BRADLEY PHARMACEUTICALS, INC. and AMERICAN STOCK TRANSFER & TRUST COMPANY as Trustee INDENTURE Dated as of June 11, 2003 $25,000,000 Principal Amount (Plus Initial Purchasers Option) 4% Convertible Senior Subordinated Notes due 2013

CROSS-REFERENCE TABLE

310(a)(1)

7.10

       (a)(2)

7.10

       (a)(3)

N.A.

       (a)(4)

N.A.

       (b)

7.08; 7.10; 12.02

       (c)

N.A.

311(a)

7.11

       (b)

7.11

       (c)

N.A.

312(a)

2.05

       (b)

12.03

       (c)

12.03

313(a)

7.06

       (b)(1)

N.A.

       (b)(2)

7.06

       (c)

7.06; 12.02

       (d)

7.06

314(a)

4.02

       (b)

N.A.

       (c)(1)

12.04

       (c)(2)

12.04

       (c)(3)

N.A.

       (d)

N.A.

       (e)

12.05

       (f)

N.A.

315(a)

7.01(B)

       (b)

7.05; 12.02

       (c)

7.01(A)

       (d)

7.01(C)

       (e)

6.11

316(a)(last sentence)

2.09

       (a)(1)(A)

6.05

       (a)(1)(B)

6.04

       (a)(2)

N.A.

       (b)

6.07

317(a)(1)

6.08

       (a)(2)

6.09

       (b)

2.04

318(a)

12.01

Page 

I. DEFINITIONS AND INCORPORATION 
BY REFERENCE

1.01

Definitions.

1

1.02

Other Definitions.

4

1.03

Incorporation by Reference of Trust Indenture Act.

5

1.04

Rules of Construction.

6

1.05

Calculations.

6

II. THE SECURITIES 

2.01

Form and Dating.

6

2.02

Execution and Authentication.

7

2.03

Registrar, Paying Agent and Conversion Agent.

8

2.04

Paying Agent To Hold Money in Trust.

8

2.05

Securityholder Lists.

9

2.06

Transfer and Exchange.

9

2.07

Replacement Securities.

9

2.08

Outstanding Securities.

10

2.09

Securities Held by the Company or an Affiliate.

10

2.10

Temporary Securities.

10

2.11

Cancellation.

10

2.12

Defaulted Interest.

11

2.13

CUSIP Numbers.

11

2.14

Deposit of Moneys.

11

2.15

Book-Entry Provisions for Global Securities.

11

2.16

Special Transfer Provisions.

12

2.17

Restrictive Legends.

13

III. REDEMPTION

3.01

Right of Redemption.

13

3.02

Notices to Trustee.

14

3.03

Selection of Securities to Be Redeemed.

14

3.04

Notice of Redemption.

14

3.05

Effect of Notice of Redemption.

15

3.06

Deposit of Redemption Price.

16

3.07

Securities Redeemed in Part.

16

3.08

Purchase of Securities at Option of the Holder.

16

3.09

Repurchase at Option of Holder upon a Repurchase Event.

19

3.10

Conversion Arrangement on Call for Redemption.

23

IV. COVENANTS 

4.01

Payment of Securities.

24

4.02

Maintenance of Office or Agency.

24

4.03

Reports.

25

4.04

Compliance Certificate.

25

4.05

Stay, Extension and Usury Laws.

25

4.06

Corporate Existence.

25

4.07

Notice of Default.

26

V. SUCCESSORS 

5.01

When Company May Merge, etc.

26

5.02

Successor Substituted.

26

VI. DEFAULTS AND REMEDIES

6.01

Events of Default.

27

6.02

Acceleration.

28

6.03

Other Remedies.

29

6.04

Waiver of Past Defaults.

29

6.05

Control by Majority.

29

6.06

Limitation on Suits.

30

6.07

Rights of Holders to Receive Payment.

30

6.08

Collection Suit by Trustee.

30

6.09

Trustee May File Proofs of Claim.

31

6.10

Priorities.

31

6.11

Undertaking for Costs.

31

VII. TRUSTEE 

7.01

Duties of Trustee.

32

7.02

Rights of Trustee.

33

7.03

Individual Rights of Trustee.

34

7.04

Trustee’s Disclaimer.

34

7.05

Notice of Defaults.

34

7.06

Reports by Trustee to Holders.

34

7.07

Compensation and Indemnity.

34

7.08

Replacement of Trustee.

35

7.09

Successor Trustee by Merger, etc.

36

7.10

Eligibility; Disqualification.

36

7.11

Preferential Collection of Claims Against Company.

36

VIII. DISCHARGE OF INDENTURE 

8.01

Termination of the Obligations of the Company.

36

8.02

Application of Trust Money.

37

8.03

Repayment to Company.

37

8.04

Reinstatement.

37

IX. AMENDMENTS 

9.01

Without Consent of Holders.

38

9.02

With Consent of Holders.

38

9.03

Compliance with Trust Indenture Act.

40

9.04

Revocation and Effect of Consents.

40

9.05

Notation on or Exchange of Securities.

40

9.06

Trustee Protected.

40

X. CONVERSION 

10.01

Conversion Privilege; Restrictive Legends.

40

10.02

Conversion Procedure.

41

10.03

Fractional Shares.

42

10.04

Taxes on Conversion.

42

10.05

Company to Provide Stock.

42

10.06

Adjustment of Conversion Rate.

42

10.07

No Adjustment.

48

10.08

Other Adjustments.

48

10.09

Adjustments for Tax Purposes.

48

10.10

Notice of Adjustment.

49

10.11

Notice of Certain Transactions.

49

10.12

Effect of Reclassifications, Consolidations, Mergers, Binding Share Exchanges or Sales on Conversion Privilege.

49

10.13

Trustee’s Disclaimer.

50

10.14

Limitations on Conversion

51

XI. SUBORDINATION 

11.01

Agreement to Subordinate.

51

11.02

Certain Definitions.

52

11.03

Liquidation; Dissolution; Bankruptcy.

52

11.04

Default on Designated Senior Indebtedness

53

11.05

Acceleration of Securities.

54

11.06

When Distribution Must Be Paid Over.

54

11.07

Notice by the Company.

54

11.08

Subrogation.

55

11.09

Relative Rights.

55

11.10

Subordination May Not Be Impaired by the Company.

55

11.11

Distribution or Notice to Representative.

56

11.12

Rights of Trustee and Paying Agent.

56

XII. MISCELLANEOUS

12.01

Trust Indenture Act Controls.

56

12.02

Notices.

56

12.03

Communication by Holders with Other Holders.

57

12.04

Certificate and Opinion as to Conditions Precedent.

57

12.05

Statements Required in Certificate or Opinion.

58

12.06

Rules by Trustee and Agents.

58

12.07

Legal Holidays.

58

12.08

Duplicate Originals.

58

12.09

Governing Law.

58

12.10

No Adverse Interpretation of Other Agreements.

59

12.11

Successors.

59

12.12

Separability.

59

12.13

Table of Contents, Headings, etc.

59

     Each party agrees as follows for the benefit of the other parties and for the equal and ratable benefit of the Holders of the Company’s 4% Convertible Senior Subordinated Notes due 2013 (the “Securities”).

I.                    DEFINITIONS AND INCORPORATION BY REFERENCE

     “Affiliate” means any person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company.  For this purpose, “control” shall mean the power to direct the management and policies of a person through the ownership of securities, by contract or otherwise.

     “Agent” means any Registrar, Paying Agent, Conversion Agent or co-registrar.

     “Board of Directors” means the Board of Directors of the Company or any committee thereof authorized to act for it hereunder.

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

     “Capital Stock” means any and all shares, interests, participations or other equivalents (however designated) of capital stock of the Company and all warrants or options to acquire such capital stock.

     “Closing Sale Price” means the price of a share of Common Stock on the relevant date, determined (a) on the basis of the closing per share sale price (or if no closing sale price is reported, the average of the bid and ask prices or, if more than one in either case, the average of the average bid and the average ask prices) on such date on the New York Stock Exchange (the “NYSE”), or if the Common Stock is not listed on the NYSE, on the principal national securities exchange on which the Common Stock is listed; or (b) if the Common Stock is not listed on a national securities exchange, as reported by the National Association of Securities Dealers Automated Quotation System; or (c) if not so quoted, as reported by National Quotation Bureau, Incorporated or a similar organization.  In the absence of a quotation, the Closing Sale Price shall be such price as the Company shall reasonably determine on the basis of such quotations as most accurately reflecting the price that a fully informed buyer, acting on his own accord, would pay to a fully informed seller, acting on his own accord in an arms-length transaction, for a share of such Common Stock.

     “Common Stock” means the common stock, par value $.01 per share, of the Company, or such other Capital Stock into which the Company’s common stock is reclassified or changed.

     “Company” means the party named as such above until a successor replaces it pursuant to the applicable provision hereof and thereafter means the successor.

     “Company Request” or “Company Order” means a written request or order signed on behalf of the Company by its Chairman of the Board, its Chief Executive Officer, its President, its Chief Operating Officer, its Chief Financial Officer, any Executive Vice President or any Vice President and by its Treasurer or an Assistant Treasurer or its Secretary or an Assistant Secretary, and delivered to the Trustee.

     “Conversion Rate” means the number of shares of Common Stock issuable upon conversion of a Security per $1,000 of principal amount, which Conversion Rate shall initially be 50.0000 shares of Common Stock per $1,000 principal amount.

     “Conversion Price” means, as of any date of determination, the dollar amount derived by dividing $1,000 of principal amount by the Conversion Rate then in effect.

     “Corporate Trust Office of the Trustee” shall be at the address of the Trustee specified in Section 12.02 or such other address as the Trustee may give notice of to the Company.

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

     “Depositary” means The Depository Trust Company, its nominees and successors.

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

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

     “Indenture” means this Indenture as amended or supplemented from time to time.

     “Initial Purchasers” means UBS Securities LLC and Raymond James & Associates, Inc.

     “interest” includes liquidated damages, unless the context otherwise requires.

     “Issue Date” means June 11, 2003.

     “liquidated damages” has the meaning provided in the Registration Rights Agreement.

     “Maturity Date” means June 15, 2013.

     “Officer” means the Chairman of the Board, the Chief Executive Officer, the President, the Chief Operating Officer, the Chief Financial Officer, any Executive Vice President, any Vice President, the Treasurer or the Secretary of the Company.

     “Officers’ Certificate” means a certificate signed by two Officers or by an Officer and an Assistant Treasurer or an Assistant Secretary of the Company.

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

     “Option” means the Initial Purchasers’ option to acquire up to $8,000,000 of additional Securities (“Additional Securities”) as provided for in the Purchase Agreement.

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

     “Purchase Agreement” means the Purchase Agreement dated as of June 6, 2003 between the Company and the Initial Purchasers.

     “QIB” means a “qualified institutional buyer” within the meaning of Rule 144A under the Act.

     “Redemption Date” means the date specified for redemption of the Securities in accordance with the terms of the Securities and this Indenture.

     “Redemption Price” means, with respect to a Security to be redeemed by the Company in accordance with Article III, 100% of the outstanding principal amount of such Security, or portion thereof, to be redeemed, payable in cash.

     “Registration Rights Agreement” means the Registration Rights Agreement dated as of  June 11, 2003 between the Company and the Initial Purchasers.

     “Repurchase Price” means, with respect to a Security duly tendered for purchase by the Company in accordance with Section 3.09, 100% of the outstanding principal amount of such Security, or portion thereof, so tendered, payable in cash.

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

     “Restricted Security” means a Security that constitutes a “restricted security” within the meaning of Rule 144(a)(3) under the Securities Act; provided, however, that the Trustee shall be entitled to request and conclusively rely on an Opinion of Counsel with respect to whether any Security constitutes a Restricted Security.

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

     “SEC” means the Securities and Exchange Commission.

     “Securities” means the 4% Convertible Senior Subordinated Notes due 2013 issued by the Company pursuant to this Indenture.

     “Securities Act” means the Securities Act of 1933, as amended.

     “Significant Subsidiary” with respect to any person means any subsidiary of such person that constitutes a “significant subsidiary” within the meaning of Rule 1-02 of Regulation S-X under the Securities Act, as such regulation is in effect on the date of this Indenture.

     “Subsidiary” means (i) a corporation a majority of whose capital stock with voting power, under ordinary circumstances, to elect directors is at the time, directly or indirectly, owned by the Company, by one or more subsidiaries of the Company or by the Company and one or more of its subsidiaries or (ii) any other person (other than a corporation) in which the Company, one or more its subsidiaries or the Company and one or more its subsidiaries, directly or indirectly, at the date of determination thereof, have at least majority ownership interest.

     “TIA” means the Trust Indenture Act of 1939 (15 U.S. Code §§ 77aaa-77bbbb) as in effect on the date of this Indenture, except as provided in Section 9.03.

     “Trading Day” means a day during which trading in securities generally occurs on the NYSE or, if the Common Stock is not listed on the NYSE, on the principal other national or regional securities exchange on which the Common Stock is then listed or, if the Common Stock is not listed on a national or regional securities exchange, on the National Association of Securities Dealers Automated Quotation System or, if the Common Stock is not quoted on the National Association of Securities Dealers Automated Quotation System, on the principal other market on which the Common Stock is then traded.

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

     “Voting Stock” of any Person means the Capital Stock of such Person that is entitled to vote generally in the election of directors.

         Term

Defined in Section

“Additional Securities”

1.01

“Bankruptcy Law”

6.01

“Business Day”

12.07

“Change in Control”

3.09

“Combined Amount”

10.06

“Commencement Date”

10.06

“Conversion Agent”

2.03

“Conversion Shares”

10.06

“Custodian”

6.01

“Designated Senior Indebtedness”

10.06

“Determination Date”

10.06

“Distribution Declaration Date”

10.06

“Distribution Date”

10.06

“Event of Default”

6.01

“Expiration Time”

10.06

“Global Security”

2.01

“Indebtedness”

11.02

“Legal Holiday”

12.07

“Non-Electing Shares”

10.12

“Non-Payment Default”

11.04

“Notice of Default”

11.04

“NYSE”

1.01

“Option Purchase Date”

3.08

“Option Purchase Price”

3.08

“Participants”

2.15

“Paying Agent”

2.03

“Payment Blockage Period”

11.04

“Payment Blockage Notice”

11.04

“Payment Default”

11.04

“Physical Securities”

2.01

“Private Placement Legend”

2.17

“Purchase Notice”

3.08

“Purchased Shares”

10.06

“Redemption”

3.01

“Registrar”

2.03

“Representative”

11.02

“Repurchase at Holder’s Option”

3.01

“Repurchase Date”

3.09

“Repurchase Event”

3.09

“Repurchase Event Notice”

3.09

“Repurchase Right”

3.09

“Repurchase Upon Repurchase Event”

3.01

“Resale Restriction Termination Date”

2.17

“Rights”

10.06

“Senior Indebtedness”

11.02

“Termination of Trading”

3.09

“Triggering Distribution”

10.06

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

     The following TIA terms used in this Indenture have the following meanings:

     “Commission” means the SEC;
     “indenture securities” means the Securities;
     “indenture security holder” means a Securityholder or a Holder;

     “indenture to be qualified” means this Indenture;
     “indenture trustee” or “institutional trustee” means the Trustee; and
     “obligor” on the indenture securities means the Company or any successor.

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

     Unless the context otherwise requires:

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

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

     (iii) “or” is not exclusive;

     (iv) words in the singular include the plural and in the plural include the singular;

     (v) provisions apply to successive events and transactions; and

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

     The Company will be responsible for making all calculations called for under the Securities.  The Company will make all of these calculations in good faith and, absent manifest error, the Company’s calculations will be final and binding on Securityholders.  The Company will provide a schedule of its calculations to the Trustee, and the Trustee is entitled to rely upon the accuracy of the Company’s calculations without independent verification.

     The Securities and the Trustee’s certificate of authentication shall be substantially in the form set forth in Exhibit A, which is incorporated in and forms a part of this Indenture.  The Securities may have notations, legends or endorsements required by law, stock exchange rule or usage.  Each Security shall be dated the date of its authentication.

     Securities offered and sold in reliance on Rule 144A under the Securities Act shall be issued initially in the form of one or more Global Securities, substantially in the form set forth in

Exhibit A (the “Global Security”), deposited with the Trustee, as custodian for the Depositary, duly executed by the Company and authenticated by the Trustee as hereinafter provided and bearing the legends set forth in Exhibits B-1 and B-2.  The aggregate principal amount of the Global Security may from time to time be increased or decreased by adjustments made on the records of the Trustee, as custodian for the Depositary, as hereinafter provided; provided, that in no event shall the aggregate principal amount of the Global Security or Securities exceed $25,000,000, or up to $33,000,000 if the Initial Purchasers elect to purchase Additional Securities pursuant to the Initial Purchasers’ Option provided for in the Purchase Agreement.

     Securities issued in exchange for interests in a Global Security pursuant to Section 2.15 may be issued in the form of permanent certificated Securities in registered form in substantially the form set forth in Exhibit A (the “Physical Securities”) and, if applicable, bearing any legends required by Section 2.17.

     One Officer shall sign the Securities for the Company by manual or facsimile signature.

     If an Officer whose signature is on a Security no longer holds that office at the time the Security is authenticated, the Security shall nevertheless be valid.

     A Security shall not be valid until authenticated by the manual signature of the Trustee.  The signature shall be conclusive evidence that the Security has been authenticated under this Indenture.

