WIND RIVER SYSTEMS INC, 10-Q, 1997-09-15

WIND RIVER SYSTEMS INC
10-Q, 1997-09-15
COMPUTER PROGRAMMING SERVICES

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<PAGE>

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

[ X ] Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended July 31, 1997 or

[ ] Transition report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from ____ to ____.

Commission file number 0-21342

WIND RIVER SYSTEMS, INC.
(Exact name of registrant as specified in its charter)

DELAWARE 94-2873391
(State of incorporation) (I.R.S. Employer Identification No.)

1010 ATLANTIC AVENUE, ALAMEDA, CALIFORNIA 94501
(Address of principal executive office)

(510) 748-4100
(Telephone number)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
------ -------

Indicate the number of shares outstanding of each of each of the issuer's
classes of common stock, as of the latest practicable date.

Common stock: 25,489,329 shares outstanding as of August 31, 1997
<PAGE>

WIND RIVER SYSTEMS, INC.

FORM 10-Q

QUARTER ENDED JULY 31, 1997

INDEX

Part I: FINANCIAL INFORMATION

Item 1. Financial Statements

Consolidated Income Statements for the three
and six month periods ended July 31, 1997 and
July 31, 1996

Consolidated Balance Sheets at July 31, 1997
and January 31, 1997

Consolidated Cash Flows Statements for the
six month periods ended July 31, 1997 and
July 31, 1996

Item 2. Management Discussion and Analysis of
Financial Condition and Results of Operations

Part II: OTHER INFORMATION

Item 4. Submission of Matters to the Vote of
Securityholders

Item 6. Exhibits and Reports on Form 8-K

Signature

2
<PAGE>

WIND RIVER SYSTEMS, INC.

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

The accompanying financial information is unaudited but, in the opinion of
management, reflects all adjustments (which include only normally recurring
adjustments) necessary for a fair presentation of the results for the periods
shown. The unaudited consolidated financial statements and analyses should be
read in conjunction with the audited consolidated financial statements and notes
thereto for the year ended January 31, 1997 included in the Annual Report on
Form 10-K previously filed with the Securities and Exchange Commission.

The results for the three months and six months ended July 31, 1997, are not
necessarily indicative of the results to be expected for the entire year.

3
<PAGE>

WIND RIVER SYSTEMS, INC.
CONSOLIDATED INCOME STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)

<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
------------------------ -----------------------
JULY 31, JULY 31,
------------------------ -----------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Products $ 15,926 $ 10,700 $ 29,183 $ 19,231
Services 6,074 4,300 11,217 8,369
- --------------------------------------------------------------------------------------------------------------
Total revenues 22,000 15,000 40,400 27,600
- --------------------------------------------------------------------------------------------------------------

Cost of revenues:
Products 1,601 1,246 3,007 2,335
Services 2,362 1,744 4,300 3,305
- --------------------------------------------------------------------------------------------------------------
Total cost of revenues 3,963 2,990 7,307 5,640
- --------------------------------------------------------------------------------------------------------------

Gross profit 18,037 12,010 33,093 21,960
- --------------------------------------------------------------------------------------------------------------

Operating expenses:
Sales and marketing 8,346 5,767 15,601 10,906
Product development 3,005 1,913 5,439 3,508
General and administrative 1,565 1,133 3,102 2,151
- --------------------------------------------------------------------------------------------------------------
Total operating expenses 12,916 8,813 24,142 16,565
- --------------------------------------------------------------------------------------------------------------

Operating income 5,121 3,197 8,951 5,395
- --------------------------------------------------------------------------------------------------------------

Other income (expense):
Interest income 890 255 1,698 445
Minority interest in consolidated subsidiary 36 (62) 8 (60)
- --------------------------------------------------------------------------------------------------------------
Total other income 926 193 1,706 385
- --------------------------------------------------------------------------------------------------------------
Income before income taxes 6,047 3,390 10,657 5,780
Provision for income taxes 2,177 1,300 3,837 2,220
- --------------------------------------------------------------------------------------------------------------
Net income $ 3,870 $ 2,090 $ 6,820 $ 3,560
- --------------------------------------------------------------------------------------------------------------
Net income per share $ 0.14 $ 0.08 $ 0.24 $ 0.15
- --------------------------------------------------------------------------------------------------------------
Weighted average common and common equivalent shares 28,373 24,728 28,174 24,385
- --------------------------------------------------------------------------------------------------------------
</TABLE>

See accompanying notes to the consolidated financial statements.

