Loan Agreement
     deposited into the Collection Account as set forth below:

                 (i)    allocate to the Series 2003-4 Collection Account an
          amount equal to the sum of (A) the Series 2003-4 AESOP I Operating
          Lease Vehicle Percentage as of the date of the occurrence of such
          Event of Bankruptcy of the aggregate amount of Interest Collections
          made under the AESOP I Operating Lease Loan Agreement for such day and
          (B) any amounts received by the Trustee in respect of the Series
          2003-4 Interest Rate Swaps on such day. All such amounts allocated to
          the Series 2003-4 Collection Account shall be further allocated to the
          Series 2003-4 Accrued Interest Account;

                 (ii)   allocate to the Series 2003-4 Collection Account an
          amount equal to the Series 2003-4 AESOP I Operating Lease Vehicle
          Percentage as of the date of the occurrence of such Event of
          Bankruptcy of the aggregate amount of Principal Collections made under
          the AESOP I Operating Lease Loan Agreement, which amount shall be used
          to make principal payments in respect of the Series Class A-1 Notes,
          the Class A-2 Notes, the Class A-3 Notes and the Class A-4 Notes,
          ratably, without preference or priority of any kind, until the Series
          2003-4 Invested Amount is paid in full; PROVIDED that if on any
          Determination Date (A) the Administrator determines that the amount
          anticipated to be available from Interest Collections allocable to the
          Series 2003-4 Notes, any amounts payable to the Trustee in respect of
          Series 2003-4 Interest Rate Swaps and other amounts available pursuant
          to Section 2.3 to pay Series 2003-4 Adjusted Monthly Interest and the
          Fixed Rate Payments on the next succeeding Distribution Date will be
          less than the sum of the Series 2003-4 Adjusted Monthly Interest and
          the Fixed

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          Rate Payments for such Distribution Date and (B) the Series 2003-4
          Enhancement Amount is greater than zero, then the Administrator shall
          direct the Trustee in writing to reallocate a portion of the Principal
          Collections allocated to the Series 2003-4 Notes during the Related
          Month equal to the lesser of such insufficiency and the Series 2003-4
          Enhancement Amount to the Series 2003-4 Accrued Interest Account to be
          treated as Interest Collections on such Distribution Date.

          (e)    SERIES 2003-4 EXCESS COLLECTION ACCOUNT. Amounts allocated to
     the Series 2003-4 Excess Collection Account on any Series 2003-4 Deposit
     Date will be (w) first, deposited in the Series 2003-4 Reserve Account in
     an amount up to the excess, if any, of the Series 2003-4 Required Reserve
     Account Amount for such date over the Series 2003-4 Available Reserve
     Account Amount for such date, (x) second, used to pay the principal amount
     of other Series of Notes that are then in amortization, (y) third, released
     to AESOP Leasing in an amount equal to the product of (A) the Loan
     Agreement's Share with respect to the AESOP I Operating Lease Loan
     Agreement as of such date times (B) 100% MINUS the Loan Payment Allocation
     Percentage with respect to the AESOP I Operating Lease Loan Agreement as of
     such date times (C) the amount of any remaining funds and (z) fourth, paid
     to AFC-II for any use permitted by the Related Documents including to make
     Loans under the Loan Agreements to the extent the Borrowers have requested
     Loans thereunder and Eligible Vehicles are available for financing
     thereunder; PROVIDED, HOWEVER, that in the case of clauses (x), (y) and
     (z), that no Amortization Event, Series 2003-4 Enhancement Deficiency or
     AESOP I Operating Lease Vehicle Deficiency would result therefrom or exist
     immediately thereafter. Upon the occurrence of an Amortization Event, funds
     on deposit in the Series 2003-4 Excess Collection Account will be withdrawn
     by the Trustee, deposited in the Series 2003-4 Collection Account and
     allocated as Principal Collections to reduce the Series 2003-4 Invested
     Amount on the immediately succeeding Distribution Date.

          (f)    ALLOCATIONS FROM OTHER SERIES. Amounts allocated to other
     Series of Notes that have been reallocated by AFC-II to the Series 2003-4
     Notes (i) during the Series 2003-4 Revolving Period shall be allocated to
     the Series 2003-4 Excess Collection Account and applied in accordance with
     Section 2.2(e) and (ii) during the Series 2003-4 Amortization Period shall
     be allocated to the Series 2003-4 Collection Account and applied in
     accordance with Section 2.2(b) or 2.2(c), as applicable, to make principal
     payments in respect of the Series 2003-4 Notes.

          (g)    PAST DUE RENT PAYMENTS. Notwithstanding the foregoing, if in
     the case of Section 2.2(a) or (b), after the occurrence of a Series 2003-4
     Lease Payment Deficit, the Lessees shall make payments of Monthly Base Rent
     or other amounts payable by the Lessees under the Leases on or prior to the
     fifth Business Day after the occurrence of such Series 2003-4 Lease Payment
     Deficit (a "PAST DUE RENT PAYMENT"), the Administrator shall direct the
     Trustee in writing pursuant to the Administration Agreement to allocate to
     the Series 2003-4 Collection Account an amount equal to the Series 2003-4
     Invested Percentage as of the date of the occurrence of such Series 2003-4
     Lease Payment Deficit of the Collections attributable to such Past Due Rent
     Payment (the "SERIES 2003-4 PAST DUE RENT PAYMENT"). The Administrator
     shall instruct the Trustee in writing pursuant to the Administration
     Agreement to withdraw from the Series 2003-4

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     Collection Account and apply the Series 2003-4 Past Due Rent Payment in the
     following order:

                 (i)    if the occurrence of such Series 2003-4 Lease Payment
          Deficit resulted in one or more Lease Deficit Disbursements being made
          under the Series 2003-4 Letters of Credit, pay to each Series 2003-4
          Letter of Credit Provider who made such a Lease Deficit Disbursement
          for application in accordance with the provisions of the applicable
          Series 2003-4 Reimbursement Agreement an amount equal to the lesser of
          (x) the unreimbursed amount of such Series 2003-4 Letter of Credit
          Provider's Lease Deficit Disbursement and (y) such Series 2003-4
          Letter of Credit Provider's Pro Rata Share of the Series 2003-4 Past
          Due Rent Payment;

                 (ii)   if the occurrence of such Series 2003-4 Lease Payment
          Deficit resulted in a withdrawal being made from the Series 2003-4
          Cash Collateral Account, deposit in the Series 2003-4 Cash Collateral
          Account an amount equal to the lesser of (x) the amount of the Series
          2003-4 Past Due Rent Payment remaining after any payment pursuant to
          clause (i) above and (y) the amount withdrawn from the Series 2003-4
          Cash Collateral Account on account of such Series 2003-4 Lease Payment
          Deficit;

                 (iii)  if the occurrence of such Series 2003-4 Lease Payment
          Deficit resulted in a withdrawal being made from the Series 2003-4
          Reserve Account pursuant to Section 2.3(d), deposit in the Series
          2003-4 Reserve Account an amount equal to the lesser of (x) the amount
          of the Series 2003-4 Past Due Rent Payment remaining after any
          payments pursuant to clauses (i) and (ii) above and (y) the excess, if
          any, of the Series 2003-4 Required Reserve Account Amount over the
          Series 2003-4 Available Reserve Account Amount on such day;

                 (iv)   allocate to the Series 2003-4 Accrued Interest Account
          the amount, if any, by which the Series 2003-4 Lease Interest Payment
          Deficit, if any, relating to such Series 2003-4 Lease Payment Deficit
          exceeds the amount of the Series 2003-4 Past Due Rent Payment applied
          pursuant to clauses (i), (ii) and (iii) above; and

                 (v)    treat the remaining amount of the Series 2003-4 Past Due
          Rent Payment as Principal Collections allocated to the Series 2003-4
          Notes in accordance with Section 2.2(a)(ii) or 2.2(b)(ii), as the case
          may be.

          Section 2.3 PAYMENTS TO NOTEHOLDERS AND EACH SERIES 2003-4 INTEREST
RATE SWAP COUNTERPARTY. On each Determination Date, as provided below, the
Administrator shall instruct the Paying Agent in writing pursuant to the
Administration Agreement to withdraw, and on the following Distribution Date the
Paying Agent, acting in accordance with such instructions, shall withdraw the
amounts required to be withdrawn from the Collection Account pursuant to Section
2.3(a) below in respect of all funds available from Series 2003-4 Interest Rate
Swap Proceeds and Interest Collections processed since the preceding
Distribution Date and allocated to the holders of the Series 2003-4 Notes.

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          (a)    NOTE INTEREST WITH RESPECT TO THE SERIES 2003-4 NOTES AND THE
SERIES 2003-4 INTEREST RATE SWAPS. On each Determination Date, the Administrator
shall instruct the Trustee and the Paying Agent in writing pursuant to the
Administration Agreement as to the amount to be withdrawn and paid pursuant to
Section 2.4 from the Series 2003-4 Accrued Interest Account to the extent funds
are anticipated to be available from Interest Collections allocable to the
Series 2003-4 Notes and the Series 2003-4 Interest Rate Swap Proceeds processed
from but not including the preceding Distribution Date through the succeeding
Distribution Date in respect of (w) first, an amount equal to the Series 2003-4
Monthly Interest for the Series 2003-4 Interest Period ending on the day
preceding the related Distribution Date, (x) second, an amount equal to all
Fixed Rate Payments for the next succeeding Distribution Date, (y) third, an
amount equal to the amount of any unpaid Series 2003-4 Shortfall as of the
preceding Distribution Date (together with any accrued interest on such Series
2003-4 Shortfall) and (z) fourth, an amount equal to the Surety Provider Fee for
such Series 2003-4 Interest Period plus any Surety Provider Reimbursement
Amounts then due and owing. On the following Distribution Date, the Trustee
shall withdraw the amounts described in the first sentence of this Section
2.3(a) from the Series 2003-4 Accrued Interest Account and deposit such amounts
in the Series 2003-4 Distribution Account.

          (b)    LEASE PAYMENT DEFICIT NOTICE. On or before 10:00 a.m. (New York
City time) on each Distribution Date, the Administrator shall notify the Trustee
and the Surety Provider of the amount of any Series 2003-4 Lease Payment
Deficit, such notification to be in the form of EXHIBIT E to this Supplement
(each a "LEASE PAYMENT DEFICIT NOTICE").

          (c)    DRAWS ON SERIES 2003-4 LETTERS OF CREDIT FOR SERIES 2003-4
LEASE INTEREST PAYMENT DEFICITS. If the Administrator determines on any
Distribution Date that there exists a Series 2003-4 Lease Interest Payment
Deficit, the Administrator shall instruct the Trustee in writing to draw on the
Series 2003-4 Letters of Credit, if any, and, the Trustee shall, by 12:00 noon
(New York City time) on such Distribution Date draw an amount as set forth in
such notice equal to the least of (i) such Series 2003-4 Lease Interest Payment
Deficit, (ii) the excess, if any, of the sum of the amounts described in clauses
(w), (x), (y) and (z) of Section 2.3(a) above on such Distribution Date over the
amounts available from the Series 2003-4 Accrued Interest Account and (iii) the
Series 2003-4 Letter of Credit Liquidity Amount on the Series 2003-4 Letters of
Credit by presenting to each Series 2003-4 Letter of Credit Provider (with a
copy to the Surety Provider) a draft accompanied by a Certificate of Lease
Deficit Demand and shall cause the Lease Deficit Disbursements to be deposited
in the Series 2003-4 Distribution Account on such Distribution Date; PROVIDED,
HOWEVER, that if the Series 2003-4 Cash Collateral Account has been established
and funded, the Trustee shall withdraw from the Series 2003-4 Cash Collateral
Account and deposit in the Series 2003-4 Distribution Account an amount equal to
the lesser of (x) the Series 2003-4 Cash Collateral Percentage on such
Distribution Date of the least of the amounts described in clauses (i), (ii) and
(iii) above and (y) the Series 2003-4 Available Cash Collateral Account Amount
on such Distribution Date and draw an amount equal to the remainder of such
amount on the Series 2003-4 Letters of Credit. During the continuance of a
Surety Default, no amounts in respect of the Surety Provider Fee shall be drawn
on the Series 2003-4 Letters of Credit.

          (d)    WITHDRAWALS FROM SERIES 2003-4 RESERVE ACCOUNT. If the
Administrator determines on any Distribution Date that the amounts available
from the Series 2003-4 Accrued

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Interest Account PLUS the amount, if any, to be drawn under the Series 2003-4
Letters of Credit and /or withdrawn from the Series 2003-4 Cash Collateral
Account pursuant to Section 2.3(c) are insufficient to pay the sum of the
amounts described in clauses (w), (x), (y) and (z) of Section 2.3(a) above on
such Distribution Date, the Administrator shall instruct the Trustee in writing
to withdraw from the Series 2003-4 Reserve Account and deposit in the Series
2003-4 Distribution Account on such Distribution Date an amount equal to the
lesser of the Series 2003-4 Available Reserve Account Amount and such
insufficiency. During the continuance of a Surety Default, no amounts in respect
of the Surety Provider Fee shall be withdrawn from the Series 2003-4 Reserve
Account. The Trustee shall withdraw such amount from the Series 2003-4 Reserve
Account and deposit such amount in the Series 2003-4 Distribution Account.

          (e)    SURETY BOND. If the Administrator determines on any
Distribution Date that the sum of the amounts available from the Series 2003-4
Accrued Interest Account PLUS the amount, if any, to be drawn under the Series
2003-4 Letters of Credit and/or to be withdrawn from the Series 2003-4 Cash
Collateral Account pursuant to Section 2.3(c) above PLUS the amount, if any, to
be withdrawn from the Series 2003-4 Reserve Account pursuant to Section 2.3(d)
above is insufficient to pay the Series 2003-4 Adjusted Monthly Interest for
such Distribution Date, the Administrator shall instruct the Trustee in writing
to make a demand on the Surety Bond and, upon receipt of such notice by the
Trustee on or prior to 11:00 a.m. (New York City time) on such Distribution
Date, the Trustee shall, by 12:00 noon (New York City time) on such Distribution
Date, make a demand on the Surety Bond in an amount equal to such insufficiency
in accordance with the terms thereof and shall cause the proceeds thereof to be
deposited in the Series 2003-4 Distribution Account.

          (f)    BALANCE. On or prior to the second Business Day preceding each
Distribution Date, the Administrator shall instruct the Trustee and the Paying
Agent in writing pursuant to the Administration Agreement to pay the balance
(after making the payments required in Section 2.4), if any, of the amounts
available from the Series 2003-4 Accrued Interest Account and the Series 2003-4
Distribution Account, PLUS the amount, if any, drawn under the Series 2003-4
Letters of Credit and/or withdrawn from the Series 2003-4 Cash Collateral
Account pursuant to Section 2.3(c) PLUS the amount, if any, withdrawn from the
Series 2003-4 Reserve Account pursuant to Section 2.3(d) as follows:

          (i)    on each Distribution Date during the Series 2003-4 Revolving
     Period or a Series 2003-4 Controlled Amortization Period, (1) first, to
     each Series 2003-4 Interest Rate Swap Counterparty, an amount equal to the
     Fixed Rate Payment due and owing under the applicable Series 2003-4
     Interest Rate Swap for such Distribution Date, (2) second, to the Surety
     Provider, in an amount equal to (x) the Surety Provider Fee for the related
     Series 2003-4 Interest Period and, without duplication, (y) any Surety
     Provider Reimbursement Amounts then due and owing, (3) third, to the
     Administrator, an amount equal to the Series 2003-4 Percentage as of the
     beginning of such Series 2003-4 Interest Period of the portion of the
     Monthly Administration Fee payable by AFC-II (as specified in clause (iii)
     of the definition thereof) for such Series 2003-4 Interest Period, (4)
     fourth, to the Trustee, an amount equal to the Series 2003-4 Percentage as
     of the beginning of such Series 2003-4 Interest Period of the Trustee's
     fees for such Series 2003-4 Interest Period, (5) fifth, to pay any Carrying
     Charges (other than Carrying Charges provided for above) to the Persons to
     whom such amounts are owed, an amount equal to the Series

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     2003-4 Percentage as of the beginning of such Series 2003-4 Interest Period
     of such Carrying Charges (other than Carrying Charges provided for above)
     for such Series 2003-4 Interest Period, (6) sixth, to each Series 2003-4
     Interest Rate Swap Counterparty, any amounts due and owing under the
     applicable Series 2003-4 Interest Rate Swap (other than any Fixed Rate
     Payment) and (7) seventh, the balance, if any ("EXCESS COLLECTIONS"), shall
     be withdrawn by the Paying Agent from the Series 2003-4 Collection Account
     and deposited in the Series 2003-4 Excess Collection Account; and

          (ii)   on each Distribution Date during the Series 2003-4 Rapid
     Amortization Period, (1) first, to each Series 2003-4 Interest Rate Swap
     Counterparty, an amount equal to the Fixed Rate Payment due and owing under
     the applicable Series 2003-4 Interest Rate Swap for such Distribution Date,
     (2) second, to the Surety Provider, in an amount equal to (x) the Surety
     Provider Fee for the related Series 2003-4 Interest Period and, without
     duplication, (y) any Surety Provider Reimbursement Amounts then due and
     owing, (3) third, to the Trustee, an amount equal to the Series 2003-4
     Percentage as of the beginning of such Series 2003-4 Interest Period of the
     Trustee's fees for such Series 2003-4 Interest Period, (4) fourth, to the
     Administrator, an amount equal to the Series 2003-4 Percentage as of the
     beginning of such Series 2003-4 Interest Period of the portion of the
     Monthly Administration Fee (as specified in clause (iii) of the definition
     thereof) payable by AFC-II for such Series 2003-4 Interest Period, (5)
     fifth, to pay any Carrying Charges (other than Carrying Charges provided
     for above) to the Persons to whom such amounts are owed, an amount equal to
     the Series 2003-4 Percentage as of the beginning of such Series 2003-4
     Interest Period of such Carrying Charges (other than Carrying Charges
     provided for above) for such Series 2003-4 Interest Period, (6) sixth, so
     long as the Series 2003-4 Invested Amount is greater than the Series 2003-4
     Principal Allocations on such Distribution Date, an amount equal to the
     excess of the Series 2003-4 Invested Amount over the Series 2003-4
     Principal Allocations on such Distribution Date shall be treated as
     Principal Collections and (7) seventh, to each Series 2003-4 Interest Rate
     Swap Counterparty, any amounts due and owing under the applicable Series
     2003-4 Interest Rate Swap (other than any Fixed Rate Payment).

          (g)    SHORTFALLS. If the amounts described in Section 2.3 are
insufficient to pay the Series 2003-4 Monthly Interest on any Distribution Date,
payments of interest to the Series 2003-4 Noteholders will be reduced on a PRO
RATA basis by the amount of such deficiency. The aggregate amount, if any, of
such deficiency on any Distribution Date shall be referred to as the "SERIES
2003-4 SHORTFALL." Interest shall accrue on the portion of the Series 2003-4
Shortfall allocable to the Class A-1 Notes at the Class A-1 Note Rate, on the
portion of the Series 2003-4 Shortfall allocable to the Class A-2 Notes at the
Class A-2 Note Rate, on the portion of the Series 2003-4 Shortfall allocable to
the Class A-3 Notes at the Class A-3 Note Rate and on the portion of the Series
2003-4 Shortfall allocable to the Class A-4 Notes at the Class A-4 Note Rate.

          (h)    LISTING INFORMATION REQUIREMENT. Until the Administrator shall
give the Trustee written notice that the Class A-1, Class A-3 and/or Class A-4
Notes are not listed on the Luxembourg Stock Exchange, the Trustee shall, or
shall instruct the Paying Agent to, cause the Class A-1 Note Rate, the Class A-3
Note Rate and the Class A-4 Note Rate for the next succeeding Series 2003-4
Interest Period, the number of days in such Series 2003-4 Interest Period, the
Distribution Date for such Series 2003-4 Interest Period and the amount of
interest

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payable on the Class A-2 Notes, the Class A-3 Notes and the Class A-4
Notes on such Distribution Date to be (A) communicated to DTC, Euroclear,
Clearstream, the Paying Agent in Luxembourg and the Luxembourg Stock Exchange no
later than 11:00 a.m. (London time) on the Business Day immediately following
each LIBOR Determination Date and (B) published in the Authorized Newspaper as
soon as possible after its determination.

          Section 2.4 PAYMENT OF NOTE INTEREST.  On each Distribution Date,
subject to Section 9.8 of the Base Indenture, the Paying Agent shall, in
accordance with Section 6.1 of the Base Indenture, pay to the Series 2003-4
Noteholders from the Series 2003-4 Distribution Account the amount due to the
Series 2003-4 Noteholders deposited in the Series 2003-4 Distribution Account
pursuant to Section 2.3.

          Section 2.5 PAYMENT OF NOTE PRINCIPAL. (a) MONTHLY PAYMENTS DURING
CONTROLLED AMORTIZATION PERIOD OR RAPID AMORTIZATION PERIOD. Commencing on the
second Determination Date during the Class A-1 Controlled Amortization Period,
the Five-Year Notes Controlled Amortization Period or the Class A-4 Controlled
Amortization Period, as the case may be, or the first Determination Date after
the commencement of the Series 2003-4 Rapid Amortization Period, the
Administrator shall instruct the Trustee and the Paying Agent in writing
pursuant to the Administration Agreement and in accordance with this Section 2.5
as to (i) the amount allocated to the Series 2003-4 Notes during the Related
Month pursuant to Section 2.2(b)(ii), (c)(ii) or (d)(ii), as the case may be,
(ii) any amounts to be drawn on the Series 2003-4 Demand Notes and/or on the
Series 2003-4 Letters of Credit (or withdrawn from the Series 2003-4 Cash
Collateral Account), (iii) any amounts to be withdrawn from the Series 2003-4
Reserve Account and deposited into the Series 2003-4 Distribution Account and
(iv) the amount of any demand on the Surety Bond in accordance with the terms
thereof. On the Distribution Date following each such Determination Date, the
Trustee shall withdraw the amount allocated to the Series 2003-4 Notes during
the Related Month pursuant to Section 2.2(b)(ii), (c)(ii) or (d)(ii), as the
case may be, from the Series 2003-4 Collection Account and deposit such amount
in the Series 2003-4 Distribution Account, to be paid to the holders of the
Series 2003-4 Notes.

          (b)    PRINCIPAL DRAWS ON SERIES 2003-4 LETTERS OF CREDIT. If the
Administrator determines on any Distribution Date during the Series 2003-4 Rapid
Amortization Period that there exists a Series 2003-4 Lease Principal Payment
Deficit, the Administrator shall instruct the Trustee in writing to draw on the
Series 2003-4 Letters of Credit, if any, as provided below; PROVIDED, HOWEVER,
that the Administrator shall not instruct the Trustee to draw on the Series
2003-4 Letters of Credit in respect of a Series 2003-4 Lease Principal Payment
Deficit on or after the date of the filing by any of the Lessees of a petition
for relief under Chapter 11 of the Bankruptcy Code unless and until the date on
which each of the Lessees shall have resumed making all payments of the portion
of Monthly Base Rent relating to Loan Interest required to be made under the
AESOP I Operating Lease. Upon receipt of a notice by the Trustee from the
Administrator in respect of a Series 2003-4 Lease Principal Payment Deficit on
or prior to 11:00 a.m. (New York City time) on a Distribution Date, the Trustee
shall, by 12:00 noon (New York City time) on such Distribution Date draw an
amount as set forth in such notice equal to the lesser of (i) such Series 2003-4
Lease Principal Payment Deficit and (ii) the Series 2003-4 Letter of Credit
Liquidity Amount on the Series 2003-4 Letters of Credit by presenting to each
Series 2003-4 Letter of Credit Provider a draft accompanied by a Certificate of
Lease Deficit Demand and shall cause the Lease Deficit Disbursements to be
deposited in the Series 2003-4 Distribution

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Account on such Distribution Date; PROVIDED, HOWEVER, that if the Series 2003-4
Cash Collateral Account has been established and funded, the Trustee shall
withdraw from the Series 2003-4 Cash Collateral Account and deposit in the
Series 2003-4 Distribution Account an amount equal to the lesser of (x) the
Series 2003-4 Cash Collateral Percentage on such Distribution Date of the Series
2003-4 Lease Principal Payment Deficit and (y) the Series 2003-4 Available Cash
Collateral Account Amount on such Distribution Date and draw an amount equal to
the remainder of such amount on the Series 2003-4 Letters of Credit.

          (c)    FINAL DISTRIBUTION DATE. The entire Class A-1 Invested Amount
shall be due and payable on the Class A-1 Final Distribution Date, the entire
Class A-2 Invested Amount and the entire Class A-3 Invested Amount shall be due
and payable on the Five-Year Notes Final Distribution Date, and the entire Class
A-4 Invested Amount shall be due and payable on the Class A-4 Final Distribution
Date. In connection therewith:

          (i)    DEMAND NOTE DRAW. If the amount to be deposited in the Series
     2003-4 Distribution Account in accordance with Section 2.5(a) together with
     any amounts to be deposited therein in accordance with Section 2.5(b)
     allocable to the Class A-1 Notes on the Class A-1 Final Distribution Date,
     the Class A-2 Notes and the Class A-3 Notes on the Five-Year Notes Final
     Distribution Date or the Class A-4 Notes on the Class A-4 Final
     Distribution Date, as the case may be, is less than the Class A-1 Invested
     Amount, the sum of the Class A-2 Invested Amount and the Class A-3 Invested
     Amount or the Class A-4 Invested Amount, as the case may be, and there are
     any Series 2003-4 Letters of Credit on such date, then, prior to 10:00 a.m.
     (New York City time) on the second Business Day prior to such Series 2003-4
     Final Distribution Date, the Administrator shall instruct the Trustee in
     writing (with a copy to the Surety Provider) to make a demand (a "DEMAND
     NOTICE") substantially in the form attached hereto as EXHIBIT F on the
     Demand Note Issuers for payment under the Series 2003-4 Demand Notes in an
     amount equal to the lesser of (i) such insufficiency and (ii) the Series
     2003-4 Letter of Credit Amount. The Trustee shall, prior to 12:00 noon (New
     York City time) on the second Business Day preceding such Series 2003-4
     Final Distribution Date, deliver such Demand Notice to the Demand Note
     Issuers; PROVIDED, HOWEVER, that if an Event of Bankruptcy (or the
     occurrence of an event described in clause (a) of the definition thereof,
     without the lapse of a period of 60 consecutive days) with respect to a
     Demand Note Issuer shall have occurred and be continuing, the Trustee shall
     not be required to deliver such Demand Notice to such Demand Note Issuer.
     The Trustee shall cause the proceeds of any demand on the Series 2003-4
     Demand Notes to be deposited into the Series 2003-4 Distribution Account.

          (ii)   LETTER OF CREDIT DRAW. In the event that either (x) on or prior
     to 10:00 a.m. (New York City time) on the Business Day immediately
     preceding any Distribution Date next succeeding any date on which a Demand
     Notice has been transmitted by the Trustee to the Demand Note Issuers
     pursuant to clause (i) of this Section 2.5(c), any Demand Note Issuer shall
     have failed to pay to the Trustee or deposit into the Series 2003-4
     Distribution Account the amount specified in such Demand Notice in whole or
     in part or (y) due to the occurrence of an Event of Bankruptcy (or the
     occurrence of an event described in clause (a) of the definition thereof,
     without the lapse of a period of 60 consecutive days) with respect to one
     or more of the Demand Note Issuers, the Trustee

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     shall not have delivered such Demand Notice to any Demand Note Issuer on
     the second Business Day preceding such Series 2003-4 Final Distribution
     Date, then, in the case of (x) or (y) the Trustee shall draw on the Series
     2003-4 Letters of Credit by 12:00 noon (New York City time) on such
     Business Day an amount equal to the lesser of (a) the amount that the
     Demand Note Issuers failed to pay under the Series 2003-4 Demand Notes (or,
     the amount that the Trustee failed to demand for payment thereunder) and
     (b) the Series 2003-4 Letter of Credit Amount on such Business Day by
     presenting to each Series 2003-4 Letter of Credit Provider (with a copy to
     the Surety Provider) a draft accompanied by a Certificate of Unpaid Demand
     Note Demand; PROVIDED, HOWEVER, that if the Series 2003-4 Cash Collateral
     Account has been established and funded, the Trustee shall withdraw from
     the Series 2003-4 Cash Collateral Account and deposit in the Series 2003-4
     Distribution Account an amount equal to the lesser of (x) the Series 2003-4
     Cash Collateral Percentage on such Business Day of the amount that the
     Demand Note Issuers failed to pay under the Series 2003-4 Demand Notes (or,
     the amount that the Trustee failed to demand for payment thereunder) and
     (y) the Series 2003-4 Available Cash Collateral Account Amount on such
     Business Day and draw an amount equal to the remainder of the amount that
     the Demand Note Issuers failed to pay under the Series 2003-4 Demand Notes
     (or, the amount that the Trustee failed to demand for payment thereunder)
     on the Series 2003-4 Letters of Credit. The Trustee shall deposit, or cause
     the deposit of, the proceeds of any draw on the Series 2003-4 Letters of
     Credit and the proceeds of any withdrawal from the Series 2003-4 Cash
     Collateral Account to be deposited in the Series 2003-4 Distribution
     Account.

          (iii)  RESERVE ACCOUNT WITHDRAWAL. If, after giving effect to the
     deposit into the Series 2003-4 Distribution Account of the amount to be
     deposited in accordance with Section 2.5(a) and the amounts described in
     clauses (i) and (ii) of this Section 2.5(c), the amount to be deposited in
     the Series 2003-4 Distribution Account with respect to a Series 2003-4
     Final Distribution Date is or will be less than the Class A-1 Invested
     Amount, the sum of the Class A-2 Invested Amount and the Class A-3 Invested
     Amount or the Class A-4 Invested Amount, as the case may be, then, prior to
     12:00 noon (New York City time) on the second Business Day prior to such
     Series 2003-4 Final Distribution Date, the Administrator shall instruct the
     Trustee in writing to withdraw from the Series 2003-4 Reserve Account, an
     amount equal to the lesser of the Series 2003-4 Available Reserve Account
     Amount and such remaining insufficiency and deposit it in the Series 2003-4
     Distribution Account on such Series 2003-4 Final Distribution Date.

          (iv)   DEMAND ON SURETY BOND. If after giving effect to the deposit
     into the Series 2003-4 Distribution Account of the amount to be deposited
     in accordance with Section 2.5(a) and all other amounts described in
     clauses (i), (ii) and (iii) of this Section 2.5(c), the amount to be
     deposited in the Series 2003-4 Distribution Account with respect to such
     Series 2003-4 Final Distribution Date is or will be less than the Class A-1
     Outstanding Principal Amount, the sum of the Class A-2 Outstanding
     Principal Amount and the Class A-3 Outstanding Principal Amount or the
     Class A-4 Outstanding Principal Amount, as the case may be, then the
     Trustee shall make a demand on the Surety Bond by 12:00 p.m. (New York City
     time) on the second Business Day preceding such Distribution Date in an
     amount equal to such insufficiency in accordance with the terms

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     thereof and shall cause the proceeds thereof to be deposited in the Series
     2003-4 Distribution Account.

          (d)    PRINCIPAL DEFICIT AMOUNT. On each Distribution Date, other than
the Class A-1 Final Distribution Date, the Five-Year Notes Final Distribution
Date and the Class A-4 Final Distribution Date, on which the Principal Deficit
Amount is greater than zero, amounts shall be transferred to the Series 2003-4
Distribution Account as follows:

          (i)    DEMAND NOTE DRAW. If on any Determination Date, the
     Administrator determines that the Principal Deficit Amount with respect to
     the next succeeding Distribution Date will be greater than zero and there
     are any Series 2003-4 Letters of Credit on such date, prior to 10:00 a.m.
     (New York City time) on the second Business Day prior to such Distribution
     Date, the Administrator shall instruct the Trustee in writing (with a copy
     to the Surety Provider) to deliver a Demand Notice to the Demand Note
     Issuers demanding payment of an amount equal to the lesser of (A) the
     Principal Deficit Amount and (B) the Series 2003-4 Letter of Credit Amount.
     The Trustee shall, prior to 12:00 noon (New York City time) on the second
     Business Day preceding such Distribution Date, deliver such Demand Notice
     to the Demand Note Issuers; PROVIDED, HOWEVER, that if an Event of
     Bankruptcy (or the occurrence of an event described in clause (a) of the
     definition thereof, without the lapse of a period of 60 consecutive days)
     with respect to a Demand Note Issuer shall have occurred and be continuing,
     the Trustee shall not be required to deliver such Demand Notice to such
     Demand Note Issuer. The Trustee shall cause the proceeds of any demand on
     the Series 2003-4 Demand Note to be deposited into the Series 2003-4
     Distribution Account.

          (ii)   LETTER OF CREDIT DRAW. In the event that either (x) on or prior
     to 10:00 a.m. (New York City time) on the Business Day prior to such
     Distribution Date, any Demand Note Issuer shall have failed to pay to the
     Trustee or deposit into the Series 2003-4 Distribution Account the amount
     specified in such Demand Notice in whole or in part or (y) due to the
     occurrence of an Event of Bankruptcy (or the occurrence of an event
     described in clause (a) of the definition thereof, without the lapse of a
     period of 60 consecutive days) with respect to any Demand Note Issuer, the
     Trustee shall not have delivered such Demand Notice to any Demand Note
     Issuer on the second Business Day preceding such Distribution Date, then,
     in the case of (x) or (y) the Trustee shall on such Business Day draw on
     the Series 2003-4 Letters of Credit an amount equal to the lesser of (i)
     Series 2003-4 Letter of Credit Amount and (ii) the aggregate amount that
     the Demand Note Issuers failed to pay under the Series 2003-4 Demand Notes
     (or, the amount that the Trustee failed to demand for payment thereunder)
     by presenting to each Series 2003-4 Letter of Credit Provider (with a copy
     to the Surety Provider) a draft accompanied by a Certificate of Unpaid
     Demand Note Demand; PROVIDED, HOWEVER, that if the Series 2003-4 Cash
     Collateral Account has been established and funded, the Trustee shall
     withdraw from the Series 2003-4 Cash Collateral Account and deposit in the
     Series 2003-4 Distribution Account an amount equal to the lesser of (x) the
     Series 2003-4 Cash Collateral Percentage on such Business Day of the
     aggregate amount that the Demand Note Issuers failed to pay under the
     Series 2003-4 Demand Notes (or, the amount that the Trustee failed to
     demand for payment thereunder) and (y) the Series 2003-4 Available Cash
     Collateral Account Amount on such Business Day and draw an amount equal to
     the

                                      -34-
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     remainder of the aggregate amount that the Demand Note Issuers failed to
     pay under the Series 2003-4 Demand Notes (or, the amount that the Trustee
     failed to demand for payment thereunder) on the Series 2003-4 Letters of
     Credit. The Trustee shall deposit into, or cause the deposit of, the
     proceeds of any draw on the Series 2003-4 Letters of Credit and the
     proceeds of any withdrawal from the Series 2003-4 Cash Collateral Account
     to be deposited in the Series 2003-4 Distribution Account.

          (iii)  RESERVE ACCOUNT WITHDRAWAL. If the Series 2003-4 Letter of
     Credit Amount will be less than the Principal Deficit Amount on any
     Distribution Date, then, prior to 12:00 noon (New York City time) on the
     second Business Day prior to such Distribution Date, the Administrator
     shall instruct the Trustee in writing to withdraw from the Series 2003-4
     Reserve Account, an amount equal to the lesser of (x) the Series 2003-4
     Available Reserve Account Amount and (y) the amount by which the Principal
     Deficit Amount exceeds the amounts to be deposited in the Series 2003-4
     Distribution Account in accordance with clauses (i) and (ii) of this
     Section 2.5(d) and deposit it in the Series 2003-4 Distribution Account on
     such Distribution Date.

          (iv)   DEMAND ON SURETY BOND. If the sum of the Series 2003-4 Letter
     of Credit Amount and the Series 2003-4 Available Reserve Account Amount
     will be less than the Principal Deficit Amount on any Distribution Date,
     then the Trustee shall make a demand on the Surety Bond by 12:00 noon (New
     York City time) on the second Business Day preceding such Distribution Date
     in an amount equal to the Insured Principal Deficit Amount and shall cause
     the proceeds thereof to be deposited in the Series 2003-4 Distribution
     Account.

          (e)    DISTRIBUTION. On each Distribution Date occurring on or after
the date a withdrawal is made from the Series 2003-4 Collection Account pursuant
to Section 2.5(a) or amounts are deposited in the Series 2003-4 Distribution
Account pursuant to Section 2.5(b), (c) or (d) the Paying Agent shall, in
accordance with Section 6.1 of the Base Indenture, pay PRO RATA to each Class
A-1 Noteholder, Class A-2 Noteholder, Class A-3 Noteholder or Class A-4
Noteholder, as applicable, from the Series 2003-4 Distribution Account the
amount deposited therein pursuant to Section 2.5(a), (b), (c) or (d), to the
extent necessary to pay the Class A-1 Controlled Amortization Amount, the sum of
the Class A-2 Controlled Amortization Amount and the Class A-3 Controlled
Amortization Amount or the Class A-4 Controlled Amortization Amount during the
Class A-1 Controlled Amortization Period, the Five-Year Notes Controlled
Amortization Period or the Class A-4 Controlled Amortization Period, as the case
may be, or to the extent necessary to pay the Class A-1 Invested Amount, the
Class A-2 Invested Amount, the Class A-3 Invested Amount and the Class A-4
Invested Amount during the Series 2003-4 Rapid Amortization Period.

          Section 2.6 ADMINISTRATOR'S FAILURE TO INSTRUCT THE TRUSTEE TO MAKE A
DEPOSIT OR PAYMENT. If the Administrator fails to give notice or instructions
to make any payment from or deposit into the Collection Account required to be
given by the Administrator, at the time specified in the Administration
Agreement or any other Related Document (including applicable grace periods),
the Trustee shall make such payment or deposit into or from the Collection
Account without such notice or instruction from the Administrator, PROVIDED that
the Administrator, upon request of the Trustee, promptly provides the Trustee
with all information necessary to allow the

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Trustee to make such a payment or deposit. When any payment or deposit hereunder
or under any other Related Document is required to be made by the Trustee or the
Paying Agent at or prior to a specified time, the Administrator shall deliver
any applicable written instructions with respect thereto reasonably in advance
of such specified time.

          Section 2.7 SERIES-2003-4 RESERVE ACCOUNT. (a) ESTABLISHMENT OF
SERIES 2003-4 RESERVE ACCOUNT. AFC-II shall establish and maintain in the name
of the Series 2003-4 Agent for the benefit of the Series 2003-4 Noteholders,
each Series 2003-4 Interest Rate Swap Counterparty and the Surety Provider, or
cause to be established and maintained, an account (the "SERIES 2003-4 RESERVE
ACCOUNT"), bearing a designation clearly indicating that the funds deposited
therein are held for the benefit of the Series 2003-4 Noteholders, each Series
2003-4 Interest Rate Swap Counterparty and the Surety Provider. The Series
2003-4 Reserve Account shall be maintained (i) with a Qualified Institution, or
(ii) as a segregated trust account with the corporate trust department of a
depository institution or trust company having corporate trust powers and acting
as trustee for funds deposited in the Series 2003-4 Reserve Account; PROVIDED
that, if at any time such Qualified Institution is no longer a Qualified
Institution or the credit rating of any securities issued by such depositary
institution or trust company shall be reduced to below "BBB-" by Standard &
Poor's or "Baa2" by Moody's, then AFC-II shall, within 30 days of such
reduction, establish a new Series 2003-4 Reserve Account with a new Qualified
Institution. If the Series 2003-4 Reserve Account is not maintained in
accordance with the previous sentence, AFC-II shall establish a new Series
2003-4 Reserve Account, within ten (10) Business Days after obtaining knowledge
of such fact, which complies with such sentence, and shall instruct the Series
2003-4 Agent in writing to transfer all cash and investments from the
non-qualifying Series 2003-4 Reserve Account into the new Series 2003-4 Reserve
Account. Initially, the Series 2003-4 Reserve Account will be established with
The Bank of New York.

          (b)    ADMINISTRATION OF THE SERIES 2003-4 RESERVE ACCOUNT. The
Administrator may instruct the institution maintaining the Series 2003-4 Reserve
Account to invest funds on deposit in the Series 2003-4 Reserve Account from
time to time in Permitted Investments; PROVIDED, HOWEVER, that any such
investment shall mature not later than the Business Day prior to the
Distribution Date following the date on which such funds were received, unless
any Permitted Investment held in the Series 2003-4 Reserve Account is held with
the Paying Agent, then such investment may mature on such Distribution Date and
such funds shall be available for withdrawal on or prior to such Distribution
Date. All such Permitted Investments will be credited to the Series 2003-4
Reserve Account and any such Permitted Investments that constitute (i) physical
property (and that is not either a United States security entitlement or a
security entitlement) shall be physically delivered to the Trustee; (ii) United
States security entitlements or security entitlements shall be controlled (as
defined in Section 8-106 of the New York UCC) by the Trustee pending maturity or
disposition, and (iii) uncertificated securities (and not United States security
entitlements) shall be delivered to the Trustee by causing the Trustee to become
the registered holder of such securities.

          (c)    EARNINGS FROM SERIES 2003-4 RESERVE ACCOUNT. All interest and
earnings (net of losses and investment expenses) paid on funds on deposit in the
Series 2003-4 Reserve Account shall be deemed to be on deposit therein and
available for distribution.

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          (d)    SERIES 2003-4 RESERVE ACCOUNT CONSTITUTES ADDITIONAL COLLATERAL
FOR SERIES 2003-4 NOTES. In order to secure and provide for the repayment and
payment of the AFC-II Obligations with respect to the Series 2003-4 Notes,
AFC-II hereby grants a security interest in and assigns, pledges, grants,
transfers and sets over to the Series 2003-4 Agent, for the benefit of the
Series 2003-4 Noteholders, each Series 2003-4 Interest Rate Swap Counterparty
and the Surety Provider, all of AFC-II's right, title and interest in and to the
following (whether now or hereafter existing or acquired): (i) the Series 2003-4
Reserve Account, including any security entitlement thereto; (ii) all funds on
deposit therein from time to time; (iii) all certificates and instruments, if
any, representing or evidencing any or all of the Series 2003-4 Reserve Account
or the funds on deposit therein from time to time; (iv) all investments made at
any time and from time to time with monies in the Series 2003-4 Reserve Account,
whether constituting securities, instruments, general intangibles, investment
property, financial assets or other property; (v) all interest, dividends, cash,
instruments and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for the Series 2003-4 Reserve
Account, the funds on deposit therein from time to time or the investments made
with such funds; and (vi) all proceeds of any and all of the foregoing,
including, without limitation, cash (the items in the foregoing clauses (i)
through (vi) are referred to, collectively, as the "SERIES 2003-4 RESERVE
ACCOUNT COLLATERAL"). The Series 2003-4 Agent shall possess all right, title and
interest in and to all funds on deposit from time to time in the Series 2003-4
Reserve Account and in all proceeds thereof, and shall be the only person
authorized to originate entitlement orders in respect of the Series 2003-4
Reserve Account. The Series 2003-4 Reserve Account Collateral shall be under the
sole dominion and control of the Series 2003-4 Agent for the benefit of the
Series 2003-4 Noteholders, each Series 2003-4 Interest Rate Swap Counterparty
and the Surety Provider. The Series 2003-4 Agent hereby agrees (i) to act as the
securities intermediary (as defined in Section 8-102(a)(14) of the New York UCC)
with respect to the Series 2003-4 Reserve Account; (ii) that each item of
property (whether investment property, financial asset, security, instrument or
cash) credited to the Series 2003-4 Reserve Account shall be treated as a
financial asset (as defined in Section 8-102(a)(9) of the New York UCC) and
(iii) to comply with any entitlement order (as defined in Section 8-102(a)(8) of
the New York UCC) issued by the Trustee.