     Upon a written order of the Company signed by two Officers of the Company or by an Officer and an Assistant Treasurer or an Assistant Secretary of the Company, the Trustee shall authenticate Securities for original issue in the aggregate principal amount of $25,000,000 and such additional principal amount, if any, as shall be determined pursuant to the next sentence of this Section 2.02.  Upon receipt by the Trustee of a written order of the Company signed by two Officers of the Company or by an Officer and an Assistant Treasurer or an Assistant Secretary of the Company stating that the Initial Purchasers have elected to purchase from the Company a specified principal amount of Additional Securities, not to exceed $8,000,000, pursuant to the Purchase Agreement, the Trustee shall authenticate and deliver such specified principal amount of Additional Securities to or upon the written order of the Company signed as provided in the immediately preceding sentence.  Such written order must be received by the Trustee not later than the proposed date for delivery of such Additional Securities.  The aggregate principal amount of Securities outstanding at any time may not exceed $33,000,000, except as provided in Section 2.07.

     Upon a written order of the Company signed by two Officers of the Company or by an Officer and an Assistant Treasurer or an Assistant Secretary of the Company, the Trustee shall authenticate Securities not bearing the Private Placement Legend to be issued to the transferee when sold pursuant to an effective registration statement under the Securities Act as set forth in Section 2.16(B).

     The Trustee may appoint an authenticating agent acceptable to the Company to authenticate Securities.  An authenticating agent may authenticate Securities whenever the

Trustee may do so.  Each reference in this Indenture to authentication by the Trustee includes authentication by such Agent.  An authenticating agent has the same rights as an Agent to deal with the Company and its Affiliates.

     If a written order of the Company pursuant to this Section 2.02 of the Indenture has been, or simultaneously is, delivered, any instructions by the Company to the Trustee with respect to endorsement, delivery or redelivery of a Security issued in global form shall be in writing but need not comply with Section 12.04 hereof and need not be accompanied by an Opinion of Counsel.

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

     The Company shall maintain an office or agency where Securities may be presented for registration of transfer or for exchange (“Registrar”), an office or agency where Securities may be presented for payment (“Paying Agent”) and an office or agency where Securities may be presented for conversion (“Conversion Agent”).  The Registrar shall keep a register of the Securities and of their transfer and exchange.  The Company may appoint or change one or more co-registrars, one or more additional paying agents and one or more additional conversion agents without notice and may act in any such capacity on its own behalf.  The term “Registrar” includes any co-registrar; the term “Paying Agent” includes any additional paying agent; and the term “Conversion Agent” includes any additional conversion agent.

     The Company shall enter into an appropriate agency agreement with any Agent not a party to this Indenture.  The agreement shall implement the provisions of this Indenture that relate to such Agent.  The Company shall notify the Trustee of the name and address of any Agent not a party to this Indenture.  If the Company fails to maintain a Registrar, Paying Agent or Conversion Agent, the Trustee shall act as such.

     The Company initially appoints the Trustee as Paying Agent, Registrar and Conversion Agent.

     Each Paying Agent shall hold in trust for the benefit of the Securityholders or the Trustee all moneys held by the Paying Agent for the payment of the Securities, and shall notify the Trustee of any default by the Company in making any such payment.  While any such default continues, the Trustee may require a Paying Agent to pay all money held by it to the Trustee.  The Company at any time may require a Paying Agent to pay all money held by it to the Trustee.  Upon payment over to the Trustee, the Paying Agent shall have no further liability for the money.  If the Company acts as Paying Agent, it shall segregate and hold as a separate trust fund all money held by it as Paying Agent.

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

     Subject to Sections 2.15 and 2.16 hereof, where Securities are presented to the Registrar with a request to register their transfer or to exchange them for an equal principal amount of Securities of other authorized denominations, the Registrar shall register the transfer or make the exchange if its requirements for such transaction are met.  To permit registrations of transfer and exchanges, the Trustee shall authenticate Securities at the Registrar’s request.  The Company or the Trustee, as the case may be, shall not be required (a) to issue, authenticate, register the transfer of or exchange any Security during a period beginning at the opening of business 15 days before the mailing of a notice of redemption of the Securities selected for redemption under Section 3.04 and ending at the close of business on the day of such mailing or (b) to register the transfer of or exchange any Security so selected for redemption or repurchase in whole or in part, except the unredeemed or unrepurchased portion of Securities being redeemed or repurchased in part.

     No service charge shall be made for any transfer, exchange or conversion of Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any transfer, exchange or conversion of Securities, other than exchanges pursuant to Sections 2.10, 3.07, 3.08, 3.09, 9.05 or 10.02 not involving any transfer.

     If the Holder of a Security claims that the Security has been mutilated, lost, destroyed or wrongfully taken, the Company shall issue and the Trustee shall authenticate a replacement Security upon surrender to the Trustee of the mutilated Security, or upon delivery to the Trustee of evidence of the loss, destruction or theft of the Security satisfactory to the Trustee and the Company.  In the case of lost, destroyed or wrongfully taken Securities, if required by the Trustee, an indemnity bond must be provided by the Holder that is sufficient in the judgment of the Trustee and the Company to protect the Company, the Trustee or any Agent from any loss which any of them may suffer if a Security is replaced.  The Trustee may charge for its expenses in replacing a Security.

     In case any such mutilated, lost, destroyed or wrongfully taken Security has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Security, pay such Security when due.

     Every replacement Security is an additional obligation of the Company only as provided in Section 2.08.

     Securities outstanding at any time are all the Securities authenticated by the Trustee except for those converted, those cancelled by it, those delivered to it for cancellation and those described in this Section 2.08 as not outstanding.  Except to the extent provided in Section 2.09, a Security does not cease to be outstanding because the Company or one of its Subsidiaries or Affiliates holds the Security.

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

     If the Paying Agent (other than the Company) holds on the Option Purchase Date, Redemption Date, Repurchase Date or Maturity Date, money sufficient to pay Securities payable on such date, then immediately after such date such Securities shall be deemed to be no longer outstanding and interest on them shall cease to accrue, and such Security shall be deemed paid whether or not the Security is delivered to the Paying Agent.  Thereafter, all other rights of the Holders of such Securities shall terminate with respect to such Securities, other than the right to receive the principal amount, the Redemption Price, the Option Purchase Price or the Repurchase Price, as the case may be, plus, if applicable, accrued and unpaid interest, if any, payable as herein provided upon Redemption, Repurchase at Holder’s Option, Repurchase Upon Repurchase Event or the Maturity Date.

     In determining whether the Holders of the required aggregate principal amount of Securities have concurred in any direction, waiver or consent, Securities owned by the Company or any of its Subsidiaries or an Affiliate shall be considered as though not outstanding, except that for the purposes of determining whether a Responsible Officer of the Trustee shall be protected in relying on any such direction, waiver or consent, only Securities which the Trustee knows are so owned shall be so disregarded.

     Until definitive Securities are ready for delivery, the Company may prepare and the Trustee shall authenticate temporary Securities.  Temporary Securities shall be substantially in the form of definitive Securities but may have variations that the Company considers appropriate for temporary Securities.  Without unreasonable delay, the Company shall prepare and the Trustee shall authenticate definitive Securities in exchange for temporary Securities.

     The Company at any time may deliver Securities to the Trustee for cancellation.  The Registrar, Paying Agent and Conversion Agent shall forward to the Trustee any Securities surrendered to them for transfer, exchange, payment or conversion.  The Trustee shall cancel all Securities surrendered for transfer, exchange, payment, conversion or cancellation in accordance with its customary procedures.  The Company may not issue new Securities to replace Securities

that it has paid or delivered to the Trustee for cancellation or that any Securityholder has converted pursuant to Article X.

     If and to the extent the Company defaults in a payment of interest on the Securities, the Company shall pay the defaulted interest in any lawful manner plus, to the extent not prohibited by applicable statute or case law, interest payable on the defaulted interest at the rate provided in the Securities.  The Company may pay the defaulted interest to the persons who are Securityholders on a subsequent special record date.  The Company shall fix such record date and payment date.  At least 15 days before the record date, the Company shall mail to Securityholders a notice that states the record date, payment date and amount of interest to be paid.

     The Company in issuing the Securities may use one or more “CUSIP” numbers, and if so, the Trustee shall use the CUSIP numbers in notices of redemption or exchange as a convenience to Holders; provided, however, that no representation is hereby deemed to be made by the Trustee as to the correctness or accuracy of the CUSIP numbers printed in the notice or on the Securities, and that reliance may be placed only on the other identification numbers printed on the Securities.  The Company shall promptly notify the Trustee of any change in the CUSIP numbers.

     Prior to 11:00 A.M., New York City time, on each interest payment date, Maturity Date, Redemption Date, Option Purchase Date and Repurchase Date, the Company shall have deposited with the Paying Agent in immediately available funds money sufficient to make payments in cash, due on such interest payment date, Maturity Date, Redemption Date, Option Purchase Date and Repurchase Date, as the case may be, in a timely manner which permits the Paying Agent to remit payment to the Holders on such interest payment date, Maturity Date, Redemption Date, Option Purchase Date and Repurchase Date, as the case may be.

2.15     BOOK-ENTRY PROVISIONS FOR GLOBAL SECURITIES.      

     (A)       The Global Securities initially shall (i) be registered in the name of the Depositary or the nominee of such Depositary, (ii) be delivered to the Trustee as custodian for such Depositary and (iii) bear legends as set forth in Section 2.17.

     Members of, or participants in, the Depositary (“Participants”) shall have no rights under this Indenture with respect to any Global Security held on their behalf by the Depositary, or the Trustee as its custodian, or under the Global Security, and the Depositary may be treated by the Company, the Trustee and any agent of the Company or the Trustee as the absolute owner of the Global Security for all purposes whatsoever.  Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee or any agent of the Company or the Trustee from giving effect to any written certification, proxy or other authorization furnished by

the Depositary or impair, as between the Depositary and Participants, the operation of customary practices governing the exercise of the rights of a Holder of any Security.

     (B)       Transfers of Global Securities shall be limited to transfers in whole, but not in part, to the Depositary, its successors or their respective nominees.  In addition, Physical Securities shall be transferred to all beneficial owners, as identified by the Depositary, in exchange for their beneficial interests in Global Securities if (i) the Depositary notifies the Company that it is unwilling or unable to continue as depositary for any Global Security and a successor depositary is not appointed by the Company within 90 days of such notice or (ii) an Event of Default has occurred and is continuing and the Registrar has received a written request from the Depositary to issue Physical Securities.

     (C)       In connection with the transfer of a Global Security in its entirety to beneficial owners pursuant to Section 2.15(B), such Global Security shall be deemed to be surrendered to the Trustee for cancellation, and the Company shall execute, and the Trustee shall upon written instructions from the Company authenticate and deliver, to each beneficial owner identified by the Depositary in exchange for its beneficial interest in such Global Security, an equal aggregate principal amount of Physical Securities of authorized denominations.

     (D)       Any Physical Security constituting a Restricted Security delivered in exchange for an interest in a Global Security pursuant to Section 2.15(B) shall, except as otherwise provided by Section 2.16, bear the Private Placement Legend (as defined).

     (E)       The Holder of any Global Security may grant proxies and otherwise authorize any Person, including Participants and Persons that may hold interests through Participants, to take any action which a Holder is entitled to take under this Indenture or the Securities.

     (A)       Restrictions on Transfer and Exchange of Global Securities.  Notwithstanding any other provisions of this Indenture, a Global Security may not be transferred except as a whole by the Depositary to a nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary.

     (B)       Private Placement Legend.  Upon the transfer, exchange or replacement of Securities not bearing the Private Placement Legend, the Registrar or co-Registrar shall deliver Securities that do not bear the Private Placement Legend.  Upon the transfer, exchange or replacement of Securities bearing the Private Placement Legend, the Registrar or co-Registrar shall deliver only Securities that bear the Private Placement Legend unless (i) the requested transfer is after the second anniversary of the issue date for the Securities (provided, however, that neither the Company nor any of its Affiliates has held any beneficial interest in such Security, or portion thereof, at any time prior to or on the second anniversary of the issue date), (ii) there is delivered to the Trustee an Opinion of Counsel reasonably satisfactory to the Company to the effect that neither such legend nor the related restrictions on transfer are required in order to maintain compliance with the provisions of the Securities Act or (iii) such Security has been sold pursuant to an effective registration statement under the Securities Act

and the Holder selling such Securities has delivered to the Registrar or co-Registrar a notice in the form of Exhibit C hereto.  Upon the effectiveness of the Shelf Registration Statement (as defined in the Registration Rights Agreement), the Company shall deliver to the Trustee a notice of effectiveness, a Security or Securities, an authentication order in accordance with Section 2.02 and an Opinion of Counsel in the form of Exhibit D hereto and, if required by the Depositary, the Company shall deliver to the Depositary a letter of representations in a form reasonably acceptable to the Depositary.

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

     The Registrar shall retain copies of all letters, notices and other written communications received pursuant to Section 2.15 or this Section 2.16.  The Company shall have the right to inspect and make copies of all such letters, notices or other written communications at any reasonable time upon the giving of reasonable written notice to the Registrar.

     (D)       Transfers of Securities Held by Affiliates.  Any certificate (i) evidencing a Security that has been transferred to an Affiliate of the Company within two years after the Issue Date, as evidenced by a notation on the assignment form for such transfer or in the representation letter delivered in respect thereof or (ii) evidencing a Security that has been acquired from an Affiliate (other than by an Affiliate) in a transaction or a chain of transactions not involving any public offering, shall, until two years after the last date on which the Company or any Affiliate of the Company was an owner of such Security, in each case, bear the Private Placement Legend, unless otherwise agreed by the Company (with written notice thereof to the Trustee).

     Each Global Security and Physical Security that constitutes a Restricted Security shall bear the legend (the “Private Placement Legend”) as set forth in Exhibit B-1 on the face thereof until after the second anniversary of the later of (i) the Issue Date, (ii) the last date on which the Company or any Affiliate of the Company was the owner of such Security (or any predecessor security) (or such shorter period of time as permitted by Rule 144(k) under the Securities Act or any successor provision thereunder) (or such longer period of time as may be required under the Securities Act or applicable state securities laws in the opinion of counsel for the Company, unless otherwise agreed between the Company and the Holder thereof) (such date, the “Resale Restriction Termination Date”).

     Each Global Security shall also bear the legend as set forth in Exhibit B-2.

III.                REDEMPTION

     Redemption of the Securities, as permitted by any provision of this Indenture, shall be made in accordance with paragraphs 6 and 7 (a “Redemption”), with respect to a repurchase at

the Holder’s option, paragraph 8 (a “Repurchase at Holder’s Option”), and with respect to any repurchase upon a Repurchase Event, paragraph 9 (a “Repurchase Upon Repurchase Event”) of the Securities, in each case in accordance with the applicable provisions of this Article III. 

     The Company will comply with all federal and state securities laws in connection with any offer to sell or solicitations of offers to buy Common Stock pursuant to this Section 3.01.

     Prior to June 15, 2008, the Company will not have the right to redeem any Securities.  On or after June 15, 2008, the Company will have the right to redeem all or any part of the Securities at the Redemption Price, plus accrued and unpaid interest, if any, to the Redemption Date.

     If the Company elects to redeem Securities pursuant to paragraph 6 of the Securities, it shall notify the Trustee at least 15 days prior to the mailing of the notice of Redemption (unless a shorter notice period shall be satisfactory to the Trustee) of the Redemption Date and the aggregate principal amount of Securities to be redeemed.

     If less than all the Securities are to be redeemed, the Trustee shall select the Securities to be redeemed by lot, on a pro rata basis or in accordance with any other method the Trustee considers fair and appropriate.  The Trustee shall make the selection from Securities outstanding not previously called for Redemption.  The Trustee may select for Redemption portions of the principal of Securities that have denominations larger than $1,000 principal amount.  Securities and portions of them the Trustee selects shall be in amounts of $1,000 principal amount or integral multiples of $1,000 principal amount.  The Trustee shall promptly notify the Company in writing of the Securities selected for Redemption and the principal amount thereof to be redeemed.

     The Registrar need not transfer or exchange any Securities selected for Redemption, except the unredeemed portion of the Securities redeemed in part.  Also, the Registrar need not transfer or exchange any Securities for a period of 15 days before selecting Securities to be redeemed.

     At least 30 days but not more than 60 days before a Redemption Date, the Company shall mail by first-class mail a notice of Redemption to each Holder whose Securities are to be redeemed, at the address of such Holder appearing in the security register.

     The notice shall identify the Securities and the aggregate principal amount thereof to be redeemed and shall state:

     (i)         the Redemption Date;

     (ii)        the Redemption Price, plus the amount of accrued and unpaid interest, if any, to be paid on the Securities called for redemption;

     (iii)       the Conversion Rate and the Conversion Price;

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

     (v)        the date on which the right to convert the principal of the Securities called for Redemption will terminate and the place or places where such Securities may be surrendered for conversion;

     (vi)       that Holders who want to convert Securities must satisfy the requirements in Article X of this Indenture;

     (vii)      the paragraph of the Securities pursuant to which the Securities are to be redeemed;

     (viii)      that Securities called for Redemption must be surrendered to the Paying Agent to collect the Redemption Price plus the accrued and unpaid interest, if any,  payable as herein provided upon Redemption;

     (ix)       that unless the Company shall default in the payment of the Redemption Price, or accrued and unpaid interest, if any, payable as herein provided upon Redemption, interest on Securities called for redemption ceases to accrue on and after the Redemption Date and that the Securities will cease to be convertible after the close of business on the Business Day immediately preceding the Redemption Date; and

     (x)        the CUSIP number or numbers, as the case may be, of the Securities.

     The date on which the right to convert the principal of the Securities called for Redemption will terminate shall be at the close of business on the Business Day immediately preceding the Redemption Date.

     At the Company’s request, upon reasonable prior notice, the Trustee shall give the notice of Redemption in the Company’s name and at the Company’s expense; provided that the form and content of such notice shall be prepared by the Company.