4
<PAGE>

WIND RIVER SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNT)
(UNAUDITED)

<TABLE>
<CAPTION>
JULY 31, JANUARY 31,
1997 1997
---------- -----------

<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 150,153 $ 9,848
Short-term investments 20,641 46,895
Accounts receivable, net of allowances
of $1,164 and $1,204 12,544 13,296
Prepaid and other current assets 5,631 4,780
- -------------------------------------------------------------------------------------
Total current assets 188,969 74,819
Investments 70,692 43,004
Equipment and furniture, net of
accumulated depreciation of $8,924 and $7,328 11,521 8,426
Capitalized software costs, net of
accumulated amortization of $2,682 and $2,382 1,263 828
Deposits and other assets 7,228 1,584
- -------------------------------------------------------------------------------------
Total assets $ 279,673 $ 128,661
- -------------------------------------------------------------------------------------

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,204 $ 1,340
Accrued liabilities 6,269 5,530
Accrued compensation 4,449 4,391
Income taxes payable 3,408 1,941
Deferred revenue 11,423 6,271
- -------------------------------------------------------------------------------------
Total current liabilities 27,753 19,473
Long-term debt 140,000 -
Deferred rent 117 127
- -------------------------------------------------------------------------------------
Total liabilities 167,870 19,600
- -------------------------------------------------------------------------------------
Minority interest in consolidated subsidiary 304 312
- -------------------------------------------------------------------------------------
Stockholders' equity:
Common stock, par value $.001, 75,000
shares authorized, 25,802 and 25,382 shares
issued, and 25,489 and 25,269 shares outstanding 26 25
Additional paid in capital 92,112 89,890
Cumulative translation adjustments (630) (310)
Unrealized loss on securities (494) (353)
Retained earnings 29,438 22,618
Less treasury stock, 313 and 113 shares, at cost (8,953) (3,121)
- -------------------------------------------------------------------------------------
Total stockholders' equity 111,499 108,749
- -------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $ 279,673 $ 128,661
- -------------------------------------------------------------------------------------
</TABLE>

See accompanying notes to the consolidated financial statements.

5
<PAGE>

WIND RIVER SYSTEMS, INC.
CONSOLIDATED CASH FLOWS STATEMENTS
(IN THOUSANDS)
(UNAUDITED)

<TABLE>
<CAPTION>
SIX MONTHS ENDED
---------------------------
JULY 31,
---------------------------
1997 1996
---- ----

<S> <C> <C>
Cash flows from operating activities:
Net income $ 6,820 $ 3,560
Adjustments to reconcile net income to net cash
provided by operations:
Provision for doubtful accounts receivables (40) -
Depreciation and amortization 1,596 929
Amortization of capitalized software costs 300 313
Deferred rent (10) 12
Minority interest in consolidated subsidiary (8) 66
Change in assets and liabilities:
Accounts receivable 792 (1,310)
Prepaid and other assets (1,720) (369)
Accounts payable 864 (134)
Accrued liabilities 739 1,076
Accrued compensation 58 269
Income taxes payable 1,467 379
Deferred revenue 5,152 863
- --------------------------------------------------------------------------------------------
Net cash provided by operating activities 16,010 5,654
- --------------------------------------------------------------------------------------------

Cash flows from investing activities:
Capital expenditures (4,691) (2,977)
Capitalized software costs (735) (360)
Investment sales 34,591 -
Investment purchases (36,166) (64,284)
- --------------------------------------------------------------------------------------------
Net cash used in investing activities (7,001) (67,621)
- --------------------------------------------------------------------------------------------

Cash flows from financing activities:
Common stock issuances 2,223 54,988
Treasury stock purchases (5,832) (3,929)
Sales of treasury stock - 9,532
Long-term debt issuance 135,225 -
- --------------------------------------------------------------------------------------------
Net cash provided by financing activities 131,616 60,591
- --------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash (320) (345)
- --------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents 140,305 (1,721)
- --------------------------------------------------------------------------------------------
Cash and cash equivalents at beginning of period 9,848 9,205
- --------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 150,153 $ 7,484
- --------------------------------------------------------------------------------------------

Supplemental disclosures of cash flow information:
- --------------------------------------------------------------------------------------------
Cash paid for income taxes $ 2,987 $ 2,286
- --------------------------------------------------------------------------------------------
</TABLE>

See accompanying notes to the consolidated financial statements.

6
<PAGE>
WIND RIVER SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS AND SIX MONTHS ENDED JULY 31, 1997 AND 1996
(UNAUDITED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

In accordance with the rules and regulations of the Securities and Exchange
Commission, the unaudited consolidated financial statements omit or condense
certain information and footnote disclosures normally required for complete
financial statements prepared in accordance with generally accepted accounting
principles.

2. EARNINGS PER SHARE

Earnings per share is computed under the treasury stock method using the
weighted average number of common shares and dilutive common stock equivalent
shares outstanding during the period. The 5% Convertible Subordinated Notes
(see Note 5) are not common stock equivalents and, therefore, have been excluded
from the computation of earnings per share. The 5% Convertible Subordinated
Notes presently have an anti-dilutive effect on the three-month and six-month
computations of fully diluted earnings per share.

3. COMMON STOCK TRANSACTIONS

On March 10, 1997, the Company effected a three-for-two stock split by means of
a stock dividend, to holders of the Company's Common Stock on February 24, 1997.
All share numbers and prices in this document have been retroactively adjusted
to give effect to the stock split.

The Company repurchased and held as treasury stock, 100,000 shares of common
stock at a cost of $2.3 million and 100,000 shares of common stock at a cost of
$3.6 million in the first and second quarters of fiscal year 1998, respectively.

4. RECENT ACCOUNTING PRONOUNCEMENTS

In February 1997, the Financial Accounting Standards Board issued Statement No.
128 (FAS 128), "Earnings per Share". The statement simplifies the standards for
computing earnings per share (EPS) previously found in APB Opinion No. 15,
"Earnings per Share", and makes them more comparable to international EPS
standards. The Standard replaces the presentation of primary EPS with a
presentation of basic EPS. It also requires dual presentation of basic and
diluted EPS on the face of the financial statements for all entities with
complex capital structures.