          (e)    SERIES 2003-4 RESERVE ACCOUNT SURPLUS. In the event that the
Series 2003-4 Reserve Account Surplus on any Distribution Date, after giving
effect to all withdrawals from the Series 2003-4 Reserve Account, is greater
than zero, if no Series 2003-4 Enhancement Deficiency or AESOP I Operating Lease
Vehicle Deficiency would result therefrom or exist thereafter, the Trustee,
acting in accordance with the written instructions of the Administrator (with a
copy of such written instructions to be provided by the Administrator to the
Surety Provider) pursuant to the Administration Agreement, shall withdraw from
the Series 2003-4 Reserve Account an amount equal to the Series 2003-4 Reserve
Account Surplus and shall pay such amount to AFC-II.

          (f)    TERMINATION OF SERIES 2003-4 RESERVE ACCOUNT. Upon the
termination of the Indenture pursuant to Section 11.1 of the Base Indenture, the
Trustee, acting in accordance with the written instructions of the
Administrator, after the prior payment of all amounts owing to the Series 2003-4
Noteholders and to the Surety Provider and payable from the Series 2003-4
Reserve Account as provided herein, shall withdraw from the Series 2003-4
Reserve Account all amounts on deposit therein for payment to AFC-II.

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          Section 2.8 SERIES 2003-4 LETTERS OF CREDIT AND SERIES 2003-4 CASH
COLLATERAL ACCOUNT. (a) Series 2003-4 Letters of Credit and Series 2003-4 Cash
Collateral Account Constitute Additional Collateral for Series 2003-4 Notes. In
order to secure and provide for the repayment and payment of the AFC-II
Obligations with respect to the Series 2003-4 Notes, AFC-II hereby grants a
security interest in and assigns, pledges, grants, transfers and sets over to
the Trustee, for the benefit of the Series 2003-4 Noteholders, each Series
2003-4 Interest Rate Swap Counterparty and the Surety Provider, all of AFC-II's
right, title and interest in and to the following (whether now or hereafter
existing or acquired): (i) each Series 2003-4 Letter of Credit; (ii) the Series
2003-4 Cash Collateral Account, including any security entitlement thereto;
(iii) all funds on deposit in the Series 2003-4 Cash Collateral Account from
time to time; (iv) all certificates and instruments, if any, representing or
evidencing any or all of the Series 2003-4 Cash Collateral Account or the funds
on deposit therein from time to time; (v) all investments made at any time and
from time to time with monies in the Series 2003-4 Cash Collateral Account,
whether constituting securities, instruments, general intangibles, investment
property, financial assets or other property; (vi) all interest, dividends,
cash, instruments and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for the Series 2003-4 Cash
Collateral Account, the funds on deposit therein from time to time or the
investments made with such funds; and (vii) all proceeds of any and all of the
foregoing, including, without limitation, cash (the items in the foregoing
clauses (ii) through (vii) are referred to, collectively, as the "SERIES 2003-4
CASH COLLATERAL ACCOUNT COLLATERAL"). The Trustee shall, for the benefit of the
Series 2003-4 Noteholders, each Series 2003-4 Interest Rate Swap Counterparty
and the Surety Provider, possess all right, title and interest in all funds on
deposit from time to time in the Series 2003-4 Cash Collateral Account and in
all proceeds thereof, and shall be the only person authorized to originate
entitlement orders in respect of the Series 2003-4 Cash Collateral Account. The
Series 2003-4 Cash Collateral Account shall be under the sole dominion and
control of the Trustee for the benefit of the Series 2003-4 Noteholders, each
Series 2003-4 Interest Rate Swap Counterparty and the Surety Provider. The
Series 2003-4 Agent hereby agrees (i) to act as the securities intermediary (as
defined in Section 8-102(a)(14) of the New York UCC) with respect to the Series
2003-4 Cash Collateral Account; (ii) that each item of property (whether
investment property, financial asset, security, instrument or cash) credited to
the Series 2003-4 Cash Collateral Account shall be treated as a financial asset
(as defined in Section 8-102(a)(9) of the New York UCC) and (iii) to comply with
any entitlement order (as defined in Section 8-102(a)(8) of the New York UCC)
issued by the Trustee.

          (b)    SERIES 2003-4 LETTER OF CREDIT EXPIRATION DATE. If prior to the
date which is ten (10) days prior to the then scheduled Series 2003-4 Letter of
Credit Expiration Date with respect to any Series 2003-4 Letter of Credit,
excluding the amount available to be drawn under such Series 2003-4 Letter of
Credit but taking into account each substitute Series 2003-4 Letter of Credit
which has been obtained from a Series 2003-4 Eligible Letter of Credit Provider
and is in full force and effect on such date, the Series 2003-4 Enhancement
Amount would be equal to or more than the Series 2003-4 Required Enhancement
Amount and the Series 2003-4 Liquidity Amount would be equal to or greater than
the Series 2003-4 Required Liquidity Amount, then the Administrator shall notify
the Trustee and the Surety Provider (with the Surety Provider to be provided
supporting calculations in reasonable detail) in writing no later than two
Business Days prior to such Series 2003-4 Letter of Credit Expiration

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Date of such determination. If prior to the date which is ten (10) days prior to
the then scheduled Series 2003-4 Letter of Credit Expiration Date with respect
to any Series 2003-4 Letter of Credit, excluding the amount available to be
drawn under such Series 2003-4 Letter of Credit but taking into account a
substitute Series 2003-4 Letter of Credit which has been obtained from a Series
2003-4 Eligible Letter of Credit Provider and is in full force and effect on
such date, the Series 2003-4 Enhancement Amount would be less than the Series
2003-4 Required Enhancement Amount or the Series 2003-4 Liquidity Amount would
be less than the Series 2003-4 Required Liquidity Amount, then the Administrator
shall notify the Trustee and the Surety Provider (with the Surety Provider to be
provided supporting calculations in reasonable detail) in writing no later than
two Business Days prior to such Series 2003-4 Letter of Credit Expiration Date
of (x) the greater of (A) the excess, if any, of the Series 2003-4 Required
Enhancement Amount over the Series 2003-4 Enhancement Amount, excluding the
available amount under such expiring Series 2003-4 Letter of Credit but taking
into account any substitute Series 2003-4 Letter of Credit which has been
obtained from a Series 2003-4 Eligible Letter of Credit Provider and is in full
force and effect, on such date, and (B) the excess, if any, of the Series 2003-4
Required Liquidity Amount over the Series 2003-4 Liquidity Amount, excluding the
available amount under such expiring Series 2003-4 Letter of Credit but taking
into account any substitute Series 2003-4 Letter of Credit which has been
obtained from a Series 2003-4 Eligible Letter of Credit Provider and is in full
force and effect, on such date, and (y) the amount available to be drawn on such
expiring Series 2003-4 Letter of Credit on such date. Upon receipt of such
notice by the Trustee on or prior to 10:00 a.m. (New York City time) on any
Business Day, the Trustee shall, by 12:00 p.m. (New York City time) on such
Business Day (or, in the case of any notice given to the Trustee after 10:00
a.m. (New York City time), by 12:00 p.m. (New York City time) on the next
following Business Day), draw the lesser of the amounts set forth in clauses (x)
and (y) above on such expiring Series 2003-4 Letter of Credit by presenting a
draft (with a copy to the Surety Provider) accompanied by a Certificate of
Termination Demand and shall cause the Termination Disbursement to be deposited
in the Series 2003-4 Cash Collateral Account.

          If the Trustee does not receive the notice from the Administrator
described in the first paragraph of this Section 2.8(b) on or prior to the date
that is two Business Days prior to each Series 2003-4 Letter of Credit
Expiration Date, the Trustee shall, by 12:00 p.m. (New York City time) on such
Business Day draw the full amount of such Series 2003-4 Letter of Credit by
presenting a draft accompanied by a Certificate of Termination Demand and shall
cause the Termination Disbursement to be deposited in the Series 2003-4 Cash
Collateral Account.

          (c)    SERIES 2003-4 LETTER OF CREDIT PROVIDERS. The Administrator
shall notify the Trustee and the Surety Provider in writing within one Business
Day of becoming aware that (i) the long-term senior unsecured debt credit rating
of any Series 2003-4 Letter of Credit Provider has fallen below "A+" as
determined by Standard & Poor's or "Al" as determined by Moody's or (ii) the
short-term senior unsecured debt credit rating of any Series 2003-4 Letter of
Credit Provider has fallen below "A-1" as determined by Standard & Poor's or
"P-1" as determined by Moody's. At such time the Administrator shall also notify
the Trustee of (i) the greater of (A) the excess, if any, of the Series 2003-4
Required Enhancement Amount over the Series 2003-4 Enhancement Amount, excluding
the available amount under the Series 2003-4 Letter of Credit issued by such
Series 2003-4 Letter of Credit Provider, on such date, and (B) the excess, if
any, of the Series 2003-4 Required Liquidity Amount over the Series 2003-4
Liquidity Amount, excluding the available amount under such Series 2003-4 Letter
of Credit, on such date, and (ii) the amount available to be drawn on such
Series 2003-4 Letter of Credit on such date.

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Upon receipt of such notice by the Trustee on or prior to 10:00 a.m. (New York
City time) on any Business Day, the Trustee shall, by 12:00 p.m. (New York City
time) on such Business Day (or, in the case of any notice given to the Trustee
after 10:00 a.m. (New York City time), by 12:00 p.m. (New York City time) on the
next following Business Day), draw on such Series 2003-4 Letter of Credit in an
amount equal to the lesser of the amounts in clause (i) and clause (ii) of the
immediately preceding sentence on such Business Day by presenting a draft
accompanied by a Certificate of Termination Demand and shall cause the
Termination Disbursement to be deposited in the Series 2003-4 Cash Collateral
Account.

          (d)    TERMINATION DATE DEMANDS ON THE SERIES 2003-4 LETTERS OF
CREDIT. Prior to 10:00 a.m. (New York City time) on the Business Day immediately
succeeding the Series 2003-4 Letter of Credit Termination Date, the
Administrator shall determine the Series 2003-4 Demand Note Payment Amount, if
any, as of the Series 2003-4 Letter of Credit Termination Date and, if the
Series 2003-4 Demand Note Payment Amount is greater than zero, instruct the
Trustee in writing to draw on the Series 2003-4 Letters of Credit. Upon receipt
of any such notice by the Trustee on or prior to 11:00 a.m. (New York City time)
on a Business Day, the Trustee shall, by 12:00 noon (New York City time) on such
Business Day draw an amount equal to the lesser of (i) the Series 2003-4 Demand
Note Payment Amount and (ii) the Series 2003-4 Letter of Credit Liquidity Amount
on the Series 2003-4 Letters of Credit by presenting to each Series 2003-4
Letter of Credit Provider (with a copy to the Surety Provider) a draft
accompanied by a Certificate of Termination Date Demand and shall cause the
Termination Date Disbursement to be deposited in the Series 2003-4 Cash
Collateral Account; PROVIDED, HOWEVER, that if the Series 2003-4 Cash Collateral
Account has been established and funded, the Trustee shall draw an amount equal
to the product of (a) 100% MINUS the Series 2003-4 Cash Collateral Percentage
and (b) the lesser of the amounts referred to in clause (i) and (ii) on such
Business Day on the Series 2003-4 Letters of Credit as calculated by the
Administrator and provided in writing to the Trustee and the Surety Provider.

          (e)    DRAWS ON THE SERIES 2003-4 LETTERS OF CREDIT. If there is more
than one Series 2003-4 Letter of Credit on the date of any draw on the Series
2003-4 Letters of Credit pursuant to the terms of this Supplement, the
Administrator shall instruct the Trustee, in writing, to draw on each Series
2003-4 Letter of Credit in an amount equal to the Pro Rata Share of the Series
2003-4 Letter of Credit Provider issuing such Series 2003-4 Letter of Credit of
the amount of such draw on the Series 2003-4 Letters of Credit.

          (f)    ESTABLISHMENT OF SERIES 2003-4 CASH COLLATERAL ACCOUNT. On or
prior to the date of any drawing under a Series 2003-4 Letter of Credit pursuant
to Section 2.8(b), (c) or (d) above, AFC-II shall establish and maintain in the
name of the Trustee for the benefit of the Series 2003-4 Noteholders, each
Series 2003-4 Interest Rate Swap Counterparty and the Surety Provider, or cause
to be established and maintained, an account (the "SERIES 2003-4 CASH COLLATERAL
ACCOUNT"), bearing a designation clearly indicating that the funds deposited
therein are held for the benefit of the Series 2003-4 Noteholders, each Series
2003-4 Interest Rate Swap Counterparty and the Surety Provider. The Series
2003-4 Cash Collateral Account shall be maintained (i) with a Qualified
Institution, or (ii) as a segregated trust account with the corporate trust
department of a depository institution or trust company having corporate trust
powers and acting as trustee for funds deposited in the Series 2003-4 Cash
Collateral Account; PROVIDED, HOWEVER, that if at any time such Qualified
Institution is no longer a Qualified Institution or the

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credit rating of any securities issued by such depository institution or trust
company shall be reduced to below "BBB-" by Standard & Poor's or "Baa3" by
Moody's, then AFC-II shall, within 30 days of such reduction, establish a new
Series 2003-4 Cash Collateral Account with a new Qualified Institution or a new
segregated trust account with the corporate trust department of a depository
institution or trust company having corporate trust powers and acting as trustee
for funds deposited in the Series 2003-4 Cash Collateral Account. If a new
Series 2003-4 Cash Collateral Account is established, AFC-II shall instruct the
Trustee in writing to transfer all cash and investments from the non-qualifying
Series 2003-4 Cash Collateral Account into the new Series 2003-4 Cash Collateral
Account.

          (g)    ADMINISTRATION OF THE SERIES 2003-4 CASH COLLATERAL ACCOUNT.
AFC-II may instruct (by standing instructions or otherwise) the institution
maintaining the Series 2003-4 Cash Collateral Account to invest funds on deposit
in the Series 2003-4 Cash Collateral Account from time to time in Permitted
Investments; PROVIDED, HOWEVER, that any such investment shall mature not later
than the Business Day prior to the Distribution Date following the date on which
such funds were received, unless any Permitted Investment held in the Series
2003-4 Cash Collateral Account is held with the Paying Agent, in which case such
investment may mature on such Distribution Date so long as such funds shall be
available for withdrawal on or prior to such Distribution Date. All such
Permitted Investments will be credited to the Series 2003-4 Cash Collateral
Account and any such Permitted Investments that constitute (i) physical property
(and that is not either a United States security entitlement or a security
entitlement) shall be physically delivered to the Trustee; (ii) United States
security entitlements or security entitlements shall be controlled (as defined
in Section 8-106 of the New York UCC) by the Trustee pending maturity or
disposition, and (iii) uncertificated securities (and not United States security
entitlements) shall be delivered to the Trustee by causing the Trustee to become
the registered holder of such securities. The Trustee shall, at the expense of
AFC-II, take such action as is required to maintain the Trustee's security
interest in the Permitted Investments credited to the Series 2003-4 Cash
Collateral Account. AFC-II shall not direct the Trustee to dispose of (or permit
the disposal of) any Permitted Investments prior to the maturity thereof to the
extent such disposal would result in a loss of principal of such Permitted
Investment. In the absence of written investment instructions hereunder, funds
on deposit in the Series 2003-4 Cash Collateral Account shall remain uninvested.

          (h)    EARNINGS FROM SERIES 2003-4 CASH COLLATERAL ACCOUNT. All
interest and earnings (net of losses and investment expenses) paid on funds on
deposit in the Series 2003-4 Cash Collateral Account shall be deemed to be on
deposit therein and available for distribution.

          (i)    SERIES 2003-4 CASH COLLATERAL ACCOUNT SURPLUS. In the event
that the Series 2003-4 Cash Collateral Account Surplus on any Distribution Date
(or, after the Series 2003-4 Letter of Credit Termination Date, on any date) is
greater than zero, the Trustee, acting in accordance with the written
instructions (a copy of which shall be provided by the Administrator to the
Surety Provider) of the Administrator, shall withdraw from the Series 2003-4
Cash Collateral Account an amount equal to the Series 2003-4 Cash Collateral
Account Surplus and shall pay such amount: FIRST, to the Series 2003-4 Letter of
Credit Providers to the extent of any unreimbursed drawings under the related
Series 2003-4 Reimbursement Agreement, for application in accordance with the
provisions of the related Series 2003-4 Reimbursement Agreement, and, SECOND, to
AFC-II any remaining amount.

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          (j)    POST-SERIES 2003-4 LETTER OF CREDIT TERMINATION DATE
WITHDRAWALS FROM THE SERIES 2003-4 CASH COLLATERAL ACCOUNT. If the Surety
Provider notifies the Trustee in writing that the Surety Provider shall have
paid a Preference Amount (as defined in the Surety Bond) under the Surety Bond,
subject to the satisfaction of the conditions set forth in the next succeeding
sentence, the Trustee shall withdraw from the Series 2003-4 Cash Collateral
Account and pay to the Surety Provider an amount equal to the lesser of (i) the
Series 2003-4 Available Cash Collateral Account Amount on such date and (ii)
such Preference Amount. Prior to any withdrawal from the Series 2003-4 Cash
Collateral Account pursuant to this Section 2.8(j), the Trustee shall have
received a certified copy of the order requiring the return of such Preference
Amount.

          (k)    TERMINATION OF SERIES 2003-4 CASH COLLATERAL ACCOUNT. Upon the
termination of this Supplement in accordance with its terms, the Trustee, acting
in accordance with the written instructions of the Administrator, after the
prior payment of all amounts owing to the Series 2003-4 Noteholders and to the
Surety Provider and payable from the Series 2003-4 Cash Collateral Account as
provided herein, shall withdraw from the Series 2003-4 Cash Collateral Account
all amounts on deposit therein (to the extent not withdrawn pursuant to Section
2.8(i) above) and shall pay such amounts: FIRST, to the Series 2003-4 Letter of
Credit Providers to the extent of any unreimbursed drawings under the related
Series 2003-4 Reimbursement Agreement, for application in accordance with the
provisions of the related Series 2003-4 Reimbursement Agreement, and, SECOND, to
AFC-II any remaining amount.

          Section 2.9 SERIES 2003-4 DISTRIBUTION ACCOUNT (a) ESTABLISHMENT OF
SERIES 2003-4 DISTRIBUTION ACCOUNT. The Trustee shall establish and maintain in
the name of the Series 2003-4 Agent for the benefit of the Series 2003-4
Noteholders, each Series 2003-4 Interest Rate Swap Counterparty and the Surety
Provider, or cause to be established and maintained, an account (the "SERIES
2003-4 DISTRIBUTION ACCOUNT"), bearing a designation clearly indicating that the
funds deposited therein are held for the benefit of the Series 2003-4
Noteholders, each Series 2003-4 Interest Rate Swap Counterparty and the Surety
Provider. The Series 2003-4 Distribution Account shall be maintained (i) with a
Qualified Institution, or (ii) as a segregated trust account with the corporate
trust department of a depository institution or trust company having corporate
trust powers and acting as trustee for funds deposited in the Series 2003-4
Distribution Account; PROVIDED, HOWEVER, that if at any time such Qualified
Institution is no longer a Qualified Institution or the credit rating of any
securities issued by such depositary institution or trust company shall be
reduced to below "BBB-" by Standard & Poor's or "Baa3" by Moody's, then AFC-II
shall, within 30 days of such reduction, establish a new Series 2003-4
Distribution Account with a new Qualified Institution. If the Series 2003-4
Distribution Account is not maintained in accordance with the previous sentence,
AFC-II shall establish a new Series 2003-4 Distribution Account, within ten (10)
Business Days after obtaining knowledge of such fact, which complies with such
sentence, and shall instruct the Series 2003-4 Agent in writing to transfer all
cash and investments from the non-qualifying Series 2003-4 Distribution Account
into the new Series 2003-4 Distribution Account. Initially, the Series 2003-4
Distribution Account will be established with The Bank of New York.

          (b)    ADMINISTRATION OF THE SERIES 2003-4 DISTRIBUTION ACCOUNT. The
Administrator may instruct the institution maintaining the Series 2003-4
Distribution Account to invest funds on deposit in the Series 2003-4
Distribution Account from time to time in Permitted

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Investments; PROVIDED, HOWEVER, that any such investment shall mature not later
than the Business Day prior to the Distribution Date following the date on which
such funds were received, unless any Permitted Investment held in the Series
2003-4 Distribution Account is held with the Paying Agent, then such investment
may mature on such Distribution Date and such funds shall be available for
withdrawal on or prior to such Distribution Date. All such Permitted Investments
will be credited to the Series 2003-4 Distribution Account and any such
Permitted Investments that constitute (i) physical property (and that is not
either a United States security entitlement or a security entitlement) shall be
physically delivered to the Trustee; (ii) United States security entitlements or
security entitlements shall be controlled (as defined in Section 8-106 of the
New York UCC) by the Trustee pending maturity or disposition, and (iii)
uncertificated securities (and not United States security entitlements) shall be
delivered to the Trustee by causing the Trustee to become the registered holder
of such securities.

          (c)    EARNINGS FROM SERIES 2003-4 DISTRIBUTION ACCOUNT. All interest
and earnings (net of losses and investment expenses) paid on funds on deposit in
the Series 2003-4 Distribution Account shall be deemed to be on deposit and
available for distribution.

          (d)    SERIES 2003-4 DISTRIBUTION ACCOUNT CONSTITUTES ADDITIONAL
COLLATERAL FOR SERIES 2003-4 NOTES. In order to secure and provide for the
repayment and payment of the AFC-II Obligations with respect to the Series
2003-4 Notes, AFC-II hereby grants a security interest in and assigns, pledges,
grants, transfers and sets over to the Series 2003-4 Agent, for the benefit of
the Series 2003-4 Noteholders, each Series 2003-4 Interest Rate Swap
Counterparty and the Surety Provider, all of AFC-II's right, title and interest
in and to the following (whether now or hereafter existing or acquired): (i) the
Series 2003-4 Distribution Account, including any security entitlement thereto;
(ii) all funds on deposit therein from time to time; (iii) all certificates and
instruments, if any, representing or evidencing any or all of the Series 2003-4
Distribution Account or the funds on deposit therein from time to time; (iv) all
investments made at any time and from time to time with monies in the Series
2003-4 Distribution Account, whether constituting securities, instruments,
general intangibles, investment property, financial assets or other property;
(v) all interest, dividends, cash, instruments and other property from time to
time received, receivable or otherwise distributed in respect of or in exchange
for the Series 2003-4 Distribution Account, the funds on deposit therein from
time to time or the investments made with such funds; and (vi) all proceeds of
any and all of the foregoing, including, without limitation, cash (the items in
the foregoing clauses (i) through (vi) are referred to, collectively, as the
"SERIES 2003-4 DISTRIBUTION ACCOUNT COLLATERAL"). The Series 2003-4 Agent shall
possess all right, title and interest in all funds on deposit from time to time
in the Series 2003-4 Distribution Account and in and to all proceeds thereof,
and shall be the only person authorized to originate entitlement orders in
respect of the Series 2003-4 Distribution Account. The Series 2003-4
Distribution Account Collateral shall be under the sole dominion and control of
the Series 2003-4 Agent for the benefit of the Series 2003-4 Noteholders, each
Series 2003-4 Interest Rate Swap Counterparty and the Surety Provider. The
Series 2003-4 Agent hereby agrees (i) to act as the securities intermediary (as
defined in Section 8-102(a)(14) of the New York UCC) with respect to the Series
2003-4 Distribution Account; (ii) that each item of property (whether investment
property, financial asset, security, instrument or cash) credited to the Series
2003-4 Distribution Account shall be treated as a financial asset (as defined in
Section 8-102(a)(9) of the New York UCC) and (iii) to comply with any
entitlement order (as defined in Section 8-102(a)(8) of the New York UCC) issued
by the Trustee.

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          Section 2.10 SERIES 2003-4 INTEREST RATE SWAPS. (a) On the Series
2003-4 Closing Date, AFC-II shall enter into one or more interest rate swaps
acceptable to the Surety Provider in respect of the Class A-1 Notes satisfying
the requirements of clause (i) below, one or more interest rate swaps acceptable
to the Surety Provider in respect of the Class A-3 Notes satisfying the
requirements of clause (ii) below and one or more interest rate swaps acceptable
to the Surety Provider in respect of the Class A-4 Notes satisfying the
requirements of clause (iii) below, in each case from a Qualified Interest Rate
Swap Counterparty (each a "SERIES 2003-4 INTEREST RATE SWAP"):

          (i) The Series 2003-4 Interest Rate Swap in respect of the Class A-1
Notes shall have an aggregate initial notional amount equal to the Class A-1
Initial Invested Amount. The aggregate notional amount of such Series 2003-4
Interest Rate Swap shall be reduced pursuant to the terms of such Series 2003-4
Interest Rate Swap but shall not at any time be less than the Class A-1 Invested
Amount. The fixed rate of such Series 2003-4 Interest Rate Swap and any
replacement thereof shall not be greater than 1.637%.

          (ii) The Series 2003-4 Interest Rate Swap in respect of the Class A-3
Notes shall have an aggregate initial notional amount equal to the Class A-3
Initial Invested Amount. The aggregate notional amount of such Series 2003-4
Interest Rate Swap shall be reduced pursuant to the terms of such Series 2003-4
Interest Rate Swap but shall not at any time be less than the Class A-3 Invested
Amount. The fixed rate of such Series 2003-4 Interest Rate Swap and any
replacement thereof shall not be greater than 2.365%.

          (iii) The Series 2003-4 Interest Rate Swap in respect of the Class A-4
Notes shall have an aggregate initial notional amount equal to the Class A-4
Initial Invested Amount. The aggregate notional amount of such Series 2003-4
Interest Rate Swap shall be reduced pursuant to the terms of such Series 2003-4
Interest Rate Swap but shall not at any time be less than the Class A-4 Invested
Amount. The fixed rate of such Series 2003-4 Interest Rate Swap and any
replacement thereof shall not be greater than 2.919%.

          (b)    REPLACEMENT OF ANY SERIES 2003-4 INTEREST RATE SWAP. If, at any
time, a Series 2003-4 Interest Rate Swap Counterparty is not a Qualified
Interest Rate Swap Counterparty, then AFC-II will cause such Interest Rate Swap
Counterparty within 30 days following such occurrence, at the Series 2003-4
Interest Rate Swap Counterparty's expense, to do either of the following (i)
obtain a replacement interest rate swap on substantially the same terms as the
Series 2003-4 Interest Rate Swap being replaced from a Qualified Interest Rate
Swap Counterparty and simultaneously with such replacement, AFC-II shall
terminate the Series 2003-4 Interest Rate Swap being replaced or (ii) enter into
any arrangement satisfactory to Standard & Poor's, Moody's and the Surety
Provider, which is sufficient to maintain or restore the immediately prior
Shadow Rating; PROVIDED, HOWEVER, that no termination of any Series 2003-4
Interest Rate Swap shall occur until AFC-II has entered into a replacement
Series 2003-4 Interest Rate Swap. Each Series 2003-4 Interest Rate Swap must
provide that if such Series 2003-4 Interest Rate Swap Counterparty thereto is
required to take any of the actions described in clauses (i) or (ii) of the
preceding sentence and such action is not taken within 30 days, then such Series
2003- 4 Interest Rate Swap Counterparty must, until a replacement Series 2003-4
Interest Rate Swap is executed and in effect, collateralize its obligations
under such Series 2003-4 Interest Rate Swap in an amount equal to the greatest
of (i) the marked to market value of such

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Series 2003-4 Interest Rate Swap, (ii) the next payment due from such Series
2003-4 Interest Rate Swap Counterparty and (iii) 1% of the notional amount of
such Series 2003-4 Interest Rate Swap.

          (c)    To secure payment of all AFC-II Obligations with respect to the
Series 2003-4 Notes, AFC-II grants a security interest in, and assigns, pledges,
grants, transfers and sets over to the Series 2003-4 Agent, for the benefit of
the Series 2003-4 Noteholders and the Surety Provider, all of AFC-II's right,
title and interest in the Series 2003-4 Interest Rate Swaps and all proceeds
thereof (the "SERIES 2003-4 INTEREST RATE SWAP COLLATERAL"). AFC-II shall
require all Series 2003-4 Interest Rate Swap Proceeds to be paid to, and the
Trustee shall allocate all Series 2003-4 Interest Rate Swap Proceeds to, the
Series 2003-4 Accrued Interest Account of the Series 2003-4 Collection Account.

          Section 2.11 SERIES 2003-4 ACCOUNTS PERMITTED INVESTMENTS. AFC-II
shall not, and shall not permit, funds on deposit in the Series 2003-4 Accounts
to be invested in:

          (i)    Permitted Investments that do not mature at least one Business
     Day before the next Distribution Date;

          (ii)   demand deposits, time deposits or certificates of deposit with
     a maturity in excess of 360 days;

          (iii)  commercial paper which is not rated "P-1" by Moody's;

          (iv)   money market funds or eurodollar time deposits which are not
     rated at least "AAA" by Standard & Poor's;

          (v)    eurodollar deposits that are not rated "P-1" by Moody's or that
     are with financial institutions not organized under the laws of a G-7
     nation; or

          (vi)   any investment, instrument or security not otherwise listed in
     clause (i) through (vi) of the definition of "Permitted Investments" in the
     Base Indenture that is not approved in writing by the Surety Provider.

          Section 2.12 SERIES 2003-4 DEMAND NOTES CONSTITUTE ADDITIONAL
COLLATERAL FOR SERIES 2003-4 NOTES.

          In order to secure and provide for the repayment and payment of the
AFC-II Obligations with respect to the Series 2003-4 Notes, AFC-II hereby grants
a security interest in and assigns, pledges, grants, transfers and sets over to
the Trustee, for the benefit of the Series 2003-4 Noteholders, each Series
2003-4 Interest Rate Swap Counterparty and the Surety Provider, all of AFC-II's
right, title and interest in and to the following (whether now or hereafter
existing or acquired): (i) the Series 2003-4 Demand Notes; (ii) all certificates
and instruments, if any, representing or evidencing the Series 2003-4 Demand
Notes; and (iii) all proceeds of any and all of the foregoing, including,
without limitation, cash. On the date hereof, AFC-II shall deliver to the
Trustee, for the benefit of the Series 2003-4 Noteholders, each Series 2003-4
Interest Rate Swap Counterparty and the Surety Provider, each Series 2003-4
Demand Note, endorsed in blank. The Trustee, for the benefit of the Series
2003-4 Noteholders, each

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Series 2003-4 Interest Rate Swap Counterparty and the Surety Provider, shall be
the only Person authorized to make a demand for payments on the Series 2003-4
Demand Notes.

                                   ARTICLE III

                               AMORTIZATION EVENTS

          In addition to the Amortization Events set forth in Section 9.1 of the
Base Indenture, any of the following shall be an Amortization Event with respect
to the Series 2003-4 Notes and collectively shall constitute the Amortization
Events set forth in Section 9.1(n) of the Base Indenture with respect to the
Series 2003-4 Notes (without notice or other action on the part of the Trustee
or any holders of the Series 2003-4 Notes):

          (a)    a Series 2003-4 Enhancement Deficiency shall occur and continue
     for at least two (2) Business Days; PROVIDED, HOWEVER, that such event or
     condition shall not be an Amortization Event if during such two (2)
     Business Day period such Series 2003-4 Enhancement Deficiency shall have
     been cured in accordance with the terms and conditions of the Indenture and
     the Related Documents;

          (b)    the Series 2003-4 Liquidity Amount shall be less than the
     Series 2003-4 Required Liquidity Amount for at least two (2) Business Days;
     PROVIDED, HOWEVER, that such event or condition shall not be an
     Amortization Event if during such two (2) Business Day period such
     insufficiency shall have been cured in accordance with the terms and
     conditions of the Indenture and the Related Documents;

          (c)    the Collection Account, the Series 2003-4 Collection Account,
     the Series 2003-4 Excess Collection Account or the Series 2003-4 Reserve
     Account shall be subject to an injunction, estoppel or other stay or a Lien
     (other than Liens permitted under the Related Documents);

          (d)    all principal of and interest on the Class A-1 Notes is not
     paid in full on or before the Class A-1 Expected Final Distribution Date,
     all principal of and interest on the Class A-2 Notes and the Class A-3
     Notes is not paid in full on or before the Five-Year Notes Expected Final
     Distribution Date or all principal of and interest on the Class A-4 Notes
     is not paid in full on or before the Class A-4 Expected Final Distribution
     Date;

          (e)    the Trustee shall make a demand for payment under the Surety
     Bond;

          (f)    the occurrence of an Event of Bankruptcy with respect to the
     Surety Provider;

          (g)    the Surety Provider fails to pay a demand for payment in
     accordance with the requirements of the Surety Bond;

          (h)    any Series 2003-4 Letter of Credit shall not be in full force
     and effect for at least two (2) Business Days and (x) either a Series
     2003-4 Enhancement Deficiency would result from excluding such Series
     2003-4 Letter of Credit from the Series 2003-4

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     Enhancement Amount or (y) the Series 2003-4 Liquidity Amount, excluding
     therefrom the available amount under such Series 2003-4 Letter of Credit,
     would be less than the Series 2003-4 Required Liquidity Amount;

          (i)    from and after the funding of the Series 2003-4 Cash Collateral
     Account, the Series 2003-4 Cash Collateral Account shall be subject to an
     injunction, estoppel or other stay or a Lien (other than Liens permitted
     under the Related Documents) for at least two (2) Business Days and either
     (x) a Series 2003-4 Enhancement Deficiency would result from excluding the
     Series 2003-4 Available Cash Collateral Account Amount from the Series
     2003-4 Enhancement Amount or (y) the Series 2003-4 Liquidity Amount,
     excluding therefrom the Series 2003-4 Available Cash Collateral Amount,
     would be less than the Series 2003-4 Required Liquidity Amount; and

          (j)    an Event of Bankruptcy shall have occurred with respect to any
     Series 2003-4 Letter of Credit Provider or any Series 2003-4 Letter of
     Credit Provider repudiates its Series 2003-4 Letter of Credit or refuses to
     honor a proper draw thereon and either (x) a Series 2003-4 Enhancement
     Deficiency would result from excluding such Series 2003-4 Letter of Credit
     from the Series 2003-4 Enhancement Amount or (y) the Series 2003-4
     Liquidity Amount, excluding therefrom the available amount under such
     Series 2003-4 Letter of Credit, would be less than the Series 2003-4
     Required Liquidity Amount.

                                   ARTICLE IV

                      RIGHT TO WAIVE PURCHASE RESTRICTIONS

          Notwithstanding any provision to the contrary in the Indenture or the
Related Documents, upon the Trustee's receipt of notice from any Lessee, any
Borrower or AFC-II (i) to the effect that a Manufacturer Program is no longer an
Eligible Manufacturer Program and that, as a result, the Series 2003-4 Maximum
Non-Program Vehicle Amount is or will be exceeded or (ii) that the Lessees, the
Borrowers and AFC-II have determined to increase any Series 2003-4 Maximum
Amount, (such notice, a "WAIVER REQUEST"), each Series 2003-4 Noteholder may, at
its option, waive the Series 2003-4 Maximum Non-Program Vehicle Amount or any
other Series 2003-4 Maximum Amount (collectively, a "WAIVABLE AMOUNT") if (i) no
Amortization Event exists, (ii) the Requisite Noteholders and the Surety
Provider consent to such waiver and (iii) 60 days' prior written notice of such
proposed waiver is provided to the Rating Agencies by the Trustee.

          Upon receipt by the Trustee of a Waiver Request (a copy of which the
Trustee shall promptly provide to the Rating Agencies), all amounts which would
otherwise be allocated to the Series 2003-4 Excess Collection Account
(collectively, the "DESIGNATED AMOUNTS") from the date the Trustee receives a
Waiver Request through the Consent Period Expiration Date will be held by the
Trustee in the Series 2003-4 Collection Account for ratable distribution as
described below.

          Within ten (10) Business Days after the Trustee receives a Waiver
Request, the Trustee shall furnish notice thereof to the Series 2003-4
Noteholders and the Surety Provider,

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which notice shall be accompanied by a form of consent (each a "CONSENT") in the
form of EXHIBIT B hereto by which the Series 2003-4 Noteholders may, on or
before the Consent Period Expiration Date, consent to waiver of the applicable
Waivable Amount. If the Trustee receives the consent of the Surety Provider and
Consents from the Requisite Noteholders agreeing to waiver of the applicable
Waivable Amount within forty-five (45) days after the Trustee notifies the
Series 2003-4 Noteholders of a Waiver Request (the day on which such forty-five
(45) day period expires, the "CONSENT PERIOD EXPIRATION DATE"), (i) the
applicable Waivable Amount shall be deemed waived by the consenting Series
2003-4 Noteholders, (ii) the Trustee will distribute the Designated Amounts as
set forth below and (iii) the Trustee shall promptly (but in any event within
two days) provide the Rating Agency with notice of such waiver. Any Series
2003-4 Noteholder from whom the Trustee has not received a Consent on or before
the Consent Period Expiration Date will be deemed not to have consented to such
waiver.

          If the Trustee receives Consents from the Requisite Noteholders on or
before the Consent Period Expiration Date, then on the immediately following
Distribution Date, the Trustee will pay the Designated Amounts as follows:

          (i)    to the non-consenting Series 2003-4 Noteholders, if any, PRO
     RATA up to the amount required to pay all Series 2003-4 Notes held by such
     non-consenting Series 2003-4 Noteholders in full; and

          (ii)   any remaining Designated Amounts to the Series 2003-4 Excess
     Collection Account.

          If the amount paid pursuant to clause (i) of the preceding paragraph
is not paid in full on the date specified therein, then on each day following
such Distribution Date, the Administrator will allocate to the Series 2003-4
Collection Account on a daily basis all Designated Amounts collected on such
day. On each following Distribution Date, the Trustee will withdraw a portion of
such Designated Amounts from the Series 2003-4 Collection Account and deposit
the same in the Series 2003-4 Distribution Account for distribution as follows:

          (a)    to the non-consenting Series 2003-4 Noteholders, if any, PRO
     RATA an amount equal to the Designated Amounts in the Series 2003-4
     Collection Account as of the applicable Determination Date up to the
     aggregate outstanding principal balance of the Series 2003-4 Notes held by
     the non-consenting Series 2003-4 Noteholders; and

          (b) any remaining Designated Amounts to the Series 2003-4 Excess
     Collection Account.

          If the Requisite Noteholders or the Surety Provider do not timely
consent to such waiver, the Designated Amounts will be re-allocated to the
Series 2003-4 Excess Collection Account for allocation and distribution in
accordance with the terms of the Indenture and the Related Documents.

          In the event that the Series 2003-4 Rapid Amortization Period shall
commence after receipt by the Trustee of a Waiver Request, all such Designated
Amounts will thereafter be considered Principal Collections allocated to the
Series 2003-4 Noteholders.

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                                    ARTICLE V

                           FORM OF SERIES 2003-4 NOTES

          Section 5.1 RESTRICTED GLOBAL SERIES 2003-4 NOTES. The Series 2003-4
Notes to be issued in the United States will be issued in book-entry form and
represented by one or more permanent global Notes in fully registered form
without interest coupons (each, a "RESTRICTED GLOBAL CLASS A-1 NOTE", a
"RESTRICTED GLOBAL CLASS A-2 NOTE", a "RESTRICTED GLOBAL CLASS A-3 NOTE" or a
"RESTRICTED GLOBAL CLASS A-4 NOTE", as the case may be), substantially in the
forms set forth in EXHIBIT A-1-1, A-2-1, A-3-1 AND A-4-1 hereto, with such
legends as may be applicable thereto as set forth in the Base Indenture, and
will be sold only in the United States (1) initially to institutional accredited
investors within the meaning of Regulation D under the Securities Act in
reliance on an exemption from the registration requirements of the Securities
Act and (2) thereafter to qualified institutional buyers within the meaning of,
and in reliance on, Rule 144A under the Securities Act and shall be deposited on
behalf of the purchasers of the Series 2003-4 Notes represented thereby, with
the Trustee as custodian for DTC, and registered in the name of Cede as DTC's
nominee, duly executed by AFC-II and authenticated by the Trustee in the manner
set forth in Section 2.4 of the Base Indenture.

          Section 5.2 TEMPORARY GLOBAL SERIES 2003-4 NOTES; PERMANENT GLOBAL
SERIES 2003-4 NOTES. The Series 2003-4 Notes to be issued outside the United
States will be issued and sold in transactions outside the United States in
reliance on Regulation S under the Securities Act, as provided in the applicable
note purchase agreement, and shall initially be issued in the form of one or
more temporary notes in registered form without interest coupons (each, a
"TEMPORARY GLOBAL CLASS A-1 NOTE", a "TEMPORARY GLOBAL CLASS A-2 NOTE", a
"TEMPORARY GLOBAL CLASS A-3 NOTE" or a "TEMPORARY GLOBAL CLASS A-4 NOTE", as the
case may be), substantially in the forms set forth in EXHIBITS A-1-2, A-2-2,
A-3-2 AND A-4-2 hereto, which shall be deposited on behalf of the purchasers of
the Series 2003-4 Notes represented thereby with a custodian for, and registered
in the name of a nominee of DTC, for the account of Euroclear Bank S.A./N.V., as
operator of the Euroclear System ("EUROCLEAR") or for Clearstream Banking,
societe anonyme ("CLEARSTREAM"), duly executed by AFC-II and authenticated by
the Trustee in the manner set forth in Section 2.4 of the Base Indenture.
Interests in a Temporary Global Class A-1 Note, a Temporary Global Class A-2
Note, a Temporary Global Class A-3 Note or a Temporary Global Class A-4 Note
will be exchangeable, in whole or in part, for interests in one or more
permanent global notes in registered form without interest coupons (each, a
"PERMANENT GLOBAL CLASS A-1 NOTE", a "PERMANENT GLOBAL CLASS A-2 NOTE", a
"PERMANENT GLOBAL CLASS A-3 NOTE" or a "PERMANENT GLOBAL CLASS A-4 NOTE", as the
case may be), substantially in the form of EXHIBITS A-1-3, A-2-3, A-3-3 AND
A-3-4 hereto, in accordance with the provisions of such Temporary Global Class
A-1 Note, Temporary Global Class A-2 Note, Temporary Global Class A-3 Note or
Temporary Global Class A-4 Note and the Base Indenture (as modified by this
Supplement). Interests in a Permanent Global Class A-1 Note, a Permanent Global
Class A-2 Note, a Permanent Global Class A-3 Note or a Permanent Global Class
A-4 Note will be exchangeable for definitive Class A-1 Notes, definitive Class
A-2 Notes, definitive Class A-3 Notes or definitive Class A-4 Notes, as the case
may be, in accordance with the provisions of such Permanent Global Class A-1
Note, Permanent Global Class A-2 Note, Permanent Global Class A-3 Note or
Permanent Global Class A-4 Note and the Base Indenture (as modified by this
Supplement).