     Once notice of Redemption is mailed, Securities called for Redemption become due and payable on the Redemption Date at the Redemption Price plus accrued and unpaid interest to the Redemption Date, and, on and after such Redemption Date (unless the Company shall default in the payment of the Redemption Price, or accrued and unpaid interest, if any, to the Redemption Date), such Securities shall cease to bear interest.  Upon surrender to the Paying Agent, such Securities shall be paid at the Redemption Price, plus accrued and unpaid interest to the

Redemption Date, unless the Redemption Date is an interest payment date, in which case the accrued and unpaid interest will be paid in the ordinary course.

     On or before the Redemption Date, the Company shall deposit with the Paying Agent, in cash, money in funds immediately available on the Redemption Date sufficient to pay the Redemption Price, plus accrued and unpaid interest on, all Securities to be redeemed on that date.  The Paying Agent shall return to the Company, as soon as practicable, any money not required for that purpose.

     Upon surrender of a Security that is redeemed in part, the Company shall execute and the Trustee shall authenticate for the Holder a new Security or Securities in an aggregate principal amount equal to the unredeemed portion of the Security surrendered.

     If any Security selected for partial Redemption is converted in part, the converted portion of such Security shall be deemed to be the portion selected for Redemption.

     (A)       Subject to the rights of holders of Senior Indebtedness under Article XI of this Indenture, Securities shall be purchased by the Company pursuant to paragraph 8 of the Securities on June 15, 2008 (the “Option Purchase Date”), at 100% of the principal amount of the Securities or portion thereof to be purchased (the “Option Purchase Price”), plus accrued and unpaid interest, if any, to the Option Purchase Date, at the option of the Holder thereof, upon:

     (i)         delivery to the Paying Agent, by the Holder, of a written notice of purchase (a “Purchase Notice”), in the form set forth in the Securities, or any other form of written notice substantially similar thereto, at any time from the opening of business on the date that is 20 Business Days prior to the Option Purchase Date until the close of business on the Business Day immediately preceding the Option Purchase Date stating:

     (A)       the certificate number of the Security which the Holder will deliver to be purchased,

     (B)       the principal amount of Securities to be purchased, which must be $1,000 or an integral multiple thereof, and

     (C)       that such Principal amount of Securities shall be purchased as of the Option Purchase Date pursuant to the terms and conditions specified in paragraph 8 of the Securities and in this Indenture; and

     (ii)        delivery of such Security (together with all necessary endorsements) to the Paying Agent, such delivery being a condition to receipt by the Holder of the Option

Purchase Price therefore plus accrued and unpaid interest thereon, if any, to the Option Purchase Date.

     Any purchase by the Company contemplated pursuant to the provisions of this Section 3.08 shall be consummated by the delivery of the consideration to be received by the Holder (together with accrued and unpaid interest, if any,) as promptly as practicable following the later of the Option Purchase Date and the time of delivery of the Security, but in no event more than 3 Business Days following the later of the Option Purchase Date or the time of delivery of the Security.

     Notwithstanding anything herein to the contrary, any Holder delivering to the Paying Agent the Purchase Notice contemplated by this Section 3.08(A) shall have the right to withdraw such Purchase Notice by delivery, at any time prior to the close of business on the Business Day prior to the Option Purchase Date, of a written notice of withdrawal to the Paying Agent, which notice shall contain the information specified in Section 3.08(B)(viii).

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

     (B)       The Company shall give notice on a date not less than 20 Business Days prior to the Option Purchase Date to all Holders at their addresses shown in the register and to beneficial owners as required by applicable law.  Such notice shall state:

     (i)         the Option Purchase Price, plus accrued and unpaid interest, if any, to the Option Purchase Date and the Conversion Rate;

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

     (iii)       that Securities as to which a Purchase Notice has been given may be converted pursuant to Article X hereof only if the applicable Purchase Notice has been withdrawn in accordance with the terms of this Indenture;

     (iv)       that Securities must be surrendered to the Paying Agent to collect payment of the Option Purchase Price plus accrued and unpaid interest, if any, to the Option Purchase Date;

     (v)        that the Option Purchase Price, plus accrued and unpaid interest, if any, to the Option Purchase Date, for any Security as to which a Purchase Notice has been given and not withdrawn, will be paid as promptly as practicable following the later of the Option Purchase Date and the time of delivery of the Security, but in no event more than 3 Business Days following the later of the Option Purchase Date or the time of delivery of the Security as described in (iv);

     (vi)       the procedures the Holder must follow to exercise rights under this Section 3.08 and a brief description of those rights;

     (vii)      briefly, the conversion rights of the Securities and that Holders who want to convert Securities must satisfy the requirements set forth in paragraph 10 of the Securities;

     (viii)      that a Holder will be entitled to withdraw its election if the Company (if acting as its own Paying Agent), or the Paying Agent receives, at any time prior to the close of business on the Business Day prior to the Option Purchase Date, or such longer period as may be required by law, a letter or telegram, telex or facsimile transmission (receipt of which is confirmed and promptly followed by a letter) setting forth (I) the name of such Holder, (II) a statement that such Holder is withdrawing his election to have Securities repurchased, (III) the principal amount of Securities of such Holder to be so withdrawn, which amount must be $1,000 or an integral multiple thereof, (IV) the certificate number of such Securities to be so withdrawn, (V) the principal amount, if any, of Securities of such Holder that remain subject to the Purchase Notice delivered by such Holder in accordance with this Section 3.08, which amount must be $1,000 or an integral multiple thereof, and (VI) that Securities with respect to which a Purchase Notice is given by such Holder may be converted, if otherwise convertible, only if the Purchase Notice has been withdrawn in accordance with the terms hereof;

     (ix)       that, unless the Company defaults in making payment of such Option Purchase Price plus such accrued and unpaid interest, interest on Securities surrendered for purchase will cease to accrue, and such Securities shall cease to be convertible on and after the Option Purchase Date; and

     (x)        the CUSIP number of the Securities.

     At the Company’s request, the Trustee shall give such notice in the Company’s name and at the Company’s expense; provided, however, that, in all cases, the text of such notice shall be prepared by the Company. 

     There shall be no purchase of any Securities pursuant to this Section 3.08 if there has occurred (at the time of, or after, as the case may be, the giving, by the Holders of such Securities, of the required Purchase Notice) and is continuing an Event of Default (other than a default in the payment of the Option Purchase Price, plus accrued and unpaid interest, if any, payable as herein provided upon Repurchase at Holder’s Option.  The Paying Agent will promptly return to the respective Holders thereof any Securities held by it during the continuance of an Event of Default (other than a default in the payment of the Option Purchase Price plus such accrued and unpaid interest) in which case, upon such return, the Purchase Notice with respect thereto shall be deemed to have been withdrawn.

     Notwithstanding anything herein to the contrary, if the option granted to Securityholders to require the repurchase of the Securities at the Option Purchase Date is determined to constitute a tender offer, the Company will comply with all applicable tender offer rules under the Exchange Act, including Rules 13e-4 and 14e-1, and file Schedule a TO or any other schedules required under the Exchange Act.

3.09     Repurchase at Option of Holder upon a Repurchase Event.

     Upon any Repurchase Event (as defined below), each Holder of Securities shall have the right (the “Repurchase Right”), at the Holder’s option, subject to the rights of the holders of Senior Indebtedness under Article XI of this Indenture, to require the Company to repurchase all of such Holder’s Securities, or a portion thereof which is $1,000 in principal amount or any integral multiple thereof, on a date (the “Repurchase Date”) no later than 30 days after the date the Repurchase Event Notice (as defined below) is mailed in accordance with the immediately succeeding paragraph, at the Repurchase Price plus accrued and unpaid interest, if any, to the Repurchase Date.

     Within 15 days after the occurrence of a Repurchase Event of the Company, the Company shall mail to all Holders of record of the Securities at their addresses shown in the security register, and to beneficial owners as required by applicable law, a notice (the “Repurchase Event Notice”) of the occurrence of such Repurchase Event and the Repurchase Right arising as a result thereof.  The Company shall deliver a copy of the Repurchase Event Notice to the Trustee and shall cause a copy to be published at the expense of the Company in The New York Times or The Wall Street Journalor another newspaper of national circulation.  To exercise the Repurchase Right, a Holder of Securities must deliver on or before the close of business on the Business Day immediately preceding the Repurchase Date written notice to the Company (or an agent designated by the Company for such purpose), and the Trustee of the Holder’s exercise of such right together with the Securities with respect to which the right is being exercised, duly endorsed for transfer.

     Each Repurchase Event Notice shall state:

     (i)         the events causing the Repurchase Event;

     (ii)        the date of such Repurchase Event;

     (iii)       the Repurchase Date;

     (iv)       the date by which the Repurchase Right must be exercised;

     (v)        the Repurchase Price, plus accrued and unpaid interest, if any, to the Repurchase Date;

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

     (vii)      a description of the procedure which a Holder must follow to exercise a Repurchase Right;

     (viii)      that, in order to exercise the Repurchase Right, the Securities must be surrendered for payment of the Repurchase Price plus accrued and unpaid interest, if any, payable as herein provided upon Repurchase Upon Repurchase Event;

     (ix)       that a Holder will be entitled to withdraw its election if the Company (if acting as its own Paying Agent), or the Paying Agent receives, prior to the close of business on the Business Day immediately preceding the Repurchase Date, or such longer period as may be required by law, a letter or telegram, telex or facsimile transmission (receipt of which is confirmed and promptly followed by a letter) setting forth (I) the name of such Holder, (II) a statement that such Holder is withdrawing his election to have Securities repurchased, (III) the principal amount of Securities of such Holder to be so withdrawn, which amount must be $1,000 or an integral multiple thereof, (IV) the certificate number of such Securities to be so withdrawn, (V) the principal amount, if any, of Securities of such Holder that remains subject to the Purchase Notice delivered by such Holder in accordance with this Section 3.09, which amount must be $1,000 or an integral multiple thereof, and (VI) that Securities with respect to which a Purchase Notice is given by such Holder may be converted, if otherwise convertible, only if the Purchase Notice has been withdrawn in accordance with the terms hereof;

     x)        the Conversion Rate, and any adjustments to the Conversion Rate that will result from the Repurchase Event;

     (xi)       that Securities with respect to which a Purchase Notice is given by a Holder may be converted, only if such Purchase Notice has been withdrawn in accordance with this Section 3.09;

     (xii)      the place or places where such Securities may be surrendered for conversion; and

     (xiii)      the CUSIP number or numbers, as the case may be, of the Securities.

     No failure of the Company to give the foregoing notice shall limit any Holder’s right to exercise a Repurchase Right.

     To exercise a Repurchase Right, a Holder shall deliver to the Company (if it is acting as its own Paying Agent), or to a Paying Agent designated by the Company for such purpose in the Repurchase Event Notice (i) no later than the close of business on the Business Day immediately preceding the Repurchase Date, a Purchase Notice, in the form set forth in the Securities or any other form of written notice substantially similar thereto, in each case, duly completed and signed, with appropriate signature guarantee, and stating (A) the certificate number of the Security which the Holder will deliver to be repurchased, (B) the principal amount of Securities to be repurchased, which must be $1,000 or an integral multiple thereof, and (C) that such Security is being tendered for repurchase pursuant to the terms and conditions specified in paragraph 9 of the Securities and in this Indenture; and (ii) at any time after the delivery of such Repurchase Notice, such Securities with respect to which the Repurchase Right is being exercised, duly endorsed for transfer to the Company.  Upon such delivery of Securities to the Company (if it is acting as its own Paying Agent) or such Paying Agent, such Holder shall be

entitled to receive from the Company or such Paying Agent, as the case may be, a nontransferable receipt of deposit evidencing such delivery.

     In the event a Repurchase Right shall be exercised in accordance with the terms hereof, the Company shall pay or cause to be paid the Repurchase Price, plus accrued and unpaid interest, if any, to the Repurchase Date, with respect to the Securities as to which the Repurchase Right shall have been exercised to the Holder promptly following the later of the Repurchase Date or the time of delivery of the Security, subject to the provisions of the immediately preceding paragraph.

     On or prior to a Repurchase Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if the Company is acting as its own Paying Agent, segregate and hold in trust in accordance with Section 2.04) an amount of money (to be available on the Repurchase Date) sufficient to pay the Repurchase Price, plus accrued and unpaid interest, if any, to the Repurchase Date, of all of the Securities which are to be repurchased on that date.

     Both the Repurchase Event Notice and the notice of the Holder to exercise a Repurchase Right having been duly given as specified in this Section 3.09, the Securities so to be repurchased shall, on the Repurchase Date, become due and payable at the Repurchase Price (plus accrued and unpaid interest , if any, to the Repurchase Date applicable thereto and from and after such date (unless there shall be a default in the payment of the Repurchase Price or such accrued and unpaid interest) such Securities shall cease to bear interest and shall cease to be convertible.  Upon surrender of any such Security for repurchase in accordance with said notice, such Security shall be paid by the Company at the Repurchase Price plus such accrued and unpaid interest.

     If any Security shall not be paid upon surrender thereof for repurchase, the principal shall, until paid, bear interest from the Repurchase Date at the rate borne by such Security on the principal amount of such Security and shall continue to be convertible.

     Any Security which is to be submitted for repurchase only in part shall be delivered pursuant to this Section 3.09 (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by the Holder thereof or its attorney duly authorized in writing), and the Company shall execute, and the Trustee shall authenticate and make available for delivery to the Holder of such Security without service charge, a new Security or Securities, of any authorized denomination as requested by such Holder, of the same tenor and in aggregate principal amount equal to the portion of such Security not submitted for repurchase.

     There shall be no purchase of any Securities pursuant to this Section 3.09 if there has occurred (at the time of, or after, as the case may be, the giving, by the Holders of such Securities, of the required Repurchase Event Notice) and is continuing an Event of Default (other than a default in the payment of the Repurchase Price, plus accrued and unpaid interest, if any, payable as herein provided upon Repurchase Upon Repurchase Event).  The Paying Agent will promptly return to the respective Holders thereof any Securities held by it during the continuance of an Event of Default (other than a default in the payment of the Repurchase Price plus 

such accrued and unpaid interest) in which case, upon such return, the Repurchase Event Notice with respect thereto shall be deemed to have been withdrawn.

     Notwithstanding anything herein to the contrary, if the option granted to Securityholders to require the repurchase of the Securities upon the occurrence of a Repurchase Event is determined to constitute a tender offer, the Company will comply with all applicable tender offer rules under the Exchange Act, including Rules 13e-4 and 14e-1, and file Schedule a TO or any other schedules required under the Exchange Act.

     As used in this Section 3.09 and in the Securities:

     A “Repurchase Event” of the Company shall be deemed to have occurred upon the occurrence of either a “Change in Control” or a “Termination of Trading.”

     A “Change in Control” of the Company shall be deemed to have occurred at such time as:

     (i)         any “person” or “group” (as such terms are used for purposes of Sections 13(d) and 14(d) of the Exchange Act) is or becomes the “beneficial owner” (as such term is used in Rule 13d-3 under the Exchange Act), directly or indirectly, of 50% or more of the total voting power of all classes of the Company’s Capital Stock entitled to vote generally in the election of directors (other than Daniel Glassman, Iris Glassman, Bradley Glassman, trusts for their benefit and heirs, lineal descendants, legatees and legal representatives of any of the foregoing and the trustee of any bona fide trust of which one or more of the foregoing are the sole beneficiaries or the grantors thereof, unless, after giving effect to such transaction, (1) the Company’s Common Stock ceases to be listed on a United States national securities exchange or approved for quotation on the Nasdaq National Market or any similar United States system for automated dissemination of quotations of securities prices or (2) less than 40% of the outstanding shares of the Company’s Common Stock remain beneficially owned by persons other than the Glassman family); or

     (ii)        any “person” or “group” (as such terms are used for purposes of Sections 13(d) and 14(d) of the Exchange Act) is or becomes the “beneficial owner” (as such term is used in Rule 13d-3 under the Exchange Act), directly or indirectly, of 50% or more of the total voting power of the Company’s Class B common stock (other than Daniel Glassman, Iris Glassman, Bradley Glassman, trusts for their benefit and heirs, lineal descendants, legatees and legal representatives of any of the foregoing and the trustee of any bona fide trust of which one or more of the foregoing are the sole beneficiaries or the grantors thereof); or

     (iii)       at any time the following persons cease for any reason to constitute a majority of the Company’s Board of Directors:

     (1)        individuals who on the Issue Date constituted the Company’s Board of Directors; and

     (2)        any new directors whose election by the Company’s Board of Directors or whose nomination for election by the Company’s stockholders was approved by at least a majority of the directors then still in office who were either directors on the Issue Date or whose election or nomination for election was previously so approved; or

     (iv)       The Company consolidates with, or merges with or into, another person or any person consolidates with, or merges with or into, the Company, in any such event other than pursuant to a transaction in which the persons that “beneficially owned,” directly or indirectly, the shares of the Company’s Voting Stock immediately prior to such transaction, “beneficially own,” directly or indirectly, shares of the Company’s Voting Stock representing at least a majority of the total voting power of all outstanding classes of Voting Stock of the continuing or surviving corporation in substantially the same proportion as such ownership prior to the transaction; or

     (v)        the sale, lease, transfer or other conveyance or disposition of all or substantially all of the assets or property of the Company to any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), including any group acting for the purpose of acquiring, holding, or disposing of securities within the meaning of Rule 13d-5(b)(1) under the Exchange Act; or

     (vi)       the Company is liquidated or dissolved or the holders of the Company’s Capital Stock approve any plan or proposal for the liquidation or dissolution of the Company.

     A “Termination of Trading” shall occur if the Common Stock of the Company (or other common stock into which the Securities are then convertible) is neither listed for trading on a U.S. national securities exchange nor approved for trading on an established automated over-the-counter trading market in the United States.