7
<PAGE>

Basic EPS excludes dilution and is computed by dividing income available to
common stockholders by the weighted-average number of common shares outstanding
for the period. Diluted EPS is computed similarly to fully diluted EPS under
APB Opinion No. 15. FAS 128 must be adopted in connection with the Company's
annual financial statements for the year ending January 31, 1998. The following
table represents unaudited, pro forma disclosures of basic and diluted earnings
per share in accordance with FAS 128 assuming the standard was applied during
all periods presented below:

- --------------------------------------------------------------------------------
Three months ended Six months ended
- --------------------------------------------------------------------------------
July 31, July 31,
1997 1996 1997 1996
---- ----- ---- ----

Net income per common share, as reported $0.14 $0.08 $0.24 $0.15

Basic net income per common
share, pro forma $0.15 $0.10 $0.27 $0.17

Diluted net income
per common share, pro forma $0.14 $0.08 $0.24 $0.15
- --------------------------------------------------------------------------------

In June, 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 130 (FAS 130), "Reporting
Comprehensive Income", and Statement of Financial Accounting Standards No.
131 (FAS 131), "Disclosures about Segments of an Enterprise and Related
Information". The adoption of both statements is required for fiscal years
beginning after December 15, 1997.

FAS 130 establishes standards of disclosure and financial statement display for
reporting total comprehensive income and its individual components. FAS 131
changes current practice under FAS 14, "Financial Reporting of Segments of a
Business Enterprise", by establishing a new framework on which to base segment
reporting (referred to as the management approach) and also requires interim
reporting of segment information.

The Company is studying the implications of these new statements and the impact
of their implementation on its consolidated financial statements.

8
<PAGE>

5. LONG-TERM DEBT

In July 1997, the Company issued $140 million of 5.0% Convertible
Subordinated Notes (the "Notes"), due 2002. The Notes are subordinated to all
existing and future senior debt and, commencing 90 days following original
issuance, are convertible into shares of the Company's common stock at a
conversion price of $48.50 per share. The Notes are redeemable at the option
of the Company in whole or in part at any time on or after August 2, 2000 at
102% initially, and thereafter at prices declining to 100% at maturity, in
cash plus accrued interest. Each holder of these Notes has the right, subject
to certain conditions and restrictions, to require the Company to offer to
repurchase all outstanding Notes, in whole or in part, owned by such holder,
at specified repurchase prices plus accrued interest upon the occurrence
of certain events. The costs incurred in connection with the offering
of $4.8 million are included in the prepaid and other assets balance. These
costs are being amortized over the 5-year term of the Notes using the
straight-line method, which approximates the effective interest method.
Interest on the Notes began accruing July 31, 1997 and is payable semi-annually
on February 1 and August 1, commencing February 1, 1998.

9
<PAGE>

WIND RIVER SYSTEMS, INC.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

OVERVIEW

Except for the historical information contained herein, the following discussion
contains forward-looking statements that involve risks and uncertainties. The
Company's actual results could differ materially from those discussed herein.
Factors that could cause or contribute to such differences include, but are not
limited to, those discussed below, as well as in the Company's Annual Report on
Form 10-K for the fiscal year ended January 31, 1997.

RESULTS OF OPERATIONS

REVENUES

Total revenues for the three and six months ended July 31, 1997 were $22.0
million and $40.4 million, respectively, compared to $15.0 million and $27.6
million for the same periods in fiscal 1997.

Revenue from the sale of products increased 49% and 52% to $15.9 million and
$29.2 million for the three-month and six-month periods in fiscal 1998, compared
to $10.7 million and $19.2 million for the same periods in fiscal 1997. These
increases were due primarily to the continued market acceptance of the Company's
flagship product, Tornado-TM- and increased sales to the telecommunication and
computer equipment manufacturing industries.

Service revenues for the three and six months ended July 31, 1997 increased $1.8
million and $2.8 million, respectively, representing increases of 41% and 34%,
respectively, over the comparable periods in fiscal 1997. Increases in service
revenues were due to an increased number of customers requiring consulting and
custom software design services. In addition, increased sales of the
Tornado-TM- software development environment has generated additional revenue
from maintenance support agreements.

COSTS OF REVENUES

The overall cost of products and services as a percentage of total revenues
decreased to 18% in both the three months and six months ended July 31, 1997,
from 20% in the same periods in fiscal 1997. Product-related cost of sales
decreased as a percentage of product revenues to 10% in both the three-month and
six-month periods of fiscal 1998 from 12% in the same periods of fiscal 1997.
These decreases were due to

10
<PAGE>

increases in sales of products which did not carry royalty costs.
Service-related cost of revenues decreased as a percentage of service
revenues to 39% and 38% for the three-month and six-month periods fiscal
1998, respectively, from 41% and 39% in the same periods in fiscal 1997,
respectively. Although the cost of services revenues as a percentage of total
revenues was slightly lower than in the three and six month periods of the
prior fiscal year, the Company believes it will be necessary to make
significant investments in support-related services for its customers in the
future. Accordingly, the Company expects such percentage may increase as a
result of these increased investments.