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                                   ARTICLE VI

                                     GENERAL

          Section 6.1 OPTIONAL REPURCHASE. Each Class of the Series 2003-4 Notes
shall be subject to repurchase by AFC-II at its option in accordance with
Section 6.3 of the Base Indenture on any Distribution Date after the Class A-1
Invested Amount, the Class A-2 Invested Amount, the Class A-3 Invested Amount or
the Class A-4 Invested Amount, as the case may be, is reduced to an amount less
than or equal to 10% of the Class A-1 Initial Invested Amount, the Class A-2
Initial Invested Amount, the Class A-3 Initial Invested Amount or the Class A-4
Initial Invested Amount, as the case may be (the "SERIES 2003-4 REPURCHASE
AMOUNT"); PROVIDED, HOWEVER, that as a condition precedent to any such optional
repurchase, on or prior to the Distribution Date on which any Series 2003-4 Note
is repurchased by AFC-II pursuant to this Section 6.1, AFC-II shall have paid
the Surety Provider all Surety Provider Fees and all other Surety Provider
Reimbursement Amounts due and unpaid as of such Distribution Date. The
repurchase price for any Series 2003-4 Note shall equal the aggregate
outstanding principal balance of such Series 2003-4 Note (determined after
giving effect to any payments of principal and interest on such Distribution
Date), plus accrued and unpaid interest on such outstanding principal balance.

          Section 6.2 INFORMATION. The Trustee shall provide to the Series
2003-4 Noteholders, or their designated agent, and the Surety Provider copies of
all information furnished to the Trustee or AFC-II pursuant to the Related
Documents, as such information relates to the Series 2003-4 Notes or the Series
2003-4 Collateral. In connection with any Preference Amount payable under the
Surety Bond, the Trustee shall furnish to the Surety Provider its records
evidencing the distributions of principal of and interest on the Series 2003-4
Notes that have been made and subsequently recovered from Series 2003-4
Noteholders and the dates on which such payments were made.

          Section 6.3 EXHIBITS. The following exhibits attached hereto
supplement the exhibits included in the Indenture.

          EXHIBIT A-1-1:          Form of Restricted Global Class A-1 Note
          EXHIBIT A-1-2:          Form of Temporary Global Class A-1 Note
          EXHIBIT A-1-3:          Form of Permanent Global Class-1 Note
          EXHIBIT A-2-1           Form of Restricted Global Class A-2 Note
          EXHIBIT A-2-2           Form of Temporary Global Class A-2 Note
          EXHIBIT A-2-3           Form of Permanent Global Class A-2 Note
          EXHIBIT A-3-1           Form of Restricted Global Class A-3 Note
          EXHIBIT A-3-2           Form of Temporary Global Class A-3 Note
          EXHIBIT A-3-3           Form of Permanent Global Class A-3 Note
          EXHIBIT A-4-1           Form of Restricted Global Class A-4 Note
          EXHIBIT A-4-2           Form of Temporary Global Class A-4 Note
          EXHIBIT A-4-3           Form of Permanent Global Class A-4 Note
          EXHIBIT B:              Form of Consent
          EXHIBIT C:              Form of Series 2003-4 Demand Note
          EXHIBIT D:              Form of Letter of Credit

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          EXHIBIT E:              Form of Lease Payment Deficit Notice
          EXHIBIT F:              Form of Demand Notice

          Section 6.4 RATIFICATION OF BASE INDENTURE. As supplemented by this
Supplement, the Base Indenture is in all respects ratified and confirmed and the
Base Indenture as so supplemented by this Supplement shall be read, taken, and
construed as one and the same instrument.

          Section 6.5 COUNTERPARTS. This Supplement may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all of such counterparts shall together constitute but one and the
same instrument.

          Section 6.6 GOVERNING LAW. This Supplement shall be construed in
accordance with the law of the State of New York, and the obligations, rights
and remedies of the parties hereto shall be determined in accordance with such
law.

          Section 6.7 AMENDMENTS. This Supplement may be modified or amended
from time to time with the consent of the Surety Provider and in accordance with
the terms of the Base Indenture; PROVIDED, HOWEVER, that if, pursuant to the
terms of the Base Indenture or this Supplement, the consent of the Required
Noteholders is required for an amendment or modification of this Supplement,
such requirement shall be satisfied if such amendment or modification is
consented to by the Series 2003-4 Noteholders representing more than 50% of the
aggregate outstanding principal amount of the Series 2003-4 Notes affected
thereby; PROVIDED, FURTHER, that if that consent of the Required Noteholders is
required for a proposed amendment or modification of this Supplement that (i)
affects only the Class A-1 Notes (and does not affect in any material respect
the Class A-2 Notes, the Class A-3 Notes or Class A-4 Notes, as evidenced by an
opinion of counsel to such effect), then such requirement shall be satisfied if
such amendment or modification is consented to by the Class A-1 Noteholders
representing more than 50% of the aggregate outstanding principal amount of the
Class A-1 Notes (without the necessity of obtaining the consent of the Required
Noteholders in respect of the Class A-2 Notes, the Class A-3 Notes or Class A-4
Notes), (ii) affects only the Class A-2 Notes (and does not affect in material
respect the Class A-1 Notes, the Class A-3 Notes or Class A-4 Notes, as
evidenced by an opinion of counsel to such effect), then such requirement shall
be satisfied if such amendment or modification is consented to by the Class A-2
Noteholders representing more than 50% of the aggregate outstanding principal
amount of the Class A-2 Notes (without the necessity of obtaining the consent of
the Required Noteholders in respect of the Class A-1 Notes, the Class A-3 Notes
or Class A-4 Notes), (iii) affects only the Class A-4 Notes (and does not affect
in any material respect the Class A-1 Notes, Class A-2 Notes or the Class A-4
Notes, as evidenced by an opinion of counsel to such effect), then such
requirement shall be satisfied if such amendment or modification is consented to
by the Class A-3 Noteholders representing more than 50% of the aggregate
outstanding principal amount of the Class A-3 Notes (without the necessity of
obtaining the consent of the Required Noteholders in respect of the Class A-1
Notes, Class A-2 Notes or the Class A-4 Notes) and (iv) affects only the Class
A-4 Notes (and does not affect in any material respect the Class A-1 Notes,
Class A-2 Notes or the Class A-3 Notes, as evidenced by an opinion of counsel to
such effect), then such requirement shall be satisfied if such amendment or
modification is consented to by the Class A-4 Noteholders representing more than
50% of the aggregate outstanding principal amount of the Class A-4 Notes
(without the necessity

                                      -51-
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of obtaining the consent of the Required Noteholders in respect of the Class A-1
Notes, Class A-2 Notes or the Class A-3 Notes).

          Section 6.8 DISCHARGE OF INDENTURE. Notwithstanding anything to the
contrary contained in the Base Indenture, no discharge of the Indenture pursuant
to Section 11.1(b) of the Base Indenture will be effective as to the Series
2003-4 Notes without the consent of the Required Noteholders.

          Section 6.9 NOTICE TO SURETY PROVIDER AND RATING AGENCIES. The Trustee
shall provide to the Surety Provider and each Rating Agency a copy of each
notice, opinion of counsel, certificate or other item delivered to, or required
to be provided by, the Trustee pursuant to this Supplement or any other Related
Document. Each such opinion of counsel shall be addressed to the Surety
Provider, shall be from counsel reasonably acceptable to the Surety Provider and
shall be in form and substance reasonably acceptable to the Surety Provider. All
such notices, opinions, certificates or other items delivered to the Surety
Provider shall be forwarded to XL Capital Assurance Inc., 1221 Avenue of the
Americas, New York, New York 10020-1001, Attention: Surveillance, Telephone:
(212) 478-3400.

          Section 6.10 CERTAIN RIGHTS OF SURETY PROVIDER. The Surety Provider
shall be deemed to be an Enhancement Provider entitled to receive confirmation
of the rating on the Series 2003-4 Notes (without regard to the Surety Bond)
pursuant to the definition of "Rating Agency Confirmation Condition." In
addition, the Surety Provider shall be deemed to be an Enhancement Provider
entitled to exercise the consent rights described in clause (ii) of the
definition of "Rating Agency Consent Condition."

          Section 6.11 SURETY PROVIDER DEEMED NOTEHOLDER AND SECURED PARTY.
Except for any period during which a Surety Default is continuing, the Surety
Provider shall be deemed to be the holder of 100% of the Series 2003-4 Notes for
the purposes of giving any consents, waivers, approvals, instructions,
directions, requests, declarations and/or notices pursuant to the Base Indenture
and this Supplement. Any reference in the Base Indenture or the Related
Documents (including, without limitation, in Sections 2.3, 8.14, 9.1, 9.2 or
12.1 of the Base Indenture) to materially, adversely, or detrimentally affecting
the rights or interests of the Noteholders, or words of similar meaning, shall
be deemed, for purposes of the Series 2003-4 Notes, to refer to the rights or
interests of the Surety Provider. The Surety Provider shall constitute an
"Enhancement Provider" with respect to the Series 2003-4 Notes for all purposes
under the Indenture and the other Related Documents. Furthermore, the Surety
Provider shall be deemed to be a "Secured Party" under the Base Indenture and
the Related Documents to the extent of amounts payable to the Surety Provider
pursuant to this Supplement and the Insurance Agreement shall constitute an
"Enhancement Agreement" with respect to the Series 2003-4 Notes for all purposes
under the Indenture and the Related Documents. Moreover, wherever in the Related
Documents money or other property is assigned, conveyed, granted or held for, a
filing is made for, action is taken for or agreed to be taken for, or a
representation or warranty is made for the benefit of the Noteholders, the
Surety Provider shall be deemed to be the Noteholder with respect to 100% of the
Series 2003-4 Notes for such purposes.

          Section 6.12 CAPITALIZATION OF AFC-II. AFC-II agrees that on the
Series 2003-4 Closing Date it will have capitalization in an amount equal to or
greater than 3% of the sum of

                                      -52-
<Page>

                                                                  CONFORMED COPY

(x) the Series 2003-4 Invested Amount and (y) the invested amount of the Series
1998-1 Notes, Series 2000-1 Notes, Series 2000-2 Notes, Series 2000-3 Notes, the
Series 2000-4 Notes, the Series 2001-1 Notes, the Series 2001-2 Notes, the
Series 2002-1 Notes, the Series 2002-2 Notes, the Series 2002-3 Notes, the
Series 2002-4 Notes, the Series 2003-1 Notes, the Series 2003-2 Notes and the
Series 2003-3 Notes.

          Section 6.13 SERIES 2003-4 REQUIRED NON-PROGRAM ENHANCEMENT
PERCENTAGE. AFC-II agrees that it will not make any Loan under any Loan
Agreement to finance the acquisition of any Vehicle by AESOP Leasing, AESOP
Leasing II or ARAC, as the case may be, if, after giving effect to the making of
such Loan, the acquisition of such Vehicle and the inclusion of such Vehicle
under the relevant Lease, the Series 2003-4 Required Non-Program Enhancement
Percentage would exceed 25.0%.

          Section 6.14 THIRD PARTY BENEFICIARY. The Surety Provider and each
Series 2003-4 Interest Rate Swap Counterparty is an express third party
beneficiary of (i) the Base Indenture to the extent of provisions relating to
any Enhancement Provider and (ii) this Supplement.

          Section 6.15 PRIOR NOTICE BY TRUSTEE TO SURETY PROVIDER. Subject to
Section 10.1 of the Base Indenture, the Trustee agrees that, so long as no
Amortization Event shall have occurred and be continuing with respect to any
Series of Notes other than the Series 2003-4 Notes, it shall not exercise any
rights or remedies available to it as a result of the occurrence of an
Amortization Event with respect to the Series 2003-4 Notes (except those set
forth in clauses (f) and (g) of Article III) or a Series 2003-4 Limited
Liquidation Event of Default until after the Trustee has given prior written
notice thereof to the Surety Provider and obtained the direction of the Required
Noteholders with respect to the Series 2003-4 Notes. The Trustee agrees to
notify the Surety Provider promptly following any exercise of rights or remedies
available to it as a result of the occurrence of any Amortization Event or a
Series 2003-4 Limited Liquidation Event of Default.

          Section 6.16 EFFECT OF PAYMENTS BY THE SURETY PROVIDER. Anything
herein to the contrary notwithstanding, any distribution of principal of or
interest on the Series 2003-4 Notes that is made with moneys received pursuant
to the terms of the Surety Bond shall not (except for the purpose of calculating
the Principal Deficit Amount) be considered payment of the Series 2003-4 Notes
by AFC-II. The Trustee acknowledges that, without the need for any further
action on the part of the Surety Provider, (i) to the extent the Surety Provider
makes payments, directly or indirectly, on account of principal of or interest
on the Series 2003-4 Notes to the Trustee for the benefit of the Series 2003-4
Noteholders or to the Series 2003-4 Noteholders (including any Preference
Amounts as defined in the Surety Bond), the Surety Provider will be fully
subrogated to the rights of such Series 2003-4 Noteholders to receive such
principal and interest and will be deemed to the extent of the payments so made
to be a Series 2003-4 Noteholder and (ii) the Surety Provider shall be paid
principal and interest in its capacity as a Series 2003-4 Noteholder until all
such payments by the Surety Provider have been fully reimbursed, but only from
the sources and in the manner provided herein for the distribution of such
principal and interest and in each case only after the Series 2003-4 Noteholders
have received all payments of principal and interest due to them hereunder on
the related Distribution Date.

                                      -53-
<Page>

                                                                  CONFORMED COPY

          Section 6.17 SERIES 2003-4 DEMAND NOTES. Other than pursuant to a
demand thereon pursuant to Section 2.5, AFC-II shall not reduce the amount of
the Series 2003-4 Demand Notes or forgive amounts payable thereunder so that the
outstanding principal amount of the Series 2003-4 Demand Notes after such
reduction or forgiveness is less than the Series 2003-4 Letter of Credit
Liquidity Amount. AFC-II shall not agree to any amendment of the Series 2003-4
Demand Notes without first satisfying the Rating Agency Confirmation Condition
and the Rating Agency Consent Condition.

          Section 6.18 SUBROGATION. In furtherance of and not in limitation of
the Surety Provider's equitable right of subrogation, each of the Trustee and
AFC-II acknowledge that, to the extent of any payment made by the Surety
Provider under the Surety Bond with respect to interest on or principal of the
Series 2003-4 Notes, including any Preference Amount, as defined in the Surety
Bond, the Surety Provider is to be fully subrogated to the extent of such
payment and any additional interest due on any late payment, to the rights of
the Series 2003-4 Noteholders under the Indenture. Each of AFC-II and the
Trustee agree to such subrogation and, further, agree to take such actions as
the Surety Provider may reasonably request in writing to evidence such
subrogation.

          Section 6.19 TERMINATION OF SUPPLEMENT. This Supplement shall cease to
be of further effect when all outstanding Series 2003-4 Notes theretofore
authenticated and issued have been delivered (other than destroyed, lost, or
stolen Series 2003-4 Notes which have been replaced or paid) to the Trustee for
cancellation, AFC-II has paid all sums payable hereunder, the Surety Provider
has been paid all Surety Provider Fees and all other Surety Provider
Reimbursement Amounts due under the Insurance Agreement, the Series 2003-4
Interest Rate Swaps have been terminated and there are no amounts due and owing
thereunder and, if the Series 2003-4 Demand Note Payment Amount on the Series
2003-4 Letter of Credit Termination Date was greater than zero, all amounts have
been withdrawn from the Series 2003-4 Cash Collateral Account in accordance with
Section 2.8(i).

                                      -54-
<Page>

                                                                  CONFORMED COPY

          IN WITNESS WHEREOF, AFC-II and the Trustee have caused this Supplement
to be duly executed by their respective officers thereunto duly authorized as of
the day and year first above written.

                                     AESOP FUNDING II L.L.C.

                                     By:  /s/ Lori Gebron
                                        ----------------------------------------
                                        Title: Vice President

                                     THE BANK OF NEW YORK (as successor in
                                        interest to the corporate trust
                                        administration of Harris Trust and
                                        Savings Bank), as Trustee

                                     By:  /s/ Eric A. Lindahl
                                        ----------------------------------------
                                        Title: Agent

                                     THE BANK OF NEW YORK, as Series 2003-4
                                        Agent

                                     By:  /s/ Eric A. Lindahl
                                        ----------------------------------------
                                        Title: AgentLATTICE SEMICONDUCTOR CORPORATION

 

To

 

U.S. BANK NATIONAL ASSOCIATION

as Trustee

 

 

INDENTURE

 

Dated as of

June 20, 2003

 

 

Zero Coupon Convertible Subordinated Notes due July 1, 2010

 

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
   

  	
  Page

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE ONE DEFINITIONS

  	
   

  	
  1

  	
   

  
	
  Section
  1.1.

  	
  Definitions

  	
   

  	
  1

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE TWO ISSUE, DESCRIPTION, EXECUTION,
  REGISTRATION AND EXCHANGE OF NOTES

  	
   

  	
  7

  	
   

  
	
  Section
  2.1.

  	
  Designation Amount and Issue of Notes

  	
   

  	
  7

  	
   

  
	
  Section
  2.2.

  	
  Form of Notes

  	
   

  	
  8

  	
   

  
	
  Section
  2.3.

  	
  Date and Denomination of Notes; Payments of
  Interest

  	
   

  	
  8

  	
   

  
	
  Section
  2.4.

  	
  Execution of Notes

  	
   

  	
  10

  	
   

  
	
  Section
  2.5.

  	
  Exchange and Registration of Transfer of
  Notes; Restrictions on Transfer; Depositary

  	
   

  	
  10

  	
   

  
	
  Section
  2.6.

  	
  Mutilated, Destroyed, Lost or Stolen Notes

  	
   

  	
  15

  	
   

  
	
  Section
  2.7.

  	
  Temporary Notes

  	
   

  	
  16

  	
   

  
	
  Section
  2.8.

  	
  Cancellation of Notes Paid, Etc.

  	
   

  	
  17

  	
   

  
	
  Section
  2.9.

  	
  CUSIP Numbers

  	
   

  	
  17

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE THREE REDEMPTION OF NOTES

  	
   

  	
  17

  	
   

  
	
  Section 3.1.

  	
  Optional Redemption by the Company

  	
   

  	
  17

  	
   

  
	
  Section
  3.2.

  	
  Notice of Redemptions; Selection of Notes

  	
   

  	
  17

  	
   

  
	
  Section
  3.3.

  	
  Payment of Notes Called for Redemption

  	
   

  	
  19

  	
   

  
	
  Section
  3.4.

  	
  Conversion Arrangement on Call for
  Redemption

  	
   

  	
  19

  	
   

  
	
  Section
  3.5.

  	
  Repurchase at Option of Holders.

  	
   

  	
  20

  	
   

  
	
  Section
  3.6.

  	
  Purchase at the Option of the Holder on the
  Purchase Date

  	
   

  	
  23

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE FOUR SUBORDINATION OF NOTES

  	
   

  	
  25

  	
   

  
	
  Section
  4.1.

  	
  Agreement of Subordination

  	
   

  	
  25

  	
   

  
	
  Section
  4.2.

  	
  Payments to Noteholders

  	
   

  	
  25

  	
   

  
	
  Section
  4.3.

  	
  Subrogation of Notes

  	
   

  	
  28

  	
   

  
	
  Section
  4.4.

  	
  Authorization to Effect Subordination

  	
   

  	
  29

  	
   

  
	
  Section
  4.5.

  	
  Notice to Trustee

  	
   

  	
  29

  	
   

  
	
  Section
  4.6.

  	
  Trustee’s Relation to Senior Indebtedness

  	
   

  	
  29

  	
   

  
	
  Section
  4.7.

  	
  No Impairment of Subordination

  	
   

  	
  30

  	
   

  
	
  Section
  4.8.

  	
  Certain Conversions Not Deemed Payment

  	
   

  	
  30

  	
   

  
	
  Section
  4.9.

  	
  Article Applicable to Paying Agents

  	
   

  	
  30

  	
   

  
	
  Section
  4.10.

  	
  Senior Indebtedness Entitled to Rely

  	
   

  	
  31

  	
   

  
	
  Section
  4.11.

  	
  Reliance on Judicial Order or Certificate
  of Liquidating Agent

  	
   

  	
  31

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE FIVE PARTICULAR COVENANTS OF THE
  COMPANY

  	
   

  	
  31

  	
   

  
	
  Section
  5.1.

  	
  Payment of Principal, Liquidated Damages,
  if any

  	
   

  	
  31

  	
   

  
	
  Section
  5.2.

  	
  Maintenance of Office or Agency

  	
   

  	
  31

  	
   

  
	
  Section
  5.3.

  	
  Appointments to Fill Vacancies in Trustee’s
  Office

  	
   

  	
  32

  	
   

  
	
  Section
  5.4.

  	
  Provisions as to Paying Agent

  	
   

  	
  32

  	
   

  
	
  Section 5.5.

  	
  Existence

  	
   

  	
  33

  	
   

  
	
  Section 5.6.

  	
  Maintenance of Properties

  	
   

  	
  33

  	
   

  
	
  Section
  5.7.

  	
  Payment of Taxes and Other Claims

  	
   

  	
  33

  	
   

  
	
  Section
  5.8.

  	
  Rule 144A Information Requirement

  	
   

  	
  34

  	
   

  
	
  Section
  5.9.

  	
  Stay, Extension and Usury Laws

  	
   

  	
  34

  	
   

  

 

i

 

	
  Section 5.10.

  	
  Compliance
  Certificate

  	
   

  	
  34

  	
   

  
	
  Section
  5.11.

  	
  Liquidated Damages Notice

  	
   

  	
  35

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE SIX NOTEHOLDERS’ LISTS AND REPORTS
  BY THE COMPANY AND THE TRUSTEE

  	
   

  	
  35

  	
   

  
	
  Section
  6.1.

  	
  Noteholders’ Lists

  	
   

  	
  35

  	
   

  
	
  Section
  6.2.

  	
  Preservation and Disclosure of Lists

  	
   

  	
  35

  	
   

  
	
  Section
  6.3.

  	
  Reports by Trustee

  	
   

  	
  35

  	
   

  
	
  Section
  6.4.

  	
  Reports by Company

  	
   

  	
  36

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE SEVEN REMEDIES OF THE TRUSTEE AND
  NOTEHOLDERS UPON AN EVENT OF DEFAULT

  	
   

  	
  36

  	
   

  
	
  Section
  7.1.

  	
  Events of Default

  	
   

  	
  36

  	
   

  
	
  Section
  7.2.

  	
  Payments of Notes on Default; Suit Therefor

  	
   

  	
  37

  	
   

  
	
  Section
  7.3.

  	
  Application of Monies Collected by Trustee

  	
   

  	
  39

  	
   

  
	
  Section 7.4.

  	
  Proceedings by Noteholder

  	
   

  	
  39

  	
   

  
	
  Section
  7.5.

  	
  Proceedings by Trustee

  	
   

  	
  40

  	
   

  
	
  Section
  7.6.

  	
  Remedies Cumulative and Continuing

  	
   

  	
  40

  	
   

  
	
  Section
  7.7.

  	
  Direction of Proceedings and Waiver of
  Defaults by Majority of Noteholders

  	
   

  	
  40

  	
   

  
	
  Section
  7.8.

  	
  Notice of Defaults

  	
   

  	
  41

  	
   

  
	
  Section
  7.9.

  	
  Undertaking to Pay Costs

  	
   

  	
  41

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE EIGHT THE TRUSTEE

  	
   

  	
  41

  	
   

  
	
  Section
  8.1.

  	
  Duties and Responsibilities of Trustee

  	
   

  	
  41

  	
   

  
	
  Section 8.2.

  	
  Reliance
  on Documents, Opinions, Etc.

  	
   

  	
  43

  	
   

  
	
  Section
  8.3.

  	
  No Responsibility for Recitals, Etc.

  	
   

  	
  43

  	
   

  
	
  Section
  8.4.

  	
  Trustee, Paying Agents, Conversion Agents
  or Registrar May Own Notes

  	
   

  	
  43

  	
   

  
	
  Section
  8.5.

  	
  Monies to be Held in Trust

  	
   

  	
  43

  	
   

  
	
  Section
  8.6.

  	
  Compensation and Expenses of Trustee

  	
   

  	
  44

  	
   

  
	
  Section
  8.7.

  	
  Officers’ Certificate as Evidence

  	
   

  	
  44

  	
   

  
	
  Section
  8.8.

  	
  Conflicting Interests of Trustee

  	
   

  	
  44

  	
   

  
	
  Section
  8.9.

  	
  Eligibility of Trustee

  	
   

  	
  44

  	
   

  
	
  Section
  8.10.

  	
  Resignation or Removal of Trustee

  	
   

  	
  45

  	
   

  
	
  Section
  8.11.

  	
  Acceptance by Successor Trustee

  	
   

  	
  46

  	
   

  
	
  Section
  8.12.

  	
  Succession by Merger, Etc.

  	
   

  	
  46

  	
   

  
	
  Section
  8.13.

  	
  Preferential Collection of Claims

  	
   

  	
  47

  	
   

  
	
  Section
  8.14.

  	
  Trustee’s Application for Instructions from
  the Company

  	
   

  	
  47

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE NINE THE NOTEHOLDERS

  	
   

  	
  47

  	
   

  
	
  Section
  9.1.

  	
  Action by Noteholders

  	
   

  	
  47

  	
   

  
	
  Section
  9.2.

  	
  Proof of Execution by Noteholders

  	
   

  	
  47

  	
   

  
	
  Section
  9.3.

  	
  Who Are Deemed Absolute Owners

  	
   

  	
  48

  	
   

  
	
  Section
  9.4.

  	
  Company-Owned Notes Disregarded

  	
   

  	
  48

  	
   

  
	
  Section
  9.5.

  	
  Revocation of Consents; Future Holders
  Bound

  	
   

  	
  48

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

ii

 

	
  ARTICLE TEN MEETINGS OF NOTEHOLDERS

  	
   

  	
  49

  	
   

  
	
  Section
  10.1.

  	
  Purpose of Meetings

  	
   

  	
  49

  	
   

  
	
  Section
  10.2.

  	
  Call of Meetings by Trustee

  	
   

  	
  49

  	
   

  
	
  Section
  10.3.

  	
  Call of Meetings by Company or Noteholders

  	
   

  	
  49

  	
   

  
	
  Section
  10.4.

  	
  Qualifications for Voting

  	
   

  	
  49

  	
   

  
	
  Section
  10.5.

  	
  Regulations

  	
   

  	
  50

  	
   

  
	
  Section
  10.6.

  	
  Voting

  	
   

  	
  50

  	
   

  
	
  Section
  10.7.

  	
  No Delay of Rights by Meeting

  	
   

  	
  50

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE ELEVEN SUPPLEMENTAL INDENTURES

  	
   

  	
  51

  	
   

  
	
  Section
  11.1.

  	
  Supplemental Indentures Without Consent of
  Noteholders

  	
   

  	
  51

  	
   

  
	
  Section
  11.2.

  	
  Supplemental Indenture with Consent of
  Noteholders

  	
   

  	
  52

  	
   

  
	
  Section
  11.3.

  	
  Effect of Supplemental Indenture

  	
   

  	
  52

  	
   

  
	
  Section
  11.4.

  	
  Notation on Notes

  	
   

  	
  53

  	
   

  
	
  Section
  11.5.

  	
  Evidence of Compliance of Supplemental
  Indenture to be Furnished to Trustee

  	
   

  	
  53

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE TWELVE CONSOLIDATION, MERGER,
  SALE, CONVEYANCE AND LEASE

  	
   

  	
  53

  	
   

  
	
  Section
  12.1.

  	
  Company May Consolidate, Etc. on Certain
  Terms

  	
   

  	
  53

  	
   

  
	
  Section
  12.2.

  	
  Successor Corporation to Be Substituted

  	
   

  	
  53

  	
   

  
	
  Section
  12.3.

  	
  Opinion of Counsel to Be Given Trustee

  	
   

  	
  54

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE THIRTEEN SATISFACTION AND
  DISCHARGE OF INDENTURE

  	
   

  	
  54

  	
   

  
	
  Section
  13.1.

  	
  Discharge of Indenture

  	
   

  	
  54

  	
   

  
	
  Section
  13.2.

  	
  Deposited Monies to Be Held in Trust by
  Trustee

  	
   

  	
  55

  	
   

  
	
  Section
  13.3.

  	
  Paying Agent to Repay Monies Held

  	
   

  	
  55

  	
   

  
	
  Section
  13.4.

  	
  Return of Unclaimed Monies

  	
   

  	
  55

  	
   

  
	
  Section
  13.5.

  	
  Reinstatement

  	
   

  	
  55

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE FOURTEEN IMMUNITY OF
  INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS

  	
   

  	
  55

  	
   

  
	
  Section
  14.1.

  	
  Indenture and Notes Solely Corporate
  Obligations

  	
   

  	
  55

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE FIFTEEN CONVERSION OF NOTES

  	
   

  	
  56

  	
   

  
	
  Section
  15.1.

  	
  Conversion Privilege and Conversion Rate

  	
   

  	
  56

  	
   

  
	
  Section
  15.2.

  	
  Exercise of Conversion Privilege; Issuance
  of Common Stock on Conversion; No Adjustment for Liquidated Damages or
  Dividends

  	
   

  	
  58

  	
   

  
	
  Section
  15.3.

  	
  Cash Payments in Lieu of Fractional Shares

  	
   

  	
  60

  	
   

  
	
  Section
  15.4.

  	
  Conversion Price

  	
   

  	
  60

  	
   

  
	
  Section
  15.5.

  	
  Adjustment of Conversion Price

  	
   

  	
  60

  	
   

  
	
  Section 15.6.

  	
  Effect of Reclassification, Consolidation,
  Merger or Sale

  	
   

  	
  67

  	
   

  
	
  Section
  15.7.

  	
  Taxes on Shares Issued

  	
   

  	
  68

  	
   

  
	
  Section
  15.8.

  	
  Reservation of Shares; Shares to be Fully
  Paid; Compliance with Governmental Requirements; Listing of Common Stock

  	
   

  	
  68

  	
   

  
	
  Section
  15.9.

  	
  Responsibility of Trustee

  	
   

  	
  69

  	
   

  
	
  Section
  15.10.

  	
  Notice to Holders Prior to Certain Actions

  	
   

  	
  70

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

iii

 

	
  ARTICLE SIXTEEN MISCELLANEOUS
  PROVISIONS

  	
   

  	
  70

  	
   

  
	
  Section
  16.1.

  	
  Provisions Binding on Company’s Successors

  	
   

  	
  70

  	
   

  
	
  Section 16.2.

  	
  Official Acts by Successor Corporation

  	
   

  	
  70

  	
   

  
	
  Section
  16.3.

  	
  Addresses for Notices, Etc.

  	
   

  	
  70

  	
   

  
	
  Section
  16.4.

  	
  Governing Law

  	
   

  	
  71

  	
   

  
	
  Section
  16.5.

  	
  Evidence of Compliance with Conditions
  Precedent; Certificates to Trustee

  	
   

  	
  71

  	
   

  
	
  Section 16.6.

  	
  Legal Holidays

  	
   

  	
  71

  	
   

  
	
  Section
  16.7.

  	
  Trust Indenture Act

  	
   

  	
  72

  	
   

  
	
  Section
  16.8.

  	
  No Security Interest Created

  	
   

  	
  72

  	
   

  
	
  Section
  16.9.

  	
  Benefits of Indenture

  	
   

  	
  72

  	
   

  
	
  Section
  16.10.

  	
  Table of Contents, Headings, Etc.

  	
   

  	
  72

  	
   

  
	
  Section
  16.11.

  	
  Authenticating Agent

  	
   

  	
  72

  	
   

  
	
  Section
  16.12.

  	
  Execution in Counterparts

  	
   

  	
  73

  	
   

  
	
  Section
  16.13.

  	
  Severability

  	
   

  	
  73

  	
   

  

 

 

iv

 

Reconciliation and tie Between the Trust
Indenture Act of 1939 and Indenture, dated as of January 20, 2003, between
Lattice Semiconductor Corporation and U.S. Bank National Association, as
Trustee.

 

	
  TRUST INDENTURE ACT
  SECTION

  	
  INDENTURE
  SECTION

  	
   

  
	
  Section 310

  	
  (a)(1)

  	
  8.9

  	
   

  
	
   

  	
  (a)(2)

  	
  8.9

  	
   

  
	
   

  	
  (a)(3)

  	
  N.A.

  	
   

  
	
   

  	
  (a)(4)

  	
  N.A.

  	
   

  
	
   

  	
  (b)

  	
  8.8;
  8.9; 8.10; 8.11

  	
   

  
	
  Section 311

  	
  (a)

  	
  8.13

  	
   

  
	
   

  	
  (b)

  	
  8.13

  	
   

  
	
   

  	
  (b)(2)

  	
  8.13

  	
   

  
	
  Section 312

  	
  (a)

  	
  6.1;
  6.2(a

  	
  )

  
	
   

  	
  (b)

  	
  6.2(b

  	
  )

  
	
   

  	
  (c)

  	
  6.2(c

  	
  )

  
	
  Section 313

  	
  (a)

  	
  6.3(a

  	
  )

  
	
   

  	
  (b)

  	
  6.3(a

  	
  )

  
	
   

  	
  (c)

  	
  6.3(a

  	
  )

  
	
   

  	
  (d)

  	
  6.3(b

  	
  )

  
	
  Section 314

  	
  (a)

  	
  6.4

  	
   

  
	
   

  	
  (b)

  	
  N.A.

  	
   

  
	
   

  	
  (c)(1)

  	
  16.5

  	
   

  
	
   

  	
  (c)(2)

  	
  16.5

  	
   

  
	
   

  	
  (c)(3)

  	
  N.A.

  	
   

  
	
   

  	
  (d)

  	
  N.A.

  	
   

  
	
   

  	
  (e)

  	
  16.5

  	
   

  
	
  Section 315

  	
  (a)

  	
  8.1

  	
   

  
	
   

  	
  (b)

  	
  7.8

  	
   

  
	
   

  	
  (c)

  	
  8.1

  	
   

  
	
   

  	
  (d)

  	
  8.1

  	
   

  
	
   

  	
  (d)(1)

  	
  8.1(a

  	
  )

  
	
   

  	
  (d)(2)

  	
  8.1(b

  	
  )

  
	
   

  	
  (d)(3)

  	
  8.1(c

  	
  )

  
	
   

  	
  (e)

  	
  7.9

  	
   

  
	
  Section 316

  	
  (a)

  	
  7.7

  	
   

  
	
   

  	
  (a)(1)(A)

  	
  7.7

  	
   

  
	
   

  	
  (a)(1)(B)

  	
  7.7

  	
   

  
	
   

  	
  (a)(2)

  	
  N.A.

  	
   

  
	
   

  	
  (b)

  	
  7.4

  	
   

  
	
  Section 317

  	
  (a)(1)

  	
  7.5

  	
   

  
	
   

  	
  (a)(2)

  	
  7.5

  	
   

  
	
   

  	
  (b)

  	
  5.4

  	
   

  
	
  Section 318

  	
  (a)

  	
  16.7

  	
   

  

 

*      Note:  This
reconciliation and tie shall not, for any purpose, be deemed to be a part of
the Indenture.

**   Note:  N.A. means Not
Applicable.

 

 

INDENTURE

INDENTURE, dated as of June 20, 2003,
between Lattice Semiconductor Corporation, a Delaware corporation (hereinafter
called the “Company”), having its principal office at 5555 N.E. Moore Court,
Hillsboro, Oregon 97124-6421, and U.S. Bank National Association, a national
banking association organized under the laws of the United States, as trustee
hereunder (hereinafter called the “Trustee”).

W I T N E S S E T H:

WHEREAS, for its lawful corporate purposes,
the Company has duly authorized the issue of its Zero Coupon Convertible
Subordinated Notes due 2010 (hereinafter called the “Notes”), in an aggregate
principal amount not to exceed $230,000,000 and, to provide the terms and
conditions upon which the Notes are to be authenticated, issued and delivered,
the Company has duly authorized the execution and delivery of this Indenture;
and

WHEREAS, the Notes, the certificate of
authentication to be borne by the Notes, a form of assignment, a form of option
to elect repayment upon a Fundamental Change, and a form of conversion notice
to be borne by the Notes are to be substantially in the forms hereinafter
provided for; and

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

NOW, THEREFORE, THIS INDENTURE WITNESSETH:

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

ARTICLE
ONE

DEFINITIONS

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

 

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

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

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

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

“Closing Price” has the meaning
specified in Section 15.5(h)(i).

“Commission” means the 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 Indenture 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 any stock of any
class of the Company which has no preference in respect of dividends or of
amounts payable in the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Company and which is not subject to redemption
by the Company.  Subject to the
provisions of Section 15.6, however, shares issuable on conversion of
Notes shall include only shares of the class designated as common stock of the
Company at the date of this Indenture (namely, the Common Stock, par value $.01
per share) or shares of any class or classes resulting from any
reclassification or reclassifications thereof and which have no preference in
respect of dividends or of amounts payable in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Company and which are
not subject to redemption by the Company; provided, however, that if at any
time there shall be more than one such resulting class, the shares of each such
class then so issuable shall be substantially in the proportion which the total
number of shares of such class resulting from all such reclassifications bears
to the total number of shares of all such classes resulting from all such reclassifications.

“Company” means the corporation named
as the “Company” in the first paragraph of this Indenture, and, subject to the
provisions of Article Twelve, shall include its successors and assigns.

“Company Notice” has the meaning
specified in Section 3.5(c).

“Conversion Date” means the date on
which a holder of Notes delivers its Notes and a duly signed and completed
conversion notice pursuant to this Indenture.

“Conversion Price” has the meaning
specified in Section 15.4.

 

2

 

“Corporate Trust Office” or other
similar term, means the designated office of the Trustee at which at any
particular time its corporate trust business shall be administered, which
office is, at the date as of which this Indenture is dated, located at
550 S. Hope Street, Suite 500, Los Angeles, California 90071,
Attention: Corporate Trust Services (Lattice Semiconductor Corporation, Zero
Coupon Convertible Subordinated Notes due July 1, 2010).

“Custodian” means U.S. Bank National
Association, as custodian with respect to the Notes in global form, or any
successor entity thereto.

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

“Defaulted Interest” has the meaning
specified in Section 2.3.

“Depositary” means, with respect to
the Notes issuable or issued in whole or in part in global form, the Person
specified in Section 2.5(d) as the Depositary with respect to such Notes,
until a successor shall have been appointed and become such pursuant to the
applicable provisions of this Indenture, and thereafter, “Depositary” shall
mean or include such successor.

“Designated Senior Indebtedness” means
the Company’s obligations under any particular Senior Indebtedness 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 Senior Indebtedness shall be “Designated Senior
Indebtedness” for purposes of this Indenture (provided that such instrument or
agreement may place limitations and conditions on the right of such Senior
Indebtedness to exercise the rights of Designated Senior Indebtedness).  If any payment made to any holder of any
Designated Senior Indebtedness or its Representative with respect to such
Designated Senior Indebtedness is rescinded or must otherwise be returned by
such holder or Representative upon the insolvency, bankruptcy or reorganization
of the Company or otherwise, the reinstated Indebtedness of the Company arising
as a result of such rescission or return shall constitute Designated Senior
Indebtedness effective as of the date of such rescission or return.

“Event of Default” means any event
specified in Section 7.1(a), (b), (c), (d) or (e).

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

“Fundamental Change” means the
occurrence of any transaction or event in connection with which all or
substantially all of the Common Stock shall be exchanged for, converted into,
acquired for or constitute solely the right to receive consideration (whether
by means of an exchange offer, liquidation, tender offer, consolidation,
merger, combination, reclassification, recapitalization or otherwise) which is
not all or substantially all common stock listed (or, upon consummation of or
immediately following such transaction or event, which will be listed) on a
United States national securities exchange or approved for quotation on the
Nasdaq National Market or any similar United States system of automated
dissemination of quotations of securities prices.

“Global Note” has the meaning set
forth in Section 2.5(b).

“Indebtedness” means, with respect to
any Person, and without duplication, (a) all indebtedness, obligations and
other liabilities (contingent or otherwise) of such Person for borrowed money
(including 

 

3

 

obligations of the Company in respect of
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 evidenced by bonds,
debentures, notes or similar instruments (whether or not the recourse of the
lender is to the whole of the assets of such Person or to only a portion
thereof), other than any account payable or other accrued current liability or
obligation incurred in the ordinary course of business in connection with the
obtaining of materials or services; (b) all reimbursement obligations and
other liabilities (contingent or otherwise) of such Person with respect to
letters of credit, bank guarantees or bankers’ acceptances; (c) all obligations
and liabilities (contingent or otherwise) in respect of leases of such Person
required, in conformity with generally accepted accounting principles, to be
accounted for as capitalized lease obligations on the balance sheet of such
Person and all 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 which provides that such Person is
contractually obligated to purchase or cause a third party to purchase the
leased property and thereby guarantee a minimum residual value of the leased
property to the lessor and the obligations of such Person under such lease or
related document to purchase or to cause a third party to purchase such leased
property; (d) all obligations of such Person (contingent or otherwise)
with respect to an interest rate or other swap, cap or collar agreement or
other similar instrument or agreement or foreign currency hedge, exchange,
purchase or similar instrument or agreement; (e) all direct or indirect
guaranties or similar agreements by such Person in respect of, and obligations
or liabilities (contingent or otherwise) of such Person to purchase or
otherwise acquire or otherwise assure a creditor against loss in respect of,
indebtedness, obligations or liabilities of another Person of the kind
described in clauses (a) through (d); (f) any indebtedness or other
obligations described in clauses (a) through (e) secured by any mortgage,
pledge, lien or other encumbrance existing on property which is owned or held
by such Person, regardless of whether the indebtedness or other obligation
secured thereby shall have been assumed by such Person; and (g) any and
all deferrals, renewals, extensions and refundings of, or amendments,
modifications or supplements to, any indebtedness, obligation or liability of
the kind described in clauses (a) through (f).