     In connection with any redemption of Securities, the Company may arrange, in lieu of redemption, for the purchase and conversion of any Securities called for redemption by an agreement with one or more investment bankers or other purchasers to purchase all or a portion of such Securities by paying to the Trustee in trust for the Holders whose Securities are to be so purchased, on or before the close of business on the Redemption Date, an amount that, together with any amounts deposited with the Trustee by the Company for redemption of such Securities, is not less than the Redemption Price, together with interest, if any, accrued to the Redemption Date, of such Securities.  Notwithstanding anything to the contrary contained in this Article III, the obligation of the Company to pay the Redemption Price of such Securities, including all accrued interest, if any, shall be deemed to be satisfied and discharged to the extent such amount is so paid by such purchasers, but no such agreement shall relieve the Company of its obligation to pay such Redemption Price and such accrued interest, if any.  If such an agreement is entered into, any Securities 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 X) surrendered by such purchasers for conversion, all as of immediately prior to the close of business on the Redemption Date, subject to payment of the above amount as aforesaid.  The Trustee shall hold and pay to the Holders whose Securities are selected for redemption any such amount paid to it for purchase and conversion in the same manner as it would moneys deposited with it by the Company for the redemption of Securities.  Without the Trustee’s prior written consent, no arrangement between the Company and such purchasers for the purchase and conversion of any Securities shall increase or otherwise affect any of the powers, duties, rights, immunities, responsibilities or obligations of the Trustee as set forth in this Indenture, and the Company agrees to indemnify the Trustee from, and hold it harmless against, any and all loss, liability or expense arising out of or in connection with any such arrangement for the purchase and conversion of any Securities between the Company and such purchasers, including the costs and expenses (including counsel fees and expenses) incurred by the Trustee in the defense of any claim or liability arising out of or in connection with the exercise or performance of any of its powers, duties, responsibilities or obligations under this Indenture except to the extent arising from its bad faith, willful misconduct or negligence. 

4.01     PAYMENT OF SECURITIES.

     The Company shall pay all amounts due with respect to the Securities on the dates and in the manner provided in the Securities.  All such amounts shall be considered paid on the date due if the Paying Agent holds (or, if the Company is acting as Paying Agent, if the Company has segregated and holds in trust in accordance with Section 2.04) on that date money sufficient to pay the amount then due with respect to the Securities.

     The Company shall pay interest on any overdue amount (including, to the extent permitted by applicable law, overdue interest) at the rate borne by the Securities.

     The Company will maintain in the Borough of Manhattan, the City of New York, an office or agency (which may be an office of the Trustee or an affiliate of the Trustee, Registrar or co-Registrar) where Securities may be surrendered for registration of transfer or exchange or conversion and where notices and demands to or upon the Company in respect of the Securities 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.  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 of the Trustee.

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

written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency.

     The Company hereby designates the Corporate Trust Office of the Trustee as an agency of the Company in accordance with Section 2.03.

     (A)       The Company will promptly provide to the Trustee and shall, upon request, provide to any Holder or beneficial owner of Securities or prospective purchaser of Securities that so requests, the information required to be delivered pursuant to Rule 144A(d)(4) until such time as the Securities and the underlying Common Stock have been registered by the Company for resale under the Securities Act pursuant to the Registration Rights Agreement.  In addition, the Company will furnish such Rule 144A(d)(4) information if, at any time while the Securities or the Common Stock issuable upon conversion of the Securities are restricted securities within the meaning of the Securities Act, the Company is not subject to the informational requirements of the Exchange Act.

     (B)       The Company will comply with the provisions of TIA § 314(a).

     The Company shall deliver to the Trustee within 90 days after the end of each fiscal year of the Company an Officers’ Certificate stating whether or not the signers know of any Default or Event of Default by the Company in performing any of its obligations under this Indenture or the Securities.  If they do know of any such Default or Event of Default, the certificate shall describe the Default or Event of Default and its status.

     The Company covenants (to the extent that it may lawfully do so) that it will 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 wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Company (in each case, to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not, 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 has been enacted.

     Subject to Article V, the Company will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence and the corporate existence of each of its Subsidiaries in accordance with the respective organizational documents of each Subsidiary and the rights (charter and statutory), licenses and franchises of the Company and its Subsidiaries; provided, however, that the Company shall not be required to preserve any such right, license or franchise, or the corporate existence of any Subsidiary, if in the judgment of the Board of Directors (i) such preservation or existence is not material to the conduct of business of

the Company and (ii) the loss of such right, license or franchise or the dissolution of such Subsidiary does not have a material adverse impact on the Holders.

     In the event that any Default or Event of Default shall occur, the Company will give prompt written notice of such Default or Event of Default to the Trustee, and any remedial action proposed to be taken.

4.08     LIMITATION ON LAYERING INDEBTEDNESS

     The Company shall not incur, create, issue, assume, guarantee or otherwise become liable for any Indebtedness that is subordinate or junior in right of payment to any Senior Indebtedness and senior in any respect in right of payment to the Securities.

V.                 SUCCESSORS

     The Company shall not consolidate with or merge with or into any other person or sell, convey, transfer, lease or otherwise dispose of its properties and assets substantially as an entirety to another person (whether in a single or series of related transactions) unless (i) such other person is a corporation organized under the laws of the United States, any State thereof or the District of Columbia; (ii) such person assumes by supplemental indenture all the obligations of the Company, under the Securities and this Indenture; and (iii) immediately after giving effect to the transaction, no Default or Event of Default shall exist.

     The Company shall deliver to the Trustee prior to the consummation of the proposed transaction an Officers’ Certificate to the foregoing effect and an Opinion of Counsel, which may rely upon such Officers’ Certificate as to the absence of Defaults and Events of Default, stating that the proposed transaction and such supplemental indenture will, upon consummation of the proposed transaction, comply with this Indenture.

     Upon any consolidation or merger or sale, conveyance, transfer, lease, or other disposition of all or substantially all of the assets of the Company in accordance with Section 5.01, the successor person formed by such consolidation or into which the Company is merged or to which such sale, conveyance, transfer, lease, or other disposition is made shall succeed to, and, except in the case of a lease, be substituted for, and may exercise every right and power of, and shall assume every duty and obligation of, the Company under this Indenture with the same effect as if such successor had been named as the Company herein.  When the successor assumes all obligations of the Company hereunder, except in the case of a lease, all obligations of the predecessor shall terminate.

6.01     EVENTS OF DEFAULT.

     An “Event of Default” occurs if:

     (i)         the Company fails to pay the principal of or premium, if any, of any Security when the same becomes due and payable, whether at maturity, upon Redemption, on the Option Purchase Date with respect to a Repurchase at Holder’s Option, on a Repurchase Date with respect to a Repurchase Upon Repurchase Event or otherwise, whether or not such payment shall be prohibited by the provisions of Article XI hereof;

     (ii)        the Company fails to pay an installment of interest or liquidated damages, if any, on the Securities when due, if such failure continues for 30 days after the date when due, whether or not such payment shall be prohibited by the provisions of Article XI hereof;

     (iii)       the Company fails to provide timely notice of a Repurchase Event, or a notice required under Section 3.08(B), as required by the provisions of this Indenture;

     (iv)       the Company fails to comply with any other term, covenant, or agreement set forth in the Securities or this Indenture and such failure continues for the period, and after the notice, specified below;

     (v)        the Company or any of its Subsidiaries defaults in the payment when due, after the expiration of any applicable grace period, of principal of, or premium, if any, or interest on indebtedness for money borrowed, in the aggregate principal amount then outstanding of $5,000,000 or more, or the acceleration of indebtedness for money borrowed in such aggregate principal amount so that it becomes due and payable prior to the date on which it would otherwise become due and payable and such acceleration is not rescinded or such default is not cured within 30 days after notice to the Company by the Trustee or to the Company and the Trustee by holders of not less than 25% in the aggregate principal amount of the Securities then outstanding, each in accordance with this Indenture;

     (vi)       the Company or any of its Subsidiaries fails to pay final judgments, the uninsured portion of which aggregates in excess of $5,000,000, and such judgments are not paid, discharged or stayed for a period of 30 days;

     (vii)      the Company or any of its Significant Subsidiaries or any group of Subsidiaries that in the aggregate would constitute a Significant Subsidiary pursuant to or within the meaning of any Bankruptcy Law:

     (A)       commences a voluntary case,

     (B)       consents to the entry of an order for relief against it in an involuntary case,

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

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

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

     (A)       is for relief against the Company or any of its Significant Subsidiaries or any group of Subsidiaries that in the aggregate constitute a significant part of the Company’s business in an involuntary case or proceeding, or adjudicates the Company or any Significant Subsidiary or any group of Subsidiaries that in the aggregate constitute a significant part of the Company’s business insolvent or bankrupt,

     (B)       appoints a Custodian of the Company or any of its Significant Subsidiaries or any group of Subsidiaries that in the aggregate constitute a significant part of the Company’s business for all or substantially all of the property of the Company or any such Significant Subsidiary or any group of Subsidiaries that in the aggregate constitute a significant part of the Company’s business, as the case may be, or

     (C)       orders the winding up or liquidation of the Company or any of its Significant Subsidiaries or any group of Subsidiaries that in the aggregate constitute a significant part of the Company’s business, and the order or decree remains unstayed and in effect for 90 consecutive days.

     The term “Bankruptcy Law” means Title 11, U.S. Code or any similar Federal or State law for the relief of debtors.  The term “Custodian” means any receiver, trustee, assignee, liquidator or similar official under any Bankruptcy Law.

     A default under clause (iv) is not an Event of Default until the Trustee notifies the Company or the Holders of at least 25% in aggregate principal amount of the Securities then outstanding notify the Company and the Trustee of the default and the default is not cured within 30 days after receipt of the notice.  The notice must specify the default, demand that it be remedied and state that the notice is a “Notice of Default”.  If the Holders of 25% in aggregate principal amount of the outstanding Securities request the Trustee to give such notice on their behalf, the Trustee shall do so.  When a default is cured, it ceases.

     If an Event of Default (other than an Event of Default specified in Section 6.01(vii) or (viii) with respect to the Company) as to which the Trustee has received notice pursuant to the provisions of this Indenture occurs and is continuing, the Trustee by notice to the Company or

the Holders of at least 25% in principal amount of the Securities then outstanding by notice to the Company and the Trustee may declare the Securities to be due and payable.  Upon such declaration such principal and interest shall be due and payable immediately.  If an Event of Default specified in Section 6.01(vii) or 6.01(viii) with respect to the Company occurs, the principal of and accrued interest on all the Securities shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Securityholder.  The Holders of a majority in aggregate principal amount of the Securities then outstanding by written notice to the Trustee may rescind or annul an acceleration and its consequences if the rescission would not conflict with any order or decree and if all existing Events of Default have been cured or waived except nonpayment of principal or interest that has become due solely because of the acceleration and if all amounts due to the Trustee under Section 7.07 have been paid.

     Notwithstanding any other provision of this Indenture, if an Event of Default occurs and is continuing, the Trustee may pursue any available remedy by proceeding at law or in equity to collect the payment of amounts due with respect to the Securities or to enforce the performance of any provision of the Securities or this Indenture.

     The Trustee may maintain a proceeding even if it does not possess any of the Securities or does not produce any of them in the proceeding.  A delay or omission by the Trustee or any Securityholder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default.  All remedies are cumulative.

     Subject to Sections 6.07 and 9.02, the Holders of a majority in aggregate principal amount of the Securities then outstanding by notice to the Trustee may waive any past Default or Event of Default and its consequences; provided, however, that a default or Event of Default in the payment of the principal of, premium, if any, or interest on any Security or in the payment of the Redemption Price, the Option Purchase Price or the Repurchase Price (or accrued and unpaid interest, if any, payable as herein provided upon Redemption, Repurchase at Holder’s Option or Repurchase Upon Repurchase Event), a failure by the Company to convert any Securities into Common Stock or any default or Event of Default in respect of any provision of this Indenture or the Securities which, under Section 9.02, cannot be modified or amended without the consent of the Holder of each Security affected.  When a Default or an Event of Default is waived, it is cured and ceases for every purpose of this Indenture.

     The Holders of a majority in aggregate principal amount of the Securities then outstanding may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on it.  However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture, is unduly prejudicial to the rights of other Securityholders or would involve the Trustee in personal liability unless the

Trustee is offered indemnity reasonably satisfactory to it; provided that the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction.

     Except as provided in Section 6.07, a Securityholder may not pursue a remedy with respect to this Indenture or the Securities unless:

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

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

     (iii)       such Holder or Holders offer and, if requested, provide to the Trustee indemnity reasonably satisfactory to the Trustee against any loss, liability or expense;

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

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

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

     Notwithstanding any other provision of this Indenture, the right of any Holder to receive payment of all amounts due with respect to the Securities, on or after the respective due dates expressed in the Securities, or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of the Holder. 

     Notwithstanding any other provision of this Indenture, the right of any Holder to bring suit for the enforcement of the right to convert the Security in accordance with this Indenture shall not be impaired or affected without the consent of the Holder.

     If an Event of Default specified in Section 6.01(i) or (ii) occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against the Company for the whole amount due with respect to the Securities, including any unpaid and accrued interest.

     The Trustee may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee, any predecessor Trustee and the Securityholders allowed in any judicial proceedings relative to the Company or its creditors or properties.

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

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

     If the Trustee collects any money pursuant to this Article VI, it shall pay out the money in the following order:

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

Second:      to holders of Senior Indebtedness to the extent required by
                  Article XI;

Third:          to Securityholders for all amounts due and unpaid on the Securities, without
                   preference or priority of any kind, according to the amounts due and                    payable on the Securities; and

Fourth:        to the Company.

     The Trustee, upon prior written notice to the Company may fix a record date and payment date for any payment by it to Securityholders pursuant to this Section 6.10.

     In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing by any party litigant in the suit other than the Trustee of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys’ fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant.  This Section 6.11 does not

apply to a suit by the Trustee, a suit by a Holder pursuant to Section 6.07 or a suit by Holders of more than 10% in aggregate principal amount of the outstanding Securities.

7.01     DUTIES OF TRUSTEE.

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

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

     (i)         the Trustee need perform only those duties that are specifically set forth in this Indenture and no implied covenants or obligations shall be read into this Indenture against the Trustee; and

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

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

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

     (ii)        the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.05.

     (D)       Every provision of this Indenture that in any way relates to the Trustee is subject to the provisions of this Section 7.01.

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

     (A)       Subject to Section 7.01, the Trustee may conclusively rely on any document believed by it to be genuine and to have been signed or presented by the proper person.  The Trustee need not investigate any fact or matter stated in the document; if, however, the Trustee shall determine to make such further inquiry or investigation, it shall be entitled during normal business hours to examine the relevant books, records and premises of the Company, personally or by agent or attorney upon reasonable prior notice.

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

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

     (D)       The Trustee may consult with counsel and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon.

     (E)       The Trustee may act through agents or attorneys and shall not be responsible for the misconduct or negligence of any agent or attorney appointed with due care.

     (F)       The Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its discretion, rights or powers conferred upon it by this Indenture.

     (G)       Except with respect to Section 6.01, the Trustee shall have no duty to inquire as to the performance of the Company with respect to the covenants contained in Article IV.  In addition, the Trustee shall not be deemed to have knowledge of an Event of Default except (i) any Default or Event of Default occurring pursuant to Sections 6.01(i) and (ii) or (ii) any Default or Event of Default of which a Responsible Officer of the Trustee shall have received written notification or obtained actual knowledge.  Delivery of reports, information and documents to the Trustee under Article IV (other than Sections 4.04 and 4.07) is for informational purposes only and the Trustee’s receipt of the foregoing 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).

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

     (I)        The rights, privileges, protections, immunities and benefits given to the Trustee, including without limitation, its right to be indemnified, are extended to, and shall be enforceable

by, the Trustee in each of its capacities hereunder, and each agent, custodian and other Person employed to act hereunder.

     (J)        The Trustee may request that the Company deliver an Officers’ Certificate setting forth the names of individuals and/or titles of officers authorized at such time to take specified actions pursuant to this Indenture, which Officers’ Certificate may be signed by any person authorized to sign an Officers’ Certificate, including any person specified as so authorized in any such certificate previously delivered and not superseded.

     The Trustee in its individual or any other capacity may become the owner or pledgee of Securities and may otherwise deal with the Company or any of its Affiliates with the same rights it would have if it were not Trustee.  Any Agent may do the same with like rights.  The Trustee, however, must comply with Sections 7.10 and 7.11.

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

     If a Default or Event of Default occurs and is continuing as to which the Trustee has received notice pursuant to the provisions of this Indenture, the Trustee shall mail to each Securityholder a notice of the Default or Event of Default within 30 days after it occurs unless such Default or Event of Default has been cured or waived.  Except in the case of a Default or Event of Default in payment of any amounts due with respect to any Security, the Trustee may withhold the notice if and so long as it in good faith determines that withholding the notice is in the interests of Securityholders.

     Within 60 days after each May 15 beginning with May 15, 2004, the Trustee shall mail to each Securityholder if required by TIA § 313(a) a brief report dated as of such May 15 that complies with TIA § 313(c).  In such event, the Trustee also shall comply with TIA § 313(b).

     A copy of each report at the time of its mailing to Securityholders shall be mailed to the Company and filed by the Trustee with the SEC and each stock exchange, if any, on which the Securities are listed.  The Company shall promptly notify the Trustee when the Securities are listed on any stock exchange.

     The Company shall pay to the Trustee from time to time such compensation for its services as shall be agreed upon in writing.  The Trustee’s compensation shall not be limited by

any law on compensation of a trustee of an express trust.  The Company shall reimburse the Trustee upon request for all reasonable out-of-pocket expenses incurred by it.  Such expenses shall include the reasonable compensation and out-of-pocket expenses of the Trustee’s agents and counsel.