OPERATING EXPENSES

Sales and marketing expenses remained steady as a percentage of total revenues
at 38% in the second quarters of fiscal years 1998 and 1997. The same expenses
decreased as a percentage of total revenues to 39% in the first six months of
fiscal 1998, compared to 40% in the same period of fiscal 1997. In overall
dollars, sales and marketing expenses increased $2.6 million and $4.7 million,
or 45% and 43%, in the three-month and six-month periods of fiscal 1998,
respectively, over comparable periods in the prior fiscal year. The growth in
total revenues continued to increase at a faster rate than sales and marketing
costs in both the three-month and six-month periods of fiscal year 1998. The
increase in overall dollars resulted primarily from increases in sales personnel
and increases in expenses related to marketing and advertising programs.
Management expects to continue investing heavily in sales and marketing over the
current year to expand its customer base and introduce new products.

Product development expenses, which consist primarily of personnel costs,
increased to 14% of total revenues for the second quarter of fiscal 1998, from
13% for the same period in fiscal 1997. The percentage of total revenues for
the first six months of fiscal years 1998 and 1997 remained steady at 13%. In
overall dollars, product development expenses increased $1.1 million and $1.9
million, or 57% and 55%, for the second quarter and first six months of in
fiscal 1998, respectively, over the comparable periods in fiscal 1997. The
Company believes it will continue to be necessary to make significant
investments in product development for the foreseeable future.

General and administrative expenses decreased to 7% of total revenues for the
second quarter of in fiscal 1998 from 8% for the same period in fiscal 1997.
The percentage of total revenues for the first six months of in both fiscal
years 1998 and 1997 remained steady at 8%. In overall dollars, these expenses
increased $432,000 and $951,000 for the three-month and six-month periods in
fiscal 1998, respectively, compared to the same periods in fiscal 1997. This
increase was primarily due to the growth in worldwide staff and infrastructure
investments in the areas of information systems, finance and administration.

11
<PAGE>

The effective tax rate in both the second quarter and first six months of fiscal
1998 decreased to 36% from 38% in the same periods of fiscal 1997. The
provision for income taxes is an estimate based on the Company's anticipated
effective tax rate at the end of the fiscal year. The decrease in the effective
tax rate between the first quarters of fiscal 1998 and 1997 was due to increased
income from tax-free investment instruments.

RISK FACTORS THAT MAY AFFECT FUTURE RESULTS OF OPERATIONS

The Company typically charges a one-time fee for a development license and a
run-time license fee for each copy of the Company's operating system embedded in
the customer's product. A key component of the Company's strategy is to
increase revenue through run-time license fees. Any increase in the percentage
of revenues attributable to run-time licenses will depend on the Company's
successful negotiation of run-time license agreements and on the successful
commercialization by the Company's customers of the underlying products. In
addition, the Company has experienced significant period-to-period fluctuations
in revenues and operating results and anticipates that such fluctuations will
continue. These fluctuations have been caused by a number of factors, including
customer buying patterns, product development cycles, delays in shipments of new
products and the timing of significant sales of the Company's products.

In connection with the sale of Convertible Subordinated Notes, the Company
incurred $140 million in debt which resulted in an increase in its ratio of
long-term debt to total capitalization. As a result of this additional
indebtedness, the Company's principal and interest obligations have increased
substantially. The degree to which the Company will be leveraged could
materially and adversely affect the Company's ability to obtain financing for
working capital, acquisitions or other purposes and could make it more
vulnerable to industry downturns and competitive pressures. The Company's
ability to meet its debt service obligations will be dependent upon the
Company's future performance, which will be subject to financial, business and
other factors affecting operations of the Company, many of which are beyond its
control.

Due to the foregoing factors, the Company believes that period-to-period
comparisons of its results of operations may not be meaningful and should not be
relied upon as an indication of future performance. It is likely that, in some
future quarters, the Company's operating results will be below the expectations
of stock market analysts and investors. In such event, the price of the
Company's Common Stock would likely be materially adversely affected.

RECENT ACCOUNTING PRONOUNCEMENTS

In February 1997, the Financial Accounting Standards Board issued Statement No.
128 (FAS 128), "Earnings per Share". The statement simplifies the standards for

12
<PAGE>

computing earnings per share (EPS) previously found in APB Opinion No. 15,
"Earnings per Share", and makes them more comparable to international EPS
standards. The Standard replaces the presentation of primary EPS with a
presentation of basic EPS. It also requires dual presentation of basic and
diluted EPS on the face of the financial statements for all entities with
complex capital structures. Basic EPS excludes dilution and is computed by
dividing income available to common stockholders by the weighted-average number
of common shares outstanding for the period. Diluted EPS is computed similarly
to fully diluted EPS under APB Opinion No. 15. FAS 128 must be adopted in
connection with the Company's annual financial statements for the year ending
January 31, 1998.

The following table represents unaudited, pro forma disclosures of basic and
diluted earnings per share in accordance with FAS 128 assuming the standard was
applied during all periods presented below:

Net income per common share, as reported $0.14 $0.08 $0.24 $0.15

Basic net income per common $0.15 $0.10 $0.27 $0.17
share, pro forma

Diluted net income per common $0.14 $0.08 $0.24 $0.15
share, pro forma
- --------------------------------------------------------------------------------

13
<PAGE>

The Company is studying the implications of these new statements and the impact
of their implementation on its consolidated financial statements.