“Indenture” means this instrument as
originally executed or, if amended or supplemented as herein provided, as so
amended or supplemented.

“Initial Purchaser” means Goldman,
Sachs & Co.

“Liquidated Damages” has the meaning
specified for “Liquidated Damages Amount” in Section 2(e) of the
Registration Rights Agreement.

“Liquidated Damages Payment
Date” means each July 1 and January 1.

“Liquidated Damages Record Date” means
each June 15 and December 15 immediately preceding a Liquidated Damages Payment
Date, if any.

“Non-Payment Default” has the meaning
specified in Section 4.2(ii).

“Note” or “Notes” means any
Note or Notes, as the case may be, authenticated and delivered under this
Indenture, including the Global Note.

“Note register” has the meaning
specified in Section 2.5(a).

 

4

 

“Noteholder” or “holder” as
applied to any Note, or other similar terms (but excluding the term “beneficial
holder”), means any Person in whose name at the time a particular Note is
registered on the Note registrar’s books.

“Notice of Optional Purchase” has the
meaning specified in Section 3.6(b).

“Notice of Withdrawal” has the meaning
specified in Section 3.6(c).

“Officers’ Certificate”, when used
with respect to the Company, means a certificate signed by both (a) the
Chairman of the Board, the Chief Executive Officer, the President or any Vice
President (whether or not designated by a number or numbers or word or words
added before or after the title “Vice President”) and (b) the Treasurer or
any Assistant Treasurer, the Controller or any Assistant Controller, or the
Secretary or any Assistant Secretary of the Company.

“Opinion of Counsel” means an opinion
in writing signed by legal counsel, who may be an employee of or counsel to the
Company, or other counsel reasonably acceptable to the Trustee.

“Outstanding” or “outstanding” when
used with reference to Notes and subject to the provisions of Section 9.4,
means, as of any particular time, all Notes authenticated and delivered by the
Trustee under this Indenture, except:

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

(b)           Notes, or portions thereof,
(i) for the redemption, purchase or repurchase of which monies in the
necessary amount shall have been deposited in trust with the Trustee or with
any paying agent (other than the Company) or (ii) which shall have been
otherwise defeased in accordance with Article Thirteen;

(c)           Notes in lieu of which, or in
substitution for which, other Notes shall have been authenticated and delivered
pursuant to the terms of Section 2.6; and

(d)           Notes converted into Common Stock
pursuant to Article Fifteen and Notes deemed not outstanding pursuant to
Article Three.

“Payment Blockage Notice” has the
meaning specified in Section 4.2(ii).

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

“Portal Market” means The Portal
Market operated by the National Association of Securities Dealers, Inc. or any
successor thereto.

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

“Principal Amount” shall have the
meaning specified in Section 2.5(b).

 

5

 

“QIB” means a “qualified institutional
buyer” as defined in Rule 144A.

“Purchase Date” has the meaning
specified in Section 3.6(a).

“Purchase Notice” has the meaning
specified in Section 3.6(a).

“Purchase Price” has the meaning specified
in Section 3.6(a).

“Record Date” shall have the meaning
specified in Section 15.5(h)(ii)(2)

“Redemption Date” or “redemption
date,” when used with respect to any Note to be redeemed, means the date
fixed for such redemption by or pursuant to this Indenture.

“Redemption Price” or “redemption
price,” when used with respect to any Note to be redeemed, means the price
at which it is to be redeemed pursuant to this Indenture.

“Registration Rights Agreement” means
that certain Registration Rights Agreement, dated as of June 20, 2003,
among the Company and the Initial Purchaser, as amended from time to time in
accordance with its terms.

“Representative” means (a) the
indenture trustee or other trustee, agent or representative for holders of
Senior Indebtedness or (b) with respect to any Senior Indebtedness that
does not have any such trustee, agent or other representative, (i) in the
case of such Senior Indebtedness issued pursuant to an agreement providing for
voting arrangements as among the holders or owners of such Senior Indebtedness,
any holder or owner of such Senior Indebtedness acting with the consent of the
required persons necessary to bind such holders or owners of such Senior
Indebtedness and (ii) in the case of all other such Senior Indebtedness, the
holder or owner of such Senior Indebtedness.

“Repurchase Date” has the meaning
specified in Section 3.5(a).

“Repurchase Price” has the meaning
specified in Section 3.5(a).

“Responsible Officer,” when used with
respect to the Trustee, means an officer of the Trustee in the Corporate Trust
Office assigned and duly authorized by the Trustee to administer this
Indenture.

“Restricted Securities” has the
meaning specified in Section 2.5(d).

“Rule 144A” means Rule 144A as
promulgated under the Securities Act.

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

“Senior Indebtedness” means the
principal of, premium, if any, interest (including any 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) and rent or termination payment on or in connection with, and all
fees, costs, expenses and other amounts accrued or due on or in connection
with, Indebtedness of the Company, whether outstanding on the date of this
Indenture or thereafter created, incurred, assumed, guaranteed or in effect
guaranteed by the Company (including any deferrals, renewals, extensions or
refundings of, or amendments, modifications or supplements to, the foregoing),
unless in the 

 

6

 

case of any particular Indebtedness the
instrument creating or evidencing the same or the assumption or guarantee
thereof expressly provides that such Indebtedness shall not be senior in right
of payment to the Notes or expressly provides that such Indebtedness is “pari
passu”
or “junior” to the Notes. 
Notwithstanding the foregoing, the term Senior Indebtedness shall not
include (i) any Indebtedness of the Company to any subsidiary of the
Company, a majority of the voting stock of which is owned, directly or
indirectly, by the Company, (ii) the Company’s 43⁄4% Convertible Subordinated
Notes due 2006 and (iii) the Notes.  If
any payment made to any holder of any Senior Indebtedness or its Representative
with respect to such Senior Indebtedness is rescinded or must otherwise be
returned by such holder or Representative upon the insolvency, bankruptcy or
reorganization of the Company or otherwise, the reinstated Indebtedness of the
Company arising as a result of such rescission or return shall constitute
Senior Indebtedness effective as of the date of such rescission or return.

“Significant Subsidiary” means, as of
any date of determination, a Subsidiary of the Company, if as of such date of
determination either (a) the assets of such subsidiary equal 10% or more
of the Company’s total consolidated assets or (b) the total revenue of
which represented 10% or more of the Company’s consolidated total revenue for
the most recently completed fiscal year.

“Subsidiary” means, with respect to
any Person, (i) any corporation, association or other business entity of
which more than 50% of the total voting power of shares of capital stock or
other equity interest entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by such Person or
one or more of the other subsidiaries of that Person (or a combination thereof)
and (ii) any partnership (a) the sole general partner or managing
general partner of which is such Person or a subsidiary of such Person or
(b) the only general partners of which are such Person or of one or more
subsidiaries of such Person (or any combination thereof).

“Trading Day” has the meaning
specified in Section 15.5(h)(ii)(3).

“Trigger Event” has the meaning
specified in Section 15.5(d).

“Trust Indenture Act” means the Trust
Indenture Act of 1939, as amended, as it was in force at the date of this
Indenture, except as provided in Sections 11.3 and 15.6; provided,
however, that, in the event the Trust Indenture Act of 1939 is amended after
the date hereof, the term “Trust Indenture Act” shall mean, to the extent
required by such amendment, the Trust Indenture Act of 1939 as so amended.

“Trustee” means U.S. Bank National
Association and its successors and any corporation resulting from or surviving
any consolidation or merger to which it or its successors may be a party and
any successor trustee at the time serving as successor trustee hereunder.

The definitions of certain other terms are as
specified in Sections 2.5, 3.5 and 3.6 and Article Fifteen.

ARTICLE TWO

ISSUE, DESCRIPTION, EXECUTION,

REGISTRATION AND EXCHANGE OF NOTES

Section 2.1.            Designation
Amount and Issue of Notes.  The Notes shall be designated as “Zero
Coupon Convertible Subordinated Notes due 2010.”  Notes not to exceed the aggregate principal amount of
$230,000,000 (except pursuant to Sections 2.5, 2.6, 3.3, 3.5, 3.6 and 15.2
hereof) upon the execution of this Indenture, or from time to time thereafter,
may be executed by the Company and delivered to the Trustee for authentication,
and the Trustee shall thereupon authenticate and deliver said Notes to or upon
the written 

 

7

 

order
of the Company, signed by (a) its Chairman of the Board, Chief Executive
Officer, President or any Vice President (whether or not designated by a number
or numbers or word or words added before or after the title “Vice President”)
and (b) its Treasurer or any Assistant Treasurer, its Controller or any
Assistant Controller or its Secretary or any Assistant Secretary, without any further
action by the Company hereunder.

Section 2.2.            Form
of Notes.  The Notes and the Trustee’s certificate of authentication
to be borne by such Notes shall be substantially in the form set forth in Exhibit A,
which is incorporated in and made a part of this Indenture.

Any of the Notes may have such letters,
numbers or other marks of identification and such notations, legends and
endorsements as the officers executing the same may approve (execution thereof
to be conclusive evidence of such approval) and as are not inconsistent with
the provisions of this Indenture, or as may be required to comply with any law
or with any rule or regulation made pursuant thereto or with any rule or
regulation of any securities exchange or automated quotation system on which
the Notes may be listed, or to conform to usage.

Any Global Note shall represent such of the
outstanding Notes as shall be specified therein and shall provide that it shall
represent the aggregate amount of outstanding Notes from time to time endorsed
thereon and that the aggregate amount of outstanding Notes represented thereby
may from time to time be increased or reduced to reflect transfers or exchanges
permitted hereby.  Any endorsement of a
Global Note to reflect the amount of any increase or decrease in the amount of
outstanding Notes represented thereby shall be made by the Trustee or the
Custodian, at the direction of the Trustee, in such manner and upon
instructions given by the holder of such Notes in accordance with this
Indenture.  Payment of principal of and
Liquidated Damages, if any, on any Global Note shall be made to the holder of
such Note.

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

Section 2.3.            Date
and Denomination of Notes; Payments of Interest.  The Notes shall be
issuable in registered form without coupons in denominations of $1,000
principal amount and integral multiples thereof.  Every Note shall be dated the date of its authentication.  The Notes shall not bear interest, other
than Liquidated Damages payable in accordance with the Registration Rights
Agreement.

The Person in whose name any Note (or its
Predecessor Note) is registered on the Note register at the close of business
on any Liquidated Damages Record Date with respect to any Liquidated Damages
Payment Date may be entitled to receive the Liquidated Damages, if any, payable
on such Liquidated Damages Payment Date, except (i) that the Liquidated
Damages, if any, payable upon redemption, repurchase or purchase (unless the
date of such redemption, repurchase or purchase is a Liquidated Damages Payment
Date) will be payable to the Person to whom principal is payable and
(ii) as set forth in the next succeeding sentence.  In the case of any Note (or portion thereof)
that is converted into Common Stock during the period from (but excluding) a
Liquidated Damages Record Date to (but excluding) the next succeeding
Liquidated Damages Payment Date either (x) if such Note (or portion
thereof) has been (a) called for redemption on a Redemption Date that
occurs during such period, (b) submitted for repurchase in connection with
a Fundamental Change on a Repurchase Date that occurs during such period or,
(c) submitted for purchase on a Purchase Date that occurs during such
period or the Company shall not be required to pay Liquidated Damages on such
Liquidated Damage Payment Date in respect of any such Note (or portion thereof)
except to 

 

8

 

the extent required to be paid upon
redemption, repurchase or purchase of such Note or portion thereof pursuant to
Sections 3.3, 3.5 or 3.6 hereof or (y) if such Note (or portion
thereof) has not been (a) called for redemption on a Redemption Date that
occurs during such period, (b) submitted for repurchase in connection with
a Fundamental Change on a Repurchase Date that occurs during such period,
(c) submitted for purchase on a Purchase Date that occurs during such
period and is submitted for conversion during such period, such Note shall be
accompanied by funds equal to the Liquidated Damages, if any, payable on such
succeeding Liquidated Damages Payment Date on the principal amount so
converted, as provided in the penultimate paragraph of Section 15.2
hereof.  Liquidated Damages, if any,
shall be payable at the office of the Company maintained by the Company for
such purposes in the Borough of Manhattan, City of New York, which shall
initially be an office or agency of the Trustee and may, as the Company shall
specify to the paying agent in writing by each record date, be paid either (i)
by check mailed to the address of the Person entitled thereto as it appears in
the Note register (provided that the holder of Notes with an aggregate
principal amount in excess of $5,000,000 shall, at the written election of such
holder, be paid by wire transfer in immediately available funds) or (ii) by
transfer to an account maintained by such Person located in the United States;
provided, however, that payments to the Depositary will be made by wire
transfer of immediately available funds to the account of the Depositary or its
nominee.

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

(1)           The
Company may elect to make payment of any Defaulted Interest to the Persons in
whose names the Notes (or their respective Predecessor Notes) are registered at
the close of business on a special record date for the payment of such
Defaulted Interest, which shall be fixed in the following manner.  The Company shall notify the Trustee in
writing of the amount of Defaulted Interest to be paid on each Note and the
date of the payment (which shall be not less than twenty-five (25) days after
the receipt by the Trustee of such notice, unless the Trustee shall consent to
an earlier date), and at the same time the Company shall deposit with the
Trustee an amount of money equal to the aggregate amount to be paid in respect
of such Defaulted Interest or shall make arrangements satisfactory to the
Trustee for such deposit prior to the date of the proposed payment, such money
when deposited to be held in trust for the benefit of the Person entitled to
such Defaulted Interest as in this clause provided.  Thereupon the Trustee shall fix a special record date for the
payment of such Defaulted Interest which shall be not more than fifteen (15)
days and not less than ten (10) days prior to the date of the proposed payment,
and not less than ten (10) days after the receipt by the Trustee of the notice
of the proposed payment, the Trustee shall promptly notify the Company of such
special record date and, in the name and at the expense of the Company, shall
cause notice of the proposed payment of such Defaulted Interest and the special
record date therefor to be mailed, first-class postage prepaid, to each
Noteholder at his address as it appears in the Note register, not less than ten
(10) days prior to such special record date. 
Notice of the proposed payment of such Defaulted Interest and the
special record date therefor having been so mailed, such Defaulted Interest
shall be paid to the Persons in whose names the Notes (or their respective
Predecessor Notes) were registered at the close of business on such special
record date and shall no longer be payable pursuant to the following clause (2)
of this Section 2.3.

(2)           The
Company may make payment of any Defaulted Interest in any other lawful manner
not inconsistent with the requirements of any securities exchange or automated
quotation system on which the Notes may be listed or designated for issuance,
and upon such notice as may be required by such exchange or automated quotation
system, if, after notice given by the Company to the Trustee of the 

 

9

 

proposed
payment pursuant to this clause, such manner of payment shall be deemed
practicable by the Trustee.

Section 2.4.            Execution
of Notes.  The Notes shall be signed in the name and on behalf of the
Company by the manual or facsimile signature of its Chairman of the Board,
Chief Executive Officer, President or any Vice President (whether or not
designated by a number or numbers or word or words added before or after the
title “Vice President”) and attested by the manual or facsimile signature of
its Secretary or any of its Assistant Secretaries or its Treasurer or any of
its Assistant Treasurers (which may be printed, engraved or otherwise
reproduced thereon, by facsimile or otherwise).  Only such Notes as shall bear thereon a certificate of
authentication substantially in the form set forth on the form of Note attached
as Exhibit A hereto, manually executed by the Trustee (or an
authenticating agent appointed by the Trustee as provided by
Section 16.11), shall be entitled to the benefits of this Indenture or be
valid or obligatory for any purpose. 
Such certificate by the Trustee (or such an authenticating agent) upon
any Note executed by the Company shall be conclusive evidence that the Note so
authenticated has been duly authenticated and delivered hereunder and that the
holder is entitled to the benefits of this Indenture.

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

Section 2.5.            Exchange
and Registration of Transfer of Notes; Restrictions on Transfer; Depositary.

(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 5.2 being herein sometimes
collectively referred to as the “Note register”) in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Notes and of transfers of Notes.  The Note register shall be in written form or in any form capable
of being converted into written form within a reasonably prompt period of
time.  The Trustee is hereby appointed
“Note registrar” for the purpose of registering Notes and transfers of Notes as
herein provided.  The Company may
appoint one or more co-registrars in accordance with Section 5.2.

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

Notes may be exchanged for other Notes of any
authorized denominations and of a like aggregate principal amount, upon
surrender of the Notes to be exchanged at any such office or agency maintained
by the Company pursuant to Section 5.2. 
Whenever any Notes are so surrendered for exchange, the Company shall
execute, and the Trustee shall authenticate and deliver, the Notes which the
Noteholder making the exchange is entitled to receive bearing registration
numbers not contemporaneously outstanding.

 

10

 

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

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

No service charge shall be made to any holder
for any registration of transfer or exchange of Notes, but the Company may
require payment by the holder of a sum sufficient to cover any tax, assessment
or other governmental charge that may be imposed in connection with any
registration of transfer or exchange of Notes.

Neither the Company nor the Trustee nor any
Note registrar shall be required to exchange or register a transfer of
(a) any Notes for a period of fifteen (15) days next preceding any
selection of Notes to be redeemed, repurchased or purchased pursuant to
Article Three, (b) any Notes or portions thereof called for
redemption pursuant to Section 3.2, (c) any Notes or portions thereof
surrendered for conversion pursuant to Article Fifteen, (d) any Notes
submitted for purchase (and not withdrawn) pursuant to Section 3.6, or
(e) any Notes submitted for repurchase (and not withdrawn) pursuant to
Section 3.5.

(b)           So
long as the Notes are eligible for book-entry settlement with the Depositary,
or unless otherwise required by law, all Notes that, upon initial issuance are
beneficially owned by QIBs or as a result of a sale or transfer after initial
issuance are beneficially owned by QIBs, will be represented by one or more
Notes in global form registered in the name of the Depositary or the nominee of
the Depositary (each, a “Global Note”), except as otherwise specified
below.  The transfer and exchange of
beneficial interests in any such Global Note shall be effected through the
Depositary in accordance with this Indenture and the procedures of the
Depositary therefor.  The Trustee shall
make appropriate endorsements to reflect increases or decreases in the
principal amounts of any such Global Note as set forth on the face of the Note
(“Principal Amount”) to reflect any such transfers.  Except as provided below, beneficial owners of a Global Note
shall not be entitled to have certificates registered in their names, will not
receive or be entitled to receive physical delivery of certificates in definitive
form and will not be considered holders of such Global Note.

(c)           So
long as the Notes are eligible for book-entry settlement with the Depositary,
or unless otherwise required by law, upon any transfer of a definitive Note to
a QIB in accordance with Rule 144A, and upon receipt of the definitive
Note or Notes being so transferred, together with a certification,
substantially in the form on the reverse of the Note, from the transferor that
the transfer is being made in compliance with Rule 144A (or other evidence
satisfactory to the Trustee), the Trustee shall make an endorsement on the
Global Note to reflect an increase in the aggregate Principal Amount of the
Notes represented by such Global Note, and the Trustee shall cancel such
definitive Note or Notes in accordance with the standing instructions and
procedures of the Depositary, the aggregate Principal Amount of the Notes
represented by such Global Note to be increased accordingly; provided, however,
that no definitive Note, or portion thereof, in respect of which the Company or
an Affiliate of the Company held any beneficial interest shall be included in
such Global Note until such definitive Note is freely tradable in accordance
with Rule 144(k) under the Securities Act, provided further that the Trustee
shall issue Notes in definitive form upon any transfer of a beneficial interest
in the Global Note to the Company or any Affiliate of the Company.

 

11

 

Upon any sale or transfer of a Note to an Institutional
Accredited Investor (other than pursuant to a registration statement that has
been declared effective under the Securities Act), such Institutional
Accredited Investor shall, prior to such sale or transfer, furnish to the
Company and/or the Trustee a signed letter containing representations and
agreements relating to restrictions on transfer substantially in the form set
forth in Exhibit A to this Indenture.  Upon any transfer of a beneficial interest in the Global Note to
an Institutional Accredited Investor, the Trustee shall make an endorsement on
the Global Note to reflect a decrease in the aggregate Principal Amount of the
Notes represented by such Global Note, and the Company shall execute a
definitive Note or Notes in exchange therefore, and the Trustee, upon receipt
of such definitive Note or Notes and the written order of the Company, shall
authenticate and deliver such, definitive Note or Notes.

Any Global Note may be endorsed with or have
incorporated in the text thereof such legends or recitals or changes not
inconsistent with the provisions of this Indenture as may be required by the
Custodian, the Depositary or by the National Association of Securities Dealers,
Inc. in order for the Notes to be tradeable on The Portal Market or as may be
required for the Notes to be tradeable on any other market developed for
trading of securities pursuant to Rule 144A or required to comply with any
applicable law or any regulation thereunder or with the rules and regulations
of any securities exchange or automated quotation system upon which the Notes
may be listed or traded or to conform with any usage with respect thereto, or
to indicate any special limitations or restrictions to which any particular
Notes are subject.

(d)           Every
Note that bears or is required under this Section 2.5(d) to bear the
legend set forth in this Section 2.5(d) (together with any Common Stock
issued upon conversion of the Notes and required to bear the legend set forth
in Section 2.5(e), collectively, the “Restricted Securities”) shall be
subject to the restrictions on transfer set forth in this Section 2.5(d)
(including those set forth in the legend set forth below) unless such
restrictions on transfer shall be waived by written consent of the Company, and
the holder of each such Restricted Security, by such Noteholder’s acceptance
thereof, agrees to be bound by all such restrictions on transfer.  As used in Sections 2.5(d) and 2.5(e),
the term “transfer” encompasses any sale, pledge, loan, transfer or other
disposition whatsoever of any Restricted Security.

Until the expiration of the holding period
applicable to sales thereof under Rule 144(k) under the Securities Act (or
any successor provision), any certificate evidencing such Note (and all
securities issued in exchange therefor or substitution thereof, other than
Common Stock, if any, issued upon conversion thereof, which shall bear the
legend set forth in Section 2.5(e), if applicable) shall bear a legend in
substantially the following form, unless such Note has been sold pursuant to a
registration statement that has been declared effective under the Securities
Act (and which continues to be effective at the time of such transfer), or
unless otherwise agreed by the Company in writing, with written notice thereof
to the Trustee:

THIS NOTE HAS 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 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 

 

12

 

THE MEANING OF RULE 144A UNDER THE SECURITIES ACT ACQUIRING FOR ITS OWN ACCOUNT
OR FOR 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
PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT (IF
AVAILABLE) OR (4) 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 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 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 SHALL BE DEEMED BY
THE ACCEPTANCE OF THIS NOTE TO HAVE AGREED TO ANY SUCH AMENDMENT OR SUPPLEMENT.

Any Note (or security issued in exchange or
substitution therefor) as to which such restrictions on transfer shall have
expired in accordance with their terms or as to the conditions for removal of
the foregoing legend set forth therein have been satisfied may, upon surrender
of such Note for exchange to the Note registrar in accordance with the
provisions of this Section 2.5, be exchanged for a new Note or Notes, of
like tenor and aggregate principal amount, which shall not bear the restrictive
legend required by this Section 2.5(d).

Notwithstanding any other provisions of this
Indenture (other than the provisions set forth in the second paragraph of
Section 2.5(c) and in this Section 2.5(d)), a Global Note may not be
transferred as a whole or in part except by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary.

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

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

 

13

 

If a Note in certificated form is issued in
exchange for any portion of a Global Note after the close of business at the
office or agency where such exchange occurs on any Liquidated Damages Record
Date and before the opening of business at such office or agency on the next
succeeding Liquidated Damages Payment Date, Liquidated Damages, if any, will
not be payable on such Liquidated Damages Payment Date in respect of such
certificated Note, but will be payable on such Liquidated Damages Payment Date,
subject to the provisions of Section 2.3, only to the Person to whom
Liquidated Damages, if any, in respect of such portion of such Global Note is
payable in accordance with the provisions of this Indenture and the
Registration Rights Agreement.

Notes in certificated form issued in exchange
for all or a part of a Global Note pursuant to this Section 2.5 shall be
registered in such names and in such authorized denominations as the
Depositary, pursuant to instructions from its direct or indirect participants
or otherwise, shall instruct the Trustee. 
Upon execution and authentication, the Trustee shall deliver such Notes
in certificated form to the Persons in whose names such Notes in certificated
form are so registered.

At such time as all interests in a Global
Note have been redeemed, repurchased, purchased, converted or canceled or
exchanged for Notes in certificated form, or transferred to a transferee who
receives Notes in certificated form thereof, such Global Note shall, upon
receipt thereof, be canceled by the Trustee in accordance with standing
procedures and instructions existing between the Depositary and the Custodian.  At any time prior to such cancellation, if
any interest in a Global Note is exchanged for Notes in certificated form,
redeemed, converted, purchased, repurchased or canceled, or transferred to a
transferee who receives Notes in certificated form therefor or any Note in
certificated form is exchanged or transferred for part of a Global Note, the
principal amount of such Global Note shall, in accordance with the standing
procedures and instructions existing between the Depositary and the Custodian,
be appropriately reduced or increased, as the case may be, and an endorsement
shall be made on such Global Note, by the Trustee or the Custodian, at the
direction of the Trustee, to reflect such reduction or increase.

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

THE COMMON STOCK EVIDENCED
HEREBY HAS NOT BEEN REGISTERED UNDER THE 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 COMMON STOCK IS
HEREBY NOTIFIED THAT THE SELLER OF THIS COMMON STOCK MAY BE RELYING ON THE
EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED
BY RULE 144A THEREUNDER.

THE COMMON STOCK EVIDENCED
HEREBY MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A)
(1) TO A 

 

14

 

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 FOR 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 PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT (IF AVAILABLE) OR (4) 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.

THE COMMON STOCK EVIDENCED
HEREBY 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.

Any such Common Stock as to which such
restrictions on transfer shall have expired in accordance with their terms or
as to which the conditions for removal of the foregoing legend set forth
therein have been satisfied may, upon surrender of the certificates
representing such shares of Common Stock for exchange in accordance with the
procedures of the transfer agent for the Common Stock, be exchanged for a new
certificate or certificates for a like number of shares of Common Stock, which
shall not bear the restrictive legend required by this Section 2.5(e).

(f)            Any
Note or Common Stock issued upon the conversion or exchange of a Note that,
prior to the expiration of the holding period applicable to sales thereof under
Rule 144(k) under the Securities Act (or any successor provision), is
purchased or owned by the Company or any Affiliate thereof may not be resold by
the Company or such Affiliate unless registered under the Securities Act or
resold pursuant to an exemption from the registration requirements of the
Securities Act in a transaction which results in such Notes or Common Stock, as
the case may be, no longer being “restricted securities” (as defined under
Rule 144).

Section 2.6.            Mutilated,
Destroyed, Lost or Stolen Notes.  In case any Note shall become
mutilated or be destroyed, lost or stolen, the Company in its discretion may
execute, and upon its written request the Trustee or an authenticating agent
appointed by the Trustee shall authenticate and make available for delivery, a
new Note, bearing a number not contemporaneously outstanding, in exchange and
substitution for the mutilated Note, or in lieu of and in substitution for the
Note so destroyed, lost or stolen.  In
every case the applicant for a substituted Note shall furnish to the Company,
to the Trustee and, if applicable, to such authenticating agent such security
or indemnity as may be required by them to save each of them harmless for 

 

15

 

any loss, liability, cost or expense caused
by or connected with such substitution, and, in every case of destruction, loss
or theft, the applicant shall also furnish to the Company, to the Trustee and,
if applicable, to such authenticating agent evidence to their satisfaction of
the destruction, loss or theft of such Note and of the ownership thereof.

Following receipt by the Trustee or such authenticating
agent, as the case may be, of satisfactory security or indemnity and evidence,
as described in the preceding paragraph, the Trustee or such authenticating
agent may authenticate any such substituted Note and make available for
delivery such Note.  Upon the issuance
of any substituted Note, the Company may require the payment by the holder of a
sum sufficient to cover any tax, assessment or other governmental charge that
may be imposed in relation thereto and any other expenses connected therewith.  In case any Note which has matured or is
about to mature has been called for redemption, has been tendered for
redemption, submitted for purchase (and not withdrawn), or submitted for
repurchase (and not withdrawn) or is to be converted into Common Stock shall
become mutilated or be destroyed, lost or stolen, the Company may, instead of
issuing a substitute Note, pay or authorize the payment of or convert or
authorize the conversion of the same (without surrender thereof except in the
case of a mutilated Note), as the case may be, if the applicant for such
payment or conversion shall furnish to the Company, to the Trustee and, if
applicable, to such authenticating agent such security or indemnity as may be
required by them to save each of them harmless for any loss, liability, cost or
expense caused by or connected with such substitution, and, in every case of
destruction, loss or theft, the applicant shall also furnish to the Company,
the Trustee and, if applicable, any paying agent or conversion agent evidence
to their satisfaction of the destruction, loss or theft of such Note and of the
ownership thereof.

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

Section 2.7.            Temporary
Notes.  Pending the preparation of Notes in certificated form, the
Company may execute and the Trustee or an authenticating agent appointed by the
Trustee shall, upon the written request of the Company, authenticate and
deliver temporary Notes (printed or lithographed).  Temporary Notes shall be issuable in any authorized denomination,
and substantially in the form of the Notes in certificated form, but with such
omissions, insertions and variations as may be appropriate for temporary Notes,
all as may be determined by the Company. 
Every such temporary Note shall be executed by the Company and
authenticated by the Trustee or such authenticating agent upon the same
conditions and in substantially the same manner, and with the same effect, as
the Notes in certificated form.  Without
unreasonable delay the Company will execute and deliver to the Trustee or such
authenticating agent Notes in certificated form (other than in the case of
Notes in global form) and thereupon any or all temporary Notes (other than any
such Global Note) may be surrendered in exchange therefor, at each office or
agency maintained by the Company pursuant to Section 5.2 and the Trustee or
such authenticating agent shall authenticate and make available for delivery in
exchange for such temporary Notes an equal aggregate principal amount of Notes
in certificated form.  Such exchange
shall be made by the Company at its own expense and without any charge
therefor.  Until so exchanged, the
temporary Notes shall in all respects be 

 

16

 

entitled
to the same benefits and subject to the same limitations under this Indenture
as Notes in certificated form authenticated and delivered hereunder.

Section 2.8.            Cancellation
of Notes Paid, Etc.  All Notes surrendered for the purpose of payment,
redemption, repurchase, purchase, conversion, exchange or registration of
transfer shall, if surrendered to the Company or any paying agent or any Note
registrar or any conversion agent, be surrendered to the Trustee and promptly
canceled by it, or, if surrendered to the Trustee, shall be promptly canceled
by it, and no Notes shall be issued in lieu thereof except as expressly
permitted by any of the provisions of this Indenture.  The Trustee shall dispose of such canceled Notes in accordance
with its customary procedures.  If the
Company shall acquire any of the Notes, such acquisition shall not operate as a
redemption or satisfaction of the indebtedness represented by such Notes unless
and until the same are delivered to the Trustee for cancellation.

Section 2.9.            CUSIP
Numbers.  The Company in issuing the Notes may use “CUSIP” numbers (if
then generally in use), and, if so, the Trustee shall use “CUSIP” numbers in
notices of redemption, repurchase or purchase as a convenience to Noteholders;
provided, however, that any such notice may state that no representation is
made as to the correctness of such numbers either as printed on the Notes or as
contained in any notice of a redemption, repurchase or purchase and that
reliance may be placed only on the other identification numbers printed on the
Notes, and any such redemption, repurchase or purchase shall not be affected by
any defect in or omission of such numbers. 
The Company will promptly notify the Trustee of any change in the
“CUSIP” numbers.

ARTICLE
THREE

REDEMPTION
OF NOTES

Section 3.1.            Optional
Redemption by the Company.  At any time or from time to time on or
after July 1, 2008, and prior to maturity, the Notes may be redeemed at
the option of the Company, in whole or in part, upon notice as set forth in
Section 3.2, at 100% of principal amount of the Notes, together in each
case with accrued and unpaid Liquidated Damages, if any, to, but excluding, the
Redemption Date; provided, however, that if the Redemption Date is on a
July 1 or January 1, then the Liquidated Damages, if any, payable on
such date shall be paid to the holder of record on the preceding June 15
or December 15, respectively.

Section 3.2.            Notice
of Redemptions; Selection of Notes.  In case the Company shall desire
to exercise the right to redeem all or, as the case may be, any part of the
Notes pursuant to Section 3.1, it shall fix the Redemption Date and it or,
at its written request received by the Trustee not fewer than twenty (20) days
prior (or such shorter period of time as may be acceptable to the Trustee) to
the Redemption Date, the Trustee in the name of and at the expense of the
Company, shall mail or cause to be mailed a notice of such redemption not fewer
than twenty (20) nor more than sixty (60) days prior to the Redemption Date to
the holders of Notes so to be redeemed as a whole or in part at their last
addresses as the same appear on the Note register; provided, however, that if
the Company shall give such notice, it shall also give written notice, and
written notice of the Notes to be redeemed, to the Trustee.  Such mailing shall be by first class
mail.  The notice if mailed in the manner
herein provided shall be conclusively presumed to have been duly given, whether
or not the holder receives such notice. 
In any case, failure to give such notice by mail or any defect in the
notice to the holder of any Note designated for redemption as a whole or in
part shall not affect the validity of the proceedings for the redemption of any
other Note.  Concurrently with the
mailing of any such notice of redemption, the Company shall issue a press
release announcing such redemption, the form and content of which press release
shall be determined by the Company in its sole discretion.  The failure to issue 

 

17

 

any
such press release or any defect therein shall not affect the validity of the
redemption notice or any of the proceedings for the redemption of any Note
called for redemption.

Each such notice of redemption shall specify
the aggregate principal amount of Notes to be redeemed, the CUSIP number or
numbers of the Notes being redeemed, the Redemption Date (which shall be a
Business Day), the Redemption Price at which Notes are to be redeemed, the
place or places of payment, that payment will be made upon presentation and
surrender of such Notes, that Liquidated Damages, if any, accrued to the Redemption
Date will be paid as specified in said notice, and that on and after said date
Liquidated Damages, if any, thereon or on the portion thereof to be redeemed
will cease to accrue.  Such notice shall
also state the current Conversion Price and the date on which the right to
convert such Notes or portions thereof into Common Stock will expire.  If fewer than all the Notes are to be
redeemed, the notice of redemption shall identify the Notes to be redeemed
(including CUSIP numbers, if any).  In
case any Note is to be redeemed in part only, the notice of redemption shall
state the portion of the principal amount thereof to be redeemed and shall
state that, on and after the date fixed for redemption, upon surrender of such
Note, a new Note or Notes in principal amount equal to the unredeemed portion
thereof will be issued.

On or prior to the redemption date specified
in the notice of redemption given as provided in this Section 3.2, the
Company will deposit with the Trustee or with one or more paying agents (or, if
the Company is acting as its own paying agent, set aside, segregate and hold in
trust as provided in Section 5.4) an amount of money in immediately
available funds sufficient to redeem on the Redemption Date all the Notes (or
portions thereof) so called for redemption (other than those theretofore
surrendered for conversion into Common Stock) at the appropriate Redemption
Price, together with accrued Liquidated Damages, if any, to, but excluding, the
Redemption Date; provided, however, that if such payment is made on the
Redemption Date it must be received by the Trustee or paying agent, as the case
may be, by 10:00 a.m. New York City time on such date.  The Company shall be entitled to retain any
interest, yield or gain on amounts deposited with the Trustee or any paying
agent pursuant to this Section 3.2 in excess of amounts required hereunder
to pay the Redemption Price together with accrued Liquidated Damages, if any,
to, but excluding, the Redemption Date. 
If any Note called for redemption is converted pursuant hereto prior to
such redemption, any money deposited with the Trustee or any paying agent or so
segregated and held in trust for the redemption of such Note shall be paid to
the Company upon its written request, or, if then held by the Company, shall be
discharged from such trust.  Whenever
any Notes are to be redeemed, the Company will give the Trustee written notice
in the form of an Officers’ Certificate not fewer than twenty (20) days (or
such shorter period of time as may be acceptable to the Trustee) prior to the
Redemption Date as to the aggregate principal amount of Notes to be redeemed.

If less than all of the outstanding Notes are
to be redeemed, the Trustee shall select the Notes or portions thereof of the
Global Note or the Notes in certificated form to be redeemed (in principal
amounts of $1,000 or integral multiples thereof) by lot, on a pro rata basis or
by another method the Trustee deems fair and appropriate.  If any Note selected for partial redemption
is submitted for conversion in part after such selection, the portion of such
Note submitted for conversion shall be deemed (so far as may be) to be the
portion to be selected for redemption. 
The Notes (or portions thereof) so selected shall be deemed duly
selected for redemption for all purposes hereof, notwithstanding that any such
Note is submitted for conversion in part before the mailing of the notice of
redemption.

Upon any redemption of less than all of the
outstanding Notes, the Company and the Trustee may (but need not), solely for
purposes of determining the pro rata allocation among such Notes as are
unconverted and outstanding at the time of redemption, treat as outstanding any
Notes surrendered for conversion during the period of fifteen (15) days next
preceding the mailing of a notice of redemption and 

 

18

 

may (but need not) treat as outstanding any
Note authenticated and delivered during such period in exchange for the
unconverted portion of any Note converted in part during such period.

Section 3.3.            Payment
of Notes Called for Redemption.  If notice of redemption has been
given as above provided, the Notes or portion of Notes with respect to which
such notice has been given shall, unless converted into Common Stock pursuant
to the terms hereof, become due and payable on the Redemption Date and at the
place or places stated in such notice at the applicable Redemption Price,
together with Liquidated Damages, if any, accrued to (but excluding) the
Redemption Date, and on and after said date (unless the Company shall default
in the payment of such Notes at the Redemption Price, together with Liquidated
Damages, if any, accrued to said date) Liquidated Damages, if any, on the Notes
or portion of Notes so called for redemption shall cease to accrue and, after
the close of business on the Business Day next preceding the Redemption Date,
such Notes shall cease to be convertible into Common Stock and, except as
provided in Sections 8.5 and 13.4, to be entitled to any benefit or security
under this Indenture, and the holders thereof shall have no right in respect of
such Notes except the right to receive the Redemption Price thereof and unpaid
Liquidated Damages, if any, to (but excluding) the Redemption Date.  On presentation and surrender of such Notes
at a place of payment in said notice specified, the said Notes or the specified
portions thereof shall be paid and redeemed by the Company at the applicable
Redemption Price, together with Liquidated Damages, if any, accrued thereon to
(but excluding) the Redemption Date; provided, however, that if the applicable
Redemption Date is a Liquidated Damages Payment Date, the payment of Liquidated
Damages, if any, due on such date shall be payable to the holders of such Notes
registered as such on the relevant Liquidated Damages Record Date instead of
the holders surrendering such Notes for redemption on such date.

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

Notwithstanding the foregoing, the Trustee
shall not redeem any Notes or mail any notice of redemption during the
continuance of a default in payment of Liquidated Damages, if any, on the
Notes.  If any Note called for
redemption shall not be so paid upon surrender thereof for redemption, the
principal shall, until paid or duly provided for, bear interest from the
Redemption Date at the rate of 1% per annum and such Note shall remain
convertible into Common Stock until the principal and Liquidated Damages, if
any, have been paid or duly provided for.

Section 3.4.            Conversion
Arrangement on Call for Redemption.  In connection with any redemption
of Notes, the Company may arrange for the purchase and conversion of any Notes
by an agreement with one or more investment bankers or other purchasers to
purchase such Notes by paying to the Trustee in trust for the Noteholders, on
or before the Redemption Date, an amount not less than the applicable
Redemption Price, together with Liquidated Damages, if any, accrued to (but
excluding) the Redemption Date, of such Notes.  Notwithstanding anything to the contrary contained in this
Article Three, the obligation of the Company to pay the Redemption Price
of such Notes, together with Liquidated Damages, if any, accrued to (but excluding)
the Redemption Date, shall be deemed to be satisfied and discharged to the
extent such amount is so paid by such purchasers.  If such an agreement is entered into, a copy of which will be
filed with the Trustee prior to the date fixed for redemption, any Notes not
duly surrendered for conversion by the holders thereof may, at the option of
the Company, be deemed, to the fullest extent permitted by law, acquired by
such purchasers from such holders and (notwithstanding anything to the contrary
contained in Article Fifteen) surrendered by such purchasers for
conversion, all as of immediately prior to the close of business on the
Redemption Date (and the right to convert any such Notes shall be extended
through such 

 

19

 

time),
subject to payment of the above amount as aforesaid.  At the direction of the Company, the Trustee shall hold and
dispose of any such amount paid to it in the same manner as it would monies
deposited with it by the Company for the redemption of Notes.  Without the Trustee’s prior written consent,
no arrangement between the Company and such purchasers for the purchase and
conversion of any Notes shall increase or otherwise affect any of the powers,
duties, responsibilities or obligations of the Trustee as set forth in this
Indenture.

Section 3.5.            Repurchase
at Option of Holders.

(a)           If
there shall occur a Fundamental Change at any time prior to maturity of the
Notes, then each Noteholder shall have the right, at such holder’s option, to
require the Company to repurchase all of such holder’s Notes, or any portion
thereof that is an integral multiple of $1,000 principal amount, on the date
(the “Repurchase Date”) that is thirty (30) days after the date of the Company
Notice (as defined in Section 3.5(c) below) of such Fundamental Change
(or, if such 30th day is not a Business Day, the next succeeding Business Day)
at a repurchase price equal to 100% of the principal amount thereof together
with accrued Liquidated Damages, if any, to (but excluding) the Repurchase Date
(the “Repurchase Price”); provided however, that, if such Repurchase Date is a
July 1 or January 1, then the Liquidated Damages, if any, payable on
such date shall be paid to the holders of record of the Notes on the next
preceding June 15 or December 15, respectively.

At the option of the Company, the Repurchase
Price may be paid in cash or, subject to fulfillment by the Company of the
conditions set forth in Section 3.5(b), by delivery of shares of Common
Stock having a fair market value equal to the Repurchase Price as set forth in
Section 3.5(b).

Upon presentation of any Note repurchased in
part only, the Company shall execute and, upon the Company’s written direction
to the Trustee, the Trustee shall authenticate and deliver to the holder
thereof, at the expense of the Company, a new Note or Notes, of authorized
denominations, in principal amount equal to the unrepurchased portion of the
Notes so presented.