     The Company shall indemnify the Trustee against any and all loss, liability, damage, claim or expense (including the reasonable fees and expenses of counsel and taxes other than those based upon the income of the Trustee) incurred by it in connection with the acceptance or administration of this trust and the performance of its duties hereunder, including the reasonable costs and expenses of defending itself against any claim (whether asserted by the Company, any Holder or any other Person) or liability in connection with the exercise or performance of any of its powers and duties hereunder.  The Company need not pay for any settlement made without its consent.  The Trustee shall notify the Company promptly of any claim for which it may seek indemnification.  The Company need not reimburse any expense or indemnify against any loss or liability incurred by the Trustee through the Trustee’s negligence, bad faith or willful misconduct.

     To secure the Company’s payment obligations in this Section 7.07, the Trustee shall have a lien prior to the Securities on all money or property held or collected by the Trustee, except that held in trust to pay amounts due on particular Securities.

     The indemnity obligations of the Company with respect to the Trustee provided for in this Section 7.07 shall survive any resignation or removal of the Trustee.

     When the Trustee incurs expenses or renders services after an Event of Default specified in Section 6.01(vii) or 6.01(viii) occurs, the expenses and the compensation for the services are intended to constitute expenses of administration under any Bankruptcy Law.

     A resignation or removal of the Trustee and appointment of a successor Trustee shall become effective only upon the successor Trustee’s acceptance of appointment as provided in this Section 7.08.

     The Trustee may resign by so notifying the Company in writing 30 Business Days prior to such resignation.  The Holders of a majority in aggregate principal amount of the Securities then outstanding may remove the Trustee by so notifying the Trustee and the Company in writing and may appoint a successor Trustee with the Company’s consent.  The Company may remove the Trustee if:

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

     (ii)        the Trustee is adjudged a bankrupt or an insolvent;

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

     (iv)       the Trustee becomes incapable of acting.

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

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

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

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

     If the Trustee consolidates with, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation, the successor corporation without any further act shall be the successor Trustee, if such successor corporation is otherwise eligible hereunder.

     There shall at all times be a Trustee hereunder that is a corporation organized and doing business under the laws of the United States of America or of any state thereof that is authorized under such laws to exercise corporate trustee power, that is subject to supervision or examination by federal or state authorities and that has a combined capital and surplus of at least $10 million as set forth in its most recent published annual report of condition.  The Trustee shall comply with TIA § 310(b).

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

8.01     TERMINATION OF THE OBLIGATIONS OF THE COMPANY.

     When (a) the Company delivers to the Trustee all outstanding Securities (other than Securities replaced pursuant to Section 2.07 hereof) for cancellation or (b) all outstanding Securities have become due and payable and the Company irrevocably deposits with the Trustee

or the Paying Agent (if the Paying Agent is not the Company or any of its Affiliates) cash sufficient to pay all amounts due and owing on all outstanding Securities (other than Securities replaced pursuant to Security 2.07 hereof), and if in either case the Company pays all other sums payable hereunder by the Company, then this Indenture shall, subject to Section 7.07 hereof, cease to be of further effect.  The Trustee shall join in the execution of a document prepared by the Company acknowledging satisfaction and discharge of this Indenture on demand of the Company accompanied by an Officers’ Certificate of the Company and Opinion of Counsel and at the cost and expense of the Company.

     The Trustee shall hold in trust money deposited with it pursuant to Section 8.01.  It shall apply the deposited money through the Paying Agent and in accordance with this Indenture to the payment of the principal of and any unpaid and accrued interest on the Securities.  Money and securities so held in trust are not subject to the subordination provisions of Article XI.

     The Trustee and the Paying Agent shall promptly notify the Company of, and pay to the Company upon the request of the Company, any excess money or securities held by them at any time.  The Trustee and the Paying Agent shall pay to the Company upon the written request of the Company any money held by them for the payment of the principal of and any unpaid and accrued interest that remains unclaimed for two years; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may, at the expense and request of the Company, cause to be published once in a newspaper of general circulation in the City of New York or cause to be mailed to each Holder, notice stating that such money remains and that, after a date specified therein, which shall not be less than 30 days from the date of such publication or mailing, any unclaimed balance of such money then remaining will be repaid to the Company.  After payment to the Company, Securityholders entitled to the money must look to the Company for payment as general creditors unless an applicable abandoned property law designates another person and all liability of the Trustee and the Paying Agent shall cease.

     If the Trustee or Paying Agent is unable to apply any money in accordance with Sections 8.01 and 8.02 by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the obligations of the Company under this Indenture and the Securities shall be revived and reinstated as though no deposit had occurred pursuant to Sections 8.01 and 8.02 until such time as the Trustee or Paying Agent is permitted to apply all such money in accordance with Sections 8.01 and 8.02; provided, however, that if the Company has made any payment of amounts due with respect to any Securities because of the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Securities to receive such payment from the money held by the Trustee or Paying Agent.

9.01     WITHOUT CONSENT OF HOLDERS.

     The Company, with the consent of the Trustee, may amend or supplement this Indenture or the Securities without notice to or the consent of any Securityholder:

     (i)      to comply with Sections 5.01 and 10.12;

     (ii)      to make any changes or modifications to this Indenture necessary in connection with the registration of the Securities under the Securities Act pursuant to the Registration Rights Agreement and the qualification of the Indenture under the TIA;

     (iii)     to secure the obligations of the Company in respect of the Securities;

     (iv)     to add to the covenants of the Company described in this Indenture for the benefit of Securityholders or to surrender any right or power conferred upon the Company; and

     (v)     to make provisions with respect to adjustments to the Conversion Rate as required by this Indenture or to increase the Conversion Rate in accordance with this Indenture.

     In addition, the Company and the Trustee may enter into a supplemental indenture without the consent of Holders of the Securities to cure any ambiguity, defect, omission or inconsistency in this Indenture in a manner that does not adversely affect the rights of any Holder.

     The Company, with the consent of the Trustee, may amend or supplement this Indenture or the Securities without notice to any Securityholder but with the written consent of the Holders of at least a majority in aggregate principal amount of the outstanding Securities.  Subject to Section 6.07, the Holders of a majority in aggregate principal amount of the outstanding Securities may waive compliance by the Company with any provision of this Indenture or the Securities without notice to any other Securityholder.  However, without the consent of each Securityholder affected, an amendment, supplement or waiver, including a waiver pursuant to Section 6.04, may not:

     (a)        change the stated maturity of the principal of, or interest on, any Security;

     (b)        reduce the principal amount of, or any premium or interest or liquidated damages on, any Security;

     (c)        reduce the amount of principal payable upon acceleration of the maturity of any Security;

     (d)        change the place or currency of payment of principal of, or any premium or interest or liquidated damages on, any Security;

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

     (f)         modify the provisions with respect to the right of Holders pursuant to Article III to require the Company to purchase Securities on the Option Purchase Date or to repurchase Securities upon the occurrence of Repurchase Event in a manner adverse to Holders;

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

     (h)        adversely affect the right of Holders to convert Securities other than as provided in or under Article X of this Indenture;

     (i)         reduce the percentage of the aggregate principal amount of the outstanding Securities whose Holders must consent to a modification or amendment;

     (j)         reduce the percentage of the aggregate principal amount of the outstanding Securities necessary for the waiver of compliance with certain provisions of this Indenture or the waiver of certain defaults under this Indenture; and

     (k)        modify the provisions of this Indenture with respect to modification and waiver (including waiver of Events of Default), except to increase the percentage required for modification or waiver or to provide for consent of each affected Holder.

     An amendment under this Section 9.02 may not make any change that adversely affects the rights under Article XI of any holder of Senior Indebtedness unless the holders of such Senior Indebtedness pursuant to its terms consent to the change.

     Promptly after an amendment under Section 9.01 and this Section 9.02 becomes effective, the Company shall mail to Securityholders a notice briefly describing the amendment.  Any failure of the Company to mail such notice shall not in any way impair or affect the validity of such amendment, supplement or waiver.

     It shall not be necessary for the consent of the Holders under this Section 9.02 to approve the particular form of any proposed amendment or supplement, but it shall be sufficient if such consent approves the substance thereof.

     Every amendment, waiver or supplement to this Indenture or the Securities shall comply with the TIA as then in effect.

     Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder is a continuing consent by the Holder and every subsequent Holder of a Security or portion of a Security that evidences the same debt as the consenting Holder’s Security, even if notation of the consent is not made on any Security.  However, any such Holder or subsequent Holder may revoke the consent as to its Security or portion of a Security if the Trustee receives the notice of revocation before the date the amendment, supplement or waiver becomes effective.  An amendment, supplement or waiver becomes effective in accordance with its terms and thereafter binds every Securityholder.

     After an amendment, supplement or waiver becomes effective with respect to the Securities, it shall bind every Securityholder unless it makes a change described in Section 9.02.  In that case, the amendment, supplement or waiver shall bind each Holder of a Security who has consented to it and every subsequent Holder of a Security or portion of a Security that evidences the same debt as the consenting Holder’s Security, even if notation of the consent is not made on any Security.

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

     The Trustee need not sign any amendment, supplement or waiver authorized pursuant to this Article IX that adversely affects the Trustee’s rights, duties, liabilities or immunities.  The Trustee shall be entitled to receive and conclusively rely upon an Opinion of Counsel and an Officers’ Certificate that any supplemental indenture, amendment or waiver is permitted or authorized pursuant to this Indenture.

10.01   CONVERSION PRIVILEGE; RESTRICTIVE LEGENDS.

     A Holder of a Security may convert such Security into Common Stock at any time prior to Maturity, subject to Section 10.14 hereof.  The initial Conversion Rate is 50.0000 shares of

Common Stock per $1,000 principal amount.  The Conversion Rate is subject to adjustment in accordance with Sections 10.06 through 10.12.

     A Holder may convert a portion of the principal of such Security if the portion is $1,000 principal amount or an integral multiple of $1,000 principal amount.  Provisions of this Indenture that apply to conversion of all of a Security also apply to conversion of a portion of it.

     Any shares issued upon conversion of a Security shall bear the Private Placement Legend until after the second anniversary of the later of the Issue Date and the last date on which the Company or any Affiliate of the Company was the owner of such shares or the Security (or any predecessor security) from which such shares were converted (or such shorter period of time as permitted by Rule 144(k) under the Securities Act or any successor provision thereunder) (or such longer period of time as may be required under the Securities Act or applicable state securities laws in the Opinion of Counsel for the Company, unless otherwise agreed by the Company and the Holder thereof).

     To convert a Security, a Holder must satisfy the requirements of paragraph 10 of the Securities.  The date on which the Holder satisfies all those requirements is the conversion date.  As soon as practicable following the conversion date, the Company shall deliver to the Holder through the Conversion Agent a certificate for the number of full shares of Common Stock issuable upon the conversion and a check in lieu of any fractional share.  The person in whose name the certificate is registered shall be treated as a stockholder of record on and after the conversion date.

     Except as described below, no payment or adjustment will be made for accrued interest on, or liquidated damages with respect to, a converted Security or for dividends on any Common Stock issued on or prior to conversion.  If any Holder surrenders a Security for conversion after the close of business on the record date for the payment of an installment of interest and prior to the next succeeding interest payment date, then, notwithstanding such conversion, the interest payable on such interest payment date shall be paid to the Holder of such Security on such record date; provided, however, that such Security, when surrendered for conversion, must be accompanied by payment to the Trustee on behalf of the Company of an amount equal to the interest payable on such interest payment date on the portion so converted; provided, further, however, that such payment to the Trustee described in the immediately preceding proviso shall not be required in connection with any conversion of a Security called for Redemption pursuant to Section 3.04 hereof.

     If a Holder converts more than one Security at the same time, the number of full shares issuable upon the conversion shall be based on the total principal amount of the Securities converted.

     Upon surrender of a Security that is converted in part the Trustee shall authenticate for the Holder a new Security equal in principal amount to the unconverted portion of the Security surrendered.

     If the last day on which a Security may be converted is a Legal Holiday in a place where a Conversion Agent is located, the Security may be surrendered to that Conversion Agent on the next succeeding day that is not a Legal Holiday.

     The Company will not issue fractional shares of Common Stock upon conversion of Securities and instead will deliver a check in an amount equal to the value of such fraction computed on the basis of the Closing Sale Price.

     If a Holder converts its Security, the Company shall pay any documentary, stamp or similar issue or transfer tax due on the issue of shares of Common Stock upon the conversion.  However, the Holder shall pay any such tax which is due because the shares are issued in a name other than the Holder’s name.

     The Company shall reserve out of its authorized but unissued Common Stock or Common Stock held in its treasury enough shares of Common Stock to permit the conversion of all of the Securities.

     All shares of Common Stock which may be issued upon conversion of the Securities shall be validly issued, fully paid and non-assessable and shall be free of preemptive rights and free of any lien or adverse claim created by the Company.

     The Company shall comply with all securities laws regulating the offer and delivery of shares of Common Stock upon conversion of Securities and shall list such shares on each national securities exchange or automated quotation system on which the Common Stock is listed.

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

     (a)        In case the Company shall (1) pay a dividend in shares of Common Stock to all holders of Common Stock, (2) make a distribution in shares of Common Stock to all holders of Common Stock, (3) subdivide the outstanding shares of Common Stock into a greater number of shares of Common Stock or (4) combine the outstanding shares of Common Stock into a smaller number of shares of Common Stock, the Conversion Rate in effect immediately prior to such action shall be adjusted so that the holder of any Security thereafter surrendered for conversion shall be entitled to receive the number of shares of Common Stock which he would have owned immediately following such action had such Securities been converted immediately prior thereto.  Any adjustment made pursuant to this Section 10.06(a) shall become effective immediately after the

record date in the case of a dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision or combination.

     (b)        In case the Company shall issue rights or warrants to all or substantially all holders of Common Stock, as the case may be, entitling them for a period commencing on the record date for the determination of holders of Common Stock entitled to receive such rights or warrants and expiring not more than 60 days after such record date, to subscribe for or purchase shares of Common Stock (or securities convertible into Common Stock), at a price per share less than the then current market price (as determined pursuant to Section 10.06(g) below) of Common Stock on such record date, the Conversion Rate shall be increased by multiplying the Conversion Rate in effect immediately prior to such record date by a fraction of which the numerator shall be the number of shares of Common Stock outstanding on such record date, plus the number of shares of Common Stock so offered for subscription or purchase, and the denominator of which shall be the number of shares of Common Stock outstanding at the close of business on such record date plus the number of shares of Common Stock which the aggregate of the offering price of the total number of shares of Common Stock so offered for subscription or purchase would purchase at such current market price.  Such adjustments shall become effective immediately after such record date.

     (c)        In case the Company shall dividend or distribute to all or substantially all holders of Common Stock shares of Capital Stock of the Company other than Common Stock, evidences of indebtedness or other assets (other than cash dividends), or shall dividend or distribute to all or substantially all holders of Common Stock rights or warrants to subscribe for securities (other than those referred to in Section 10.06(b) above), then in each such case the Conversion Rate shall be increased by multiplying the Conversion Rate in effect immediately prior to the close of business on the record date for the determination of shareholders entitled to such distribution by a fraction of which the numerator shall be the current market price of Common Stock (as determined pursuant to Section 10.06(g) below), on such date and the denominator shall be such current market price less the fair market value (as determined by the Board of Directors whose determination shall be conclusive and described in a Board Resolution) on such date of the portion of the evidences of indebtedness, shares of Capital Stock, cash and other assets to be distributed or of such subscription rights or warrants applicable to one share of Common Stock, such increase to become effective immediately prior to the opening of business on the day following such record date.  Notwithstanding the foregoing, in the event that the Company shall distribute rights or warrants (other than those referred to in Section 10.06(b) above) (“Rights”) pro rata to holders of Common Stock, the Company may, in lieu of making any adjustment pursuant to this Section 10.06(c), make proper provision so that each Holder of a Security who converts such Security (or any portion thereof) after the record date for such distribution and prior to the expiration or redemption of the Rights shall be entitled to receive upon such conversion, in addition to the shares of Common Stock issuable upon such conversion (the

“Conversion Shares”), a number of Rights to be determined as follows:  (i) if such conversion occurs on or prior to the date for the distribution to the holders of Rights of separate certificates evidencing such Rights (the “Distribution Date”), the same number of Rights to which a holder of a number of shares of Common Stock equal to the number of shares of Conversion Shares is entitled at the time of such conversion in accordance with the terms and provisions of and applicable to the Rights; and (ii) if such conversion occurs after the Distribution Date, the same number of Rights to which a holder of the number of shares of Common Stock into which the principal amount of the Security so converted was convertible immediately prior to the Distribution Date would have been entitled on the Distribution Date in accordance with the terms and provisions of and applicable to the Rights. 

In the event that the Company implements a stockholders' rights plan after the date hereof, the Company shall provide that the Holders will receive, in addition to Common Stock, the rights described therein upon conversion of the Securities (whether or not the rights have separated from the Common Stock prior to the time of conversion), subject to the limitations set forth in the stockholders' rights plan.  Any distribution of rights or warrants pursuant to a stockholders’ rights plan complying with the requirements set forth in the two preceding sentences of this paragraph shall not constitute a distribution of rights or warrants pursuant to this Section 10.06(c).