LIQUIDITY AND CAPITAL RESOURCES

At July 31, 1997, the Company had working capital in excess of $161 million, and
approximately $171 million in cash and short-term investments. The Company also
had long-term investments in excess of $70 million.

Net cash provided by operating activities in the first six months of fiscal
years 1998 and 1997 totaled $11.1 million and $5.7 million, respectively. In the
first six months of fiscal 1998, net income, depreciation and amortization, and
changes in accounts receivable, accounts payable, accrued liabilities, accrued
taxes payable, and deferred revenue were partially offset by the change in
prepaid and other assets. Deferred revenues increased because of the increases
in maintenance agreement sales and in prepaid distributor purchase commitments.
The increase in prepaid and other assets was due primarily to escrow deposits
and prepaid costs for land acquisition. Income tax payable increased due to
increased operating income. In the same period of fiscal 1997, net income,
depreciation and amortization, and changes in accrued liabilities and deferred
revenue were partially offset by a change in accounts receivable.

Net cash used in investing activities in the first six months of fiscal years
1998 and 1997 totaled $6.9 million and $67.6 million, respectively. In the first
six months of fiscal 1998, uses of cash in capital expenditures, capitalized
software costs, and purchases of security investments were partially offset by
cash provided from the sales of security investments. In the same period of
fiscal 1997, uses of cash were from purchases of security investments, capital
expenditures and capitalized software cost. Capital expenditures were $4.7
million in the first six months of fiscal 1998 compared to $3.0 million in the
same period of fiscal 1997. The Company will continue to invest in capital
equipment to support its anticipated revenue growth.

Net cash provided by financing activities in the first six months of fiscal
years 1998 and 1997 totaled $136.4 million and $60.6 million, respectively. In
July 1997, the Company sold $140 million of 5% Convertible Subordinated Notes
due 2002, realizing $ 135.2 million in proceeds after deducting offering
expenses. The Notes are convertible into common stock at a price of $48.50 per
share. In the first six months of fiscal 1998, the Company also repurchased and
held as treasury stock 200,000 shares of common stock at a cost of $5.8 million.
The purchases of treasury stock were partially offset by the issuance of common
stock for employee stock option exercises and for the employee stock purchase
program in the first six-month period of fiscal year 1998. In the same period of
fiscal 1997, the sale of treasury stock and issuance of common stock as part of
a public offering were partially offset by the repurchase of common shares, held
as treasury stock.

On March 10, 1997, the Company effected a three-for-two stock split by means of
a

14
<PAGE>

stock dividend to all holders of the Company's Common Stock on February 24,
1997. All share numbers and prices in this document have been retroactively
adjusted to give effect to the stock split.

During the quarter, the Company negotiated an option to purchase real property
in the City of Alameda, California. The property is currently undeveloped land
that can be developed for future expansion of customer support, engineering and
administrative operations. If the option is exercised, the Company will use
existing liquid resources to fund the purchase. On September 12, 1997, the
Company executed agreements providing for the construction financing and lease
of planned improvements in the event the option to purchase the land is
exercised.

Management believes that the Company's working capital and the cash flow
generated from operations are sufficient to meet its working capital
requirements for planned expansion, product development and capital expenditures
through fiscal 1998.

15
<PAGE>

PART II - OTHER INFORMATION

ITEM 4. SUBMISSION OF MATTERS TO THE VOTE OF SECURITY HOLDERS

At the Annual meeting of Stockholders held July 24, 1997, the stockholders
elected directors of the Company with the following nominees receiving the votes
indicated:

Name For Withheld
- ---- --- --------

Jerry L. Fiddler 25,163,599 87,125

Ronald A. Abelmann 25,163,749 86,975

David Wilner 25,163,749 86,975

William B. Elmore 25,163,749 86,975

David B. Pratt 25,163,749 86,975

The stockholders ratified the selection of Price Waterhouse LLP as independent
accountants of the Company for its fiscal year ending January 31, 1998 by a vote
of 25,229,827 for, 7,945 against, and 12,952 abstaining.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.

(a) Exhibits

10.16 Indenture between the Company and Deutschebank AG as
Trustee, dated as of July 31, 1997.

10.17 Convertible Subordinated Notes Purchase Agreement between
the Registrant and Deutsche Morgan Grenfell Inc., Hambrecht
& Quist LLC, and Wessels, Arnold & Henderson, L.L.C., dated
as of July 31, 1997.

10.18 Registration Rights Agreement between the Registrant and
Deutsche Morgan Grenfell Inc., Hambrecht & Quist LLC and
Wessels, Arnold & Henderson, L.L.C., dated as of July 31,
1997.

11 Computation of Earnings per Share

27 Financial Data Schedule

16
<PAGE>

(b) Reports on form 8-K

(i) The Company filed a report on Form 8-K, dated July
17, 1997, with respect to an announcement of a
private placement of Convertible Subordinated
Notes.

(ii) The Company filed a report on Form 8-K, dated July
22, 1997, reporting the pricing of its Convertible
Subordinated Notes.