(b)           The
Company may elect to pay the Repurchase Price by delivery of shares of Common
Stock pursuant to Section 3.5(a) if and only if the following conditions
shall have been satisfied:

(i)    The shares
of Common Stock deliverable in payment of the Repurchase Price shall have a
fair market value as of the Repurchase Date of not less than the Repurchase
Price.  For purposes of
Section 3.5(a) and this Section 3.5(b), 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 Closing Price per share of the Common Stock for the
10 Trading Days immediately preceding and including the third Trading Day prior
to the Repurchase Date;

(ii)   The
Repurchase Price shall be paid only in cash in the event any shares of Common
Stock to be issued upon repurchase of Notes hereunder (i) 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 (ii) 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;

 

20

 

(iii)  Payment of
the Repurchase Price may not be made in Common Stock unless such stock is, or
shall have been, approved for quotation on the Nasdaq National Market or listed
on a national securities exchange, in either case, prior to the Repurchase
Date; and

(iv)  All shares
of Common Stock that may be issued upon repurchase of Notes 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 or similar rights.

If all of the conditions set forth in this
Section 3.5(b) are not satisfied in accordance with the terms thereof, the
Repurchase Price shall be paid by the Company only in cash.

(c)           On
or before the tenth day after the occurrence of a Fundamental Change, the
Company or at its written request (which must be received by the Trustee at
least five (5) Business Days prior to the date the Trustee is requested to give
notice as described below, unless the Trustee shall agree in writing to a
shorter period), the Trustee, in the name of and at the expense of the Company,
shall mail or cause to be mailed to all holders of record on the date of the
Fundamental Change a notice (the “Company Notice”) of the occurrence of such
Fundamental Change and of the repurchase right at the option of the holders
arising as a result thereof.  The notice
shall be mailed in the manner and with the effect set forth in the first
paragraph of Section 3.2 (without regard for the time limits set forth
therein).  If the Company shall give
such notice, the Company shall also deliver a copy of the Company Notice to the
Trustee at such time as it is mailed to Noteholders.  Concurrently with the mailing of any Company Notice, the Company
shall issue a press release announcing such Fundamental Change referred to in
the Company Notice, the form and content of which press release shall be
determined by the Company in its sole discretion.  The failure to issue any such press release or any defect therein
shall not affect the validity of the Company Notice or any proceedings for the
repurchase of any Note which any Noteholder may elect to have the Company
repurchase as provided in this Section 3.5.

Each Company Notice shall specify the
circumstances constituting the Fundamental Change, the Repurchase Date, the
Repurchase Price, and whether the Repurchase Price shall be paid by the Company
in cash or by delivery of shares of Common Stock, that the holder must exercise
the repurchase right on or prior to the close of business on the Repurchase
Date (the “Fundamental Change Expiration Time”), that the holder shall have the
right to withdraw any Notes surrendered prior to the Fundamental Change
Expiration Time, a description of the procedure which a Noteholder must follow
to exercise such repurchase right and to withdraw any surrendered Notes, the
place or places where the holder is to surrender such holder’s Notes and the
“CUSIP” number or numbers of the Notes (if then generally in use).

No failure of the Company to give the
foregoing notices and no defect therein shall limit the Noteholders’ repurchase
rights or affect the validity of the proceedings for the repurchase of the
Notes pursuant to this Section 3.5.

(d)           For
a Note to be so repurchased at the option of the holder, the Company must
receive at the office or agency of the Company maintained for that purpose or,
at the option of such holder, the Corporate Trust Office, such Note with the
form entitled “Option to Elect Repurchase Upon a Fundamental Change” on the
reverse thereof duly completed, together with such Notes duly endorsed for
transfer, on or before the Fundamental Change Expiration Time.  All questions as to the validity,
eligibility (including time of receipt) and acceptance of any Note for
repayment shall be determined by the Company, whose determination shall be
final and binding absent manifest error.

 

21

 

(e)           On
or prior to the Repurchase Date, the Company will deposit with the Trustee or
with one or more paying agents (or, if the Company is acting as its own paying
agent, set aside, segregate and hold in trust as provided in Section 5.4)
an amount of money or shares of Common Stock, as the case may be, sufficient to
repurchase on the Repurchase Date all the Notes to be repurchased on such date
at the appropriate Repurchase Price; provided, however, that if such payment is
made on the Repurchase Date it must be received by the Trustee or paying agent,
as the case may be, by 10:00 a.m. New York City time, on such date.  Payment for Notes surrendered for repurchase
(and not withdrawn) prior to the Fundamental Change Expiration Time will be
made promptly (but in no event more than five (5) Business Days) following the
Repurchase Date by mailing checks or depositing shares of Common Stock for the
amount payable to the holders of such Notes entitled thereto as they shall
appear on the registry books of the Company.

(f)            In
the case of a reclassification, change, consolidation, merger, combination,
transfer, sale or conveyance to which Section 15.6 applies, in which the
Common Stock of the Company is changed or exchanged as a result into the right
to receive stock, securities or other property or assets (including cash),
which includes shares of Common Stock of the Company or shares of common stock
of another Person that are, or upon issuance will be, traded on a United States
national securities exchange or approved for trading on an established
automated over-the-counter trading market in the United States and such shares
constitute at the time such change or exchange becomes effective in excess of
50% of the aggregate fair market value of such stock, securities or other
property or assets (including cash) (as determined by the Company, which
determination shall be conclusive and binding), then the Person formed by such
consolidation or resulting from such merger or which acquires such assets, as
the case may be, shall execute and deliver to the Trustee a supplemental
indenture (accompanied by an Opinion of Counsel that such supplemental
indenture complies with the Trust Indenture Act as in force at the date of
execution of such supplemental indenture) modifying the provisions of this
Indenture relating to the right of holders of the Notes to cause the Company to
repurchase the Notes following a Fundamental Change, including without
limitation the applicable provisions of this Section 3.5 and the definitions
of Common Stock and Fundamental Change, as appropriate, as determined in good
faith by the Company (which determination shall be conclusive and binding), to
make such provisions apply to such other Person if different from the Company
and the common stock issued by such Person (in lieu of the Company and the
Common Stock of the Company).

(g)           The
Company will comply with the provisions of Rule 13e–4 and any other
tender offer rules under the Exchange Act to the extent then applicable in
connection with the repurchase rights of the holders of Notes in the event of a
Fundamental Change.

(h)           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 Note declared prior to the Repurchase Date.

(i)            No
fractions of shares shall be issued upon repurchase of Notes.  If more than one Note 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 

 

22

 

the
basis of the aggregate principal amount of the Notes so repurchased.  Instead of any fractional share of Common
Stock that would otherwise be issuable on the repurchase of any Note, 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, the current market price of a share of Common Stock is the
Closing Price per share of the Common Stock on the Trading Day immediately
preceding the Repurchase Date.

(j)            Any
issuance and delivery of certificates for shares of Common Stock on repurchase
of Notes shall be made without charge to the holder of Notes 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 (i) income of the holder or (ii) 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 Notes 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.

(k)           If
shares of Common Stock to be delivered upon repurchase of a Note are to be
registered in a name other than that of the beneficial owner of such Note, then
such holder must deliver to the Trustee the Assignment form attached to the
Note, dated the date of surrender of such Restricted Note and signed by such
beneficial owner, as to compliance with the restrictions on transfer applicable
to such Restricted Note.  Neither the
Trustee nor any Registrar or Transfer Agent or other agents shall be required
to register in a name other than that of the beneficial owner shares of Common
Stock issued upon repurchase of any such Restricted Note not so accompanied by
a properly completed Assignment form.

Section 3.6.            Purchase
at the Option of the Holder on the Purchase Date

(a)           At
the option of the holder, the Notes shall be purchased by the Company as of
July 1, 2008 (the “Purchase Date”), in whole or in part, at 100% of the
principal amount in cash, on the Purchase Date, of such Notes to be purchased,
together with accrued and unpaid Liquidated Damages, if any, to, but excluding,
the Purchase Date (the “Purchase Price”), upon delivery to the paying agent by
the holder, of a written notice of purchase (a “Purchase Notice”) at any time
from the opening of business on the date that is 20 Business Days prior to the
Purchase Date until the close of business on the Purchase Date.  The Purchase Notice shall include the
following information:

(i)    if
certificated Notes have been issued, the certificate number of the Notes that
the holder will deliver to be purchased, or if no certificated Notes have been
issued, such information as may be required under the applicable procedures of
the Depositary and the Indenture;

(ii)   the
portion of the principal amount of the Notes that the holder will deliver to be
purchased, which portion must be $1,000 or an integral multiple thereof;

(iii)  that such
Notes shall be purchased by the Company as of the Purchase Date pursuant to the
terms and conditions specified in this Indenture; and

(iv)  that
delivery of such Notes to the paying agent prior to, on or after the Purchase
Date (together with all necessary endorsements) (at the offices of the paying
agent in the case of 

 

23

 

certificated
Notes or otherwise by book-entry transfer) is a condition to receipt by the
holder of the Purchase Price therefore; provided, however, that such Purchase
Price shall be so paid pursuant to this Section 3.6 only if the Notes so
delivered to the paying agent shall conform in all respects to the description
thereof in the related Purchase Notice.

The paying agent shall promptly notify the
Company of its receipt by it of a Purchase Notice.

Any purchase by the Company contemplated
pursuant to the provisions of this Section 3.6 shall be consummated by the
delivery of the consideration from the Company to the paying agent, to be
received by the holder promptly following the later of the Purchase Date and
the time of delivery of the Notes.

If the paying agent holds money or securities
sufficient to pay the Purchase Price of the Notes on the Business Day following
the Purchase Date in accordance with the terms of this Indenture, then,
immediately after the Purchase Date, the Notes will cease to be outstanding
whether or not the Notes have been delivered to the paying agent.  Thereafter, all other rights of the holders
shall terminate, other than the right to receive the Purchase Price upon
delivery of the Notes.

Provisions of this Indenture that apply to
the purchase of all of a Note also apply to the purchase of a portion of a
Note.

(b)           Notice
of Optional Purchase.  The Company
is required to give notice (the “Notice of Optional Purchase”) to the holders
on a date that is no less than 20 Business Days prior to the Purchase
Date.  The Notice of Optional Repurchase
shall be delivered to all holders at their respective addresses shown in the
Register and to beneficial owners as required by law, and shall include the
following information:

(i)    the name
and address of the paying agent;

(ii)   that the
Purchase Notice must be delivered by each holder electing to have the Company
repurchase such holder’s Notes (or a portion thereof) as of the Purchase Date
to the paying agent (the Notice of Optional Repurchase shall include a form of
Purchase Notice);

(iii)  that the
Notes (together with necessary endorsements) must be surrendered (by physical
delivery at the office of the paying agent in the case of certificated Notes,
or otherwise by book-entry transfer) to the paying agent to collect payment;

(iv)  that the
Purchase Price for any security as to which a Purchase Notice has been given
and not withdrawn will be paid promptly following the later of the Purchase
Date and the time of surrender of such Notes;

(v)   a brief
summary of the conversion rights of the Notes;

(vi)  the
procedures for withdrawing a Purchase Notice and sample form of Notice of
Withdrawal; and

(vii) the CUSIP
number or numbers of the Notes being purchased.

At the Company’s request, the Trustee shall
give the Notice of Optional Repurchase in the Company’s name and at the Company’s
expense; provided, however, that, in all cases, the text of such Notice 

 

24

 

of Optional Purchase shall be prepared by the
Company and the Trustee shall be given at least five (5) Business Days’ prior notice
of the request (unless a shorter period is acceptable to the Trustee).

(c)           Notice
of Withdrawal.  Notwithstanding
anything herein to the contrary, the holder delivering to the paying agent the
Purchase Notice contemplated by this Section 3.6 shall have the right to
withdraw such Purchase Notice at any time prior to the close of business on the
Purchase Date by delivery of a written notice of withdrawal (a “Notice of
Withdrawal”) to the paying agent.  The
Notice of Withdrawal shall indicate the following:

(i)    the
principal amount of the Notes being withdrawn;

(ii)   if
certificated Notes have been issued, the certificate numbers of the Notes being
withdrawn or if certificated Notes have not been issued, such information as
may be required under the applicable procedure of the Depositary; and

(iii)  the
principal amount, if any, that remains subject to the Purchase Notice.

The paying agent shall promptly notify the
Company of the receipt by it of any written notice of withdrawal.

ARTICLE
FOUR

SUBORDINATION
OF NOTES

Section 4.1.            Agreement
of Subordination.  The Company covenants and agrees, and each holder
of Notes issued hereunder by its acceptance thereof likewise covenants and
agrees, that all Notes shall be issued subject to the provisions of this
Article Four, and each Person holding any Note, whether upon original
issue or upon registration of transfer, assignment or exchange thereof, accepts
and agrees to be bound by such provisions.

The payment of the principal of, and
Liquidated Damages, if any, the Redemption Price, the Repurchase Price, the
Purchase Price, and Liquidated Damages, if any, on all Notes issued hereunder
shall, to the extent and in the manner hereinafter set forth, be subordinated
and subject in right of payment to the prior payment in full of all Senior
Indebtedness, whether outstanding at the date of this Indenture or thereafter
incurred.

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

Section 4.2.            Payments
to Noteholders.  No payment shall be made with respect to the
principal of, the Redemption Price, the Repurchase Price and the Purchase Price
or Liquidated Damages, if any, on the Notes except payments and distributions
made by the Trustee as permitted by the first or second paragraph of
Section 4.5, if:

(i)        a default in the payment of principal,
premium, if any, interest, rent or other obligations in respect of Designated
Senior Indebtedness occurs and is continuing (or, in the case of Designated
Senior Indebtedness for which there is a period of grace, in the event of such
a default that continues beyond the period of grace, if any, specified in the
instrument or lease evidencing such 

 

25

 

Designated Senior Indebtedness) (a “Payment Default”), unless and until such
Payment Default shall have been cured or waived or shall have ceased to exist;
or

(ii)       a default, other than a Payment Default,
on any Designated Senior Indebtedness occurs and is continuing that then
permits holders of such Designated Senior Indebtedness to accelerate its
maturity (or in the case of any lease, a default occurs and is continuing that
permits the lessor to either terminate the lease or require the Company to make
an irrevocable offer to terminate the lease following an event of default
thereunder) and the Trustee receives a notice of the default (a “Payment
Blockage Notice”) from a holder of Designated Senior Indebtedness, a
Representative of Designated Senior Indebtedness or the Company (a “Non-Payment
Default”).

If the Trustee receives any Payment Blockage
Notice pursuant to clause (ii) above, no subsequent Payment Blockage
Notice shall be effective for purposes of this Section 4.2 unless and
until at least 365 days shall have elapsed since the initial effectiveness of
the immediately prior Payment Blockage Notice. 
No Non-Payment 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.

The Company may and shall resume payments on
and distributions in respect of the Notes upon the earlier of:

(1)           the date upon which any such Payment
Default is cured or waived or ceases to exist, or

(2)           in the case of a Non-Payment Default,
the earlier of (a) the date upon which such Non-Payment Default is cured
or waived or ceases to exist or (b) 179 days after the applicable Payment
Blockage Notice is received by the Trustee if the maturity of such Designated
Senior Indebtedness has not been accelerated (or in the case of any lease, 179
days after notice is received if the Company has not received notice that the
lessor under such lease has exercised its right to terminate the lease or
require the Company to make an irrevocable offer to terminate the lease
following an event of default thereunder),

unless this Article Four otherwise
prohibits the payment or distribution at the time of such payment or
distribution.

Upon any payment by the Company, or
distribution of assets of the Company of any kind or character, whether in
cash, property or securities, to creditors upon any dissolution or winding up
or liquidation or reorganization of the Company, whether voluntary or
involuntary or in bankruptcy, insolvency, receivership or other proceedings,
all amounts due or to become due upon all Senior Indebtedness shall first be
paid in full in cash or other payment satisfactory to the holders of such
Senior Indebtedness (and satisfactory to the holders of Senior Indebtedness in
the case such Senior Indebtedness includes Designated Senior Indebtedness), or
payment thereof in accordance with its terms provided for in cash or other
payment satisfactory to the holders of such Senior Indebtedness (and
satisfactory to the holders of Senior Indebtedness in the case such Senior
Indebtedness includes Designated Senior Indebtedness) before any payment is
made on account of the principal of, or Liquidated Damages, if any, on the
Notes (except payments made pursuant to Article Thirteen from monies
deposited with the Trustee pursuant thereto prior to commencement of
proceedings for such dissolution, winding up, liquidation or reorganization),
and upon any such dissolution or winding up or liquidation or reorganization of
the Company or bankruptcy, insolvency, receivership or other similar
proceeding, any payment by the Company, or distribution of assets of the
Company of any kind or 

 

26

 

character, whether in cash, property or
securities, to which the holders of the Notes or the Trustee would be entitled,
except for the provisions of this Article Four, shall (except as
aforesaid) be paid by the Company or by any receiver, trustee in bankruptcy,
liquidating trustee, agent or other Person making such payment or distribution,
or by the holders of the Notes or by the Trustee under this Indenture if
received by them or it, directly to the holders of Senior Indebtedness (pro
rata to such holders on the basis of the respective amounts of Senior
Indebtedness held by such holders, or as otherwise required by law or a court
order) or their Representative or Representatives, as their respective
interests may appear, to the extent necessary to pay all Senior Indebtedness in
full, in cash or other payment satisfactory to the holders of such Senior
Indebtedness (and satisfactory to the holders of Senior Indebtedness in the
case such Senior Indebtedness includes Designated Senior Indebtedness), after
giving effect to any concurrent payment or distribution to or for the holders
of Senior Indebtedness, before any payment or distribution is made to the
holders of the Notes or to the Trustee.

For purposes of this Article Four, the
words, “cash, property or securities” shall not be deemed to include shares of
stock of the Company as reorganized or readjusted, or securities of the Company
or any other corporation provided for by a plan of reorganization or
readjustment, the payment of which is subordinated at least to the extent
provided in this Article Four with respect to the Notes to the payment of
all Senior Indebtedness which may at the time be outstanding provided
that (i) the Senior Indebtedness is assumed by the new
corporation, if any, resulting from any reorganization or readjustment, and
(ii) the rights of the holders of Senior Indebtedness (other than leases
which are not assumed by the Company or the new corporation, as the case may
be) are not, without the consent of such holders, altered by such
reorganization or readjustment.  The
consolidation of the Company with, or the merger of the Company into, another
corporation or the liquidation or dissolution of the Company following the
conveyance or transfer of its property as an entirety, or substantially as an
entirety, to another Person upon the terms and conditions provided for in
Article Twelve shall not be deemed a dissolution, winding-up, liquidation
or reorganization for the purposes of this Section 4.2 if such other
Person shall, as a part of such consolidation, merger, conveyance or transfer,
comply with the conditions stated in Article Twelve.

In the event of the acceleration of the Notes
because of an Event of Default, no payment or distribution shall be made to the
Trustee or any holder of Notes in respect of the principal of the Redemption
Price, the Repurchase Price or the Purchase Price or Liquidated Damages, if
any, on the Notes except payments and distributions made by the Trustee as
permitted by the first or second paragraph of Section 4.5, until all
Senior Indebtedness has been paid in full in cash or other payment satisfactory
to the holders of Senior Indebtedness (and satisfactory to the holders of
Designated Senior Indebtedness in the case such Senior Indebtedness includes
Designated Senior Indebtedness) or such acceleration is rescinded in accordance
with the terms of this Indenture.  If
payment of the Notes is accelerated because of an Event of Default, the Company
or the Trustee shall promptly notify holders of Senior Indebtedness of the
acceleration.

In the event that, notwithstanding the
foregoing provisions, any payment or distribution of assets of the Company of
any kind or character, whether in cash, property or securities (including,
without limitation, by way of setoff or otherwise), prohibited by the foregoing
provisions in this Section 4.2, shall be received by the Trustee or the
holders of the Notes before all Senior Indebtedness is paid in full in cash or
other payment satisfactory to the holders of such Senior Indebtedness (and
satisfactory to the holders of Senior Indebtedness in the case such Senior
Indebtedness includes Designated Senior Indebtedness), or provision is made for
such payment thereof in accordance with its terms in cash or other payment
satisfactory to the holders of such Senior Indebtedness (and satisfactory to
the holders of Senior Indebtedness in the case such Senior Indebtedness
includes Designated Senior Indebtedness), such payment or distribution shall be
held in trust for the benefit of and shall be paid over or delivered to the
holders of Senior Indebtedness or their Representative 

 

27

 

or Representatives, as their respective
interests may appear, as calculated by the Company, for application to the
payment of any Senior Indebtedness remaining unpaid to the extent necessary to
pay all Senior Indebtedness in full in cash or other payment satisfactory to
the holders of such Senior Indebtedness (and satisfactory to the holders of
Senior Indebtedness in the case such Senior Indebtedness includes Designated
Senior Indebtedness), after giving effect to any concurrent payment or
distribution to or for the holders of such Senior Indebtedness.

Nothing in this Section 4.2 shall apply
to claims of, or payments to, the Trustee under or pursuant to
Section 8.6.  This Section 4.2
shall be subject to the further provisions of Section 4.5.

Section 4.3.            Subrogation
of Notes.  Subject to the payment in full of all Senior Indebtedness,
the rights of the holders of the Notes shall be subrogated to the extent of the
payments or distributions made to the holders of such Senior Indebtedness
pursuant to the provisions of this Article Four (equally and ratably with
the holders of all indebtedness of the Company which by its express terms is
subordinated to other indebtedness of the Company to substantially the same extent
as the Notes are subordinated and is entitled to like rights of subrogation) to
the rights of the holders of Senior Indebtedness to receive payments or
distributions of cash, property or securities of the Company applicable to the
Senior Indebtedness until the principal, and Liquidated Damages, if any, on the
Notes shall be paid in full, and, for the purposes of such subrogation, no
payments or distributions to the holders of the Senior Indebtedness of any
cash, property or securities to which the holders of the Notes or the Trustee
would be entitled except for the provisions of this Article Four, and no
payment pursuant to the provisions of this Article Four, to or for the
benefit of the holders of Senior Indebtedness by holders of the Notes or the
Trustee, shall, as among the Company, its creditors other than holders of
Senior Indebtedness, and the holders of the Notes, be deemed to be a payment by
the Company to or on account of the Senior Indebtedness, and no payments or
distributions of cash, property or securities to or for the benefit of the
holders of the Notes pursuant to the subrogation provisions of this
Article Four, which would otherwise have been paid to the holders of
Senior Indebtedness, shall be deemed to be a payment by the Company to or for the
account of the Notes.  It is understood
that the provisions of this Article Four are intended solely for the
purposes of defining the relative rights of the holders of the Notes, on the
one hand, and the holders of the Senior Indebtedness, on the other hand.

Nothing contained in this Article Four
or elsewhere in this Indenture or in the Notes is intended to or shall impair,
as among the Company, its creditors other than the holders of Senior
Indebtedness, and the holders of the Notes, the obligation of the Company,
which is absolute and unconditional, to pay to the holders of the Notes the
principal and Liquidated Damages, if any, on the Notes as and when the same
shall become due and payable in accordance with their terms, or is intended to
or shall affect the relative rights of the holders of the Notes and creditors
of the Company other than the holders of the Senior Indebtedness, nor shall
anything herein or therein prevent the Trustee or the holder of any Note from
exercising all remedies otherwise permitted by applicable law upon default
under this Indenture, subject to the rights, if any, under this
Article Four of the holders of Senior Indebtedness in respect of cash,
property or securities of the Company received upon the exercise of any such
remedy.

Upon any payment or distribution of assets of
the Company referred to in this Article Four, the Trustee, subject to the
provisions of Section 8.1, and the holders of the Notes shall be entitled
to rely upon any order or decree made by any court of competent jurisdiction in
which such bankruptcy, dissolution, winding up, liquidation or reorganization
proceedings are pending, or a certificate of the receiver, trustee in
bankruptcy, liquidating trustee, agent or other Person making such payment or
distribution, delivered to the Trustee or to the holders of the Notes, for the
purpose of ascertaining the Persons entitled to participate in 

 

28

 

such distribution, the holders of the Senior
Indebtedness and other indebtedness of the Company, the amount thereof or
payable thereon and all other facts pertinent thereto or to this
Article Four.

Section 4.4.            Authorization
to Effect Subordination.  Each holder of a Note by the holder’s
acceptance thereof authorizes and directs the Trustee on the holder’s behalf to
take such action as may be necessary or appropriate to effectuate the
subordination as provided in this Article Four and appoints the Trustee to
act as the holder’s attorney-in-fact for any and all such purposes.  If the Trustee does not file a proper proof
of claim or proof of debt in the form required in any proceeding referred to in
the third paragraph of Section 7.2 hereof at least thirty (30) days before
the expiration of the time to file such claim, the holders of any Senior
Indebtedness or their Representatives are hereby authorized to file an
appropriate claim for and on behalf of the holders of the Notes.

Section 4.5.            Notice
to Trustee.  The Company shall give prompt written notice in the form
of an Officers’ Certificate to a Responsible Officer of the Trustee and to any
paying agent of any fact known to the Company that would prohibit the making of
any payment of monies to or by the Trustee or any paying agent in respect of
the Notes pursuant to the provisions of this Article Four.  Notwithstanding the provisions of this
Article Four 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 of monies to or by the Trustee in respect of the
Notes pursuant to the provisions of this Article Four, unless and until a
Responsible Officer of the Trustee shall have received written notice thereof
at the Corporate Trust Office from the Company (in the form of an Officers’
Certificate) or a Representative or a holder or holders of Senior Indebtedness,
and before the receipt of any such written notice, the Trustee, subject to the
provisions of Section 8.1, shall be entitled in all respects to assume
that no such facts exist; provided, however, that if on a date not less than
one Business Day prior to the date upon which by the terms hereof any such
monies may become payable for any purpose (including, without limitation, the
payment of the principal or Liquidated Damages, if any, on any Note) the
Trustee shall not have received, with respect to such monies, the notice
provided for in this Section 4.5, then, anything herein contained to the
contrary notwithstanding, the Trustee shall have full power and authority to apply
monies received to the purpose for which they were received, and shall not be
affected by any notice to the contrary that may be received by it on or after
such prior date.

Notwithstanding anything in this
Article Four to the contrary, nothing shall prevent any payment by the
Trustee to the Noteholders of monies deposited with it pursuant to
Section 13.1, if a Responsible Officer of the Trustee shall not have
received written notice at the Corporate Trust Office on or before one Business
Day prior to the date such payment is due that such payment is not permitted
under Section 4.1 or 4.2.

The Trustee, subject to the provisions of
Section 8.1, shall be entitled to rely on the delivery to it of a written
notice by a Representative or a person representing himself to be a holder of
Senior Indebtedness (or a trustee on behalf of such holder) to establish that
such notice has been given by a Representative or a holder of Senior
Indebtedness or a trustee on behalf of any such holder or holders.  The Trustee shall not be required to make
any payment or distribution to or on behalf of a holder of Senior Indebtedness
pursuant to this Article Four unless it has received satisfactory evidence
as to the amount of Senior Indebtedness held by such Person, the extent to
which such Person is entitled to participate in such payment or distribution
and any other facts pertinent to the rights of such Person under this
Article Four.

Section 4.6.            Trustee’s
Relation to Senior Indebtedness.  The Trustee, in its individual capacity,
shall be entitled to all the rights set forth in this Article Four in
respect of any Senior Indebtedness at any time held by it, to the same extent
as any other holder of Senior Indebtedness, and nothing in Section 8.13 or
elsewhere in this Indenture shall deprive the Trustee of any of its rights as
such holder.

 

29

 

With respect to the holders of Senior
Indebtedness, the Trustee undertakes to perform or to observe only such of its
covenants and obligations as are specifically set forth in this
Article Four, and no implied covenants or obligations with respect to the
holders of Senior Indebtedness shall be read into this Indenture against the
Trustee.  The Trustee shall not be
deemed to owe any fiduciary duty to the holders of Senior Indebtedness and,
subject to the provisions of Section 8.1, the Trustee shall not be liable
to any holder of Senior Indebtedness (i) for any failure to make any
payments or distributions to such holder or (ii) if it shall pay over or
deliver to holders of Notes, the Company or any other Person money in
compliance with this Article Four.

Section 4.7.            No
Impairment of Subordination.  No right of any present or future holder
of any Senior Indebtedness to enforce subordination as herein provided shall at
any time in any way be prejudiced or impaired by any act or failure to act on
the part of the Company or by any act or failure to act, in good faith, by any
such holder, or by any noncompliance by the Company with the terms, provisions
and covenants of this Indenture, regardless of any knowledge thereof which any
such holder may have or otherwise be charged with.  Senior Indebtedness may be created, renewed or extended and
holders of Senior Indebtedness may exercise any rights under any instrument
creating or evidencing such Senior Indebtedness, including, without limitation,
any waiver of default thereunder, without any notice to or consent from the
holders of the Notes or the Trustee.  No
compromise, alteration, amendment, modification, extension, renewal or other
change of, or waiver, consent or other action in respect of, any liability or
obligation under or in respect of the Senior Indebtedness or any terms or
conditions of any instrument creating or evidencing such Senior Indebtedness
shall in any way alter or affect any of the provisions of this
Article Four or the subordination of the Notes provided thereby.

Section 4.8.            Certain
Conversions Not Deemed Payment.  For the purposes of this
Article Four only, (1) the issuance and delivery of junior securities
upon conversion of Notes in accordance with Article Fifteen shall not be
deemed to constitute a payment or distribution on account of the principal of
or Liquidated Damages, if any on Notes or on account of the purchase or other acquisition
of Notes, and (2) the payment, issuance or delivery of cash (except in
satisfaction of fractional shares pursuant to Section 15.3), property or
securities (other than junior securities) upon conversion of a Note shall be
deemed to constitute payment on account of the principal of, or Liquidated
Damages, if any, on such Note.  For the
purposes of this Section 4.8, the term “junior securities” means
(a) shares of any stock of any class of the Company or (b) securities
of the Company that are subordinated in right of payment to all Senior
Indebtedness 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 Notes are so subordinated as provided in this Article Four.  Nothing contained in this Article Four
or elsewhere in this Indenture or in the Notes is intended to or shall impair,
as among the Company, its creditors (other than holders of Senior Indebtedness)
and the Noteholders, the right, which is absolute and unconditional, of the
holder of any Note to convert such Note in accordance with
Article Fifteen.

Section 4.9.            Article
Applicable to Paying Agents.  If at any time any paying agent other
than the Trustee shall have been appointed by the Company and be then acting
hereunder, the term “Trustee” as used in this Article Four shall (unless
the context otherwise requires) be construed as extending to and including such
paying agent within its meaning as fully for all intents and purposes as if
such paying agent were named in this Article Four in addition to or in
place of the Trustee; provided, however, that the first paragraph of
Section 4.5 shall not apply to the Company or any Affiliate of the Company
if it or such Affiliate acts as paying agent.

 

30

 

The Trustee shall not be responsible for the
actions or inactions of any other paying agents (including the Company if
acting as its own paying agent) and shall have no control of any funds held by
such other paying agents.

Section 4.10.          Senior
Indebtedness Entitled to Rely.  The holders of Senior Indebtedness
(including, without limitation, Designated Senior Indebtedness) shall have the
right to rely upon this Article Four, and no amendment or modification of
the provisions contained herein shall diminish the rights of such holders
unless such holders shall have agreed in writing thereto.

Section 4.11.          Reliance
on Judicial Order or Certificate of Liquidating Agent.  Upon any
payment or distribution of assets of the Company referred to in this
Article Four, the Trustee and the Noteholders 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, liquidating trustee, custodian, receiver, assignee for
the benefit of creditors, agent or other Person making such payment or
distribution, delivered to the Trustee or to the Noteholders, for the purpose
of ascertaining the Persons entitled to participate in such payment or
distribution, the holders of Senior Indebtedness and other indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this
Article Four.

ARTICLE
FIVE

PARTICULAR
COVENANTS OF THE COMPANY

Section 5.1.            Payment
of Principal, and Liquidated Damages, if any.  The Company covenants and
agrees that it will duly and punctually pay or cause to be paid the principal
of, the Redemption Price, the Repurchase Price and the Purchase Price, and
Liquidated Damages, if any, on each of the Notes at the places, at the
respective times and in the manner provided herein and in the Notes.

Section 5.2.            Maintenance
of Office or Agency.  The Company will maintain an office or agency in
the Borough of Manhattan, the City of New York, where the Notes may be
surrendered for registration of transfer or exchange or for presentation for
payment or for conversion, redemption, repurchase and purchase and where
notices and demands to or upon the Company in respect of the Notes and this
Indenture may be served.  The Company will
give prompt written notice to the Trustee of the location, and any change in
the location, of such office or agency not designated or appointed by the
Trustee.  If at any time the Company
shall fail to maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office or the
office of agency of the Trustee in The Borough of Manhattan, The City of New
York (which shall initially be located at U.S. Bank Trust National Association,
an Affiliate of the Trustee, 100 Wall Street, Suite 1600, New York,
NY  10005, Attention:  Corporate Trust Services (Lattice
Semiconductor Corporation, Zero Coupon Convertible Subordinated Notes due
July 1, 2010).

The Company may also from time to time
designate co-registrars and one or more offices or agencies where the Notes may
be presented or surrendered for any or all such purposes and may from time to
time rescind such designations.  The
Company will give prompt written notice of any such designation or rescission
and of any change in the location of any such other office or agency.

 

31

 

The Company hereby initially designates the
Trustee as paying agent, Note registrar, Custodian and conversion agent and
each of the Corporate Trust Office and the office of agency of the Trustee in
The Borough of Manhattan, The City of New York (which shall initially be U.S.
Bank Trust National Association, an Affiliate of the Trustee, 100 Wall
Street, Suite 1600, New York, NY 
10005, Attention: Corporate Trust Services (Lattice Semiconductor
Corporation, Zero Coupon Convertible Subordinated Notes due July 1, 2010),
shall be considered as one such office or agency of the Company for each of the
aforesaid purposes.

So long as the Trustee is the Note registrar,
the Trustee agrees to mail, or cause to be mailed, the notices set forth in
Section 8.10(a) and the third paragraph of Section 8.11.  If co-registrars have been appointed in
accordance with this Section, the Trustee shall mail such notices only to the
Company and the holders of Notes it can identify from its records.

Section 5.3.            Appointments
to Fill Vacancies in Trustee’s Office.  The Company, whenever
necessary to avoid or fill a vacancy in the office of Trustee, will appoint, in
the manner provided in Section 8.10, a Trustee, so that there shall at all
times be a Trustee hereunder.

Section 5.4.            Provisions
as to Paying Agent.

(a)           If
the Company shall appoint a paying agent other than the Trustee, or if the
Trustee shall appoint such a paying agent, the Company will cause such paying
agent to execute and deliver to the Trustee an instrument in which such agent
shall agree with the Trustee, subject to the provisions of this
Section 5.4:

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

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

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

The Company shall, on or before each due date
of the principal of, or Liquidated Damages, if any, on the Notes, deposit with
the paying agent a sum (in funds which are immediately available on the due
date for such payment) sufficient to pay such principal, or Liquidated Damages,
if any, and (unless such paying agent is the Trustee) the Company will promptly
notify the Trustee of any failure to take such action; provided, however, that
if such deposit is made on the due date, such deposit shall be received by the
paying agent by 10:00 a.m. New York City time, on such date.

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

 

32

 

(c)           Anything
in this Section 5.4 to the contrary notwithstanding, the Company may, at
any time, for the purpose of obtaining a satisfaction and discharge of this
Indenture, or for any other reason, pay or cause to be paid to the Trustee all
sums held in trust by the Company or any paying agent hereunder as required by
this Section 5.4, such sums to be held by the Trustee upon the trusts herein
contained and upon such payment by the Company or any paying agent to the
Trustee, the Company or such paying agent shall be released from all further
liability with respect to such sums.

(d)           Anything
in this Section 5.4 to the contrary notwithstanding, the agreement to hold
sums in trust as provided in this Section 5.4 is subject to
Sections 13.3 and 13.4.

The Trustee shall not be responsible for the
actions of any other paying agents (including the Company if acting as its own
paying agent) and shall have no control of any funds held by such other paying
agents.

(e)           The
Company will make all payments of principal and any Liquidated Damages on the
Notes by dollar check drawn on an account maintained at a bank in the City of
New York.  If a holder holds registered
Notes with a face value greater than $5,000,000 at its request the Company will
make payments of principal or Liquidated Damages, if any, to such holder by
wire transfer to an account maintained by such holder at a bank in the City of
New York.  If a holder holds registered
Notes with a face value in excess of $5,000,000 and it would like to receive
payments by wire transfer, it will be required to provide the Trustee with wire
transfer instructions at least 15 days prior to the relevant payment date.

Section 5.5.            Existence. 
Subject to Article Twelve, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its existence
and rights (charter and statutory); provided, however, that the Company shall
not be required to preserve any such right if the Company shall determine that
the preservation thereof is no longer desirable in the conduct of the business
of the Company and that the loss thereof is not disadvantageous in any material
respect to the Noteholders.

Section 5.6.            Maintenance
of Properties.  The Company will cause all properties used or useful
in the conduct of its business or the business of any Significant Subsidiary to
be maintained and kept in good condition, repair and working order and supplied
with all necessary equipment and will cause to be made all necessary repairs,
renewals, replacements, betterments and improvements thereof, all as in the
judgment of the Company may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted at all times;
provided, however, that nothing in this Section shall prevent the Company from
discontinuing the operation or maintenance of any of such properties if such
discontinuance is, in the judgment of the Company, desirable in the conduct of
its business or the business of any subsidiary and not disadvantageous in any
material respect to the Noteholders.

Section 5.7.            Payment
of Taxes and Other Claims.  The Company will pay or discharge, or
cause to be paid or discharged, before the same may become delinquent,
(i) all taxes, assessments and governmental charges levied or imposed upon
the Company or any Significant Subsidiary or upon the income, profits or
property of the Company or any Significant Subsidiary, (ii) all claims for
labor, materials and supplies which, if unpaid, might by law become a lien or
charge upon the property of the Company or any Significant Subsidiary and
(iii) all stamps and other duties, if any, which may be imposed by the
United States or any political subdivision thereof or therein in connection
with the issuance, transfer, exchange or conversion of any Notes or with
respect to this Indenture; provided, however, that, in the case of
clauses (i) and (ii), the Company shall not be required to pay or
discharge or cause to be paid or discharged any such tax, assessment, charge or
claim (A) if the failure to do so will not, in the aggregate, have a
material adverse impact on the 

 

33

 

Company,
or (B) if the amount, applicability or validity is being contested in good
faith by appropriate proceedings.

Section 5.8.            Rule
144A Information Requirement.  Within the period prior to the
expiration of the holding period applicable to sales thereof under
Rule 144(k) under the Securities Act (or any successor provision), the
Company covenants and agrees that it shall, during any period in which it is
not subject to Section 13 or 15(d) under the Exchange Act, make available
to any holder or beneficial holder of Notes or any Common Stock issued upon
conversion thereof which continue to be Restricted Securities in connection
with any sale thereof and any prospective purchaser of Notes or such Common
Stock designated by such holder or beneficial holder, the information required
pursuant to Rule 144A(d)(4) under the Securities Act upon the request of
any holder or beneficial holder of the Notes or such Common Stock and it will
take such further action as any holder or beneficial holder of such Notes or
such Common Stock may reasonably request, all to the extent required from time
to time to enable such holder or beneficial holder to sell its Notes or Common
Stock without registration under the Securities Act within the limitation of
the exemption provided by Rule 144A, as such Rule may be amended from time
to time.  Upon the request of any holder
or any beneficial holder of the Notes or such Common Stock, the Company will
deliver to such holder a written statement as to whether it has complied with
such requirements.

Section 5.9.            Stay,
Extension and Usury Laws.  The Company covenants (to the extent that
it may lawfully do so) that it shall not at any time insist upon, plead, or in
any manner whatsoever claim or take the benefit or advantage of, any stay,
extension or usury law or other law which would prohibit or forgive the Company
from paying all or any portion of the principal of, or Liquidated Damages, if
any, on the Notes as contemplated herein, wherever enacted, now or at any time
hereafter in force, or which may affect the covenants or the performance of
this Indenture and the Company (to the extent it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that
it will not, by resort to any such law, hinder, delay or impede the execution
of any power herein granted to the Trustee, but will suffer and permit the
execution of every such power as though no such law had been enacted.

Section 5.10.          Compliance
Certificate.  The Company shall deliver to the Trustee, within one
hundred twenty (120) days after the end of each fiscal year of the Company, a
certificate signed by either the principal executive officer, principal
financial officer or principal accounting officer of the Company, stating
whether or not to the best knowledge of the signer 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 the status thereof of
which the signer may have knowledge.

The Company will deliver to the Trustee,
forthwith upon becoming aware of (i) any default in the performance or
observance of any covenant, agreement or condition contained in this Indenture,
or (ii) 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 5.10 or Section 4.5 shall be delivered to a Responsible
Officer of the Trustee at its Corporate Trust Office.  In the event that the payment of the Notes is accelerated because
of an Event of Default, the Company shall promptly provide written notice to
the Trustee specifying the names and addresses of the holders of Senior
Indebtedness if the Trustee (and not the Company) is to provide holders of
Senior Indebtedness notice of such acceleration under Section 4.5 of the
Indenture.

 

34

 

Section 5.11.          Liquidated
Damages Notice.  In the event that the Company is required to pay
Liquidated Damages to holders of Notes 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 fifteen 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 to responsibility to any holder of Notes 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.

ARTICLE SIX

NOTEHOLDERS’ LISTS AND REPORTS

BY THE COMPANY AND THE TRUSTEE

Section 6.1.            Noteholders’
Lists.  The Company covenants and agrees that it will furnish or cause
to be furnished to the Trustee, semiannually, not more than fifteen (15) days
after each December 15 and June 15 in each year beginning with December 15,
2003, and at such other times as the Trustee may request in writing, within
thirty (30) days after receipt by the Company of any such request (or such
lesser time as the Trustee may reasonably request in order to enable it to
timely provide any notice to be provided by it hereunder), a list in such form
as the Trustee may reasonably require of the names and addresses of the holders
of Notes as of a date not more than fifteen (15) days (or such other date as
the Trustee may reasonably request in order to so provide any such notices)
prior to the time such information is furnished, except that no such list need
be furnished by the Company to the Trustee so long as the Trustee is acting as
the sole Note registrar.

Section 6.2.            Preservation
and Disclosure of Lists.

(a)           The
Trustee shall preserve, in as current a form as is reasonably practicable, all
information as to the names and addresses of the holders of Notes contained in
the most recent list furnished to it as provided in Section 6.1 or
maintained by the Trustee in its capacity as Note registrar or co-registrar in
respect of the Notes, if so acting.  The
Trustee may destroy any list furnished to it as provided in Section 6.1
upon receipt of a new list so furnished.

(b)           The
rights of Noteholders to communicate with other holders of Notes with respect
to their rights under this Indenture or under the Notes, and the corresponding
rights and duties of the Trustee, shall be as provided by the Trust Indenture
Act.

(c)           Every
Noteholder, 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 of Notes made pursuant to the Trust Indenture
Act.

Section 6.3.            Reports
by Trustee.

(a)           Within
sixty (60) days after December 15 of each year commencing with the year
2003, the Trustee shall transmit to holders of Notes and to the Company such
reports dated as of December 15 

 

35

 

of the
year in which such reports are made 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 pursuant thereto.