     (d)        In case the Company shall, by dividend or otherwise, at any time make a distribution (the “Triggering Distribution,” and the amount of the Triggering Distribution, together with the sum of (w) and (x) below, the “Combined Amount”) to all or substantially all holders of its Common Stock of cash (including any distributions of cash out of current or retained earnings of the Company, but excluding any cash that is distributed as part of a distribution requiring a Conversion Rate adjustment pursuant to subsection (c) above or subsection (e) below) in an aggregate amount that, together with the sum of (w) the aggregate amount of any cash and the fair market value (as determined in good faith by the Board of Directors, whose determination shall be conclusive thereof and described in a Board Resolution), as of the expiration of the tender or exchange offer referred to below, of any other consideration payable in respect of any tender or exchange offer by the Company or a Subsidiary of the Company for all or any portion of the Common Stock consummated within the 12 months preceding the date of payment of the Triggering Distribution and in respect of which no Conversion Rate adjustment has been made pursuant to this Section 10.06, and (x) the aggregate amount of all other cash dividends or distributions to all or substantially all holders of Common Stock made within the 12 months preceding the date of payment of the Triggering Distribution and in respect of which no Conversion Rate adjustment has been made pursuant to this Section 10.06, exceeds 10% of the product of the current market price per share (as determined pursuant to Section 10.06(g) below) of the Common Stock on the close of business, New York City time, on the Business Day (the “Distribution Declaration Date”) immediately preceding the day on which the Triggering

Distribution is declared by the Company and the number of shares of Common Stock outstanding on the Distribution Declaration Date (excluding shares held in the treasury of the Company), the Conversion Rate shall be adjusted by multiplying the Conversion Rate in effect immediately prior to the effectiveness of the Conversion Rate adjustment contemplated by this subsection (d) by a fraction (y) the numerator of which shall be such current market price per share of Common Stock and (z) the denominator of which shall be (I) such current market price per share of Common Stock less (II) the number obtained by dividing the Combined Amount by such number of shares of Common Stock outstanding.  Such adjustment shall become effective immediately prior to the opening of business on the day following the Distribution Declaration Date.

     (e)        In case a tender or exchange offer made by the Company or any of its Subsidiaries for all or any portion of the Common Stock shall expire and such tender offer or exchange offer (as amended upon the expiration thereof) shall require the payment to stockholders (based on the acceptance (up to any maximum specified in the terms of the tender offer or exchange offer) of Purchased Shares (as defined below)) of an aggregate consideration having a fair market value (as determined by the Board of Directors, whose determination shall be conclusive and set forth in a Board Resolution) that combined together with: 

1. the aggregate of the cash plus the fair market value (as determined by the Board of Directors, whose determination shall be conclusive and set forth in a Board Resolution), as of the expiration of such tender or exchange offer, of consideration payable in respect of any other tender offers or exchange offers, by the Company or any of its Subsidiaries for all or any portion of the Common Stock expiring within the 12 months preceding the expiration of such tender offer or exchange offer and in respect of which no adjustment pursuant to this Section 10.06 has been made, and
   
   
2. the aggregate amount of any dividends or distributions to all or substantially all holders of the Company’s Common Stock made exclusively in cash within the 12 months preceding the expiration of such tender offer or exchange offer and in respect of which no adjustment pursuant to Section 10.06 has been made,

exceeds 10% of the product of the current market price per share (as determined pursuant to Section 10.06(g) below) as of the last time (the “Expiration Time”) tenders or exchanges could have been made pursuant to such tender or exchange offer (as it may be amended) times the number of shares of Common Stock outstanding (including any tendered shares or exchanged shares) at the Expiration Time, then, and in each such case, immediately prior to the opening of business on the day after the date of the Expiration Time, the Conversion Rate shall be adjusted by multiplying the Conversion Rate in effect immediately prior to the close of business on the date of the Expiration Time by a fraction:

     (i) the numerator 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 offer 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 as of the Expiration Time; and

     (ii) the denominator 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 as of the Expiration Time.

Such adjustment (if any) shall become effective immediately prior to the opening of business on the day following the Expiration Time.  In the event that the Company is obligated to purchase shares pursuant to any such tender offer 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 Rate shall again be adjusted to be the Conversion Rate which would then be in effect if such tender offer or exchange offer had not been made.  If the application of this Section 10.06(e) to any tender offer or exchange offer would result in a decrease in the Conversion Rate, no adjustment shall be made for such tender offer or exchange offer under this Section 10.06(e).

     (f)         In addition to the foregoing adjustments in subsections (a), (b), (c), (d) and (e) above, the Company, from time to time and to the extent permitted by law, may increase the Conversion Rate by any amount for at least 20 days or such longer period as may be required by law, if the Board of Directors of the Company has made a determination, which determination shall be conclusive, that such increase would be in the best interests of the Company, provided that the then effective Conversion Price is not less than the par value of a share of Common Stock.  The Company shall give notice to the Trustee and cause notice of such increase to be mailed to each Holder of Securities at such Holder’s address as the same appears on the registry books of the Registrar, at least 15 days prior to the date on which such increase commences.  Such Conversion Rate increase shall be irrevocable during such period. 

     (g)        For the purpose of any computation under subsections (a), (b), (c), (d) and (e) above of this Section 10.06, the current market price per share of Common Stock on the date fixed for determination of the stockholders entitled to receive the issuance or distribution requiring such computation (the “Determination Date”) shall be deemed to be the average of the Closing Sale Prices for the 10 consecutive Trading Days immediately preceding the

Determination Date; provided, however, that (i) if the “ex” date for any event (other than the issuance or distribution requiring such computation) that requires an adjustment to the Conversion Rate pursuant to subsection (a), (b), (c), (d) or (e) above occurs on or after the tenth Trading Day prior to the Determination Date and prior to the “ex” date for the issuance or distribution requiring such computation, the Closing Sale Price for each Trading Day prior to the “ex” date for such other event shall be adjusted by multiplying such Closing Sale Price by the reciprocal of the fraction by which the Conversion Rate is so required to be adjusted as a result of such other event, (ii) if the “ex” date for any event (other than the issuance or distribution requiring such computation) that requires an adjustment to the Conversion Rate pursuant to subsection (a), (b), (c), (d) or (e) above occurs on or after the “ex” date for the issuance or distribution requiring such computation and on or prior to the Determination Date, the Closing Sale Price for each Business Day on and after the “ex” date for such other event shall be adjusted by multiplying such Closing Sale Price by the same fraction by which the Conversion Rate is so required to be adjusted as a result of such other event, and (iii) if the “ex” date for the issuance or distribution requiring such computation is on or prior to the Determination Date, after taking into account any adjustment required pursuant to clause (i) or (ii) of this proviso, the Closing Sale Price for each Trading Day on and after the “ex” date shall be adjusted by adding thereto the amount of any cash and the fair market value (as determined by the Board of Directors in a manner consistent with any determination of such value for the purposes of this Section 10.06, whose determination shall be conclusive and described in a Resolution of the Board of Directors) of the evidences of indebtedness, shares of Capital Stock or other securities or assets being distributed (in the distribution requiring such computation) applicable to one share of Common Stock as of the close of business on the day before such “ex” date.  For the purpose of any computation under subsection (e) of this Section 10.06, the current market price per share of Common Stock at the expiration time for the tender offer requiring such computation shall be deemed to be the average of the Closing Sale Price for the 10 consecutive Trading Days commencing on the Business Day immediately following the expiration time of such tender offer (the “Commencement Date”); provided, however, that if the “ex” date for any event (other than the tender offer requiring such computation) that requires an adjustment to the Conversion Rate pursuant to subsection (a), (b), (c), (d) or (e) above occurs on or after the expiration time for the tender offer requiring such computation and prior to the day in question, the Closing Sale Price for each Trading Day on or after to the “ex” date for such other event shall be adjusted by multiplying such Closing Sale Price by the same fraction by which the Conversion Rate is so required to be adjusted as a result of such other event.  For purposes of this subsection, the term “ex” date, (i) 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 Sale Price was obtained without the right to receive such issuance or distribution, (ii) 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 (iii) when used with respect to any tender offer means the first date on which the Common Stock trades regular way on such exchange or in such market after the expiration time of such tender offer (as it may be amended or extended).

     No adjustment in the Conversion Rate shall be required until cumulative adjustments amount to 1% or more of the Conversion Price as last adjusted; provided, however, that any adjustments which by reason of this Section 10.07 are not required to be made shall be carried forward and taken into account in any subsequent adjustment.  All calculations under this Article X shall be made to the nearest cent or to the nearest one-hundredth of a share, as the case may be. 

     If any rights, options or warrants issued by the Company as described in Section 10.06 are only exercisable upon the occurrence of certain triggering events, then the Conversion Rate will not be adjusted as provided in Section 10.06 until the earliest of such triggering event occurs.  Upon the expiration or termination of any rights, options or warrants without the exercise of such rights, options or warrants, the Conversion Rate then in effect shall be adjusted immediately to the Conversion Rate which would have been in effect at the time of such expiration or termination had such rights, options or warrants, to the extent outstanding immediately prior to such expiration or termination, never been issued.

     No adjustment need be made for a transaction referred to in this Article X if Securityholders are to participate in the transaction without conversion on a basis and with notice that the Board of Directors determines to be fair and appropriate in light of the basis and notice on which holders of Common Stock participate in the transaction.

     In the event that, as a result of an adjustment made pursuant to Section 10.06 hereof, the Holder of any Security thereafter surrendered for conversion shall become entitled to receive any shares of Capital Stock other than shares of Common Stock, thereafter the Conversion Rate of such other shares so receivable upon conversion of any Security shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to Common Stock contained in this Article X.

     The Company may make such increases in the Conversion Rate, in addition to those required by Section 10.06 hereof, as it determines to be advisable in order that any stock dividend, subdivision of shares, distribution or rights to purchase stock or securities or distribution of securities convertible into or exchangeable for stock made by the Company or to its stockholders will not be taxable to, or minimize the income tax payable by, the recipients thereof.

     Whenever the Conversion Rate is adjusted, the Company shall promptly mail to Holders at the addresses appearing on the Registrar’s books a notice of the adjustment and file with the Trustee an Officers’ Certificate briefly stating the facts requiring the adjustment and the manner of computing it.  The certificate shall be conclusive evidence of the correctness of such adjustment.

     In the event that:

     (1)        the Company takes any action which would require an adjustment in the Conversion Rate;

     (2)        the Company takes any action that would require a supplemental indenture pursuant to Section 10.12; or

     (3)        there is a dissolution or liquidation of the Company;

a Holder of a Security may wish to convert such Security into shares of Common Stock prior to the record date for or the effective date of the transaction so that he may receive the rights, warrants, securities or assets which a holder of shares of Common Stock on that date may receive.  Therefore, the Company shall mail to Holders at the addresses appearing on the Registrar’s books and the Trustee a notice stating the proposed record or effective date, as the case may be, of any transaction referred to in clause (1), (2) or (3) of this Section 10.11.  The Company shall mail such notice at least 15 days before such date; however, failure to mail such notice or any defect therein shall not affect the validity of any transaction referred to in clause (1), (2) or (3) of this Section 10.11.

     If any of the following shall occur, namely:  (i) any reclassification or change in the Common Stock issuable upon conversion of Securities (other than a change in par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision or combination), (ii) any consolidation, merger or binding share exchange to which the Company is a party other than a merger in which the Company is the continuing corporation and which does not result in any reclassification of, or change (other than a change in name, or par value, or from par value to no par value, or from no par value to par value or as a result of a subdivision or combination) in, the Common Stock, or (iii) any sale or conveyance of all or substantially all of the property or business of the Company as an entirety, then the Company or such successor or purchasing corporation, as the case may be, shall, as a condition precedent to such reclassification, change, consolidation, merger,

binding share exchange, sale or conveyance, execute and deliver to the Trustee a supplemental indenture in form reasonably satisfactory to the Trustee providing that the Holder of each Security then outstanding shall have the right to convert such Security into the kind and amount of shares of stock and other securities and property (including cash) receivable upon such reclassification, change, consolidation, merger, binding share exchange, sale or conveyance by a holder of the number of shares of Common Stock, deliverable upon conversion of such Security immediately prior to such reclassification, change, consolidation, merger, binding share exchange, sale or conveyance, assuming such holder of Common Stock did not exercise his rights of election, if any, as to the kind or amount of securities, cash or other property receivable upon such reclassification, change, consolidation, merger, binding share exchange, sale or conveyance (provided that, if the kind or amount of securities, cash or other property receivable upon such reclassification, change, consolidation, merger, binding share exchange, sale or conveyance is not the same for each share of Common Stock in respect of which such rights of election shall not have been exercised (“Non-Electing Share”), then for the purposes of this Section 10.12 the kind and amount of securities, cash or other property receivable upon such reclassification, change, consolidation, merger, binding share exchange, sale or conveyance for each Non-Electing Share shall be deemed to be the kind and amount so receivable per share by a plurality of the Non-Electing Shares).  Such supplemental indenture shall provide for adjustments of the Conversion Rate which shall be as nearly equivalent as may be practicable to the adjustments of the Conversion Rate provided for in this Article X.  The foregoing, however, shall not in any way affect the right a Holder of a Security may otherwise have, pursuant to clause (ii) of the last sentence of the first paragraph of subsection (c) of Section 10.06 hereof, to receive Rights upon conversion of a Security.  If, in the case of any such consolidation, merger, binding share exchange, sale or conveyance, the stock or other securities and property (including cash) receivable thereupon by a holder of Common Stock includes shares of stock or other securities and property of a corporation other than the successor or purchasing corporation, as the case may be, in such consolidation, merger, binding share exchange, sale or conveyance, then such supplemental indenture shall also be executed by such other corporation and shall contain such additional provisions to protect the interests of the Holders of the Securities as the Board of Directors shall reasonably consider necessary by reason of the foregoing.  The provision of this Section 10.12 shall similarly apply to successive consolidations, mergers, binding share exchanges, sales or conveyances.

     In the event the Company shall execute a supplemental indenture pursuant to this Section 10.12, the Company shall promptly file with the Trustee an Officers’ Certificate briefly stating the reasons therefor, the kind or amount of shares of stock or securities or property (including cash) receivable by Holders of the Securities upon the conversion of their Securities after any such reclassification, change, consolidation, merger, binding share exchange, sale or conveyance and any adjustment to be made with respect thereto.

     The Trustee has no duty to determine when an adjustment under this Article X should be made, how it should be made or what such adjustment should be, but may accept as conclusive evidence of the correctness of any such adjustment, and shall be protected in relying upon the Officers’ Certificate with respect thereto which the Company is obligated to file with the Trustee pursuant to Section 10.10 hereof.  The Trustee makes no representation as to the validity or value of any securities or assets issued upon conversion of Securities, and the Trustee shall not be responsible for the failure by the Company to comply with any provisions of this Article X.

     The Trustee shall not be under any responsibility to determine the correctness of any provisions contained in any supplemental indenture executed pursuant to Section 10.12, but may

accept as conclusive evidence of the correctness thereof, and shall be protected in relying upon, the Officers’ Certificate with respect thereto which the Company is obligated to file with the Trustee pursuant to Section 10.12 hereof.

     A Holder shall not have the right to convert any portion of the Securities to the extent that after giving effect to such conversion the Holder (together with the Holder's Affiliates) would beneficially own in excess of 4.99% of the number of shares of Common Stock outstanding immediately after giving effect to such conversion.  For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates shall include the number of shares of Common Stock issuable upon conversion of the Securities with respect to which the determination of such sentence is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (A) conversion of the remaining, non-converted portion of the Securities beneficially owned by the Holder or any of its Affiliates and (B) exercise or conversion of the unexercised or non-converted portion of any other securities of the Company (including, without limitation, any other Securities or warrants) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates.  Except as set forth in the preceding sentence, for purposes of this Section 10.14, beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended.  For purposes of this Section 10.14, in determining the number of outstanding shares of Common Stock, the Holder may rely on the number of outstanding shares of Common Stock as reflected in (x) the Company's most recent Quarterly Report on Form 10-Q or Annual Report on Form 10-K, as the case may be, (y) a more recent public announcement by the Company or (z) any other notice by the Company or its transfer agent setting forth the number of shares of Common Stock outstanding.  Upon the written or oral request of the Holder, the Company shall within two Business Days confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding.  In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including the Securities, by the Holder or its Affiliates since the date as of which such number of outstanding shares of Common Stock was reported.

11.01   AGREEMENT TO SUBORDINATE.

     The Company agrees, and each Securityholder by accepting a Security agrees, that the payment of all amounts due with respect to the Securities is subordinated in right of payment, to the extent and in the manner provided in this Article XI, to the prior payment in full in cash or cash equivalents of all Senior Indebtedness (whether outstanding on the date hereof or hereafter created, incurred, assumed or guaranteed) and that the subordination is for the benefit of the holders of Senior Indebtedness.

     “Designated Senior Indebtedness” means any Senior Indebtedness in which the instrument creating or evidencing the indebtedness expressly provides that such indebtedness is “designated senior indebtedness.”

     “Indebtedness” means, with respect to any person, the principal of, and premium, if any, and interest on and all other obligations in respect of (a) all indebtedness of such person for borrowed money (including all indebtedness evidenced by notes, bonds, debentures or other securities), (b) all obligations (other than trade payables) incurred by such person in the acquisition (whether by way of purchase, merger, consolidation or otherwise and whether by such person or another person) of any business, real property or other assets, (c) all reimbursement obligations of such person with respect to letters of credit, bankers’ acceptances or similar facilities issued for the account of such person, (d) all capital lease obligations of such person, (e) all net obligations of such person under interest rate swap, currency exchange or similar agreements of such person and (f) all obligations and other liabilities, contingent or otherwise, under any lease or related document, including a purchase agreement, conditional sale or other title retention agreement, in connection with the lease of real property or improvements thereon (or any personal property included as part of any such lease) which provides that such person is contractually obligated to purchase or cause a third party to purchase the leased property or pay an agreed upon residual value of the leased property, including such person’s obligations under such lease or related document to purchase or cause a third party to purchase such leased property or pay an agreed upon residual value of the leased property to the lessor, (g) guarantees by such person of indebtedness described in clauses (a) through (f) of another person, and (h) all renewals, extensions, refundings, deferrals, restructurings, amendments and modifications of any indebtedness, obligation, guarantee or liability of the kind described in clauses (a) through (g).

     “Representative” means the indenture trustee or other trustee, agent or representative for an issue of Senior Indebtedness.

     “Senior Indebtedness” means all Indebtedness of the Company outstanding at any time, except the Securities, Indebtedness that by its terms provides that it shall not be “senior” in right of payment to the Securities or Indebtedness that by its terms provides that it shall be “pari passu” or “junior” in right of payment to the Securities.  Senior Indebtedness does not include Indebtedness for trade payables or 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.  In addition, Senior Indebtedness does not include Indebtedness of the Company to any of its Subsidiaries.