(iii) The Company filed a report on Form 8-K, dated July
31, 1997, reporting the sale of $23,330,000
aggregate principal amount of 5% Convertible
Subordinated Notes pursuant to Regulation S under
the Securities Act.

No other items.

SIGNATURE

Pursuant to the Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned thereunto authorized.

WIND RIVER SYSTEMS, INC.

Date: September 15, 1997 RICHARD W. KRABER
----------------------------
Richard W. Kraber
Chief Financial Officer

17
<PAGE>
Exhibit Index

Exhibit No. Exhibit Name
- ----------- ------------

10.16 Indenture between the Company and Deutschebank AG as Trustee,
dated as of July 31, 1997.

10.17 Convertible Subordinated Notes Purchase Agreement between the
Registrant and Deutsche Morgan Grenfell Inc., Hambrecht & Quist
LLC, and Wessels, Arnold & Henderson, L.L.C., dated as of July
31, 1997.

10.18 Registration Rights Agreement between the Registrant and Deutsche
Morgan Grenfell Inc., Hambrecht & Quist LLC and Wessels, Arnold &
Henderson, L.L.C., dated as of July 31, 1997.

11 Computation of Earnings per Share

27 Financial Data Schedule

<PAGE>

Exhibit 10.16

----------------------------------------

WIND RIVER SYSTEMS, INC.

ISSUER

DEUTSCHE BANK AG,
NEW YORK BRANCH

TRUSTEE

----------------

INDENTURE

DATED AS OF JULY 31, 1997

----------------

U.S.$140,000,000

5% CONVERTIBLE SUBORDINATED NOTES
DUE 2002

----------------------------------------

<PAGE>

Exhibit 10.16

TABLE OF CONTENTS

Page

ARTICLE ONE - DEFINITIONS AND OTHER PROVISIONS OF GENERAL
APPLICATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
SECTION 1.1. Definitions . . . . . . . . . . . . . . . . . . . . . .7
Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
Additional Amounts . . . . . . . . . . . . . . . . . . . . . . .8
Affiliate. . . . . . . . . . . . . . . . . . . . . . . . . . . .8
Agent Member . . . . . . . . . . . . . . . . . . . . . . . . . .8
Applicable Price . . . . . . . . . . . . . . . . . . . . . . . .8
Authenticating Agent . . . . . . . . . . . . . . . . . . . . . .8
Authorized Newspaper . . . . . . . . . . . . . . . . . . . . . .8
Board of Directors or "Board". . . . . . . . . . . . . . . . . .8
Board Resolution . . . . . . . . . . . . . . . . . . . . . . . .9
Business Day . . . . . . . . . . . . . . . . . . . . . . . . . .9
Cedel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
Certificated Individual Securities . . . . . . . . . . . . . . .9
Closing Price. . . . . . . . . . . . . . . . . . . . . . . . . .9
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
Commission . . . . . . . . . . . . . . . . . . . . . . . . . . .9
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . .9
Constituent Person . . . . . . . . . . . . . . . . . . . . . . .9
Conversion Agent . . . . . . . . . . . . . . . . . . . . . . . .9
Conversion Price . . . . . . . . . . . . . . . . . . . . . . . 10
Corporate Trust Office . . . . . . . . . . . . . . . . . . . . 10
corporation. . . . . . . . . . . . . . . . . . . . . . . . . . 10
Defaulted Interest . . . . . . . . . . . . . . . . . . . . . . 10
Depositary . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Designated Senior Indebtedness . . . . . . . . . . . . . . . . 10
"Dollar" or "U.S. $" . . . . . . . . . . . . . . . . . . . . . 10
DTC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Euroclear. . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Event of Default . . . . . . . . . . . . . . . . . . . . . . . 10
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . 10
Expiration Time. . . . . . . . . . . . . . . . . . . . . . . . 10
Fundamental Change . . . . . . . . . . . . . . . . . . . . . . 11
Global Security. . . . . . . . . . . . . . . . . . . . . . . . 11
Global Security Legends. . . . . . . . . . . . . . . . . . . . 11
Holder . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . 11
Indenture. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Individual Security. . . . . . . . . . . . . . . . . . . . . . 12