(b)           A
copy of such report shall, at the time of such transmission to holders of
Notes, be filed by the Trustee with each stock exchange and automated quotation
system upon which the Notes are listed and with the Company.  The Company will promptly notify the Trustee
in writing when the Notes are listed on any stock exchange or automated
quotation system or delisted therefrom.

Section 6.4.            Reports
by Company.  The Company shall file with the Trustee (and the
Commission if at any time after the Indenture becomes qualified under the Trust
Indenture Act), and transmit to holders of Notes, 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 pursuant to
such Act, whether or not the Notes are governed by such Act; 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 fifteen (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 of such shall not constitute
constructive notice of any information contained therein or determinable from
information contained therein, including the Company’s compliance with any of
its covenants hereunder (as to which the Trustee is entitled to rely
exclusively on Officers’ Certificates).

ARTICLE
SEVEN

REMEDIES
OF THE TRUSTEE AND

NOTEHOLDERS UPON AN EVENT OF DEFAULT

Section 7.1.            Events
of Default.  In case one or more of the following Events of Default
(whatever the reason for such Event of Default and whether it shall be voluntary
or involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body) shall have occurred and be continuing:

(a)           default in the payment of any
installment of Liquidated Damages, if any, upon any of the Notes as and when
the same shall become due and payable, and continuance of such default for a
period of thirty (30) days, whether or not such payment is permitted under
Article Four hereof; or

(b)           default
in the payment of the principal of, the Redemption Price, the Purchase Price or
the Repurchase Price, on the Notes as and when the same shall become due and
payable, whether or not such payment is permitted under Article Four
hereof; or

(c)           failure
on the part of the Company duly to observe or perform any other of the
covenants or agreements on the part of the Company in the Notes or in this
Indenture (other than a covenant or agreement a default in whose performance or
whose breach is elsewhere in this Section 7.1 specifically dealt with)
continued for a period of sixty (60) days after the date on which written
notice of such failure, requiring the Company to remedy the same, shall have
been given to the Company by the Trustee, or the Company and a Responsible
Officer of the Trustee by the holders of at least twenty-five percent (25%) in
aggregate principal amount of the Notes at the time outstanding determined in
accordance with Section 9.4; or

(d)           the
Company shall commence a voluntary case or other proceeding seeking
liquidation, reorganization or other relief with respect to the Company or its
debts under any bankruptcy, 

 

36

 

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

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

then, and in each and every such case (other
than an Event of Default specified in Section 7.1(d) or (e)), unless the
principal of all of the Notes shall have already become due and payable, either
the Trustee or the holders of not less than twenty-five percent (25%) in
aggregate principal amount of the Notes then outstanding hereunder determined
in accordance with Section 9.4, by notice in writing to the Company (and
to the Trustee if given by Noteholders), may declare the principal of all the Notes
and accrued Liquidated Damages, if any, to be due and payable immediately, and
upon any such declaration the same shall become and shall be immediately due
and payable, anything in this Indenture or in the Notes contained to the
contrary notwithstanding.  If an Event
of Default specified in Section 7.1(d) or (e) occurs, the principal of all
the Notes and Liquidated Damages, if any, be immediately and automatically due
and payable without necessity of further action.  This provision, however, is subject to the conditions that if, at
any time after the principal of the Notes shall have been so declared due and
payable, and before any judgment or decree for the payment of the monies due
shall have been obtained or entered as hereinafter provided, the Company shall
pay or shall deposit with the Trustee a sum sufficient to pay all matured
installments of Liquidated Damages, if any, upon all Notes and the principal of
any and all Notes which shall have become due otherwise than by acceleration
(with interest on overdue installments of Liquidated Damages, if any (to the
extent that payment of such Liquidated Damages is enforceable under applicable
law) and on such principal at the rate of 1% per annum, to the date of such
payment or deposit) and amounts due to the Trustee pursuant to
Section 8.6, and if any and all defaults under this Indenture, other than
the nonpayment of principal and accrued and Liquidated Damages, if any, on
Notes which shall have become due by acceleration, shall have been cured or
waived pursuant to Section 7.7, then and in every such case the holders of
a majority in aggregate principal amount of the Notes then outstanding, by
written notice to the Company and to the Trustee, may waive all defaults or
Events of Default and rescind and annul such declaration and its consequences;
but no such waiver or rescission and annulment shall extend to or shall affect
any subsequent default or Event of Default, or shall impair any right
consequent thereon.  The Company shall
notify a Responsible Officer of the Trustee, promptly upon becoming aware
thereof, of any Event of Default.

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

Section 7.2.            Payments
of Notes on Default; Suit Therefor.  The Company covenants that
(a) in case default shall be made in the payment of any installment of
Liquidated Damages, if any, on any of the 

 

37

 

Notes
as and when the same shall become due and payable, and such default shall have
continued for a period of thirty (30) days, or (b) in case default shall
be made in the payment of the principal, the Redemption Price, the Purchase
Price or the Repurchase Price of the Notes as and when the same shall have
become due and payable, by or under this Indenture declaration or otherwise,
then, upon demand of the Trustee, the Company will pay to the Trustee, for the
benefit of the holders of the Notes, the whole amount that then shall have
become due and payable on all such Notes for principal, the Redemption Price, the
Purchase Price, the Repurchase Price or Liquidated Damages, if any, as the case
may be, with interest upon the overdue principal and (to the extent that
payment of such interest is enforceable under applicable law) upon the overdue
installments of Liquidated Damages, if any, at the rate of 1% per annum, and,
in addition thereto, such further amount as shall be sufficient to cover the
costs and expenses of collection, including reasonable compensation to the
Trustee, its agents, attorneys and counsel, and all other amounts due the
Trustee under Section 8.6.  Until
such demand by the Trustee, the Company may pay the principal and Liquidated
Damages, if any, on the Notes to the registered holders, whether or not the
Notes are overdue.

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

In case there shall be pending proceedings
for the bankruptcy or for the reorganization of the Company or any other
obligor on the Notes under Title 11 of the United States Code, or any
other applicable law, or in case a receiver, assignee or trustee in bankruptcy
or reorganization, liquidator, sequestrator or similar official shall have been
appointed for or taken possession of the Company or such other obligor, the
property of the Company or such other obligor, or in the case of any other
judicial proceedings relative to the Company or such other obligor upon the
Notes, or to the creditors or property of the Company or such other obligor,
the Trustee, irrespective of whether the principal of the Notes shall then be
due and payable as therein expressed or by declaration or otherwise and
irrespective of whether the Trustee shall have made any demand pursuant to the
provisions of this Section 7.2, shall be entitled and empowered, by
intervention in such proceedings or otherwise, to file and prove a claim or
claims for the whole amount of principal and Liquidated Damages, if any, owing
and unpaid in respect of the Notes, and, in case of any judicial proceedings,
to file such proofs of claim and other papers or documents as may be necessary
or advisable in order to have the claims of the Trustee and of the Noteholders
allowed in such judicial proceedings relative to the Company or any other
obligor on the Notes, its or their creditors, or its or their property, and to
collect and receive any monies or other property payable or deliverable on any
such claims, and to distribute the same after the deduction of any amounts due
the Trustee under Section 8.6, and any receiver, assignee or trustee in
bankruptcy or reorganization, liquidator, custodian or similar official is
hereby authorized by each of the Noteholders to make such payments to the
Trustee, and, in the event that the Trustee shall consent to the making of such
payments directly to the Noteholders, to pay to the Trustee any amount due it
for reasonable compensation, expenses, advances and disbursements, including
counsel fees incurred by it up to the date of such distribution.  To the extent that such payment of
reasonable compensation, expenses, advances and disbursements out of the estate
in any such proceedings shall be denied for any reason, payment of the same
shall be secured by a lien on, and shall be paid out of, any and all
distributions, dividends, monies, securities and other property which the
holders of the Notes may be entitled to receive in such proceedings, whether in
liquidation or under any plan of reorganization or arrangement or otherwise.

38

 

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

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

Section 7.3.            Application
of Monies Collected by Trustee.  Any monies collected by the Trustee
pursuant to this Article Seven shall be applied in the order following, at
the date or dates fixed by the Trustee for the distribution of such monies,
upon presentation of the several Notes, and stamping thereon the payment, if
only partially paid, and upon surrender thereof, if fully paid:

FIRST: To the payment of all amounts due the Trustee
under Section 8.6;

SECOND: Subject to the provisions of
Article Four, in case the principal of the outstanding Notes shall not
have become due and be unpaid, to the payment of Liquidated Damages, if any, on
the Notes in default in the order of the maturity of the installments of such
payments, with interest (to the extent that such interest has been collected by
the Trustee) upon the overdue installments of Liquidated Damages, if any, at
the rate of 1% annually, such payments to be made ratably to the Persons
entitled thereto;

THIRD: Subject to the provisions of Article Four,
in case the principal of the outstanding Notes shall have become due, by
declaration or otherwise, and be unpaid to the payment of the whole amount then
owing and unpaid upon the Notes for principal and Liquidated Damages, if any,
with interest on the overdue principal and (to the extent that such interest
has been collected by the Trustee) upon overdue installments of Liquidated
Damages, if any, at the rate of 1% per annum and in case such monies shall be
insufficient to pay in full the whole amounts so due and unpaid upon the Notes,
then to the payment of such principal and Liquidated Damages, if any, without
preference or priority of principal, over Liquidated Damages, if any, or of
Liquidated Damages, if any, over principal or of any installment of Liquidated
Damages over any other installment of Liquidated Damages or of any Note over
any other Note, ratably to the aggregate of such principal and accrued and
unpaid Liquidated Damages, if any; and

FOURTH: Subject to the provisions of
Article Four, to the payment of the remainder, if any, to the Company or
any other Person lawfully entitled thereto.

Section 7.4.            Proceedings
by Noteholder.  No holder of any Note shall have any right by virtue
of or by reference to any provision of this Indenture to institute any suit,
action or proceeding in equity or at law upon or under or with respect to this
Indenture, or for the appointment of a receiver, trustee, liquidator, custodian
or other similar official, or for any other remedy hereunder, unless such
holder previously shall have given to the Trustee written notice of an Event of
Default and of the continuance thereof, as hereinbefore provided, and unless
also the holders of not less than twenty-five percent (25%) in aggregate
principal amount of the Notes then outstanding shall have made written request
upon the Trustee to institute such action, suit or 

 

39

 

proceeding in its own
name as Trustee hereunder and shall have offered to the Trustee such reasonable
indemnity as it may require against the costs, expenses and liabilities to be
incurred therein or thereby, and the Trustee for sixty (60) days after its
receipt of such notice, request and offer of indemnity, shall have neglected or
refused to institute any such action, suit or proceeding and no direction
inconsistent with such written request shall have been given to the Trustee
pursuant to Section 7.7; it being understood and intended, and being
expressly covenanted by the taker and holder of every Note with every other
taker and holder and the Trustee, that no one or more holders of Notes shall have
any right in any manner whatever by virtue of or by reference to any provision
of this Indenture to affect, disturb or prejudice the rights of any other
holder of Notes, or to obtain or seek to obtain priority over or preference to
any other such holder, or to enforce any right under this Indenture, except in
the manner herein provided and for the equal, ratable and common benefit of all
holders of Notes (except as otherwise provided herein).  For the protection and enforcement of this
Section 7.4, each and every Noteholder and the Trustee shall be entitled
to such relief as can be given either at law or in equity.

Notwithstanding any other provision of this Indenture and any provision
of any Note, the right of any holder of any Note to receive payment of the
principal of, the Redemption Price, the Repurchase Price, or the Purchase Price
pursuant to Article Three, and Liquidated Damages, if any, on such Note,
on or after the respective due dates expressed in such Note or in the event of
redemption, repurchase or purchase, or to institute suit for the enforcement of
any such payment on or after such respective dates against the Company shall
not be impaired or affected without the consent of such holder.

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

Section 7.5.            Proceedings
by Trustee.  In case of an Event of Default known to a Responsible
Officer of the Trustee, the Trustee may, in its discretion, proceed to protect
and enforce the rights vested in it by this Indenture by such appropriate
judicial proceedings as are necessary to protect and enforce any of such
rights, either by suit in equity or by action at law or by proceeding in
bankruptcy or otherwise, whether for the specific enforcement of any covenant
or agreement contained in this Indenture or in aid of the exercise of any power
granted in this Indenture, or to enforce any other legal or equitable right
vested in the Trustee by this Indenture or by law.

Section 7.6.            Remedies
Cumulative and Continuing.  Except as provided in Section 2.6,
all powers and remedies given by this Article Seven to the Trustee or to
the Noteholders shall, to the extent permitted by law, be deemed cumulative and
not exclusive of any thereof or of any other powers and remedies available to the
Trustee or the holders of the Notes, by judicial proceedings or otherwise, to
enforce the performance or observance of the covenants and agreements contained
in this Indenture, and no delay or omission of the Trustee or of any holder of
any of the Notes to exercise any right or power accruing upon any default or
Event of Default occurring and continuing as aforesaid shall impair any such
right or power, or shall be construed to be a waiver of any such default or any
acquiescence therein, and, subject to the provisions of Section 7.4, every
power and remedy given by this Article Seven or by law to the Trustee or
to the Noteholders may be exercised from time to time, and as often as shall be
deemed expedient, by the Trustee or by the Noteholders.

Section 7.7.            Direction
of Proceedings and Waiver of Defaults by Majority of Noteholders.  The
holders of a majority in aggregate principal amount of the Notes at the time
outstanding determined in accordance with Section 9.4 shall have the right
to direct the time, method and place of conducting any 

 

40

 

proceeding for any remedy
available to the Trustee or exercising any trust or power conferred on the
Trustee; provided, however, that (a) such direction shall not be in
conflict with any rule of law or with this Indenture, (b) the Trustee may
take any other action which is not inconsistent with such direction and
(c) the Trustee may decline to take any action that would benefit some
Noteholder to the detriment of other Noteholders.  The holders of a majority in aggregate principal amount of the
Notes at the time outstanding determined in accordance with Section 9.4
may, on behalf of the holders of all of the Notes, waive any past default or
Event of Default hereunder and its consequences except (i) a default in
the payment of Liquidated Damages, if any, or the principal of, the Notes,
(ii) a failure by the Company to convert any Notes into Common Stock,
(iii) a default in the payment of the Redemption Price, the Repurchase
Price or the Purchase Price pursuant to Article Three or (iv) a
default in respect of a covenant or provisions hereof which under
Article Eleven cannot be modified or amended without the consent of the
holders of each or all Notes then outstanding or affected thereby.  Upon any such waiver, the Company, the
Trustee and the holders of the Notes shall be restored to their former
positions and rights hereunder; but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
thereon.  Whenever any default or Event
of Default hereunder shall have been waived as permitted by this
Section 7.7, said default or Event of Default shall for all purposes of
the Notes and this Indenture be deemed to have been cured and to be not
continuing; but no such waiver shall extend to any subsequent or other default
or Event of Default or impair any right consequent thereon.

Section 7.8.            Notice
of Defaults.  The Trustee shall, within ninety (90) days after a
Responsible Officer of the Trustee has knowledge of the occurrence of a
default, mail to all Noteholders, as the names and addresses of such holders
appear upon the Note register, notice of all defaults known to a Responsible
Officer, unless such defaults shall have been cured or waived before the giving
of such notice; provided, however, that except in the case of default in the
payment of the principal of, or Liquidated Damages, if any, on any of the
Notes, the Trustee shall be protected in withholding such notice if and so long
as a trust committee of directors and/or Responsible Officers of the Trustee in
good faith determines that the withholding of such notice is in the interests
of the Noteholders.

Section 7.9.            Undertaking
to Pay Costs.  All parties to this Indenture agree, and each holder of
any Note by his acceptance thereof shall be deemed to have agreed, that any
court may, in its discretion, require, in any suit for the enforcement of any
right or remedy under this Indenture, or in any suit against the Trustee for any
action taken or omitted by it as Trustee, the filing by any party litigant in
such suit of an undertaking to pay the costs of such suit and that such court
may in its discretion assess reasonable costs, including reasonable attorneys’
fees and expenses, against any party litigant in such suit, having due regard
to the merits and good faith of the claims or defenses made by such party
litigant; provided, however, that the provisions of this Section 7.9 (to
the extent permitted by law) shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Noteholder, or group of Noteholders,
holding in the aggregate more than ten percent in principal amount of the Notes
at the time outstanding determined in accordance with Section 9.4, or to any
suit instituted by any Noteholder for the enforcement of the payment of the
principal of any Note on or after the due date expressed in such Note or to any
suit for the enforcement of the right to convert any Note in accordance with
the provisions of Article Fifteen.

ARTICLE
EIGHT

THE
TRUSTEE

Section 8.1.            Duties
and Responsibilities of Trustee.  The Trustee, prior to the occurrence
of an Event of Default and after the curing of all Events of Default which may
have occurred, undertakes to 

 

41

 

perform such duties and
only such duties as are specifically set forth in this Indenture.  In case an Event of Default has occurred
(which has not been cured or waived), 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 person would exercise or use
under the circumstances in the conduct of his own affairs.

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:

(a)           prior
to the occurrence of an Event of Default and after the curing or waiving of all
Events of Default which may have occurred:

(1)           the duties and obligations of the
Trustee shall be determined solely by the express provisions of this Indenture
and the Trust Indenture Act, and the Trustee shall not be liable except for the
performance of such duties and obligations as are specifically set forth in
this Indenture and no implied covenants or obligations shall be read into this
Indenture and the Trust Indenture Act against the Trustee; and

(2)           in the absence of bad faith and
willful misconduct on the part of the Trustee, the Trustee may conclusively
rely as to the truth of the statements and the correctness of the opinions
expressed therein, upon any certificates or opinions furnished to the Trustee
and conforming to the requirements of this Indenture; but, in the case of any
such certificates or opinions which by any provisions hereof are specifically
required to be furnished to the Trustee, the Trustee shall be under a duty to
examine the same to determine whether or not they conform to the requirements
of this Indenture;

(b)           the
Trustee shall not be liable for any error of judgment made in good faith by a
Responsible Officer or Officers of the Trustee, unless the Trustee was
negligent in ascertaining the pertinent facts;

(c)           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 written direction of the
holders of not less than a majority in principal amount of the Notes at the
time outstanding determined as provided in Section 9.4 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;

(d)           whether
or not therein 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;

(e)           the
Trustee shall not be liable in respect of any payment (as to the correctness of
amount, entitlement to receive or any other matters relating to payment) or
notice effected by the Company or any paying agent or any records maintained by
any co-registrar with respect to the Notes; and

(f)            if
any party fails to deliver a notice relating to an event the fact of which,
pursuant to this Indenture, requires notice to be sent to the Trustee, the
Trustee may conclusively rely on its failure to receive such notice as reason
to act as if no such event occurred.

None of the provisions contained in this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur personal financial
liability in the performance of any of its duties or in the exercise of 

 

42

 

any of its rights or powers, if there is reasonable
ground for believing that the repayment of such funds or adequate indemnity
against such risk or liability is not reasonably assured to it.

Section 8.2.            Reliance
on Documents, Opinions, Etc.  Except as otherwise provided in
Section 8.1:

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

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

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

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

(e)           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 or other paper or
document, but the Trustee, in its discretion, may make such further inquiry or
investigation into such facts or matters as it may see fit, and, if the Trustee
shall determine to make such further inquiry or investigation, it shall be
entitled to examine the books, records and premises of the Company, personally
or by agent or attorney; and

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

Section 8.3.            No
Responsibility for Recitals, Etc.  The recitals contained herein and
in the Notes (except in the Trustee’s certificate of authentication) shall be
taken as the statements of the Company, and the Trustee assumes no responsibility
for the correctness of the same.  The
Trustee makes no representations as to the validity or sufficiency of this
Indenture or of the Notes.  The Trustee
shall not be accountable for the use or application by the Company of any Notes
or the proceeds of any Notes authenticated and delivered by the Trustee in
conformity with the provisions of this Indenture.

Section 8.4.            Trustee,
Paying Agents, Conversion Agents or Registrar May Own Notes.  The
Trustee, any paying agent, any conversion agent or Note registrar, in its
individual or any other capacity, may become the owner or pledgee of Notes with
the same rights it would have if it were not Trustee, paying agent, conversion
agent or Note registrar.

Section 8.5.            Monies
to be Held in Trust.  Subject to the provisions of Section 13.4
and Section 4.2, all monies received by the Trustee shall, until used or
applied as herein provided, be held in trust 

 

43

 

for the purposes for
which they were received.  Money held by
the Trustee in trust hereunder need not be segregated from other funds except
to the extent required by law.  The
Trustee shall be under no liability for interest on any money received by it
hereunder except as may be agreed in writing from time to time by the Company
and the Trustee.

Section 8.6.            Compensation
and Expenses of Trustee.  The Company covenants and agrees to pay to
the Trustee from time to time, and the Trustee shall be entitled to, reasonable
compensation for all services rendered by it hereunder in any capacity (which
shall not be limited by any provision of law in regard to the compensation of a
trustee of an express trust) as mutually agreed to from time to time in writing
between the Company and the Trustee, and the Company will pay or reimburse the
Trustee upon its request for all reasonable expenses, disbursements and
advances reasonably incurred or made by the Trustee in accordance with any of
the provisions of this Indenture (including the reasonable compensation and the
expenses and disbursements of its counsel and of all Persons not regularly in
its employ) except any such expense, disbursement or advance as may arise from
its negligence, willful misconduct, recklessness or bad faith.  The Company also covenants to indemnify the Trustee
(or any officer, director or employee of the Trustee), in any capacity under
this Indenture and its agents and any authenticating agent for, and to hold
them harmless against, any and all loss, liability, claim or expense incurred
without negligence, willful misconduct, recklessness or bad faith on the part
of the Trustee or such officers, directors, employees and agent or
authenticating agent, as the case may be, and arising out of or in connection
with the acceptance or administration of this trust or in any other capacity
hereunder, including the costs and expenses of defending themselves against any
claim of liability in the premises.  The
obligations of the Company under this Section 8.6 to compensate or
indemnify the Trustee and to pay or reimburse the Trustee for expenses,
disbursements and advances shall be secured by a lien prior to that of the
Notes upon all property and funds held or collected by the Trustee as such,
except funds held in trust for the benefit of the holders of particular Notes.  The obligation of the Company under this
Section shall survive the satisfaction and discharge of this Indenture.

When the Trustee and its agents and any authenticating agent incur
expenses or render services after an Event of Default specified in Section 7.1(d)
or (e) with respect to the Company occurs, the expenses and the compensation
for the services are intended to constitute expenses of administration under
any bankruptcy, insolvency or similar laws.

Section 8.7.            Officers’
Certificate as Evidence.  Except as otherwise provided in
Section 8.1, whenever in the administration of the provisions of this
Indenture the Trustee shall deem it necessary or desirable that a matter be
proved or established prior to taking or omitting any action hereunder, such
matter (unless other evidence in respect thereof be herein specifically
prescribed) may, in the absence of negligence or willful misconduct,
recklessness or bad faith on the part of the Trustee, be deemed to be
conclusively proved and established by an Officers’ Certificate delivered to
the Trustee.

Section 8.8.            Conflicting
Interests of Trustee.  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, to the extent and in the manner
provided by, and subject to the provisions of, the Trust Indenture Act and this
Indenture.

Section 8.9.            Eligibility
of Trustee.  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 and has a combined capital and surplus of at least $50,000,000 (or if
such Person is a member of a bank holding company system, its bank holding
company shall have a combined capital and surplus of at least
$50,000,000).  If such Person publishes 

 

44

 

reports of condition at
least annually, pursuant to law or to the requirements of any supervising or
examining authority, then for the purposes of this Section the combined capital
and surplus of such Person shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published.  If at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section 8.9, it shall
resign immediately in the manner and with the effect hereinafter specified in
this Article.

Section 8.10.          Resignation
or Removal of Trustee.

(a)           The
Trustee may at any time resign by giving written notice of such resignation to
the Company and to the holders of Notes. 
Upon receiving such notice of resignation, the Company shall promptly
appoint a successor trustee by written instrument, in duplicate, executed by
order of the Board of Directors, one copy of which instrument shall be
delivered to the resigning Trustee and one copy to the successor trustee.  If no successor trustee shall have been so
appointed and have accepted appointment sixty (60) days after the mailing of
such notice of resignation to the Noteholders, the resigning Trustee may, upon
ten (10) business days’ notice to the Company and the Noteholders, appoint a
successor identified in such notice or may petition, at the expense of the
Company, any court of competent jurisdiction for the appointment of a successor
trustee, or, if any Noteholder who has been a bona fide holder of a Note or
Notes for at least six (6) months may, subject to the provisions of
Section 7.9, on behalf of himself and all others similarly situated,
petition any such court for the appointment of a successor trustee.  Such court may thereupon, after such notice,
if any, as it may deem proper and prescribe, appoint a successor trustee.

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

(1)           the Trustee shall fail to comply with
Section 8.8 after written request therefor by the Company or by any
Noteholder who has been a bona fide holder of a Note or Notes for at least six
(6) months; or

(2)           the Trustee shall cease to be
eligible in accordance with the provisions of Section 8.9 and shall fail
to resign after written request therefor by the Company or by any such
Noteholder; or

(3)           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, in any such case, the Company may remove the
Trustee and appoint a successor trustee by written instrument, in duplicate,
executed by order of the Board of Directors, one copy of which instrument shall
be delivered to the Trustee so removed and one copy to the successor trustee,
or, subject to the provisions of Section 7.9, any Noteholder who has been
a bona fide holder of a Note or Notes for at least six (6) 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; provided, however, that if no successor Trustee shall have
been appointed and have accepted appointment sixty (60) days after either the
Company or the Noteholders has removed the Trustee, the Trustee so removed may
petition any court of competent jurisdiction for an appointment of a successor
trustee.  Such court may thereupon,
after such notice, if any, as it may deem proper and prescribe, remove the
Trustee and appoint a successor trustee.

 

45

 

(c)           The
holders of a majority in aggregate principal amount of the Notes at the time
outstanding may at any time remove the Trustee and nominate a successor trustee
which shall be deemed appointed as successor trustee unless, within ten (10)
days after notice to the Company of such nomination, the Company objects
thereto, in which case the Trustee so removed or any Noteholder, or if such
Trustee so removed or any Noteholder fails to act, the Company, upon the terms
and conditions and otherwise as in Section 8.10(a) provided, may petition
any court of competent jurisdiction for an appointment of a successor trustee.

(d)           Any
resignation or removal of the Trustee and appointment of a successor trustee
pursuant to any of the provisions of this Section 8.10 shall become effective
upon acceptance of appointment by the successor trustee as provided in
Section 8.11.

Section 8.11.          Acceptance
by Successor Trustee.  Any successor trustee appointed as provided in
Section 8.10 shall execute, acknowledge and deliver to the Company and to
its predecessor trustee an instrument accepting such appointment hereunder, and
thereupon the resignation or removal of the predecessor trustee shall become
effective and such successor trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with like effect as if originally
named as trustee herein; but, nevertheless, on the written request of the
Company or of the successor trustee, the trustee ceasing to act shall, upon
payment of any amount then due it pursuant to the provisions of
Section 8.6, execute and deliver an instrument transferring to such
successor trustee all the rights and powers of the trustee so ceasing to act.  Upon request of any such successor trustee,
the Company shall execute any and all instruments in writing for more fully and
certainly vesting in and confirming to such successor trustee all such rights
and powers.  Any trustee ceasing to act
shall, nevertheless, retain a lien upon all property and funds held or
collected by such trustee as such, except for funds held in trust for the
benefit of holders of particular Notes, to secure any amounts then due it
pursuant to the provisions of Section 8.6.

No successor trustee shall accept appointment as provided in this
Section 8.11 unless, at the time of such acceptance, such successor
trustee shall be qualified under the provisions of Section 8.8 and be
eligible under the provisions of Section 8.9.

Upon acceptance of appointment by a successor trustee as provided in
this Section 8.11, the Company (or the former trustee, at the written
direction of the Company) shall mail or cause to be mailed notice of the
succession of such trustee hereunder to the holders of Notes at their addresses
as they shall appear on the Note register. 
If the Company fails to mail such notice within ten (10) days after
acceptance of appointment by the successor trustee, the successor trustee shall
cause such notice to be mailed at the expense of the Company.

Section 8.12.          Succession
by Merger, Etc.  Any corporation into which the Trustee may be merged
or converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Trustee shall be a
party, or any corporation succeeding to all or substantially all of the
corporate trust business of the Trustee (including any trust created by this
Indenture), shall be the successor to the Trustee hereunder without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, provided that in the case of any corporation succeeding to all
or substantially all of the corporate trust business of the Trustee, such
corporation shall be qualified under the provisions of Section 8.8 and eligible
under the provisions of Section 8.9.

In case at the time such successor to the Trustee shall succeed to the
trusts created by this Indenture, any of the Notes shall have been
authenticated but not delivered, any such successor to the Trustee may adopt 

 

46

 

the certificate of authentication of any predecessor
trustee or authenticating agent appointed by such predecessor trustee, and
deliver such Notes so authenticated; and in case at that time any of the Notes
shall not have been authenticated, any successor to the Trustee or any
authenticating agent appointed by such successor trustee may authenticate such
Notes in the name of the successor trustee; and in all such cases such
certificates shall have the full force that is provided in the Notes or in this
Indenture; provided, however, that the right to adopt the certificate of
authentication of any predecessor Trustee or authenticate Notes in the name of
any predecessor Trustee shall apply only to its successor or successors by
merger, conversion or consolidation.

Section 8.13.          Preferential
Collection of Claims.  If and when the Trustee shall be or become a
creditor of the Company (or any other obligor upon the Notes), the Trustee
shall be subject to the provisions of the Trust Indenture Act regarding the
collection of the claims against the Company (or any such other obligor).

Section 8.14.          Trustee’s
Application for Instructions from the Company.  Any application by the
Trustee for written instructions from the Company (other than with regard to
any action proposed to be taken or omitted to be taken by the Trustee that
affects the rights of the holders of the Notes or holders of Senior
Indebtedness under this Indenture, including, without limitation, under
Article Four hereof) may, at the option of the Trustee, set forth in
writing any action proposed to be taken or omitted by the Trustee under this
Indenture and the date on and/or after which such action shall be taken or such
omission shall be effective.  The
Trustee shall not be liable for any action taken by, or omission of, the
Trustee in accordance with a proposal included in such application on or after
the date specified in such application (which date shall not be less than three
(3) Business Days after the date any officer of the Company actually receives
such application, unless any such officer shall have consented in writing to
any earlier date) unless prior to taking any such action (or the effective date
in the case of an omission), the Trustee shall have received written
instructions in response to such application specifying the action to be taken
or omitted.

ARTICLE
NINE

THE
NOTEHOLDERS

Section 9.1.            Action
by Noteholders.  Whenever in this Indenture it is provided that the
holders of a specified percentage in aggregate principal amount of the Notes
may take any action (including the making of any demand or request, the giving
of any notice, consent or waiver or the taking of any other action), the fact
that at the time of taking any such action, the holders of such specified
percentage have joined therein may be evidenced (a) by any instrument or
any number of instruments of similar tenor executed by Noteholders in person or
by agent or proxy appointed in writing, or (b) by the record of the holders
of Notes voting in favor thereof at any meeting of Noteholders duly called and
held in accordance with the provisions of Article Ten, or (c) by a
combination of such instrument or instruments and any such record of such a
meeting of Noteholders.  Whenever the
Company or the Trustee solicits the taking of any action by the holders of the
Notes, the Company or the Trustee may fix in advance of such solicitation, a
date as the record date for determining holders entitled to take such action.  The record date shall be not more than
fifteen (15) days prior to the date of commencement of solicitation of such
action.

Section 9.2.            Proof
of Execution by Noteholders.  Subject to the provisions of
Sections 8.1, 8.2 and 10.5, proof of the execution of any instrument by a
Noteholder or its agent or proxy shall be sufficient if made in accordance with
such reasonable rules and regulations as may be prescribed by the Trustee or in
such 

 

47

 

manner as shall be
satisfactory to the Trustee.  The
holding of Notes shall be proved by the registry of such Notes or by a
certificate of the Note registrar.

The record of any Noteholders’ meeting shall be proved
in the manner provided in Section 10.6.

Section 9.3.            Who
Are Deemed Absolute Owners.  The Company, the Trustee, any paying
agent, any conversion agent and any Note registrar may deem the Person in whose
name such Note shall be registered upon the Note register to be, and may treat
it as, the absolute owner of such Note (whether or not such Note shall be
overdue and notwithstanding any notation of ownership or other writing thereon
made by any Person other than the Company or any Note registrar) for the
purpose of receiving payment of or on account of the principal of, and Liquidated
Damages, if any, on such Note, for conversion of such Note and for all other
purposes; and neither the Company nor the Trustee nor any paying agent nor any
conversion agent nor any Note registrar shall be affected by any notice to the
contrary.  All such payments so made to
any holder for the time being, or upon his order, shall be valid, and, to the
extent of the sum or sums so paid, effectual to satisfy and discharge the
liability for monies payable upon any such Note.

Section 9.4.            Company-Owned
Notes Disregarded.  In determining whether the holders of the
requisite aggregate principal amount of Notes have concurred in any direction,
consent, waiver or other action under this Indenture, Notes which are owned by
the Company or any other obligor on the Notes or any Affiliate of the Company
or any other obligor on the Notes shall be disregarded and deemed not to be
outstanding for the purpose of any such determination; provided, however, that,
for the purposes of determining whether the Trustee shall be protected in
relying on any such direction, consent, waiver or other action, only Notes
which a Responsible Officer knows are so owned shall be so disregarded.  Notes so owned which have been pledged in
good faith may be regarded as outstanding for the purposes of this
Section 9.4 if the pledgee shall establish to the satisfaction of the
Trustee the pledgee’s right to vote such Notes and that the pledgee is not the
Company, any other obligor on the Notes or any Affiliate of the Company or any
such other obligor.  In the case of a
dispute as to such right, any decision by the Trustee taken upon the advice of
counsel shall be full protection to the Trustee.  Upon request of the Trustee, the Company shall furnish to the
Trustee promptly an Officers’ Certificate listing and identifying all Notes, if
any, known by the Company to be owned or held by or for the account of any of
the above described Persons, and, subject to Section 8.1, the Trustee
shall be entitled to accept such Officers’ Certificate as conclusive evidence
of the facts therein set forth and of the fact that all Notes not listed
therein are outstanding for the purpose of any such determination.

Section 9.5.            Revocation
of Consents; Future Holders Bound.  At any time prior to (but not
after) the evidencing to the Trustee, as provided in Section 9.1, of the
taking of any action by the holders of the percentage in aggregate principal
amount of the Notes specified in this Indenture in connection with such action,
any holder of a Note which is shown by the evidence to be included in the Notes
the holders of which have consented to such action may, by filing written
notice with the Trustee at its Corporate Trust Office and upon proof of holding
as provided in Section 9.2, revoke such action so far as concerns such
Note.  Except as aforesaid, any such
action taken by the holder of any Note shall be conclusive and binding upon
such holder and upon all future holders and owners of such Note and of any
Notes issued in exchange or substitution therefor, irrespective of whether any
notation in regard thereto is made upon such Note or any Note issued in
exchange or substitution therefor.

 

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ARTICLE
TEN

MEETINGS
OF NOTEHOLDERS

Section 10.1.          Purpose
of Meetings.  A meeting of Noteholders may be called at any time and
from time to time pursuant to the provisions of this Article Ten for any
of the following purposes:

(1)           to give any notice to the Company or
to the Trustee or to give any directions to the Trustee permitted under this
Indenture, or to consent to the waiving of any default or Event of Default
hereunder and its consequences, or to take any other action authorized to be
taken by Noteholders pursuant to any of the provisions of Article Seven;

(2)           to remove the Trustee and nominate a
successor trustee pursuant to the provisions of Article Eight;

(3)           to consent to the execution of an
indenture or indentures supplemental hereto pursuant to the provisions of
Section 11.2; or

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

Section 10.2.          Call
of Meetings by Trustee.  The Trustee may at any time call a meeting of
Noteholders to take any action specified in Section 10.1, to be held at
such time and at such place as the Trustee shall determine.  Notice of every meeting of the Noteholders,
setting forth the time and the place of such meeting and in general terms the
action proposed to be taken at such meeting and the establishment of any record
date pursuant to Section 9.1, shall be mailed to holders of Notes at their
addresses as they shall appear on the Note register.  Such notice shall also be mailed to the Company.  Such notices shall be mailed not less than
twenty (20) nor more than ninety (90) days prior to the date fixed for the
meeting.

Any meeting of Noteholders shall be valid without notice if the holders
of all Notes then outstanding are present in person or by proxy or if notice is
waived before or after the meeting by the holders of all Notes outstanding, and
if the Company and the Trustee are either present by duly authorized
representatives or have, before or after the meeting, waived notice.

Section 10.3.          Call
of Meetings by Company or Noteholders.  In case at any time the
Company, pursuant to a resolution of its Board of Directors, or the holders of
at least ten percent (10%) in aggregate principal amount of the Notes then
outstanding, shall have requested the Trustee to call a meeting of Noteholders,
by written request setting forth in reasonable detail the action proposed to be
taken at the meeting, and the Trustee shall not have mailed the notice of such
meeting within twenty (20) days after receipt of such request, then the Company
or such Noteholders may determine the time and the place for such meeting and
may call such meeting to take any action authorized in Section 10.1, by
mailing notice thereof as provided in Section 10.2.

Section 10.4.          Qualifications
for Voting.  To be entitled to vote at any meeting of Noteholders a
person shall (a) be a holder of one or more Notes on the record date
pertaining to such meeting or (b) be a person appointed by an instrument
in writing as proxy by a holder of one or more Notes on the record date
pertaining to such meeting.  The only
persons who shall be entitled to be present or to speak at any meeting of 

 

49

 

Noteholders shall be the
persons entitled to vote at such meeting and their counsel and any
representatives of the Trustee and its counsel and any representatives of the
Company and its counsel.

Section 10.5.          Regulations. 
Notwithstanding any other provisions of this Indenture, the Trustee may make
such reasonable regulations as it may deem advisable for any meeting of
Noteholders, in regard to proof of the holding of Notes and of the appointment
of proxies, and in regard to the appointment and duties of inspectors of votes,
the submission and examination of proxies, certificates and other evidence of
the right to vote, and such other matters concerning the conduct of the meeting
as it shall think fit.

The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the
Company or by Noteholders as provided in Section 10.3, in which case the
Company or the Noteholders calling the meeting, as the case may be, shall in
like manner appoint a temporary chairman. 
A permanent chairman and a permanent secretary of the meeting shall be
elected by vote of the holders of a majority in principal amount of the Notes
represented at the meeting and entitled to vote at the meeting.

Subject to the provisions of Section 9.4, at any meeting each
Noteholder or proxyholder shall be entitled to one vote for each $1,000
principal amount of Notes held or represented by him; provided, however, that
no vote shall be cast or counted at any meeting in respect of any Note
challenged as not outstanding and ruled by the chairman of the meeting to be
not outstanding.  The chairman of the
meeting shall have no right to vote other than by virtue of Notes held by him
or instruments in writing as aforesaid duly designating him as the proxy to
vote on behalf of other Noteholders. 
Any meeting of Noteholders duly called pursuant to the provisions of
Section 10.2 or 10.3 may be adjourned from time to time by the holders of
a majority of the aggregate principal amount of Notes represented at the
meeting, whether or not constituting a quorum, and the meeting may be held as
so adjourned without further notice.

Section 10.6.          Voting. 
The vote upon any resolution submitted to any meeting of Noteholders shall be
by written ballot on which shall be subscribed the signatures of the holders of
Notes or of their representatives by proxy and the outstanding principal amount
of the Notes held or represented by them. 
The permanent chairman of the meeting shall appoint two inspectors of
votes who shall count all votes cast at the meeting for or against any
resolution and who shall make and file with the secretary of the meeting their
verified written reports in duplicate of all votes cast at the meeting.  A record in duplicate of the proceedings of
each meeting of Noteholders shall be prepared by the secretary of the meeting
and there shall be attached to said record the original reports of the
inspectors of votes on any vote by ballot taken thereat and affidavits by one
or more persons having knowledge of the facts setting forth a copy of the notice
of the meeting and showing that said notice was mailed as provided in
Section 10.2.  The record shall
show the principal amount of the Notes voting in favor of or against any
resolution.  The record shall be signed
and verified by the affidavits of the permanent chairman and secretary of the
meeting and one of the duplicates shall be delivered to the Company and the
other to the Trustee to be preserved by the Trustee, the latter to have
attached thereto the ballots voted at the meeting.

Any record so signed and verified shall be conclusive evidence of the
matters therein stated.

Section 10.7.          No
Delay of Rights by Meeting.  Nothing contained in this
Article Ten shall be deemed or construed to authorize or permit, by reason
of any call of a meeting of Noteholders or any rights expressly or impliedly
conferred hereunder to make such call, any hindrance or delay in the exercise
of any right or rights conferred upon or reserved to the Trustee or to the
Noteholders under any of the provisions of this Indenture or of the Notes.

 

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ARTICLE ELEVEN

SUPPLEMENTAL INDENTURES

Section 11.1.          Supplemental
Indentures Without Consent of Noteholders.  The Company, when
authorized by the resolutions of the Board of Directors, and the Trustee may,
from time to time, and at any time enter into an indenture or indentures
supplemental hereto for one or more of the following purposes:

(a)           make
provision with respect to the conversion rights of the holders of Notes
pursuant to the requirements of Article Fifteen and the redemption,
repurchase, purchase obligations of the Company pursuant to the requirements of
Article Three;

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

(c)           to
evidence the succession of another Person to the Company, or successive
successions, and the assumption by the successor Person of the covenants,
agreements and obligations of the Company pursuant to Article Twelve;

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

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

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

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

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

Upon the written request of the Company, accompanied by a copy of the
resolutions of the Board of Directors certified by its Secretary or Assistant
Secretary authorizing the execution of any supplemental indenture, the Trustee
is hereby authorized to join with the Company in the execution of any such
supplemental indenture, to make any further appropriate agreements and
stipulations that may be therein 

 

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contained and to accept the conveyance, transfer and
assignment of any property thereunder, but the Trustee shall not be obligated
to, but may in its discretion, enter into any supplemental indenture that
affects the Trustee’s own rights, duties or immunities under this Indenture or
otherwise.

Any supplemental indenture authorized by the provisions of this
Section 11.1 may be executed by the Company and the Trustee without the
consent of the holders of any of the Notes at the time outstanding,
notwithstanding any of the provisions of Section 11.2.

Notwithstanding any other provision of the Indenture or the Notes, the
Registration Rights Agreement and the obligation to pay Liquidated Damages
thereunder may be amended, modified or waived in accordance with the provisions
of the Registration Rights Agreement.