     In the event of any insolvency or bankruptcy case or proceeding, or any receivership, liquidation, reorganization or other similar case or proceeding in connection therewith, relating to the Company or to its assets, or any liquidation, dissolution or other winding-up of the Company, whether voluntary or involuntary, or any assignment for the benefit of creditors or other marshaling of assets or liabilities of the Company (except in connection with the

consolidation or merger of the Company or its liquidation or dissolution following the conveyance, transfer or lease of its properties and assets substantially upon the terms and conditions described in Article V), the holders of Senior Indebtedness will be entitled to receive payment in full in cash or cash equivalents of all Senior Indebtedness, or provision shall be made for such payment in full, before the Securityholders will be entitled to receive any payment or distribution of any kind or character on account of principal of, or premium, if any, or interest or liquidated damages on the Securities; and any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities, by set-off or otherwise, to which the Securityholders or the Trustee would be entitled but for the provisions of this Article XI shall be paid by the liquidating trustee or agent or other person making such payment or distribution, whether a trustee in bankruptcy, a receiver or liquidating trustee or otherwise, directly to the holders of Senior Indebtedness or their representative or representatives ratably according to the aggregate amounts remaining unpaid on account of the Senior Indebtedness to the extent necessary to make payment in full of all Senior Indebtedness remaining unpaid, after giving effect to any concurrent payment or distribution to the holders of such Senior Indebtedness. 

     No payment or distribution of any assets of the Company of any kind or character, whether in cash, property or securities, may be made by or on behalf of the Company on account of the principal of, or premium, if any, or interest on the Securities or on account of the purchase, redemption or other acquisition of Securities, upon the occurrence of any Payment Default in respect of Designated Senior Indebtedness until such payment default shall have been cured or waived in writing or shall have ceased to exist or such Designated Senior Indebtedness shall have been discharged or paid in full in cash or cash equivalents.  A “Payment Default” shall mean a default in payment, whether at scheduled maturity, upon a scheduled installment, by acceleration or otherwise, of principal of, or premium, if any, or interest on Designated Senior Indebtedness beyond any applicable grace period. 

     No payment or distribution of any assets of the Company of any kind or character, whether in cash, property or securities, may be made by or on behalf of the Company on account of principal of, or premium, if any, or interest on the Securities or on account of the purchase, redemption or other acquisition of Securities for the period specified below (a “Payment Blockage Period”), upon the occurrence of any default or event of default with respect to any Designated Senior Indebtedness, other than a Payment Default, pursuant to which the maturity thereof may be accelerated (a “Non-Payment Default”) and receipt by the Trustee of written notice thereof from the Company or a Representative with respect to such Designated Senior Indebtedness (a “Payment Blockage Notice”).

     The Payment Blockage Period shall mean the period (each a “Payment Blockage Period”) that shall commence upon receipt by the Trustee of the Payment Blockage Notice, and shall end on the earliest of:

     (i)         179 days thereafter, (provided that any Designated Senior Indebtedness to which the non-payment default relates shall not theretofore have been accelerated);

     (ii)        the date on which such Non-Payment Default is cured, waived or ceases to exist;

     (iii)       the date on which such Designated Senior Indebtedness is discharged or paid in full; or

     (iv)       the date on which such Payment Blockage Period shall have been terminated by written notice to the Trustee from the Representative initiating such Payment Blockage Period, after which the Company will resume making any and all required payments in respect of the Securities, including any missed payments.  In any event, not more than one Payment Blockage Period may be commenced during any period of 365 consecutive days.  No Non-Payment Default that existed or was continuing on the date of the commencement of any Payment Blockage Period will be, or can be made, the basis for the commencement of a subsequent Payment Blockage Period, unless such Non-Payment default has been cured or waived for a period of not less than 90 consecutive days subsequent to the commencement of such initial Payment Blockage Period.

     If payment of the Securities is accelerated because of an Event of Default, the Company shall promptly notify holders of Senior Indebtedness of the acceleration.

     In the event that, notwithstanding the provisions of Sections 11.03 and 11.04, any payment or distribution of any kind or character, whether in cash, property or securities, shall be received by the Trustee or any Holder which is prohibited by such provisions, then and in such event such payment shall be held in trust for the benefit of, and shall be paid over and delivered by such Trustee or Holder to, the trustee or Representative with respect to holders of Senior Indebtedness, as their interest may appear, for application to Senior Indebtedness remaining unpaid until all such Senior Indebtedness has been paid in full in cash or cash equivalents after giving effect to any concurrent distribution to or for the holders of Senior Indebtedness.

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

     The Company shall promptly notify the Trustee and the Paying Agent of any facts known to the Company that would cause a payment of any obligations with respect to the Securities to

violate this Article XI, but failure to give such notice shall not affect the subordination of the Securities to the Senior Indebtedness as provided in this Article XI.

     After all Senior Indebtedness is paid in full and until the Securities are paid in full, Securityholders shall be subrogated (equally and ratably with all other Indebtedness that is equal in right of payment to the Securities) to the rights of holders of Senior Indebtedness to receive distributions applicable to Senior Indebtedness to the extent that distributions otherwise payable to the Securityholders have been applied to the payment of Senior Indebtedness.  A distribution made under this Article XI, to holders of Senior Indebtedness that otherwise would have been made to Securityholders is not, as between the Company and Securityholders a payment by the Company of the Securities.

     This Article XI, defines the relative rights of Holders and holders of Senior Indebtedness.  Nothing in this Indenture shall:  (i) impair, as between the Company and Holders, the obligation of the Company, which is absolute and unconditional, to pay principal of and interest on the Securities in accordance with their terms; (ii) affect the relative rights of Holders and creditors of Holders other than their rights in relation to holders of Senior Indebtedness; or (iii) prevent the Trustee or any Holder from exercising its available remedies upon a Default or Event of Default, subject to the rights of holders and owners of Senior Indebtedness to receive distributions and payments otherwise payable to Holders of Securities.  If the Company fails because of this Article XI, to pay principal of or interest on a Security on the Maturity Date, the failure is still a Default or Event of Default.

     No right of any holder of Senior Indebtedness to enforce the subordination of the Indebtedness evidenced by the Securities shall be impaired by any act or failure to act by the Company or any Holder or by the failure of the Company or any Holder to comply with this Indenture.

     Without in any way limiting the generality of this Section 11.10, the holders of Senior Indebtedness may, at any time and from time to time, without the consent of or notice to the Trustee or the Holders, without incurring responsibility to the Trustee or the Holders and without impairing or releasing the subordination provided in this Article XI, or the obligations hereunder of the Holders to the holders of Senior Indebtedness, do any one or more of the following: (a) change the manner, place or terms of payment or extend the time of payment of, or renew or alter, Senior Indebtedness, or any instrument evidencing the same or any agreement under which Senior Indebtedness is outstanding or secured; (b) sell, exchange, release, foreclose against or otherwise deal with any property pledged, mortgaged or otherwise securing Senior Indebtedness; (c) release any person liable in any manner for the collection of Senior Indebtedness; and (d) exercise or refrain from exercising any rights against the Company, and Subsidiary thereof or any other person.

     Whenever a distribution is to be made or a notice given to holders of any Senior Indebtedness, the distribution may be made and the notice given to their trustee or Representative.

     Upon any payment or distribution of assets of the Company referred to in this Article XI, the Trustee and the Holders the Securities shall be entitled to rely upon any order or decree made by any court of competent jurisdiction or upon any certificate of such representative(s) or of the liquidating trustee or agent or other Person making any distribution to the Trustee or to the Holders for the purpose of ascertaining the Persons entitled to participate in such distribution, all holders of the Senior Indebtedness and other Indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article XI.

     Notwithstanding the provisions of this Article XI, or any other provision of this Indenture, the Trustee shall not be charged with knowledge of the existence of any facts that would prohibit the making of any payment or distribution by the Trustee, and the Trustee and the Paying Agent may continue to make payments on the Securities, unless a Responsible Officer of the Trustee shall have received at its Corporate Trust Office of the Trustee at least three Business Days prior to the date of such payment written notice of facts that would cause the payment of any obligations with respect to the Securities to violate this Article XI.  Only the Company or a trustee or Representative with respect to Senior Indebtedness may give the notice.  Nothing in this Article XI, shall impair the claims of, or payments to, the Trustee under or pursuant to Section 7.07.

     The Trustee in its individual or any other capacity may hold Senior Indebtedness with the same rights it would have if it were not Trustee.

12.01   TRUST INDENTURE ACT CONTROLS.

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

     Any notice or communication by the Company or the Trustee to one or both of the others is duly given if in writing and delivered in person, mailed by first-class mail or by express delivery to the other parties’ addresses stated in this Section 12.02.  The Company or the Trustee by notice to the others may designate additional or different addresses for subsequent notices or communications.

     Any notice or communication to a Securityholder shall be mailed to its address shown on the register kept by the Registrar.  Failure to mail a notice or communication to a Securityholder or any defect in it shall not affect its sufficiency with respect to other Securityholders.

     If a notice or communication is mailed in the manner provided above, it is duly given, whether or not the addressee receives it.

     If the Company mails a notice or communication to Securityholders, it shall mail a copy to the other and to the Trustee and each Agent at the same time.

     All notices or communications shall be in writing.

     The Company’s address is:

     Bradley Pharmaceuticals, Inc.
     383 Route 46 West
     Fairfield, New Jersey  07004
     Attention:  R. Brent Lenczycki

     The Trustee’s address is:

     American Stock Transfer & Trust Company
     59 Maiden Lane
     New York, New York 10038
     Attention: Corporate Trust Administration

     Securityholders may communicate pursuant to TIA § 312(b) with other Securityholders with respect to their rights under this Indenture or the Securities.  The Company, the Trustee, the Registrar and anyone else shall have the protection of TIA § 312(c).

     Upon any request or application by the Company to the Trustee to take any action under this Indenture, the Company shall furnish to the Trustee:

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

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

     Each signer of an Officers’ Certificate or an Opinion of Counsel may (if so stated) rely, effectively, upon an Opinion of Counsel as to legal matters and an Officers’ Certificate as to factual matters if such signer reasonably and in good faith believes in the accuracy of the document relied upon.

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

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

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

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

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

     The Trustee may make reasonable rules for action by or at a meeting of Securityholders.  The Registrar, Paying Agent or Conversion Agent may make reasonable rules and set reasonable requirements for their respective functions.

     A “Legal Holiday” is a Saturday, a Sunday or a day on which banking institutions are not required to be open in the City of New York, in the State of New York or in the city in which the Trustee administers its corporate trust business.  If a payment date is a Legal Holiday at a place of payment, payment may be made at that place on the next succeeding day that is not a Legal Holiday, and no interest shall accrue on that payment for the intervening period.

     A “Business Day” is a day other than a Legal Holiday.

     The parties may sign any number of copies of this Indenture.  Each signed copy shall be an original, but all of them together represent the same agreement.  Delivery of an executed counterpart by facsimile shall be effective as delivery of a manually executed counterpart thereof.

     The laws of the State of New York, without regard to principles of conflicts of law, shall govern this Indenture and the Securities.

     This Indenture may not be used to interpret another indenture, loan or debt agreement of the Company or any of its Subsidiaries.  Any such indenture, loan or debt agreement may not be used to interpret this Indenture.

     All agreements of the Company in this Indenture and the Securities shall bind their respective successors.  All agreements of the Trustee in this Indenture shall bind its successors.

     In case any provision in this Indenture or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby and a Holder shall have no claim therefor against any party hereto.

     The Table of Contents, Cross-Reference Table 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.

EXHIBIT A

[Face of Security]

BRADLEY PHARMACEUTICALS, INC.

[Certificate No. _______]

[INSERT PRIVATE PLACEMENT LEGEND AND GLOBAL SECURITY LEGEND AS REQUIRED]

4% Convertible Senior Subordinated Note due 2013
CUSIP No. ____________

     Bradley Pharmaceuticals, Inc., a Delaware corporation (herein called the “Company”), for value received, hereby promises to pay to Cede & Co. or registered assigns, the principal sum of _________________ Dollars ($_______________) on June 15, 2013, and to pay interest thereon, as provided on the reverse hereof, until the principal and any unpaid and accrued interest is paid or duly provided for.  The right to payment of the principal and all other amounts due with respect hereto is subordinated to the rights of Senior Indebtedness as set forth in the Indenture referred to on the reverse side hereof.

     Interest Payment Dates:  June 15 and December 15, with the first payment to be made on December 15, 2003.

     Record Dates:  June 1 and December 1.

     The provisions on the back of this certificate are incorporated as if set forth on the face hereof.

     IN WITNESS WHEREOF, BRADLEY PHARMACEUTICALS, INC. has caused this instrument to be duly signed.

                                                                 BRADLEY PHARMACEUTICALS, INC.

                                                                 By:                                                                  
                                                                      Name:
                                                                      Title:

Dated:  _______________

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

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

AMERICAN STOCK TRANSFER & TRUST COMPANY, as Trustee

By:                                                                  

Authorized Signatory

Dated:  ________________

[REVERSE OF SECURITY]

BRADLEY PHARMACEUTICALS, INC.

4% Convertible Senior Subordinated Note due 2013

     1.              Interest.  Bradley Pharmaceuticals, Inc., a Delaware corporation (the “Company”), promises to pay interest on the principal amount of this Security at the rate per annum shown above.  The Company will pay interest semi-annually on June 15 and December 15 of each year, with the first payment to be made on December 15, 2003.  Interest on the Securities will accrue on the principal amount from the most recent date to which interest has been paid or provided for or, if no interest has been paid, from June 11, 2003.  Interest will be computed on the basis of a 360-day year of twelve 30-day months.

     2.              Maturity.  The Securities will mature on June 15, 2013.

     3.              Method of Payment.  The Company will pay interest on the Securities (except defaulted interest) to the persons who are registered Holders of Securities at the close of business on the record date set forth on the face of this Security next preceding the applicable interest payment date.  Holders must surrender Securities to a Paying Agent to collect the principal, Redemption Price, Option Purchase Price or Repurchase Price of the Securities, plus, if applicable, accrued and unpaid interest payable, if any, as herein provided upon Redemption, Repurchase at Holder’s Option, Repurchase Upon Repurchase Event or Maturity, as the case may be.  The Company will pay all amounts due with respect to the Securities in money of the United States that at the time of payment is legal tender for payment of public and private debts.  If this Security is in global form, the Company will pay interest on the Securities by wire transfer of immediately available funds to the account specified by the Holder.  With respect to securities held other than in global form, the Company will make payments by wire transfer of immediately available funds to the account specified by the Holders thereof or, if no such account is specified with respect to a Holder, by mailing a check to the Holder’s registered address.

     4.              Paying Agent, Registrar, Conversion Agent.  Initially, American Stock Transfer & Trust Company (the “Trustee”) will act as Paying Agent, Registrar and Conversion Agent.  The Company may change any Paying Agent, Registrar or Conversion Agent without notice. 

     5.              Indenture.  The Company issued the Securities under an Indenture dated as of  June 11, 2003 (the “Indenture”) between the Company and the Trustee.  The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S. Code §§ 77aaa-77bbbb) (the “Act”) as in effect on the date of the Indenture.  The Securities are subject to all such terms, and Securityholders are referred to the Indenture and the Act for a statement of such terms.  The Securities are general unsecured senior subordinated obligations of the Company limited to $25,000,000 aggregate principal amount (up to $33,000,000 if the Initial Purchasers have elected to exercise the Initial Purchasers’ Option to purchase up to an additional $8,000,000 of the Securities), except as

otherwise provided in the Indenture.  Terms used herein which are defined in the Indenture have the meanings assigned to them in the Indenture.

     6.              Optional Redemption.  Subject to the terms and conditions of the Indenture, the Securities will be redeemable prior to maturity at the option of the Company, in whole or in part, at any time on or after June 15, 2008 (the date of such time, the “Redemption Date”) at a redemption price equal to 100% of the principal amount of the Securities to be redeemed, plus any accrued and unpaid interest to the Redemption Date; provided that if such Redemption Date is also an interest payment date, such accrued and unpaid interest will be payable in the ordinary course to the holder of record on the relevant record date.

     7.              Notice of Redemption.  Notice of redemption will be mailed at least 30 days but not more than 60 days before the Redemption Date to each Holder of Securities to be redeemed at its registered address.  Securities in denominations larger than $1,000 principal amount may be redeemed in part but only in integral multiples of $1,000 principal amount.  On and after the Redemption Date, interest will cease to accrue on Securities or portions of them called for redemption (except to the extent the Company defaults in the payment of the Redemption Price or accrued and unpaid interest, if any, to the Redemption Date).

     8.              Purchase by the Company at the Option of the Holder.  Subject to the terms and conditions of the Indenture, the Company shall become obligated to purchase, at the option of the Holder, the Securities held by such Holder on June 15, 2008 (the “Option Purchase Date”) at an Option Purchase Price of 100% of the principal amount of Securities to be purchased, plus accrued and unpaid interest to the Option Purchase Date, upon delivery of a Purchase Notice containing the information set forth in the Indenture, at any time from the opening of business on the date that is 20 Business Days prior to the Option Purchase Date until the close of business on the day immediately preceding such Option Purchase Date and upon delivery of the Securities to the Paying Agent by the Holder as set forth in the Indenture.

     Holders have the right to withdraw any Purchase Notice by delivering to the Paying Agent a written notice of withdrawal in accordance with the provisions of the Indenture.

     9.              Repurchase at Option of Holder Upon a Repurchase Event.  Subject to the terms and conditions of the Indenture, in the event of a Repurchase Event, then each Holder of the Securities shall have the right, at the Holder’s option to require the Company to repurchase such Holder’s Securities including any portion thereof which is $1,000 in principal amount or any integral multiple thereof on a date (the “Repurchase Date”) no later than 30 days after the date on which notice of such Repurchase Event is mailed in accordance with the immediately succeeding paragraph, at a price equal to 100% of the outstanding principal amount of the Securities tendered, plus accrued and unpaid interest to the Repurchase Date.