<PAGE>

Initial Purchasers . . . . . . . . . . . . . . . . . . . . . . 12
Interest Payment Date. . . . . . . . . . . . . . . . . . . . . 12
Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Issuer Notice. . . . . . . . . . . . . . . . . . . . . . . . . 12
Issuer Request . . . . . . . . . . . . . . . . . . . . . . . . 12
Liquidated Damages . . . . . . . . . . . . . . . . . . . . . . 12
Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Non-electing Share . . . . . . . . . . . . . . . . . . . . . . 12
Note Register. . . . . . . . . . . . . . . . . . . . . . . . . 12
Note Registrar . . . . . . . . . . . . . . . . . . . . . . . . 12
Officer. . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Officers' Certificate. . . . . . . . . . . . . . . . . . . . . 13
Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . 13
Outstanding. . . . . . . . . . . . . . . . . . . . . . . . . . 13
Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . 14
Payment Blockage Notice. . . . . . . . . . . . . . . . . . . . 14
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Place of Conversion. . . . . . . . . . . . . . . . . . . . . . 14
Place of Payment . . . . . . . . . . . . . . . . . . . . . . . 14
Predecessor Security . . . . . . . . . . . . . . . . . . . . . 14
Purchase Agreement . . . . . . . . . . . . . . . . . . . . . . 14
Purchased Shares . . . . . . . . . . . . . . . . . . . . . . . 14
Record Date. . . . . . . . . . . . . . . . . . . . . . . . . . 14
Redemption Date. . . . . . . . . . . . . . . . . . . . . . . . 14
Redemption Price . . . . . . . . . . . . . . . . . . . . . . . 14
Reference Market Price . . . . . . . . . . . . . . . . . . . . 14
Registration Rights Agreement. . . . . . . . . . . . . . . . . 14
Regular Record Date. . . . . . . . . . . . . . . . . . . . . . 15
Regulation S . . . . . . . . . . . . . . . . . . . . . . . . . 15
Representative . . . . . . . . . . . . . . . . . . . . . . . . 15
Repurchase Date. . . . . . . . . . . . . . . . . . . . . . . . 15
Repurchase Price . . . . . . . . . . . . . . . . . . . . . . . 15
Responsible Officer. . . . . . . . . . . . . . . . . . . . . . 15
Restricted Global Security . . . . . . . . . . . . . . . . . . 15
Restricted Securities. . . . . . . . . . . . . . . . . . . . . 15
Restricted Securities Legend . . . . . . . . . . . . . . . . . 15
Rule 144A. . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Rule 144A Information. . . . . . . . . . . . . . . . . . . . . 15
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . 16
Senior Indebtedness. . . . . . . . . . . . . . . . . . . . . . 16
Special Record Date. . . . . . . . . . . . . . . . . . . . . . 16
Stated Maturity. . . . . . . . . . . . . . . . . . . . . . . . 16
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Note: This table of contents shall not, for any purpose, be deemed to be a
part of the Indenture.

<PAGE>

Successor Security . . . . . . . . . . . . . . . . . . . . . . 16
Tax Affected Security. . . . . . . . . . . . . . . . . . . . . 16
Taxing Jurisdiction. . . . . . . . . . . . . . . . . . . . . . 17
Tax Law Change . . . . . . . . . . . . . . . . . . . . . . . . 17
Trading Day. . . . . . . . . . . . . . . . . . . . . . . . . . 17
Trust Indenture Act. . . . . . . . . . . . . . . . . . . . . . 17
Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
United States. . . . . . . . . . . . . . . . . . . . . . . . . 17
Western Europe . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 1.2. Compliance Certificates and Opinions. . . . . . . . . 17
SECTION 1.3. Form of Documents Delivered to the Trustee. . . . . . 18
SECTION 1.4. Acts of Holders of Securities . . . . . . . . . . . . 18
SECTION 1.5. Notices, Etc., to Trustee and Issuer. . . . . . . . . 20
SECTION 1.6. Notice to Holders of Securities; Waiver . . . . . . . 21
SECTION 1.7. Effect of Headings and Table of Contents. . . . . . . 22
SECTION 1.8. Successors and Assigns. . . . . . . . . . . . . . . . 22
SECTION 1.9. Separability Clause . . . . . . . . . . . . . . . . . 22
SECTION 1.10. Benefits of Indenture. . . . . . . . . . . . . . . . 22
SECTION 1.11. Governing Law. . . . . . . . . . . . . . . . . . . . 22
SECTION 1.12. Legal Holidays . . . . . . . . . . . . . . . . . . . 22
SECTION 1.13. Conflict with Trust Indenture Act. . . . . . . . . . 23
SECTION 1.14. Jurisdiction . . . . . . . . . . . . . . . . . . . . 23
SECTION 1.15. Indenture and Securities Solely Corporate
Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 1.16. Luxembourg Obligations . . . . . . . . . . . . . . . 24
ARTICLE TWO - SECURITY FORMS . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 2.1. Forms Generally . . . . . . . . . . . . . . . . . . . 24
SECTION 2.2. Form of Security. . . . . . . . . . . . . . . . . . . 25
SECTION 2.3. Assignment Form and Certificate of Transfer . . . . . 40
SECTION 2.4. Form of Election of Holder to Rquire Repurchase . . . 42
SECTION 2.5. Form of Conversion Notice . . . . . . . . . . . . . . 43
SECTION 2.6. Form of Certificate of Authentication . . . . . . . . 44
ARTICLE THREE - THE SECURITIES . . . . . . . . . . . . . . . . . . . . . 45
SECTION 3.1. Title and Terms . . . . . . . . . . . . . . . . . . . 45
SECTION 3.2. Denominations . . . . . . . . . . . . . . . . . . . . 46
SECTION 3.3. Execution, Authentication, Delivery and Dating. . . . 46
SECTION 3.4. Global Securities; Certificated Individual
Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 3.5. Registration, Registration of Transfer and Exchange;
Restrictions on Transfer. . . . . . . . . . . . . . . . . . . . . . 49
SECTION 3.6. Mutilated, Destroyed, Lost or Stolen Securities. . . 51
SECTION 3.7. Payment of Interest; Interest Rights Preserved . . . 52
SECTION 3.8. Persons Deemed Owners . . . . . . . . . . . . . . . . 54
SECTION 3.9. Cancellation. . . . . . . . . . . . . . . . . . . . . 54
SECTION 3.10. Computation of Interest. . . . . . . . . . . . . . . 54
SECTION 3.11. CUSIP Numbers. . . . . . . . . . . . . . . . . . . . 54