Section 11.2.          Supplemental
Indenture with Consent of Noteholders.  Subject to Section 11.1,
with the consent (evidenced as provided in Article Nine) of the holders of
not less than a majority in aggregate principal amount of the Notes at the time
outstanding, the Company, when authorized by the resolutions of the Board of
Directors, and the Trustee may, from time to time and at any time, enter into
an indenture or indentures supplemental hereto for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Indenture or any supplemental indenture or of modifying in any manner the
rights of the holders of the Notes; provided, however, that no such
supplemental indenture shall (i) extend the fixed maturity of any Note, or
reduce the principal amount thereof or impair the right of any Noteholder to
institute suit for the payment thereof, or make the principal thereof,
Liquidated Damages, if any, thereon payable in any coin or currency other than
that provided in the Notes, or modify the provisions of this Indenture with
respect to the subordination of the Notes in a manner adverse to the
Noteholders in any material respect, or change the obligation of the Company to
purchase, repurchase or redeem any Note as set forth in Article Three in a
manner adverse to the holder of Notes, or impair the right to convert the Notes
into Common Stock subject to the terms set forth herein, including
Section 15.6, in each case, without the consent of the holder of each Note
so affected, or (ii) reduce the aforesaid percentage of Notes, the holders
of which are required to consent to any such supplemental indenture, without
the consent of the holders of all Notes then outstanding.

Upon the written request of the Company, accompanied by a copy of the
resolutions of the Board of Directors certified by its Secretary or Assistant
Secretary authorizing the execution of any such supplemental indenture, and
upon the filing with the Trustee of evidence of the consent of Noteholders as
aforesaid, the Trustee shall join with the Company in the execution of such
supplemental indenture unless such supplemental indenture affects the Trustee’s
own rights, duties or immunities under this Indenture or otherwise, in which
case the Trustee may in its discretion, but shall not be obligated to, enter
into such supplemental indenture.

It shall not be necessary for the consent of the Noteholders under this
Section 11.2 to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such consent shall approve the
substance thereof.

Section 11.3.          Effect
of Supplemental Indenture.  Any supplemental indenture executed
pursuant to the provisions of this Article Eleven shall comply with the
Trust Indenture Act, as then in effect, provided that this Section 11.3
shall not require such supplemental indenture or the Trustee to be qualified
under the Trust Indenture Act prior to the time such qualification is in fact
required under the terms of the Trust Indenture Act or the Indenture has been
qualified under the Trust Indenture Act, nor shall it constitute any admission
or acknowledgment by any party to such supplemental indenture that any such
qualification is required prior to 

 

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the time such
qualification is in fact required under the terms of the Trust Indenture Act or
the Indenture has been qualified under the Trust Indenture Act.  Upon the execution of any supplemental
indenture pursuant to the provisions of this Article Eleven, this
Indenture shall be and be deemed to be modified and amended in accordance
therewith and the respective rights, limitation of rights, obligations, duties
and immunities under this Indenture of the Trustee, the Company and the holders
of Notes shall thereafter be determined, exercised and enforced hereunder,
subject in all respects to such modifications and amendments and all the terms
and conditions of any such supplemental indenture shall be and be deemed to be
part of the terms and conditions of this Indenture for any and all purposes.

Section 11.4.          Notation
on Notes.  Notes authenticated and delivered after the execution of
any supplemental indenture pursuant to the provisions of this
Article Eleven may bear a notation in form approved by the Trustee as to
any matter provided for in such supplemental indenture.  If the Company or the Trustee shall so
determine, new Notes so modified as to conform, in the opinion of the Trustee
and the Board of Directors, to any modification of this Indenture contained in
any such supplemental indenture may, at the Company’s expense, be prepared and
executed by the Company, authenticated by the Trustee (or an authenticating
agent duly appointed by the Trustee pursuant to Section 16.11) and
delivered in exchange for the Notes then outstanding, upon surrender of such
Notes then outstanding.

Section 11.5.          Evidence
of Compliance of Supplemental Indenture to be Furnished to Trustee. 
Prior to entering into any supplemental indenture, the Trustee may request an
Officers’ Certificate and an Opinion of Counsel as conclusive evidence that any
supplemental indenture executed pursuant hereto complies with the requirements
of this Article Eleven.

ARTICLE
TWELVE

CONSOLIDATION,
MERGER, SALE, CONVEYANCE AND LEASE

Section 12.1.          Company
May Consolidate, Etc. on Certain Terms.  Subject to the provisions of
Section 12.2, nothing contained in this Indenture or in any of the Notes
shall prevent any consolidation or merger of the Company with or into any other
Person or Persons (whether or not affiliated with the Company), or successive
consolidations or mergers in which the Company or its successor or successors
shall be a party or parties, or shall prevent any sale, transfer, conveyance or
lease (or successive sales, transfers, conveyances or leases) of all or
substantially all of the property of the Company, to any other Person (whether or
not affiliated with the Company), authorized to acquire and operate the same
and that shall be organized under the laws of the United States of America, any
state thereof or the District of Columbia; provided, however, that upon any
such consolidation, merger, sale, transfer, conveyance or lease, the due and
punctual payment of the principal of, and Liquidated Damages, if any, on all of
the Notes, according to their tenor and the due and punctual performance and
observance of all of the covenants and conditions of this Indenture to be
performed by the Company, shall be expressly assumed, by supplemental indenture
satisfactory in form to the Trustee, executed and delivered to the Trustee by
the Person (if other than the Company) formed by such consolidation, or into
which the Company shall have been merged, or by the Person that shall have
acquired or leased such property, and such supplemental indenture shall provide
for the applicable conversion rights set forth in Section 15.6.

Section 12.2.          Successor
Corporation to Be Substituted.  In case of any such consolidation,
merger, sale, transfer, conveyance or lease and upon the assumption by the
successor Person, by supplemental indenture, executed and delivered to the
Trustee and satisfactory in form to the Trustee, of the due and punctual
payment of the principal of and Liquidated Damages, if any, on all of the Notes
and the due and 

 

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punctual performance of
all of the covenants and conditions of this Indenture to be performed by the
Company, such successor Person shall succeed to and be substituted for the
Company, with the same effect as if it had been named herein as the party of
this first part.  Such successor Person
thereupon may cause to be signed, and may issue either in its own name or in
the name of Lattice Semiconductor Corporation any or all of the Notes, issuable
hereunder that theretofore shall not have been signed by the Company and
delivered to the Trustee; and, upon the order of such successor Person instead
of the Company and subject to all the terms, conditions and limitations in this
Indenture prescribed, the Trustee shall authenticate and shall deliver, or
cause to be authenticated and delivered, any Notes that previously shall have
been signed and delivered by the officers of the Company to the Trustee for
authentication, and any Notes that such successor Person thereafter shall cause
to be signed and delivered to the Trustee for that purpose.  All the Notes so issued shall in all
respects have the same legal rank and benefit under this Indenture as the Notes
theretofore or thereafter issued in accordance with the terms of this Indenture
as though all of such Notes had been issued at the date of the execution
hereof.  In the event of any such
consolidation, merger, sale, conveyance or lease, the Person named as the
“Company” in the first paragraph of this Indenture or any successor that shall
thereafter have become such in the manner prescribed in this
Article Twelve may be dissolved, wound up and liquidated at any time
thereafter and such Person shall be released from its liabilities as obligor
and maker of the Notes and from its obligations under this Indenture.

In case of any such consolidation, merger, sale, conveyance or lease,
such changes in phraseology and form (but not in substance) may be made in the
Notes thereafter to be issued as may be appropriate.

Section 12.3.          Opinion
of Counsel to Be Given Trustee.  The Trustee shall receive an
Officers’ Certificate and an Opinion of Counsel as conclusive evidence that any
such consolidation, merger, sale, conveyance or lease and any such assumption
complies with the provisions of this Article Twelve.

ARTICLE
THIRTEEN

SATISFACTION
AND DISCHARGE OF INDENTURE

Section 13.1.          Discharge
of Indenture.  When (a) the Company shall deliver to the Trustee
for cancellation all Notes theretofore authenticated (other than any Notes that
have been destroyed, lost or stolen and in lieu of or in substitution for which
other Notes shall have been authenticated and delivered) and not theretofore
canceled, or (b) all the Notes not theretofore canceled or delivered to
the Trustee for cancellation shall have become due and payable, or are by their
terms to become due and payable within one year or are to be called for redemption
or submitted for repurchase or purchase pursuant to Article Three, as the
case may be, within one year under arrangements satisfactory to the Trustee for
the giving of notice of redemption, repurchase or purchase, as the case may be,
and the Company shall deposit with the Trustee, in trust, funds sufficient to
pay at maturity or upon the Redemption Date, the Repurchase Date or the
Purchase Date, as the case may be, all of the Notes (other than any Notes that
shall have been mutilated, destroyed, lost or stolen and in lieu of or in
substitution for which other Notes shall have been authenticated and delivered)
not theretofore canceled or delivered to the Trustee for cancellation,
including principal, the Repurchase Price, the Purchase Price or the Redemption
Price and Liquidated Damages, if any, thereon, due or to become due to such
date of maturity, the Purchase Date, the Redemption Date or the Repurchase
Date, as the case may be, accompanied by a verification report, as to the
sufficiency of the deposited amount, from an independent certified accountant
or other financial professional satisfactory to the Trustee, and if the Company
shall also pay or cause to be paid all other sums payable hereunder by the
Company, then this Indenture shall cease to be of further effect (except as to
(i) remaining rights of registration of transfer, substitution and
exchange and conversion of Notes, (ii) rights hereunder of Noteholders to
receive payments of principal of and Liquidated 

 

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Damages, if any, the
Notes and the other rights, duties and obligations of Noteholders, as
beneficiaries hereof with respect to the amounts, if any, so deposited with the
Trustee and (iii) the rights, obligations and immunities of the Trustee
hereunder), and the Trustee, on written demand of the Company accompanied by an
Officers’ Certificate and an Opinion of Counsel as required by
Section 16.5 and at the cost and expense of the Company, shall execute
proper instruments acknowledging satisfaction of and discharging this
Indenture; the Company, however, hereby agrees to reimburse the Trustee for any
costs or expenses thereafter reasonably and properly incurred by the Trustee
and to compensate the Trustee for any services thereafter reasonably and
properly rendered by the Trustee in connection with this Indenture or the
Notes.

Section 13.2.          Deposited
Monies to Be Held in Trust by Trustee.  Subject to Section 13.4,
all monies deposited with the Trustee pursuant to Section 13.1, provided such
deposit was not in violation of Article Four, shall be held in trust for
the sole benefit of the Noteholders and not to be subject to the subordination
provisions of Article Four, and such monies shall be applied by the
Trustee to the payment, either directly or through any paying agent (including
the Company if acting as its own paying agent), to the holders of the
particular Notes for the payment or redemption of which such monies have been
deposited with the Trustee, of all sums due and to become due thereon for
principal of and Liquidated Damages, if any.

Section 13.3.          Paying
Agent to Repay Monies Held.  Upon the satisfaction and discharge of
this Indenture, all monies then held by any paying agent of the Notes (other
than the Trustee) shall, upon written request of the Company, be repaid to it
or paid to the Trustee, and thereupon such paying agent shall be released from
all further liability with respect to such monies.

Section 13.4.          Return
of Unclaimed Monies.  Subject to the requirements of applicable law,
any monies deposited with or paid to the Trustee for payment of the principal
of and Liquidated Damages, if any on Notes and not applied but remaining
unclaimed by the holders of Notes for two years after the date upon which the
principal of and Liquidated Damages, if any, such Notes, as the case may be,
shall have become due and payable, shall be repaid to the Company by the
Trustee on demand and all liability of the Trustee shall thereupon cease with
respect to such monies; and the holder of any of the Notes shall thereafter
look only to the Company for any payment that such holder may be entitled to
collect unless an applicable abandoned property law designates another Person.

Section 13.5.          Reinstatement. 
If the Trustee or the paying agent is unable to apply any money in accordance
with Section 13.2 by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, the Company’s obligations under this Indenture and the Notes shall
be revived and reinstated as though no deposit had occurred pursuant to
Section 13.1 until such time as the Trustee or the paying agent is
permitted to apply all such money in accordance with Section 13.2;
provided, however, that if the Company makes any payment of Liquidated Damages,
if any, principal of any Note following the reinstatement of its obligations,
the Company shall be subrogated to the rights of the holders of such Notes to
receive such payment from the money held by the Trustee or paying agent.

ARTICLE
FOURTEEN

IMMUNITY
OF INCORPORATORS,

STOCKHOLDERS, OFFICERS AND DIRECTORS

Section 14.1.          Indenture
and Notes Solely Corporate Obligations.  No recourse for the payment
of the principal of or Liquidated Damages, if any, on any Note, or for any
claim based thereon or otherwise in 

 

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respect thereof, and no
recourse under or upon any obligation, covenant or agreement of the Company in
this Indenture or in any supplemental indenture or in any Note, or because of
the creation of any indebtedness represented thereby, shall be had against any
incorporator, stockholder, employee, agent, officer, director or subsidiary, as
such, past, present or future, of the Company or of any successor corporation,
either directly or through the Company or any successor corporation, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of
any assessment or penalty or otherwise; it being expressly understood that all
such liability is hereby expressly waived and released as a condition of, and
as a consideration for, the execution of this Indenture and the issue of the
Notes.

ARTICLE FIFTEEN

CONVERSION OF NOTES

Section 15.1.          Conversion
Privilege and Conversion Rate

(a)           Subject
to and upon compliance with the provisions of this Article, at the option of
the holder thereof, any Note that is an integral multiple of $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 Price, determined as hereinafter provided, in effect at the time
of conversion and subject to the adjustments described below, as follows:

(i)    if, on or
prior to December 31, 2007, the Closing Price per share of the Common
Stock for at least twenty (20) Trading Days in the period of the thirty (30)
consecutive Trading Days ending on the Trading Day immediately preceding the
first day of a Conversion Period was more than 110% of the then current Conversion
Price of the Notes, then the holder thereof will be entitled to convert such
Note during that Conversion Period;

(ii)   if, on any
date after December 31, 2007 and prior to the stated maturity of the
Notes, the Closing Price per share of the Common Stock is more than 110% of the
then current Conversion Price of the Notes, then the holder of the Notes will
be entitled to convert such Notes at all times thereafter;

(iii)  if the
Company elects to call the Notes for redemption on or after July 1, 2008
then the holder of the Notes will be entitled to convert the Notes until the
close of business on the Business Day prior to the Redemption Date;

(iv)  if the
Company distributes to all or substantially all holders of Common Stock rights,
options or warrants entitling them to purchase Common Stock at less than the
Closing Price per share of the Common Stock on the last Trading Day preceding
the declaration for such distribution;

(v)   if the
Company distributes to all or substantially all holders of Common Stock cash,
assets, debt securities or capital stock, which distribution has a per share
value as determined by the Board of Directors exceeding 5% of the Closing Price
per share of the Common Stock on the last Trading Date preceding the
declaration for such distribution; or

(vi)  if the
Company becomes a party to a consolidation, merger or sale of all or
substantially all of the Company’s assets where such consolidation, merger or
sale of all or substantially all of the Company’s assets constitutes a
Fundamental Change.

 

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A “Conversion Period” for the Notes is the period from and including
the first day in any fiscal quarter of the Company to, but excluding, the first
day of the immediately following fiscal quarter.

In the case of a distribution contemplated by clauses (iv) and (v)
of this Section 15.1(a), the Company will notify holders at least twenty
(20) days prior to the ex-dividend date for such distribution (the
“Distribution Notice”).  Once the
Company has given the Distribution Notice, holders may surrender their Notes
for conversion at any time until the earlier of the close of business on the
last Business Day preceding the ex-dividend date or the Company’s announcement
that such distribution will not take place. 
Notwithstanding the foregoing, in the event of a distribution
contemplated by clauses (iv) and (v) of this Section 15.1(a), holders
may not convert the Notes if the holders may participate in such distribution
without converting their Notes.  In the event
of a consolidation, merger or sale of all or substantially all of the Company’s
assets as contemplated by clause (vi) of this Section 15.1(a), the
Company will notify holders at least twenty (20) days prior to the anticipated
closing date of such transaction (the “Merger Notice”).  Once the Company has given the Merger
Notice, the holders may, in the event of such consolidation, merger or sale of
all or substantially all of the Company’s assets, surrender Notes for
conversion at any time from and after the date which is 15 days prior to the
anticipated closing date of such transaction until the date which is fifteen
(15) days after the actual closing date of such transaction.

With respect to clause (i) of this Section 15.1(a), the
conversion agent (which shall initially be the Trustee) will determine, on
behalf of the Company, on the first Business Day succeeding the first day of
the Conversion Period whether the Notes are convertible as set forth in such
clause (i) as a result of the Closing Price per share of the Common Stock
and the then current Conversion Price and, if so, will notify the Company.  With respect to clause (ii) of this
Section 15.1(a), the conversion agent (which shall initially be the
Trustee) will determine, on behalf of the Company, daily on any date after
December 31, 2007, whether the Notes are convertible as set forth in such
clause (ii) as a result of the Closing Price per share of the Common Stock
and the then current Conversion Price and, if so, will notify the Company.

(b)           Subject
to the further provisions of this Article 15, a holder of a Note may also
convert the principal amount of such Note (or any portion thereof equal to
$1,000 or any integral multiple of $1,000 in excess thereof) into Common Stock
for the five (5) Business Day period after any five (5) consecutive Trading Day
period in which the average Trading Prices for the Securities for such five (5)
Trading Day period was less than 95% of the average Conversion Value for the
Notes during such period; provided, however, if on the Conversion Date, the
Closing Price per share of Common Stock is greater than the then current
Conversion Price of the Notes and less than or equal to 110% of the then
current Conversion Price of the Notes, a holder surrenders its Notes for conversion
and the Notes are not otherwise convertible, then such holder will receive, at
the Company’s option, cash, Common Stock or a combination of cash and Common
Stock with a value equal to the principal amount of such holders’ Notes on such
Conversion Date.  If the Company elects
to pay the holder in Common Stock or in a combination of cash and Common Stock,
the Common Stock will be valued at 100% of the average Closing Price per share
of Common Stock for the five (5) Trading Days ending on the third Trading Day
preceding the Conversion Date.

The “Conversion Value” for the Notes is equal to the product of
(i) the Closing Price per share of the Common Stock on a given day and
(ii) the then current Conversion Rate.

The “Trading Price” of the Notes on any Trading Day means the average
of the secondary market bid quotations per Note obtained by the conversion
agent for $5,000,000 principal amount of the Notes at approximately 3:30 p.m.,
New York City time, on such Trading Day from an independent nationally recognized
securities dealer the Company selects; provided that if the conversion agent
cannot reasonably 

 

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obtain a bid for $5,000,000 principal amount of the
Notes from a nationally recognized securities dealer or if in the Company’s
reasonable judgment, as set forth in an Officers’Certificate delivered to the
Trustee, the bid quotations are not indicative of the secondary market value of
the Notes, then the Trading Price of the Notes will be deemed to be equal to
the product of the then current Conversion Rate and the Closing Price per share
of Common Stock on such Trading Day.

The conversion agent shall have no obligation to determine the Trading
Price of the Notes unless the Company has requested such determination; and the
Company shall have no obligation to make such request unless a holder provides
the Company with reasonable evidence that the Trading Price of the Notes is
reasonably likely to be less than 95% of the average Conversion Value; at which
time, the Company shall instruct the conversion agent to determine the Trading
Price of the Notes beginning on the next Trading Day and on each successive
Trading Day until the Trading Price is greater than or equal to 95% of the
average Conversion Value.

(c)           The
conversion right, subject to the conditions described in clauses (a) and
(b) of this Section 15.1, shall commence on the initial issuance date of
the Notes and expire at the close of business on the date of maturity of the
Notes, subject in the case of conversion of a Global Security, to any
Applicable Procedures (except that, with respect to any Note or portion of a
Note that shall be called for redemption or submitted for purchase or
repurchase, such right shall terminate, except as provided in Section 15.2
or Article Three at the close of business on the Business Day immediately
preceding the Purchase Date, Repurchase Date or Redemption Date, as the case
may be unless the Company shall default in payment due upon redemption,
repurchase or purchase thereof).  A Note
in respect of which a holder is exercising its option to require repurchase or
purchase pursuant to Article Three may be converted only if such holder
withdraws its election to exercise in accordance with Article Three.  A holder of Notes is not entitled to any
rights of a holder of Common Stock until such holder has converted his Notes to
Common Stock, and only to the extent such Notes are deemed to have been
converted to Common Stock under this Article Fifteen.

Provisions of this Indenture that apply to conversion of all of a Note
also apply to conversion of a portion of a Note.

The “Conversion Rate” is determined by dividing $1,000 principal amount
of the Notes by the Conversion Price and shall initially be 82.9105 shares of
Common Stock for each $1,000 principal amount of Notes.  The Conversion Price shall be adjusted in
certain instances as provided in this Article Fifteen.

Section 15.2.          Exercise
of Conversion Privilege; Issuance of Common Stock on Conversion; No Adjustment
for Liquidated Damages or Dividends.  In order to exercise the
conversion privilege with respect to any Note in certificated form, the holder
of any such Note to be converted in whole or in part shall surrender such Note,
duly endorsed, at an office or agency maintained by the Company pursuant to
Section 5.2, accompanied by the funds, if any, required by the penultimate
paragraph of this Section 15.2, and shall give written notice of
conversion in the form provided on the Notes (or such other notice which is
acceptable to the Company) to the office or agency that the holder elects to
convert such Note or the portion thereof specified in said notice.  Such notice shall also state the name or
names (with address or addresses) in which the certificate or certificates for shares
of Common Stock which shall be issuable on such conversion shall be issued, and
shall be accompanied by transfer taxes, if required pursuant to
Section 15.7.  Each such Note
surrendered for conversion shall, unless the shares issuable on conversion are
to be issued in the same name as the registration of such Note, be duly
endorsed by, or be accompanied by instruments of transfer in form satisfactory
to the Company duly executed by, the holder or his duly authorized attorney.

 

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In order to exercise the conversion privilege with respect to any
interest in a Global Note, the beneficial holder must complete, or cause to be
completed, the appropriate instruction form for conversion pursuant to the
Depository’s book-entry conversion program, deliver, or cause to be delivered,
by book-entry delivery an interest in such Global Note, furnish appropriate
endorsements and transfer documents if required by the Company or the Trustee
or conversion agent, and pay the funds, if any, required by this
Section 15.2 and any transfer taxes if required pursuant to
Section 15.7.

As promptly as practicable after satisfaction of the requirements for
conversion set forth above, subject to compliance with any restrictions on transfer
if shares issuable on conversion are to be issued in a name other than that of
the Noteholder (as if such transfer were a transfer of the Note or Notes (or
portion thereof) so converted), the Company shall issue and shall deliver to
the Trustee at the office or agency maintained by the Company for such purpose
pursuant to Section 5.2, a certificate or certificates for the number of
full shares of Common Stock issuable upon the conversion of such Note or
portion thereof as determined by the Company in accordance with the provisions
of this Article Fifteen and a check or cash in respect of any fractional
interest in respect of a share of Common Stock arising upon such conversion,
calculated by the Company as provided in Section 15.3.  The Trustee will then send such certificate
or certificates and payment for fractional shares to the conversion agent for
delivery to the Noteholders.  In case
any Note of a denomination greater than $1,000 shall be surrendered for partial
conversion, and subject to Section 2.3, the Company shall execute and the
Trustee shall authenticate and deliver to the holder of the Note so
surrendered, without charge to him, a new Note or Notes in authorized
denominations in an aggregate principal amount equal to the unconverted portion
of the surrendered Note.

Each conversion shall be deemed to have been effected as to any such
Note (or portion thereof) on the date on which the requirements set forth above
in this Section 15.2 have been satisfied as to such Note (or portion
thereof), and the Person in whose name any certificate or certificates for
shares of Common Stock shall be issuable upon such conversion shall be deemed
to have become on said date the holder of record of the shares represented
thereby; provided, however, that any such surrender on any date when the stock
transfer books of the Company shall be closed shall constitute the Person in
whose name the certificates are to be issued as the record holder thereof for
all purposes on the next succeeding day on which such stock transfer books are
open, but such conversion shall be at the Conversion Price in effect on the
date upon which such Note shall be surrendered.

No adjustment in respect of Liquidated Damages on any Note converted or
dividends on any shares issued upon conversion of such Note will be made upon
any conversion except as set forth in the next sentence.  If this Note (or portion hereof) is
surrendered for conversion during the period from the close of business on any
Liquidated Damages Record Date for the payment of Liquidated Damages to the
close of business on the Business Day preceding the following Liquidated
Damages Payment Date and either (x) has not been called for redemption on
a Redemption Date that occurs during such period, (y) has not been submitted
for repurchase in connection with a Fundamental Change on a Repurchase Date
that occurs during such period, or (z) has not been submitted for purchase
at the option of holders on the Purchase Date that occurs during this period
must be accompanied by an amount, in New York Clearing House funds or other
funds acceptable to the Company, equal to the Liquidated Damages, if any,
payable on such Liquidated Damages Payment Date on the principal amount being
converted; provided, however, that no such payment shall be required if there
shall exist at the time of conversion a default in the payment of Liquidated
Damages, if any, on the Notes.

Upon the conversion of an interest in a Global Note, the Trustee (or
other conversion agent appointed by the Company), or the Custodian at the
direction of the Trustee (or other conversion agent appointed by the 

 

59

 

Company), shall make a notation on such Global Note as
to the reduction in the principal amount represented thereby.  The Company shall notify the Trustee in
writing of any conversions of Notes effected through any conversion agent other
than the Trustee.

Section 15.3.          Cash
Payments in Lieu of Fractional Shares.  No fractional shares of Common
Stock or scrip representing fractional shares shall be issued upon conversion
of Notes.  If more than one Note shall
be surrendered for conversion at one time by the same holder, the number of
full shares that shall be issuable upon conversion shall be computed on the
basis of the aggregate principal amount of the Notes (or specified portions
thereof to the extent permitted hereby) so surrendered.  If any fractional share of stock would be
issuable upon the conversion of any Note or Notes, the Company shall make an
adjustment and payment therefor in cash at the current market price thereof to
the holder of Notes.  The current market
price of a share of Common Stock shall be the Closing Price on the last
Business Day immediately preceding the day on which the Notes (or specified
portions thereof) are deemed to have been converted.

Section 15.4.          Conversion
Price.  The conversion price shall be as specified in the form of Note
(herein called the “Conversion Price”) attached as Exhibit A hereto,
subject to adjustment as provided in this Article Fifteen.

Section 15.5.          Adjustment
of Conversion Price.  The Conversion Price shall be adjusted from time
to time by the Company as follows:

(a)           In
case the Company shall hereafter pay a dividend or make a distribution to all
holders of the outstanding Common Stock in shares of Common Stock, the
Conversion Price shall be reduced so that the same shall equal the price
determined by multiplying the Conversion Price in effect at the opening of
business on the date following the date fixed for the determination of
stockholders entitled to receive such dividend or other distribution by a
fraction, the numerator of which shall be the number of shares of the Common
Stock outstanding at the close of business on the date fixed for such
determination, and the denominator of which shall be the sum of such number of
shares and the total number of shares constituting such dividend or other
distribution, such reduction to become effective immediately after the opening
of business on the day following the date fixed for such determination.  For the purpose 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. 
The Company will not pay any dividend or make any distribution on shares
of Common Stock held in the treasury of the Company.  If any dividend or distribution of the type described in this
Section 15.5(a) is declared but not so paid or made, the Conversion Price
shall again be adjusted to the Conversion Price that would then be in effect if
such dividend or distribution had not been declared.

(b)           In
case the Company shall issue rights or warrants to all holders of its
outstanding shares of Common Stock entitling them (for a period expiring within
forty-five (45) days after the date fixed for determination of stockholders
entitled to receive such rights or warrants) to subscribe for or purchase
shares of Common Stock at a price per share less than the Current Market Price
(as defined below) on the date fixed for determination of stockholders entitled
to receive such rights or warrants, the Conversion Price shall be adjusted so
that the same shall equal the price determined by multiplying the Conversion
Price in effect immediately prior to the date fixed for determination of stockholders
entitled to receive such rights or warrants by a fraction, the numerator of
which shall be the number of shares of Common Stock outstanding at the close of
business on the date fixed for determination of stockholders entitled to
receive such rights or warrants plus the number of shares that the aggregate
offering price of the total number of shares so offered would purchase at such
Current Market Price, and the denominator of which shall be the number of
shares of Common Stock outstanding on the date fixed for determination of
stockholders entitled to receive such rights 

 

60

 

or
warrants plus the total number of additional shares of Common Stock offered for
subscription or purchase.  Such
adjustment shall be successively made whenever any such rights or warrants are
issued, and shall become effective immediately after the opening of business on
the day following the date fixed for determination of stockholders entitled to
receive such rights or warrants.  To the
extent that shares of Common Stock are not delivered after the expiration of
such rights or warrants, the Conversion Price shall be readjusted to the
Conversion Price that would then be in effect had the adjustments made upon the
issuance of such rights or warrants been made on the basis of delivery of only
the number of shares of Common Stock actually delivered.  In the event that such rights or warrants
are not so issued, the Conversion Price shall again be adjusted to be the
Conversion Price that would then be in effect if such date fixed for the
determination of stockholders entitled to receive such rights or warrants had
not been fixed.  In determining whether
any rights or warrants entitle the holders to subscribe for or purchase shares
of Common Stock at less than such Current Market Price, and in determining the
aggregate offering price of such shares of Common Stock, there shall be taken
into account any consideration received by the Company for such rights or
warrants and any amount payable on exercise or conversion thereof, the value of
such consideration, if other than cash (as determined by the Board of
Directors, whose determination shall be conclusive, and described in a
resolution of the Board of Directors).

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

(d)           In
case the Company shall, by dividend or otherwise, distribute to all holders of
its Common Stock shares of any class of capital stock of the Company (other
than any dividends or distributions to which Section 15.5(a) applies) or
evidences of its indebtedness or assets (including securities, but excluding
any rights or warrants referred to in Section 15.5(b), and excluding any
dividend or distribution (x) paid exclusively in cash or (y) referred
to in Section 15.5(a) (any of the foregoing hereinafter in this Section 15.5(d)
called the “Securities”)), then, in each such case (unless the Company elects
to reserve such Securities for distribution to the Noteholders upon the
conversion of the Notes so that any such holder converting Notes will receive
upon such conversion, in addition to the shares of Common Stock to which such
holder is entitled, the amount and kind of such Securities which such holder
would have received if such holder had converted its Notes into Common Stock
immediately prior to the Record Date (as defined in Section 15.5(h)(4) for
such distribution of the Securities)), the Conversion Price shall be reduced so
that the same shall be equal to the price determined by multiplying the
Conversion Price in effect on the Record Date with respect to such distribution
by a fraction, the numerator of which shall be the Current Market Price per
share of the Common Stock on such Record Date less the fair market value (as
determined by the Board of Directors, whose determination shall be conclusive,
and described in a resolution of the Board of Directors) on the Record Date of
the portion of the Securities so distributed applicable to one share of Common
Stock and the denominator of which shall be the Current Market Price per share
of the Common Stock, such reduction to become effective immediately prior to
the opening of business on the day following such Record Date; provided,
however, that in the event the then fair market value (as so determined) of the
portion of the Securities so distributed applicable to one share of Common
Stock is equal to or greater than the Current Market Price of the Common Stock
on the Record Date, in lieu of the foregoing adjustment, adequate provision
shall be made so that each Noteholder shall have the right to receive upon
conversion the amount of 

 

61

 

Securities
such holder would have received had such holder converted each Note on the
Record Date.  In the event that such
dividend or distribution is not so paid or made, the Conversion Price shall
again be adjusted to be the Conversion Price that would then be in effect if
such dividend or distribution had not been declared.  If the Board of Directors determines the fair market value of any
distribution for purposes of this Section 15.5(d) by reference to the
actual or when issued trading market for any securities, it must in doing so
consider the prices in such market over the same period used in computing the
Current Market Price of the Common Stock.

To the extent that a rights plan of the Company is in effect upon such
conversion, the holders of Notes will receive, in addition to the Common Stock,
the rights described therein (whether or not the rights have separated from the
Common Stock at the time of conversion), subject to the limitations set forth
in such rights plan.

Rights or warrants distributed by the Company to all holders of Common
Stock entitling the holders thereof to subscribe for or purchase shares of the
Company’s capital stock (either initially or under certain circumstances),
which rights or warrants, until the occurrence of a specified event or events
(“Trigger Event”): (i) are deemed to be transferred with such shares of
Common Stock; (ii) are not exercisable; and (iii) are also issued in
respect of future issuances of Common Stock, shall be deemed not to have been
distributed for purposes of this Section 15.5 (and no adjustment to the
Conversion Price under this Section 15.5 will be required) until the
occurrence of the earliest Trigger Event, whereupon such rights and warrants
shall be deemed to have been distributed and an appropriate adjustment (if any
is required) to the Conversion Price shall be made under this
Section 15.5(d).  If any such right
or warrant, including any such existing rights or warrants distributed prior to
the date of this Indenture, are subject to events, upon the occurrence of which
such rights or warrants become exercisable to purchase different securities,
evidences of indebtedness or other assets, then the date of the occurrence of
any and each such event shall be deemed to be the date of distribution and
record date with respect to new rights or warrants with such rights (and a
termination or expiration of the existing rights or warrants without exercise
by any of the holders thereof).  In addition,
in the event of any distribution (or deemed distribution) of rights or
warrants, or any Trigger Event or other event (of the type described in the
preceding sentence) with respect thereto that was counted for purposes of
calculating a distribution amount for which an adjustment to the Conversion
Price under this Section 15.5 was made, (1) in the case of any such
rights or warrants that shall all have been redeemed or repurchased without
exercise by any holders thereof, the Conversion Price shall be readjusted upon
such final redemption or repurchase to give effect to such distribution or
Trigger Event, as the case may be, as though it were a cash distribution, equal
to the per share redemption or repurchase price received by a holder or holders
of Common Stock with respect to such rights or warrants (assuming such holder
had retained such rights or warrants), made to all holders of Common Stock as
of the date of such redemption or repurchase, and (2) in the case of such
rights or warrants that shall have expired or been terminated without exercise
by any holders thereof, the Conversion Price shall be readjusted as if such
rights and warrants had not been issued.

No adjustment of the Conversion Price shall be made pursuant to this
Section 15.5(d) in respect of rights or warrants distributed or deemed
distributed on any Trigger Event to the extent that such rights or warrants are
actually distributed, or reserved by the Company for distribution to holders of
Notes upon conversion by such holders of Notes to Common Stock.

For purposes of this Section 15.5(d) and Sections 15.5(a) and
(b), any dividend or distribution to which this Section 15.5(d) is
applicable that also includes shares of Common Stock, or rights or warrants to
subscribe for or purchase shares of Common Stock (or both), shall be deemed
instead to be (1) a dividend or distribution of the evidences of
indebtedness, assets or shares of capital stock other than such shares of 

 

62

 

Common Stock or rights or warrants (and any Conversion
Price reduction required by this Section 15.5(d) with respect to such
dividend or distribution shall then be made) immediately followed by (2) a
dividend or distribution of such shares of Common Stock or such rights or
warrants (and any further Conversion Price reduction required by
Sections 15.5(a) and (b) with respect to such dividend or distribution
shall then be made), except (A) the Record Date of such dividend or
distribution shall be substituted as “the date fixed for the determination of
stockholders entitled to receive such dividend or other distribution”, “the
date fixed for the determination of stockholders entitled to receive such
rights or warrants” and “the date fixed for such determination” within the meaning
of Sections 15.5(a) and (b), and (B) any shares of Common Stock
included in such dividend or distribution shall not be deemed “outstanding at
the close of business on the date fixed for such determination” within the
meaning of Section 15.5(a).

(e)           In case
the Company shall, by dividend or otherwise, distribute to all holders of its
Common Stock cash (excluding (x) any cash portion of distribution referred
to in Section 15.5(d), (y) cash distributions upon a merger or
consolidation and (z) any dividend or distribution in connection with the
liquidation, dissolution or winding up of the Company, whether voluntary or
involuntary), in an aggregate amount that, combined together with the aggregate
amount of any other all-cash distributions made within the 365-day period
preceding the date of payment of such distribution and in respect of which no
adjustment pursuant to this Section 15.5(e) has been made, exceeds 2% of
the product of the Current Market Price per share of the Common Stock on the
record date for such distribution multiplied by the number of shares the Common
Stock outstanding on such date (the “Market Capitalization”), then in such
case, the Conversion Price shall be reduced so that the same shall equal the
price determined by multiplying the Conversion Price in effect immediately
prior to the close of business on such record date by a fraction, the numerator
of which shall be the Current Market Price of the Common Stock on the date
fixed for such determination less the amount of cash so distributed in excess
of 2% of the Market Capitalization (and not excluded as provided above)
applicable to one share of Common Stock, and the denominator of which shall be
such Current Market Price of the Common Stock, such reduction to be effective
immediately prior to the opening of business on the day following the record
date; provided, however, that in the event the portion of the cash so
distributed applicable to one share of Common Stock is equal to or greater than
the Current Market Price of the Common Stock on the record date, in lieu of the
foregoing adjustment, adequate provision shall be made so that each Noteholder
shall have the right to receive upon conversion the amount of cash such holder
would have received had such holder converted each Note on the record
date.  In the event that such dividend
or distribution is not so paid or made, the Conversion Price shall again be
adjusted to be the Conversion Price that would then be in effect if such
dividend or distribution had not been declared.  Any adjustment required to be made as set forth in this
Section 15.5(e) shall be based upon the amount by which such distribution
exceeds 2% of the Market Capitalization.

(f)            In
case a tender or exchange offer made by the Company or any Subsidiary for all
or any portion of the Common Stock shall expire and such tender or exchange
offer (as amended upon the expiration thereof) shall require the payment to
stockholders of consideration per share of Common Stock having a fair market
value (as determined by the Board of Directors, whose determination shall be
conclusive and described in a resolution of the Board of Directors) that as of
the last time (the “Expiration Time”) tenders or exchanges may be made pursuant
to such tender or exchange offer (as it may be amended) exceeds the Current
Market Price of the Common Stock on the Trading Day next succeeding the
Expiration Time, the Conversion Price shall be reduced so that the same shall
equal the price determined by multiplying the Conversion Price in effect
immediately prior to the Expiration Time by a fraction the numerator of which
shall be the number of shares of Common Stock outstanding (including any
tendered or exchanged shares) at the Expiration Time multiplied by the Current
Market Price of the Common Stock on the Trading Day next succeeding the
Expiration Time and the denominator of which shall be the sum of (x) the
fair market value 

 

63

 

(determined
as aforesaid) of the aggregate consideration payable to stockholders based on
the acceptance (up to any maximum specified in the terms of the tender or
exchange offer) of all shares validly tendered or exchanged and not withdrawn
as of the Expiration Time (the shares deemed so accepted, up to any such
maximum, being referred to as the “Purchased Shares”) and (y) the product
of the number of shares of Common Stock outstanding (less any Purchased Shares)
at the Expiration Time and the Current Market Price of the Common Stock on the
Trading Day next succeeding the Expiration Time, such reduction to become
effective immediately prior to the opening of business on the Trading Day
following the Expiration Time.  In the
event that the Company is obligated to purchase shares pursuant to any such
tender or exchange offer, but the Company is permanently prevented by
applicable law from effecting any such purchases or all such purchases are
rescinded, the Conversion Price shall again be adjusted to be the Conversion
Price that would then be in effect if such tender or exchange offer had not
been made.

(g)           In
case of a tender or exchange offer made by a Person other than the Company or
any Subsidiary for an amount that increases the offeror’s ownership of Common
Stock to more than twenty-five percent (25%) of the Common Stock outstanding
and shall involve the payment by such Person of consideration per share of
Common Stock having a fair market value (as determined by the Board of
Directors, whose determination shall be conclusive, and described in a
resolution of the Board of Directors) that as of the last time (the “Offer
Expiration Time”) tenders or exchanges may be made pursuant to such tender or
exchange offer (as it shall have been amended) that exceeds the Current Market
Price of the Common Stock on the Trading Day next succeeding the Offer
Expiration Time, and in which, as of the Offer Expiration Time the Board of
Directors is not recommending rejection of the offer, the Conversion Price
shall be reduced so that the same shall equal the price determined by
multiplying the Conversion Price in effect immediately prior to the Offer
Expiration Time by a fraction the numerator of which shall be the number of
shares of Common Stock outstanding (including any tendered or exchanged shares)
at the Offer Expiration Time multiplied by the Current Market Price of the
Common Stock on the Trading Day next succeeding the Offer Expiration Time and
the denominator of which shall be the sum of (x) the fair market value
(determined as aforesaid) of the aggregate consideration payable to stockholders
based on the acceptance (up to any maximum specified in the terms of the tender
or exchange offer) of all shares validly tendered or exchanged and not
withdrawn as of the Offer Expiration Time (the shares deemed so accepted, up to
any such maximum, being referred to as the “Accepted Purchased Shares”) and
(y) the product of the number of shares of Common Stock outstanding (less
any Accepted Purchased Shares) at the Offer Expiration Time and the Current
Market Price of the Common Stock on the Trading Day next succeeding the Offer
Expiration Time, such reduction to become effective immediately prior to the
opening of business on the Trading Day following the Offer Expiration
Time.  In the event that such Person is
obligated to purchase shares pursuant to any such tender or exchange offer, but
such Person is permanently prevented by applicable law from effecting any such
purchases or all such purchases are rescinded, the Conversion Price shall again
be adjusted to be the Conversion Price that would then be in effect if such
tender or exchange offer had not been made. 
Notwithstanding the foregoing, the adjustment described in this
Section 15.5(g) shall not be made if, as of the Offer Expiration Time, the
offering documents with respect to such offer disclose a plan or intention to
cause the Company to engage in any transaction described in
Article Twelve.

(h)           For purposes of this
Section 15.5, the following terms shall have the meaning indicated:

(i)    “Closing
Price” with respect to any security on any day shall mean the closing sale
price, regular way, on such day or, in case no such sale takes place on such
day, the average of the reported closing bid and asked prices, regular way, in
each case as quoted on the Nasdaq National Market or, if such security is not
quoted or listed or admitted to trading on such Nasdaq National Market, on the 

 

64

 

principal
national securities exchange or quotation system on which such security is
quoted or listed or admitted to trading or, if not quoted or listed or admitted
to trading on any national securities exchange or quotation system, the average
of the closing bid and asked prices of such security on the over-the-counter
market on the day in question as reported by the National Quotation Bureau
Incorporated, or a similar generally accepted reporting service, or if not so
available, in such manner as furnished by any New York Stock Exchange member
firm selected from time to time by the Board of Directors for that purpose, or
a price determined in good faith by the Board of Directors or, to the extent
permitted by applicable law, a duly authorized committee thereof, whose
determination shall be conclusive.