     A “Repurchase Event” of the Company shall be deemed to have occurred upon the occurrence of either a “Change in Control” or a “Termination of Trading.”

     A “Change in Control” of the Company shall be deemed to have occurred at such time as: 

     (i)         any “person” or “group” (as such terms are used for purposes of Sections 13(d) and 14(d) of the Exchange Act), is or becomes the “beneficial owner” (as such term is used in Rule 13d-3 under the Exchange Act), directly or indirectly, of 50% or more of the total voting power of all classes of the Company’s Capital Stock entitled to vote generally in the election of directors (other than Daniel Glassman, Iris Glassman, Bradley Glassman, trusts for their benefit and heirs, lineal descendants, legatees and legal representatives of any of the foregoing and the trustee of any bona fide trust of which one or more of the foregoing are the sole beneficiaries or the grantors thereof, unless, after giving effect to such transaction, (1) the Company’s Common Stock ceases to be listed on a United States national securities exchange or approved for quotation on the Nasdaq National Market or any similar United States system for automated dissemination of quotations of securities prices or (2) less than 40% of the outstanding shares of the Company’s Common Stock remain beneficially owned by persons other than the Glassman family); or

     (ii)        any “person” or “group” (as such terms are used for purposes of Sections 13(d) and 14(d) of the Exchange Act) is or becomes the “beneficial owner” (as such term is used in Rule 13d-3 under the Exchange Act), directly or indirectly, of 50% or more of the total voting power of the Company’s Class B common stock (other than Daniel Glassman, Iris Glassman, Bradley Glassman, trusts for their benefit and heirs, lineal descendants, legatees and legal representatives of any of the foregoing and the trustee of any bona fide trust of which one or more of the foregoing are the sole beneficiaries or the grantors thereof); or

     (iii)       at any time the following persons cease for any reason to constitute a majority of the Company’s Board of Directors:

     (1)        individuals who on the Issue Date constituted the Company’s Board of Directors; and

     (2)        any new directors whose election by the Company’s Board of Directors or whose nomination for election by the Company’s stockholders was approved by at least a majority of the directors then still in office who were either directors on the Issue Date or whose election or nomination for election was previously so approved; or

     (iv)       The Company consolidates with or merges with or into, another person or any person consolidates with, or merges with or into the Company, in any such event other than pursuant to a transaction in which the persons that “beneficially owned,” directly or indirectly, the shares of the Company’s Voting Stock immediately prior to such transaction, “beneficially own,” directly or indirectly shares of the Company’s Voting Stock representing at least a majority of the total voting power of all outstanding classes of Voting Stock of the continuing or surviving corporation in substantially the same proportion as such ownership prior to the transaction; or

     (v)        the sale, lease, transfer or other conveyance or disposition of all or substantially all of the assets or property of the Company to any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), including any group acting for the purpose of acquiring, holding, or disposing of securities within the meaning of Rule 13d-5(b)(1) under the Exchange Act; or

     (vi)       the Company is liquidated or dissolved or the holders of the Company’s Capital Stock approve any plan or proposal for the liquidation or dissolution of the Company.

     A “Termination of Trading” shall occur if the Common Stock of the Company (or other common stock into which the Securities are then convertible) is neither listed for trading on a U.S. national securities exchange nor approved for trading on an established automated over-the-counter trading market in the United States.

     10.          Conversion.  A holder may convert his or her Security into Common Stock of the Company at any time prior to the close of business on June 15, 2013, or if the Security is called for redemption by the Company, the Holder may convert it at any time before the close of business on the business day immediately preceding the date fixed for such redemption.

     A Holder shall not have the right to convert any portion of the Securities to the extent that after giving effect to such conversion the Holder (together with the Holder's Affiliates) would beneficially own in excess of 4.99% of the number of shares of Common Stock outstanding immediately after giving effect to such conversion.

     The initial Conversion Rate is 50.0000 shares of Common Stock per $1,000 principal amount of Securities, or an effective initial Conversion Price of $20.00 per share, subject to adjustment as specified in the Indenture.  The Company will deliver a check in lieu of any fractional share.  On conversion no payment or adjustment for any unpaid and accrued interest with respect to the Securities will be made.  If a Holder surrenders a Security for conversion between the record date for the payment of interest and prior to the next interest payment date, such Security, when surrendered for conversion, must be accompanied by payment of an amount equal to the interest thereon which the registered Holder on such record date is to receive, unless the Securities have been called for redemption as described in the Indenture.

     Securities as to which a Purchase Notice has been given may be converted only if the applicable Purchase Notice has been withdrawn in accordance with the terms of this Indenture.

     To convert a Security, a Holder must (1) complete and sign the Conversion Notice, with appropriate signature guarantee, on the back of the Security, (2) surrender the Security to a Conversion Agent, (3) furnish appropriate endorsements and transfer documents if required by the Registrar or Conversion Agent, (4) pay the amount of interest, if any, the Holder may be paid as provided in the last sentence of the above paragraph and (5) pay any transfer or similar tax if required.  A Holder may convert a portion of a Security if the portion is $1,000 principal amount or an integral multiple of $1,000 principal amount.

     Any shares issued upon conversion of a Security shall bear the Private Placement Legend until after the second anniversary of the later of the Issue Date and the last date on which the

Company or any Affiliate of the Company was the owner of such shares or the Security (or any predecessor security) from which such shares were converted (or such shorter period of time as permitted by Rule 144(k) under the Securities Act or any successor provision thereunder) (or such longer period of time as may be required under the Securities Act or applicable state securities laws in the opinion of counsel for the Company, unless otherwise agreed by the Company and the Holder thereof).

     11.          Subordination.  The Securities are subordinated in right of payment, in the manner and to the extent set forth in the Indenture, to the prior payment in full of all Senior Indebtedness.  Each Holder by accepting a Security agrees to such subordination and authorizes the Trustee to give it effect.

     12.          Denominations, Transfer, Exchange.  The Securities are in registered form without coupons in denominations of $1,000 principal amount and integral multiples of $1,000 principal amount.  The transfer of Securities may be registered and Securities may be exchanged as provided in the Indenture.  The Registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents.  No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.  The Registrar need not exchange or register the transfer of any Security selected for redemption in whole or in part, except the unredeemed portion of Securities to be redeemed in part.  Also, it need not exchange or register the transfer of any Securities for a period of 15 days before the mailing of a notice of redemption of the Securities selected to be redeemed and in certain other circumstances provided in the Indenture.

     13.          Persons Deemed Owners.  The registered Holder of a Security may be treated as the owner of such Security for all purposes.

     14.          Merger or Consolidation.  The Company shall not consolidate with or merge with or into any other person or sell, convey, transfer, lease or otherwise dispose of its properties and assets substantially as an entirety to another person (whether in a single or series of related transactions) unless (i) such other person is a corporation organized under the laws of the United States, any State thereof or the District of Columbia; (ii) such person assumes by supplemental indenture all the obligations of the Company, under the Securities and this Indenture; and (iii) immediately after giving effect to the transaction, no Default or Event of Default shall exist.

     15.          Amendments, Supplements and Waivers.  Subject to certain exceptions, the Indenture or the Securities may be amended or supplemented with the consent of the Holders of at least a majority in aggregate principal amount of the Securities then outstanding, and any existing Default or Event of Default may be waived with the consent of the Holders of a majority in aggregate principal amount of the Securities then outstanding.  In accordance with the terms of the Indenture, without notice to or the consent of any Securityholder, the Indenture or the Securities may be amended or supplemented to cure any ambiguity, defect, omission or inconsistency, to comply with Sections 5.01 and 10.12 of the Indenture, to make any changes or modifications to the Indenture necessary in connection with the registration of the Securities under the Securities Act pursuant to the Registration Rights Agreement and the qualification of the Indenture under the TIA, to secure the obligations of the Company in respect of the

Securities, or to add to covenants of the Company described in the Indenture for the benefit of Securityholders or to surrender any right or power conferred upon the Company or to make provisions with respect to adjustments to the Conversion Rate as required by the Indenture or to increase the Conversion Rate in accordance with the Indenture.

     16.          Defaults and Remedies.  As more fully described in the Indenture, an Event of Default includes the occurrence of any of the following: default in payment of principal, when due, whether at maturity, upon redemption, upon exercise by the Holder of its right to require the Company to repurchase Securities on the Option Purchase Date, upon exercise of a Repurchase Right or otherwise; default for 30 days in payment of interest or liquidated damages; failure to provide timely notice of a Repurchase Event or Repurchase at Holder’s Option, as required; failure by the Company for 30 days after notice to it to comply with any of its other agreements in the Indenture or the Securities; certain payment defaults or the acceleration of other Indebtedness of the Company and its Subsidiaries; failure by the Company or any of its Subsidiaries to pay final judgments for certain amounts, which judgments are not paid, discharged, or stayed, for a period of 30 days; and certain events of bankruptcy or insolvency involving the Company or its Subsidiaries.  If any Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in aggregate principal amount of the Securities then outstanding may declare all the Securities to be due and payable immediately, except as provided in the Indenture.  If an Event of Default specified in Section 6.01(vii) or (viii) of the Indenture with respect to the Company occurs, the principal of and accrued interest on all the Securities shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Securityholder.  Securityholders may not enforce the Indenture or the Securities except as provided in the Indenture.  The Trustee may require indemnity reasonably satisfactory to it before it enforces the Indenture or the Securities.  Subject to certain limitations, Holders of a majority in principal amount of the Securities then outstanding may direct the Trustee in its exercise of any trust or power.  The Trustee may withhold from Securityholders notice of any continuing Default or Event of Default (except a Default or Event of Default in payment) if it determines that withholding notice is in the interests of the Securityholders.  The Company must furnish an annual compliance certificate to the Trustee.

     17.          Registration Rights.  The Holders are entitled to registration rights as set forth in the Registration Rights Agreement (as defined in the Indenture).  The Holders shall be entitled to receive liquidated damages in certain circumstances, all as set forth in the Registration Rights Agreement.

     18.          Trustee Dealings with the Company.  The Trustee under the Indenture, or any banking institution serving as successor Trustee thereunder, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Company or its Affiliates, and may otherwise deal with the Company or its Affiliates, as if it were not Trustee.

     19.          No Recourse Against Others.  No past, present or future director, officer, employee or stockholder, as such, of the Company shall have any liability for any obligations of the Company under the Securities or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation.  Each Securityholder by accepting a Security waives and releases all such liability.  The waiver and release are part of the consideration for the issue of the Securities.

     20.          Authentication.  This Security shall not be valid until authenticated by the manual signature of the Trustee or an authenticating agent.

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

     THE COMPANY WILL FURNISH TO ANY SECURITYHOLDER UPON WRITTEN REQUEST AND WITHOUT CHARGE A COPY OF THE INDENTURE AND THE REGISTRATION RIGHTS AGREEMENT.  REQUESTS MAY BE MADE TO:

Bradley Pharmaceuticals, Inc.
383 Route 46 West
Fairfield, New Jersey  07004
Attention: R. Brent Lenczycki, Chief Financial Officer

[FORM OF ASSIGNMENT]

I or we assign to

PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER

Dated:                                                               

NOTICE:  The signature on this assignment must correspond with the name as it appears upon the face of the within Security in every particular without alteration or enlargement or any change whatsoever and be guaranteed by a guarantor institution participating in the Securities Transfer Agents Medallion Program or in such other guarantee program acceptable to the Trustee.

Signature Guarantee:                                                                                                                    

     In connection with any transfer of this Security occurring prior to the Resale Restriction Termination Date, the undersigned confirms that it is transferring this Security:

[Check One]

(1)     ____       to the Company or any Subsidiary thereof;

(2)     ____       pursuant to and in compliance with Rule 144A under the Securities Act of 1933, as amended;

(3)     ____       pursuant to the exemption from registration provided by Rule 144 under the Securities Act of 1933, as amended;

(4)     ____       pursuant to the exemption from registration under the Securities Act of 1933, as amended, other than under Rule 144A or Rule 144; or

(5)     ____       pursuant to an effective registration statement under the Securities Act of 1933, as amended.

and unless the box below is checked, the undersigned confirms that such Security 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”):

     |   |     The transferee is an Affiliate of the Company.

     Unless one of the items is checked, the Trustee will refuse to register any of the Securities evidenced by this certificate in the name of any person other than the registered Holder thereof; provided, however, that if item (3) or (4) is checked, the Company or the Trustee may require, prior to registering any such transfer of the Securities, in their sole discretion, such written legal opinions, certifications and other information as the Trustee or the Company have reasonably requested to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933, as amended.

     If the Security is transferred to an Affiliate, the restrictive legend must remain on the Security for two years following the date of the transfer.

     If none of the foregoing items are checked, the Trustee or Registrar shall not be obligated to register this Security in the name of any person other than the Holder hereof unless and until the conditions to any such transfer of registration set forth herein and in the Indenture shall have been satisfied.

Dated:                                                      Signed:                            ___                             
                                                                               (Sign exactly as name appears on the                                                                                 other side of this Security)

Signature Guarantee:                                                                                                               

                          (All signatures must be guaranteed by a guarantor institution participating in                           the Securities Transfer Agents Medallion Program or in such other                           guarantee program acceptable to the Trustee.)

CONVERSION NOTICE

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

To convert only part of this Security, state the principal amount to be converted (must be in multiples of $1,000):

$__________________

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

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

                                                                                                                                                           

                                                                                                                                                           

                                                                                                                                                           

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

_____________________________________________________________________________

Date:______________    Signature(s):                                                                                                

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

Signature(s) guaranteed by:                                                                                                                  

                                         (All signatures must be guaranteed by a guarantor institution participating in                                          the Securities Transfer Agents Medallion Program or in such other guarantee                                          program acceptable to the Trustee.)

PURCHASE NOTICE

Certificate No. of Security:  ___________

     If you want to elect to have this Security purchased by the Company pursuant to Section 3.08 of the Indenture, check the box:  |   |

     If you want to elect to have this Security purchased by the Company pursuant to Section 3.09 of the Indenture, check the box:  |   |

     If you want to elect to have only part of this Security purchased by the Company pursuant to Sections 3.08 or 3.09 of the Indenture, as applicable, state the principal amount:

$ __________________________________
(in an integral multiple of $1,000)

Date:__________________

Signature(s):                                                                 


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

Signature(s) guaranteed by:

                                                                                    
(All signatures must be guaranteed by a guarantor institution participating in the Securities Transfer Agents Medallion Program or in such other guarantee program acceptable to the Trustee.)

 ^a This is included in Global Securities only.

EXHIBIT B-1

FORM OF PRIVATE PLACEMENT LEGEND

THIS SECURITY AND THE COMMON STOCK ISSUABLE UPON CONVERSION OF THIS SECURITY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH THE FOLLOWING SENTENCE.  BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE ACQUIRER

(1)        REPRESENTS THAT IT AND ANY ACCOUNT FOR WHICH IT IS ACTING IS A “QUALIFIED INSTITUTIONAL BUYER” (WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT) AND THAT IT EXERCISES SOLE INVESTMENT DISCRETION WITH RESPECT TO EACH SUCH ACCOUNT,

(2)        AGREES THAT IT WILL NOT DIRECTLY OR INDIRECTLY ENGAGE IN ANY HEDGING TRANSACTIONS INVOLVING THIS SECURITY OR THE COMMON STOCK ISSUABLE UPON CONVERSION OF THIS SECURITY UNLESS IN COMPLIANCE WITH THE SECURITIES ACT, AND

(3)        AGREES FOR THE BENEFIT OF THE COMPANY THAT IT WILL NOT OFFER, SELL, PLEDGE OR OTHERWISE TRANSFER THIS SECURITY OR ANY BENEFICIAL INTEREST HEREIN, PRIOR TO THE DATE THAT IS THE LATER OF (X) TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF THIS SECURITY) OR SUCH SHORTER PERIOD OF TIME AS PERMITTED BY RULE 144(K) UNDER THE SECURITIES ACT OR ANY SUCCESSOR PROVISION THEREUNDER, AND (Y) SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE LAW, EXCEPT ONLY

(A)       TO THE COMPANY OR ANY SUBSIDIARY THEREOF,

(B)       PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BECOME EFFECTIVE UNDER THE SECURITIES ACT,

(C)       TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, OR

(D)       PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT OR ANY OTHER

AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.

PRIOR TO THE REGISTRATION OF ANY TRANSFER IN ACCORDANCE WITH (3)(C) ABOVE, A DULY COMPLETED AND SIGNED CERTIFICATE (THE FORM OF WHICH MAY BE OBTAINED FROM THE TRUSTEE) MUST BE DELIVERED TO THE TRUSTEE.  PRIOR TO THE REGISTRATION OF ANY TRANSFER IN ACCORDANCE WITH (3)(D) ABOVE, THE COMPANY AND THE TRUSTEE RESERVE THE RIGHT TO REQUIRE THE DELIVERY OF SUCH LEGAL OPINIONS, CERTIFICATIONS OR OTHER EVIDENCE AS MAY REASONABLY BE REQUIRED IN ORDER TO DETERMINE THAT THE PROPOSED TRANSFER IS BEING MADE IN COMPLIANCE WITH THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS.  NO REPRESENTATION IS MADE AS TO THE AVAILABILITY OF ANY EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.

     THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE OF A DEPOSITARY OR A SUCCESSOR DEPOSITARY.  THIS SECURITY IS NOT EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER OF THIS SECURITY AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY) MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.

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

     TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTION 2.16 OF THE INDENTURE.

Re:       Bradley Pharmaceuticals, Inc. (the “Company”) 4% Convertible Senior             Subordinated Notes due June 15, 2013 (the “Securities”)