(ii)   “Current
Market Price” shall mean the average of the daily Closing Prices per share of
Common Stock for the ten consecutive Trading Days immediately prior to the date
in question except as hereinafter provided for purposes of any computation
under Section 15.5(f) or (g); provided, however, that (1) if the “ex”
date (as hereinafter defined) for any event (other than the issuance or
distribution requiring such computation and other than the tender or exchange
offer requiring such computation under Section 15.5(f) or (g)) that
requires an adjustment to the Conversion Price pursuant to
Section 15.5(a), (b), (c), (d), (e), (f) or (g) occurs during such ten
consecutive Trading Days, the Closing Price for each Trading Day prior to the
“ex” date for such other event shall be adjusted by multiplying such Closing
Price by the same fraction by which the Conversion Price is so required to be
adjusted as a result of such other event, (2) if the “ex” date for any
event (other than the issuance or distribution requiring such computation and
other than the tender or exchange offer requiring such computation under
Section 15.5(f) or (g)) that requires an adjustment to the Conversion
Price pursuant to Section 15.5(a), (b), (c), (d), (e), (f) or (g) occurs
on or after the “ex” date for the issuance or distribution requiring such
computation and prior to the day in question, the Closing Price for each
Trading Day on and after the “ex” date for such other event shall be adjusted
by multiplying such Closing Price by the reciprocal of the fraction by which
the Conversion Price is so required to be adjusted as a result of such other
event, and (3) if the “ex” date for the issuance or distribution requiring
such computation is prior to the day in question, after taking into account any
adjustment required pursuant to clause (1) or (2) of this proviso, the Closing
Price for each Trading Day on or after such “ex” date shall be adjusted by
adding thereto the amount of any cash and the fair market value (as determined
by the Board of Directors or, to the extent permitted by applicable law, a duly
authorized committee thereof in a manner consistent with any determination of
such value for purposes of Section 15.5(d), (f) or (g), whose
determination shall be conclusive and described in a resolution of the Board of
Directors or such duly authorized committee thereof, as the case may be) of the
evidences of indebtedness, shares of capital stock or assets being distributed
applicable to one share of Common Stock as of the close of business on the day
before such “ex” date.  For purposes of
any computation under Section 15.5(f) or (g), the “Current Market Price”
of the Common Stock on any date shall be deemed to be the average of the daily
Closing Prices per share of Common Stock for such day and the next two
succeeding Trading Days; provided, however, that if the “ex” date for any event
(other than the tender or exchange offer requiring such computation under
Section 15.5(f) or (g)) that requires an adjustment to the Conversion
Price pursuant to Section 15.5(a), (b), (c), (d), (e), (f) or (g) occurs
on or after the Expiration Time or Offer Expiration Time, as the case may be,
for the tender or exchange offer requiring such computation and prior to the
day in question, the Closing Price for each Trading Day on and after the “ex”
date for such other event shall be adjusted as provided in clauses (1),
(2) and (3) of the proviso contained in the first sentence of this
Section 15.5(h)(2).  For purpose of
this paragraph, the term “ex” date, (1) when used with respect to any issuance
or distribution, means the first date on which the Common Stock trades, regular
way, on the relevant exchange or in the relevant market from which the Closing
Price was obtained without the right to receive such issuance or distribution,
(2) when used with respect to any subdivision or combination of shares of
Common Stock, means the first date on which the Common Stock trades, regular
way, on such exchange or in such market after the time at which such
subdivision or combination becomes effective, and (3) when used with
respect to any tender or exchange offer means the first date on which the 

 

65

 

Common
Stock trades, regular way, on such exchange or in such market after the
Expiration Time or the Offer Expiration Time of such offer.

(1)           “Fair Market Value” shall mean the
amount which a willing buyer would pay a willing seller in an arm’s-length
transaction.

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

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

(i)            The
Company may make such reductions in the Conversion Price, in addition to those
required by Sections 15.5(a), (b), (c), (d), (e), (f) or (g) as the Board
of Directors considers to be advisable to avoid or diminish any income tax to
holders of Common Stock or rights to purchase Common Stock resulting from any
dividend or distribution of stock (or rights to acquire stock) or from any
event treated as such for income tax purposes.

To the extent permitted by applicable law, the Company
from time to time may reduce the Conversion Price by any amount for any period
of time if the period is at least twenty (20) days, the reduction is
irrevocable during the period and the Board of Directors shall have made a
determination that such reduction would be in the best interests of the
Company, which determination shall be conclusive.  Whenever the Conversion Price is reduced pursuant to the
preceding sentence, the Company shall mail to holders of record of the Notes a
notice of the reduction at least fifteen (15) days prior to the date the
reduced Conversion Price takes effect, and such notice shall state the reduced
Conversion Price and the period during which it will be in effect.

(j)            No
adjustment in the Conversion Price shall be required unless such adjustment
would require an increase or decrease of at least one percent (1%) in such
price; provided, however, that any adjustments that by reason of this
Section 15.5(j) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment.  All calculations under this Article Fifteen shall be made by
the Company and shall be made to the nearest cent or to the nearest
one-hundredth (1/100) of a share, as the case may be.  No adjustment need be made for rights to purchase Common Stock
pursuant to a Company plan for reinvestment of dividends or interest.  To the extent the Notes become convertible
into cash, assets, property or securities (other than capital stock of the Company),
no adjustment need be made thereafter as to the cash, assets, property or such
securities.  Interest will not accrue on
the cash.

 

66

 

(k)           Whenever
the Conversion Price is adjusted as herein provided, the Company shall promptly
file with the Trustee and any conversion agent other than the Trustee an
Officers’ Certificate setting forth the Conversion Price after such adjustment
and setting forth a brief statement of the facts requiring such
adjustment.  Unless and until a
Responsible Officer of the Trustee shall have received such Officers’
Certificate, the Trustee shall not be deemed to have knowledge of any
adjustment of the Conversion Price and may assume that the last Conversion
Price of which it has knowledge is still in effect.  Promptly after delivery of such certificate, the Company shall
prepare a notice of such adjustment of the Conversion Price setting forth the
adjusted Conversion Price and the date on which each adjustment becomes
effective and shall mail such notice of such adjustment of the Conversion Price
to the holder of each Note at his last address appearing on the Note register
provided for in Section 2.5 of this Indenture, within twenty (20) days
after execution thereof.  Failure to
deliver such notice shall not affect the legality or validity of any such
adjustment.

(l)            In
any case in which this Section 15.5 provides that an adjustment shall
become effective immediately after (1) a record date or Record Date for an
event, (2) the date fixed for the determination of stockholders entitled to
receive a dividend or distribution pursuant to Section 15.5(a), (3) a date
fixed for the determination of stockholders entitled to receive rights or
warrants pursuant to Section 15.5(b), (4) the Expiration Time for any
tender or exchange offer pursuant to Section 15.5(f), or (5) the Offer
Expiration Time for a tender or exchange offer pursuant to Section 15.5(g)
(each a “Determination Date”), the Company may elect to defer until the
occurrence of the relevant Adjustment Event (as hereinafter defined)
(x) issuing to the holder of any Note converted after such Determination
Date and before the occurrence of such Adjustment Event, the additional shares
of Common Stock or other securities issuable upon such conversion by reason of
the adjustment required by such Adjustment Event over and above the Common
Stock issuable upon such conversion before giving effect to such adjustment and
(y) paying to such holder any amount in cash in lieu of any fraction
pursuant to Section 15.3.  For
purposes of this Section 15.5(l), the term “Adjustment Event” shall mean:

(a)           in
any case referred to in clause (1) hereof, the occurrence of such event,

(b)           in
any case referred to in clause (2) hereof, the date any such dividend or
distribution is paid or made,

(c)           in
any case referred to in clause (3) hereof, the date of expiration of such
rights or warrants, and

(d)           in
any case referred to in clause (4) or clause (5) hereof, the date a
sale or exchange of Common Stock pursuant to such tender or exchange offer is
consummated and becomes irrevocable.

(m)          For
purposes of this Section 15.5, 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.

Section 15.6.          Effect
of Reclassification, Consolidation, Merger or Sale.  If any of the
following events occur, namely (i) any reclassification or change of the
outstanding shares of Common Stock (other than a subdivision or combination to
which Section 15.5(c) applies), (ii) any consolidation, merger or
combination of the Company with another Person as a result of which holders of
Common Stock shall be 

 

67

 

entitled to receive
stock, other securities or other property or assets (including cash) with
respect to or in exchange for such Common Stock, or (iii) any sale or
conveyance of all or substantially all of the properties and assets of the
Company to any other Person as a result of which holders of Common Stock shall
be entitled to receive stock, other securities or other property or assets
(including cash) with respect to or in exchange for such Common Stock, then the
Company or the successor or purchasing Person, as the case may be, shall
execute with the Trustee a supplemental indenture (which shall comply with the
Trust Indenture Act as in force at the date of execution of such supplemental
indenture) providing that such Note shall be convertible into the kind and
amount of shares of stock, other securities or other property or assets
(including cash) receivable upon such reclassification, change, consolidation,
merger, combination, sale or conveyance by a holder of a number of shares of
Common Stock issuable upon conversion of such Notes (assuming, for such
purposes, a sufficient number of authorized shares of Common Stock are
available to convert all such Notes) immediately prior to such
reclassification, change, consolidation, merger, combination, sale or
conveyance assuming such holder of Common Stock did not exercise his rights of
election, if any, as to the kind or amount of stock, other securities or other
property or assets (including cash) receivable upon such reclassification,
change, consolidation, merger, combination, sale or conveyance (provided that,
if the kind or amount of stock, other securities or other property or assets
(including cash) receivable upon such reclassification, change, consolidation,
merger, combination, sale or conveyance is not the same for each share of
Common Stock in respect of which such rights of election shall not have been
exercised (“non-electing share”), then for the purposes of this
Section 15.6 the kind and amount of stock, other securities or other
property or assets (including cash) receivable upon such reclassification,
change, consolidation, merger, combination, sale or conveyance for each
non-electing share shall be deemed to be the kind and amount so receivable per
share by a plurality of the non-electing shares).  Such supplemental indenture shall provide for adjustments which
shall be as nearly equivalent as may be practicable to the adjustments provided
for in this Article Fifteen.

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

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

If this Section 15.6 applies to any event or occurrence,
Section 15.5 shall not apply.

Section 15.7.          Taxes
on Shares Issued.  The issue of stock certificates on conversions of
Notes shall be made without charge to the converting Noteholder for any tax in
respect of the issue thereof.  The
Company shall not, however, be required to pay any tax which may be payable in
respect of any transfer involved in the issue and delivery of stock in any name
other than that of the holder of any Note converted, and the Company shall not
be required to issue or deliver any such stock certificate unless and until the
Person or Persons requesting the issue thereof shall have paid to the Company
the amount of such tax or shall have established to the satisfaction of the
Company that such tax has been paid.

Section 15.8.          Reservation
of Shares; Shares to be Fully Paid; Compliance with Governmental Requirements;
Listing of Common Stock.  The Company shall provide, free from
preemptive rights, out of its authorized but unissued shares or shares held in
treasury, sufficient shares of Common Stock to provide for the conversion of
the Notes from time to time as such Notes are presented for conversion.

 

68

 

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

The Company covenants that all shares of Common Stock which may be
issued upon conversion of Notes will upon issue be fully paid and
non-assessable by the Company and free from all taxes, liens and charges with
respect to the issue thereof.

The Company covenants that, if any shares of Common Stock to be
provided for the purpose of conversion of Notes hereunder require registration
with or approval of any governmental authority under any federal or state law
before such shares may be validly issued upon conversion, the Company will in
good faith and as expeditiously as possible, to the extent then permitted by
the rules and interpretations of the Securities and Exchange Commission (or any
successor thereto), endeavor to secure such registration or approval, as the
case may be.

The Company further covenants that, if at any time the Common Stock
shall be listed on the Nasdaq National Market or any other national securities
exchange or automated quotation system, the Company will, if permitted by the
rules of such exchange or automated quotation system, list and keep listed, so
long as the Common Stock shall be so listed on such exchange or automated
quotation system, all Common Stock issuable upon conversion of the Note;
provided, however, that, if the rules of such exchange or automated quotation
system permit the Company to defer the listing of such Common Stock until the
first conversion of the Notes into Common Stock in accordance with the
provisions of this Indenture, the Company covenants to list such Common Stock
issuable upon conversion of the Notes in accordance with the requirements of
such exchange or automated quotation system at such time.

Section 15.9.          Responsibility
of Trustee.  The Trustee and any other conversion agent shall not at
any time be under any duty or responsibility to any holder of Notes to determine
the Conversion Price or whether any facts exist which may require any
adjustment of the Conversion Price, or with respect to the nature or extent or
calculation of any such adjustment when made, or with respect to the method
employed, or herein or in any supplemental indenture provided to be employed,
in making the same.  The Trustee and any
other conversion agent shall not be accountable with respect to the validity or
value (or the kind or amount) of any shares of Common Stock, or of any
securities or property, which may at any time be issued or delivered upon the
conversion of any Note; and the Trustee and any other conversion agent make no
representations with respect thereto. 
Neither the Trustee nor any conversion agent shall be responsible for
any failure of the Company to issue, transfer or deliver any shares of Common
Stock or stock certificates or other securities or property or cash upon the
surrender of any Note for the purpose of conversion or to comply with any of
the duties, responsibilities or covenants of the Company contained in this
Article Fifteen.  Without limiting
the generality of the foregoing, neither the Trustee nor any conversion agent
shall be under any responsibility to determine the correctness of any
provisions contained in any supplemental indenture entered into pursuant to
Section 15.6 relating either to the kind or amount of shares of stock or
securities or property (including cash) receivable by Noteholders upon the
conversion of their Notes after any event referred to in such Section 15.6
or to any adjustment to be made with respect thereto, but, subject to the
provisions of Section 8.1, may accept as conclusive evidence of the
correctness of any such provisions, and shall be protected in relying upon, the
Officers’ Certificate (which the Company shall be obligated to file with the
Trustee prior to the execution of any such supplemental indenture) with respect
thereto.

 

69

 

Section 15.10.        Notice
to Holders Prior to Certain Actions.  In case:

(a)           the
Company shall declare a dividend (or any other distribution) on its Common
Stock that would require an adjustment in the Conversion Price pursuant to
Section 15.5; or

(b)           the
Company shall authorize the granting to the holders of all or substantially all
of its Common Stock of rights or warrants to subscribe for or purchase any
share of any class or any other rights or warrants; or

(c)           of
any reclassification or reorganization of the Common Stock of the Company
(other than a subdivision or combination of its outstanding Common Stock, or a
change in par value, or from par value to no par value, or from no par value to
par value), or of any consolidation or merger to which the Company is a party
and for which approval of any stockholders of the Company is required, or of
the sale or transfer of all or substantially all of the assets of the Company
or any Significant Subsidiary; or

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

the Company shall cause to be filed with the Trustee
and to be mailed to each holder of Notes at his address appearing on the Note
register provided for in Section 2.5 of this Indenture, as promptly as
possible but in any event at least ten (10) days prior to the applicable date
hereinafter specified, a notice stating (x) the date on which a record is
to be taken for the purpose of such dividend, distribution or rights 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 or
rights are to be determined, or (y) the date on which such
reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding up is expected to become effective or occur, and the
date as of which it is expected that holders of Common Stock of record shall be
entitled to exchange their Common Stock for securities or other property
deliverable upon such reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding up. 
Failure to give such notice, or any defect therein, shall not affect the
legality or validity of such dividend, distribution, reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation or winding up.

ARTICLE
SIXTEEN

MISCELLANEOUS
PROVISIONS

Section 16.1.          Provisions
Binding on Company’s Successors.  All the covenants, stipulations,
promises and agreements by the Company contained in this Indenture shall bind
its successors and assigns whether so expressed or not.

Section 16.2.          Official
Acts by Successor Corporation.  Any act or proceeding by any provision
of this Indenture authorized or required to be done or performed by any board,
committee or officer of the Company shall and may be done and performed with
like force and effect by the like board, committee or officer of any Person
that shall at the time be the lawful sole successor of the Company.

Section 16.3.          Addresses
for Notices, Etc.  Any notice or demand which by any provision of this
Indenture is required or permitted to be given or served by the Trustee or by
the holders of Notes on the Company shall be deemed to have been sufficiently
given or made, for all purposes, if given or served by being deposited postage
prepaid by registered or certified mail in a post office letter box addressed
(until 

 

70

 

another address is filed
by the Company with the Trustee) to Lattice Semiconductor Corporation, 5555
N.E. Moore Court, Hillsboro, Oregon 97124-6421 Attention:  CFO. 
Any notice, direction, request or demand hereunder to or upon the
Trustee shall be deemed to have been sufficiently given or made, for all purposes,
if given or served by being deposited, postage prepaid, by registered or certified
mail in a post office letter box addressed to the Corporate Trust Office, which
office is, at the date as of which this Indenture is dated, located at U.S.
Bank National Association, 550 S. Hope Street, Suite 500, Los Angeles, CA  90071, Attention: Corporate Trust Services
(Lattice Semiconductor Corporation, Zero Coupon Convertible Subordinated Notes
due 2008).

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

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

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

Section 16.4.          Governing
Law.  This Indenture and each Note shall be deemed to be a contract
made under the laws of the State of New York, and for all purposes shall be
construed in accordance with the laws of the State of New York.

Section 16.5.          Evidence
of Compliance with Conditions Precedent; Certificates to Trustee. 
Upon any application or demand by the Company to the Trustee to take any action
under any of the provisions of this Indenture, the Company shall furnish to the
Trustee an Officers’ Certificate stating that all conditions precedent, if any,
provided for in this Indenture relating to the proposed action have been
complied with, and an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.

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

Section 16.6.          Legal
Holidays.  In any case in which the date of maturity of principal of
or Liquidated Damages on the Notes or the Redemption Date, the Repurchase Date
or the Purchase Date of any Note will not be a Business Day, then payment of
such Liquidated Damages, if any, or principal of the Notes need not be made on
such date, but may be made on the next succeeding Business Day with the same
force and effect as if made on the date of maturity or the Redemption Date, the
Repurchase Date or the Purchase Date and no Liquidated Damages, if any, shall
accrue from the period forward after such date.

 

71

 

Section 16.7.          Trust
Indenture Act.  This Indenture is hereby made subject to, and shall be
governed by, the provisions of the Trust Indenture Act required to be part of
and to govern indentures qualified under the Trust Indenture Act; provided,
however, that, unless otherwise required by law, notwithstanding the foregoing,
this Indenture and the Notes issued hereunder shall not be subject to the
provisions of subsections (a)(1), (a)(2), and (a)(3) of Section 314
of the Trust Indenture Act as now in effect or as hereafter amended or
modified; provided further that this Section 16.7 shall not require this
Indenture or the Trustee to be qualified under the Trust Indenture Act prior to
the time such qualification is in fact required under the terms of the Trust
Indenture Act, nor shall it constitute any admission or acknowledgment by any
party to the Indenture that any such qualification is required prior to the
time such qualification is in fact required under the terms of the Trust
Indenture Act.  If any provision hereof
limits, qualifies or conflicts with another provision hereof which is required
to be included in an indenture qualified under the Trust Indenture Act, such
required provision shall control.

Section 16.8.          No
Security Interest Created.  Nothing in this Indenture or in the Notes,
expressed or implied, shall be construed to constitute a security interest
under the Uniform Commercial Code or similar legislation, as now or hereafter
enacted and in effect, in any jurisdiction in which property of the Company or
its subsidiaries is located.

Section 16.9.          Benefits
of Indenture.  Nothing in this Indenture or in the Notes, express or
implied, shall give to any Person, other than the parties hereto, any paying
agent, any authenticating agent, any Note registrar and their successors
hereunder, the holders of Notes and the holders of Senior Indebtedness, any
benefit or any legal or equitable right, remedy or claim under this Indenture.

Section 16.10.        Table
of Contents, Headings, Etc.  The table of contents and the titles and
headings of the articles and sections of this Indenture have been inserted for
convenience of reference only, are not to be considered a part hereof, and
shall in no way modify or restrict any of the terms or provisions hereof.

Section 16.11.        Authenticating
Agent.  The Trustee may appoint an authenticating agent that shall be
authorized to act on its behalf, and subject to its direction, in the
authentication and delivery of Notes in connection with the original issuance
thereof and transfers and exchanges of Notes hereunder, including under
Sections 2.4, 2.5, 2.6, 2.7 and Article Three, as fully to all
intents and purposes as though the authenticating agent had been expressly
authorized by this Indenture and those Sections to authenticate and deliver
Notes.  For all purposes of this
Indenture, the authentication and delivery of Notes by the authenticating agent
shall be deemed to be authentication and delivery of such Notes “by the
Trustee” and a certificate of authentication executed on behalf of the Trustee
by an authenticating agent shall be deemed to satisfy any requirement hereunder
or in the Notes for the Trustee’s certificate of authentication.  Such authenticating agent shall at all times
be a Person eligible to serve as trustee hereunder pursuant to
Section 8.9.

Any corporation into which any authenticating agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, consolidation or conversion to which any authenticating agent
shall be a party, or any corporation succeeding to the corporate trust business
of any authenticating agent, shall be the successor of the authenticating agent
hereunder, if such successor corporation is otherwise eligible under this
Section 16.11, without the execution or filing of any paper or any further
act on the part of the parties hereto or the authenticating agent or such
successor corporation.

Any authenticating agent may at any time resign by giving written
notice of resignation to the Trustee and to the Company.  The Trustee may at any time terminate the
agency of any authenticating agent by giving written notice of termination to
such authenticating agent and to the Company. 
Upon receiving such a notice 

 

72

 

of resignation or upon such a termination, or in case
at any time any authenticating agent shall cease to be eligible under this
Section, the Trustee shall either promptly appoint a successor authenticating
agent or itself assume the duties and obligations of the former authenticating
agent under this Indenture and, upon such appointment of a successor
authenticating agent, if made, shall give written notice of such appointment of
a successor authenticating agent to the Company and shall mail notice of such
appointment of a successor authenticating agent to all holders of Notes as the
names and addresses of such holders appear on the Note register.

The Company agrees to pay to the authenticating agent from time to time
such reasonable compensation for its services as shall be agreed upon in writing
between the Company and the authenticating agent.

The provisions of Sections 8.2, 8.3, 8.4, 9.3 and this
Section 16.11 shall be applicable to any authenticating agent.

Section 16.12.        Execution
in Counterparts.  This Indenture may be executed in any number of
counterparts, each of which shall be an original, but such counterparts shall
together constitute but one and the same instrument.

Section 16.13.        Severability. 
In case any provision in this Indenture or in the Notes shall be invalid,
illegal or unenforceable, then (to the extent permitted by law) the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.

 

 

73

 

U.S. Bank National Association hereby accepts the trusts in this
Indenture declared and provided, upon the terms and conditions herein above set
forth.

IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed.

 

	
   

  	
  LATTICE
  SEMICONDUCTOR CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Steven A.
  Skaggs

  
	
   

  	
  Name:

  	
  Steven A. Skaggs

  
	
   

  	
  Title:

  	
  Senior Vice
  President, Chief Financial Officer and Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
  U.S. BANK
  NATIONAL ASSOCIATION

  
	
   

  	
  as Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Paula Oswald

  
	
   

  	
  Name:

  	
  Paula Oswald

  
	
   

  	
  Title:

  	
  Vice President

  

 

 

74

 

EXHIBIT A

For Global Note Only:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY (THE “DEPOSITARY”, WHICH TERM INCLUDES ANY SUCCESSOR
DEPOSITARY FOR THE CERTIFICATES) TO THE COMPANY OR ITS AGENT FOR REGISTRATION
OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN
THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITARY (AND ANY PAYMENT HEREIN IS MADE TO CEDE &
CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITARY), 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.

FOR PURPOSES OF SECTIONS
1272, 1273 AND 1275 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, THIS NOTE
IS BEING ISSUED WITH ORIGINAL ISSUE DISCOUNT AND THE ISSUE DATE OF THIS NOTE IS
JUNE 20, 2003.  THE COMPANY AGREES TO PROVIDE
PROMPTLY TO THE HOLDER OF THIS NOTE, UPON WRITTEN REQUEST, THE ISSUE PRICE,
AMOUNT OF TAX ORIGINAL ISSUE DISCOUNT, ISSUE DATE AND YIELD TO MATURITY.  ANY SUCH WRITTEN REQUEST SHOULD BE SENT TO
THE COMPANY AT THE FOLLOWING ADDRESS: LATTICE SEMICONDUCTOR CORPORATION 5555
N.E. MOORE COURT, HILLSBORO, OREGON 97124-6421 
ATTENTION: VICE PRESIDENT OF FINANCE.

THIS NOTE HAS 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 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 FOR
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 PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT (IF AVAILABLE) OR (4) 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 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 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 SHALL BE DEEMED BY
THE ACCEPTANCE OF THIS NOTE TO HAVE AGREED TO ANY SUCH AMENDMENT OR SUPPLEMENT.

 

 

 

A-2

 

LATTICE SEMICONDUCTOR CORPORATION

ZERO COUPON CONVERTIBLE
SUBORDINATED NOTE DUE JULY 1, 2010

	
   

  	
   

  	
  CUSIP:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  No.

  	
   

  	
  $

  	
   

  

Lattice Semiconductor Corporation, a corporation duly organized and
validly existing under the laws of the State of Delaware (herein called the
“Company”, which term includes any successor corporation under the Indenture
referred to on the reverse hereof), for value received hereby promises to pay
to Cede & Co. or its registered assigns, the principal sum of
_________________ ($___________) on July 1, 2010, at the office or agency
of the Company maintained for that purpose in accordance with the terms of the
Indenture, 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.  The Company shall not pay
interest on the Notes, other than Liquidated Damages payable in accordance with
the Registration Rights Agreement. 
Liquidated Damages, if any, will be paid on each Liquidated Damages
Payment Date to the Person entitled thereto as it appears in the Note register
at the close of business on the applicable Liquidated Damages Record Date.  Liquidated Damages, if any, may, at the
option of the Company, be paid either (i) by check mailed to the
registered address of such Person (provided that the holder of Notes with an
aggregate principal amount in excess of $5,000,000 shall, at the written
election of such holder, be paid by wire transfer of immediately available
funds) or (ii) by transfer to an account maintained by such Person located
in the United States; provided, however, that payments to the Depositary will
be made by wire transfer of immediately available funds to the account of the
Depositary or its nominee.

Reference is made to the further provisions of this Note set forth on
the reverse hereof, including, without limitation, provisions subordinating the
payment of principal of, the Repurchase Price, the Purchase Price or the
Redemption Price, and Liquidated Damages, if any, on the Notes to the prior
payment in full of all Senior Indebtedness, as defined in the Indenture, and
provisions giving the holder of this Note the right to convert this Note into
Common Stock of the Company on the terms and subject to the limitations
referred to on the reverse hereof and as more fully specified in the Indenture.  Such further provisions shall for all
purposes have the same effect as though fully set forth at this place.

This Note shall be deemed to be a contract made under the laws of the
State of New York, and for all purposes shall be construed in accordance with
and governed by the laws of the State of New York.

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

 

A-3

 

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

 

 

	
   

  	
   

  	
   

  	
  LATTICE
  SEMICONDUCTOR CORPORATION

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Attest:

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
   

  	
   

  

 

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

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

U.S. BANK NATIONAL ASSOCIATION, as Trustee

 

	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

A-4

 

FORM OF REVERSE OF NOTE

LATTICE SEMICONDUCTOR CORPORATION

ZERO COUPON CONVERTIBLE
SUBORDINATED NOTE DUE JULY 1, 2010

This Note is one of a duly authorized issue of Notes of the Company,
designated as its Zero Coupon Convertible Subordinated Notes due July 1, 2010
(herein called the “Notes”), limited to the aggregate principal amount of
$230,000,000 all issued or to be issued under and pursuant to an Indenture
dated as of June 20, 2003 (herein called the “Indenture”), between the
Company and U.S. Bank National Association, as trustee (herein called the
“Trustee”), to which Indenture and all indentures supplemental thereto
reference is hereby made for a description of the rights, limitations of
rights, obligations, duties and immunities thereunder of the Trustee, the
Company and the holders of the Notes. 
Capitalized terms used herein but not defined herein shall have the
meaning assigned to such terms in the Indenture.

In case an Event of Default (as defined in the Indenture) shall have
occurred and be continuing, the principal of, and accrued and unpaid Liquidated
Damages (as defined in the Registration Rights Agreement), if any, on all Notes
may be declared by either the Trustee or the holders of not less than
25% in aggregate principal amount of the Notes then outstanding, and upon
said declaration shall become, due and payable, in the manner, with the effect
and subject to the conditions provided in the Indenture.

The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the holders of not less than a majority in
aggregate principal amount of the Notes at the time outstanding, to execute
supplemental indentures adding any provisions to or changing in any manner or
eliminating any of the provisions of the Indenture or of any supplemental
indenture or modifying in any manner the rights of the holders of the Notes;
provided, however, that no such supplemental indenture shall (i) extend
the fixed maturity of any Note, reduce the principal amount thereof, or impair
the right of any Noteholder to institute suit for the payment thereof, or make
the principal thereof, Liquidated Damages, if any, thereon payable in any coin
or currency other than that provided in the Notes, or modify the provisions of
the Indenture with respect to the subordination of the Notes in a manner
adverse to the Noteholders in any material respect, or change the obligation of
the Company to redeem, repurchase or purchase (pursuant to Article Three
of the Indenture) any Note in a manner adverse to the holder of the Notes, or
impair the right to convert the Notes into Common Stock subject to the terms
set forth in the Indenture, including Section 15.6 thereof, without the
consent of the holder of each Note so affected or (ii) reduce the
aforesaid percentage of Notes, the holders of which are required to consent to
any such supplemental indenture, without the consent of the holders of all
Notes then outstanding.  Subject to the
provisions of the Indenture, the holders of a majority in aggregate principal
amount of the Notes at the time outstanding may on behalf of the holders of all
of the Notes waive any past default or Event of Default under the Indenture and
its consequences except a default in the payment of Liquidated Damages, if any,
or the principal of, any of the Notes, or a failure by the Company to convert
any Notes into Common Stock of the Company, or a default in the payment of the
Repurchase Price, the Redemption Price or the Purchase Price pursuant to
Article Three of the Indenture, or a default in respect of a covenant or
provisions of the Indenture which under Article Eleven of the Indenture
cannot be modified without the consent of the holders of each or all Notes then
outstanding or affected thereby.  Any
such consent or waiver by the holder of this Note (unless revoked as provided
in the Indenture) shall be conclusive and binding upon such holder and upon all
future holders and owners of this Note and any Notes which may 

 

A-5

 

be issued in exchange or substitution hereof,
irrespective of whether or not any notation thereof is made upon this Note or
such other Notes.

The indebtedness evidenced by the Notes is, to the extent and in the
manner provided in the Indenture, expressly subordinated and subject in right
of payment to the prior payment in full of all Senior Indebtedness of the
Company, whether outstanding at the date of the Indenture or thereafter
incurred, and this Note is issued subject to the provisions of the Indenture
with respect to such subordination. 
Each holder of this Note, by accepting the same, agrees to and shall be
bound by such provisions and authorizes the Trustee on its behalf to take such
action as may be necessary or appropriate to effectuate the subordination so
provided and appoints the Trustee his attorney-in-fact for such purpose.

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

The Company shall not pay interest on the Notes, other than Liquidation
Damages payable in accordance with the Registration Rights Agreement, as
defined in the Indenture.

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

The Notes will not be redeemable at the option of the Company prior to
July 1, 2008.

At any time on or from time to time after July 1, 2008, and prior to
maturity, the Notes may be redeemed at the option of the Company, in whole or
in part, upon mailing a notice of such redemption not less than 20 days
but not more than 60 days before the Redemption Date to the holders of Notes at
their last registered addresses, all as provided in the Indenture, at 100%
principal amount of the Notes together in each case with accrued and unpaid
Liquidated Damages, if any, to, but excluding, the Redemption Date: provided,
however, that if the Redemption Date is on a July 1 or January 1,
then the Liquidated Damages, if any, payable on such date shall be paid to the
holder of record on the preceding June 15 or December 15,
respectively.

The Notes are not subject to redemption through the operation of any
sinking fund.

If a Fundamental Change occurs at any time prior to maturity of the
Notes, the Notes will be repurchasable on the 30th day after notice
thereof (the “Repurchase Date”) at the option of the holder of the Notes at a
repurchase price equal to 100% of the principal amount thereof, together
with accrued Liquidated Damages, if any, 
to (but excluding) the Repurchase Date (the “Repurchase Price”);
provided, however, that, if such Repurchase Date is a July 1 or January 1, the
Liquidated Damages, if any, payable on such date shall be paid to the holder of
record of the Notes on the preceding June 15 or December 15, respectively.  At the option of the Company, the Repurchase
Price may be paid in cash or, subject to fulfillment by the Company of the
conditions set forth in Section 3.5(b) of the Indenture, by delivery of
shares of Common Stock having a fair market value equal to the Repurchase
Price.  The Notes will be repurchasable
in multiples of 

 

A-6

 

$1,000 principal amount.  The Company shall mail to all holders of
record of the Notes a notice of the occurrence of a Fundamental Change and of
the repurchase right arising as a result thereof on or before the 10th day
after the occurrence of such Fundamental Change.  For a Note to be so repurchased at the option of the holder, the
Company must receive at the office or agency of the Company maintained for that
purpose in accordance with the terms of the Indenture, such Note with the form
entitled “Option to Elect Repurchase Upon a Fundamental Change” on the reverse
thereof duly completed, together with such Note, duly endorsed for transfer, on
or before the 30th day after the date of such notice of a Fundamental
Change (or if such 30th day is not a Business Day, the immediately
succeeding Business Day).

At the option of the holder, the Notes shall be purchased by the
Company as of July 1, 2008 (the “Purchase Date”), in whole or in part, at 100%
of the principal amount in cash, on the Purchase Date, of such Notes to be
purchased, together with accrued and unpaid Liquidated Damages, if any, to, but
excluding, the Purchase Date (the “Purchase Price”), upon delivery to the
paying agent by the holder, of a written notice of purchase (a “Purchase
Notice”) at any time from the opening of business on the date that is 20
Business Days prior to the Purchase Date until the close of business on the
Purchase Date.

Subject to the provisions of the Indenture, the holder hereof has the
right, after the original issuance of any Notes through the close of business
on the final maturity date of the Notes (except that, with respect to any Note
or portion of a Note that shall be called for redemption or submitted for
purchase or repurchase, such right shall terminate, except as provided in
Section 15.2 or Article Three at the close of business on the
Business Day immediately preceding the Purchase Date, Repurchase Date or
Redemption Date, as the case may be, unless the Company shall default in the
payment due upon redemption, repurchase or purchase), to convert the principal
hereof or any portion of such principal which is $1,000 or an integral
multiple thereof into that number of shares of the Company’s Common Stock (as
such shares shall be constituted at the date of conversion) obtained by
dividing the principal amount of this Note or portion thereof to be converted
by the Conversion Price of $12.0612, as may adjusted from time to time as
provided in the Indenture, upon surrender of this Note, together with the
“Conversion Notice” to the Company at the office or agency of the Company
maintained for that purpose in accordance with the terms of the Indenture, or
at the option of such holder, the Corporate Trust Office, and, unless the
shares issuable on conversion are to be issued in the same name as this Note,
duly endorsed by, or accompanied by instruments of transfer in form
satisfactory to the Company duly executed by, the holder or by his duly
authorized attorney.  No adjustment in
respect of Liquidated Damages, if any, on any Note converted or dividends on
any shares issued upon conversion of such Note will be made upon any conversion
except as set forth in the next sentence. 
No fractional shares will be issued upon any conversion, but an
adjustment and payment in cash will be made, as provided in the Indenture, in
respect of any fraction of a share which would otherwise be issuable upon the
surrender of any Note or Notes for conversion. 
A Note in respect of which a holder is exercising its right to require
repurchase or purchase may be converted only if such holder withdraws its
election to exercise such right in accordance with the terms of the Indenture.

Upon due presentment for registration of transfer of this Note at the
office or agency of the Company maintained for that purpose in accordance with
the terms of the Indenture, a new Note or Notes of authorized denominations for
an equal aggregate principal amount will be issued to the transferee in
exchange thereof; subject to the limitations provided in the Indenture, without
charge except for any tax, assessment or other governmental charge imposed in
connection therewith.

The Company, the Trustee, any authenticating agent, any paying agent,
any conversion agent and any Note registrar may deem and treat the registered
holder hereof as the absolute owner of this Note (whether or not this Note
shall be overdue and notwithstanding any notation of ownership or other writing
hereon made 

 

A-7

 

by anyone other than the Company or any Note
registrar) for the purpose of receiving payment hereof, or on account hereof,
for the conversion hereof and for all other purposes, and neither the Company
nor the Trustee nor any other authenticating agent nor any paying agent nor
other conversion agent nor any Note registrar shall be affected by any notice
to the contrary.  All payments made to
or upon the order of such registered holder shall, to the extent of the sum or
sums paid, satisfy and discharge liability for monies payable on this Note.

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

This Note shall be deemed to be a contract made under the laws of New
York, and for all purposes shall be construed in accordance with the laws of
New York.

 

 

A-8

 

ABBREVIATIONS

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

 

	
  TEN COM -

  	
  as tenants in
  common

  	
   

  	
  UNIF GIFT MIN
  ACT -

  	
   

  	
  Custodian

  	
   

  
	
  TEN ENT -

  	
  as tenant by the
  entireties

  	
   

  	
  (Cust)

  	
  (Minor)

  	
   

  	
   

  
	
  JT TEN -

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

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  under Uniform
  Gifts to Minors Act

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (State)

  

 

Additional abbreviations may also be used though not in the above list.

 

 

A-9

 

CONVERSION NOTICE

TO:         LATTICE
SEMICONDUCTOR CORPORATION
                U.S. BANK NATIONAL
ASSOCIATION

The undersigned registered owner of this Note hereby irrevocably
exercises the option to convert this Note, or the portion thereof (which is
$1,000 or an integral multiple thereof) below designated, into shares of Common
Stock of Lattice Semiconductor Corporation in accordance with the terms of the
Indenture referred to in this Note, and directs that the shares issuable and
deliverable upon such conversion, together with any check in payment for
fractional shares and any Notes representing any unconverted principal amount
hereof, be issued and delivered to the registered holder hereof unless a
different name has been indicated below. 
If shares or any portion of this Note not converted are to be issued in
the name of a person other than the undersigned, the undersigned will provide
the appropriate information below and pay all transfer taxes payable with
respect thereto.  Any amount required to
be paid by the undersigned on account of Liquidated Damages, if any,
accompanies this Note.

 

	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Signature(s)

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Signature(s)
  must be guaranteed by an “eligible guarantor institution” meeting the
  requirements of the Note registrar, which requirements include membership or
  participation in the Security Transfer Agent Medallion Program (“STAMP”) or
  such other “signature guarantee program” as may be determined by the Note
  registrar in addition to, or in substitution for, STAMP, all in accordance
  with the Securities Exchange Act of 1934, as amended.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Signature
  Guarantee

  

 

Fill in the registration of shares of Common Stock if to be issued, and
Notes if to be delivered, other than to and in the name of the registered
holder:

 

	
   

  	
   

  	
   

  
	
  (Name)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (Street Address)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (City, State and
  Zip Code)

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

A-10

 

	
   

  	
   

  	
   

  
	
  Please print
  name and address

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Principal amount
  to be converted

  	
   

  	
   

  
	
  (if less than
  all):

  	
   

  	
   

  

 

	
  $

  	
   

  	
   

  

 

	
  Social Security
  or Other Taxpayer

  	
   

  	
   

  
	
  Identification
  Number:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

 

A-11

 

OPTION TO ELECT REPURCHASE

UPON A FUNDAMENTAL CHANGE

TO:         LATTICE
SEMICONDUCTOR CORPORATION
                U.S. BANK NATIONAL
ASSOCIATION

The undersigned registered owner of this Note hereby irrevocably
acknowledges receipt of a notice from Lattice Semiconductor Corporation (the
“Company”) as to the occurrence of a Fundamental Change with respect to the
Company and requests and instructs the Company to repay the entire principal
amount of this Note, or the portion thereof (which is $1,000 or an integral
multiple thereof) below designated, in accordance with the terms of the
Indenture referred to in this Note at the price of 100% of such entire
principal amount or portion thereof, together with accrued Liquidated Damages,
if any, to, but excluding, such Repurchase Date, to the registered holder
hereof.

 

	
  Dated:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Signature(s)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  NOTICE:  The above signatures of the holder(s)
  hereof must correspond with the name as written upon the face of the Note in
  every particular without alteration or enlargement or any change whatever.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Principal
  amount to be repaid (if less than all):

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Social
  Security or Other

  
	
   

  	
   

  	
   

  	
  Taxpayer
  Identification Number

  
						

 

 

 

A-12

 

ASSIGNMENT

For value received
__________________________________________ hereby sell(s) assign(s) and
transfer(s) unto ____________________________________________ (Please insert
social security or other Taxpayer Identification Number of assignee) the within
Note, and hereby irrevocably constitutes and appoints
____________________________________ attorney to transfer said Note on the
books of the Company, with full power of substitution in the premises.

In connection with any transfer of the Note prior to the expiration of
the holding period applicable to sales thereof under Rule 144(k) under the
Securities Act (or any successor provision) (other than any transfer pursuant
to a registration statement that has been declared effective under the Securities
Act), the undersigned confirms that such Note is being transferred:

o                                    To Lattice Semiconductor Corporation or a
subsidiary thereof; or

o                                    Inside the United States pursuant to and
in compliance with Rule 144A under the Securities Act of 1933, as amended; or

o                                    Inside the United States to an
Institutional Accredited Investor pursuant to and in compliance with the
Securities Act of 1933, as amended, in a minimum denomination of $100,000; or

o                                    Outside the Unites States in compliance
with Rule 904 under the Securities Act; or

o                                    Pursuant to and in compliance with Rule
144 under the Securities Act of 1933, as amended;

and unless the box below
is checked, the undersigned confirms that such Note is not being transferred to
an “affiliate” of the Company as defined in Rule 144 under the Securities Act
of 1933, as amended (an “Affiliate”).

o                                    The transferee is an Affiliate of the
Company.

 

	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Signature(s)

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Signature(s)
  must be guaranteed by an “eligible guarantor institution” meeting the
  requirements of the Note registrar, which requirements include membership or
  participation in the Security Transfer Agent Medallion Program (“STAMP”) or
  such other “signature guarantee program” as may be determined by the Note
  registrar in addition to, or in substitution for, STAMP, all in accordance
  with the Securities Exchange Act of 1934, as amended.

  

 

A-13

 

	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Signature
  Guarantee

  

 

NOTICE:  The signature of the conversion notice, the
option to elect repayment upon a Fundamental Change or the assignment must
correspond with the name as written upon the face of the Note in every
particular without alteration or enlargement or any change whatever.

 

 

A-14

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