Note: This table of contents shall not, for any purpose, be deemed to be a
part of the Indenture.

iii

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ARTICLE FOUR - SATISFACTION AND DISCHARGE. . . . . . . . . . . . . . . . 55
SECTION 4.1. Satisfaction and Discharge of Indenture . . . . . . . 55
SECTION 4.2. Application of Trust Money. . . . . . . . . . . . . . 56
ARTICLE FIVE - REMEDIES. . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 5.1. Events of Default . . . . . . . . . . . . . . . . . . 56
SECTION 5.2. Acceleration of Maturity; Rescission and Annulment. . 57
SECTION 5.3. Collection of Indebtedness and Suits for
Enforcement by Trustee. . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 5.4. Trustee May File Proofs of Claim. . . . . . . . . . . 59
SECTION 5.5. Trustee May Enforce Claims Without Possession of
Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 5.6. Application of Money Collected. . . . . . . . . . . . 60
SECTION 5.7. Limitation on Suits . . . . . . . . . . . . . . . . . 61
SECTION 5.8. Unconditional Right of Holders to Receive Principal,
Premium and Interest and to Convert.. . . . . . . . . . . . . . . . 61
SECTION 5.9. Restoration of Rights and Remedies. . . . . . . . . . 61
SECTION 5.10. Rights and Remedies Cumulative . . . . . . . . . . . 62
SECTION 5.11. Delay or Omission Not Waiver . . . . . . . . . . . . 62
SECTION 5.12. Control by Holders of Securities . . . . . . . . . . 62
SECTION 5.13. Waiver of Past Defaults. . . . . . . . . . . . . . . 62
SECTION 5.14. Undertaking for Costs. . . . . . . . . . . . . . . . 63
SECTION 5.15. Waiver of Stay, Extension and Usury Laws . . . . . . 63
ARTICLE SIX - THE TRUSTEE. . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 6.1. Certain Duties and Responsibilities . . . . . . . . . 63
SECTION 6.2. Notice of Defaults. . . . . . . . . . . . . . . . . . 65
SECTION 6.3. Certain Rights of Trustee . . . . . . . . . . . . . . 65
SECTION 6.4. Not Responsible for Recitals or Issuance of
Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 6.5. May Hold Securities, Act as Trustee Under Other
Indentures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 6.6. Money Held in Trust . . . . . . . . . . . . . . . . . 67
SECTION 6.7. Compensation and Reimbursement. . . . . . . . . . . . 67
SECTION 6.8. Corporate Trustee Required; Eligibility . . . . . . . 68
SECTION 6.9. Resignation and Removal; Appointment of Successor.. . 68
SECTION 6.10. Acceptance of Appointment by Successor.. . . . . . . 69
SECTION 6.11. Merger, Conversion, Consolidation or Succession to
Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 6.12. Authenticating Agents. . . . . . . . . . . . . . . . 70
SECTION 6.13. Disqualification; Conflicting Interests. . . . . . . 71
SECTION 6.14. Preferential Collection of Claims Against Issuer . . 72
ARTICLE SEVEN - CONSOLIDATION, MERGER, TRANSFER OR LEASE . . . . . . . . 72
SECTION 7.1. Issuer May Consolidate, Etc., Only on Certain Terms . 72
SECTION 7.2. Successor Substituted . . . . . . . . . . . . . . . . 73
ARTICLE EIGHT - SUPPLEMENTAL INDENTURES. . . . . . . . . . . . . . . . . 73
SECTION 8.1. Supplemental Indentures Without Consent of
Holders of Securities . . . . . . . . . . . . . . . . . . . . . . . 73

Note: This table of contents shall not, for any purpose, be deemed to be a
part of the Indenture.

<PAGE>

SECTION 8.2. Supplemental Indentures with Consent of Holders of
Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 8.3. Execution of Supplemental Indentures. . . . . . . . . 75
SECTION 8.4. Effect of Supplemental Indentures . . . . . . . . . . 75
SECTION 8.5. Reference in Securities to Supplemental Indentures. . 75
SECTION 8.6. Notice of Supplemental Indentures . . . . . . . . . . 76
ARTICLE NINE - MEETINGS OF HOLDERS OF SECURITIES . . . . . . . . . . . . 76
SECTION 9.1. Purposes for Which Meetings May Be Called . . . . . . 76
SECTION 9.2. Call, Notice and Place of Meetings. . . . . . . . . . 76
SECTION 9.3. Persons Entitled to Vote at Meetings. . . . . . . . . 77
SECTION 9.4. Quorum; Action. . . . . . . . . . . . . . . . . . . . 77
SECTION 9.5. Determination of Voting Rights; Conduct and
Adjournment of Meetings.. . . . . . . . . . . . . . . . . . . . . . 78
SECTION 9.6. Counting Votes and Recording Action of Meetings . . . 78
ARTICLE TEN - COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . 79
SECTION 10.1. Payment of Principal, Premium and Interest . . . . . 79
SECTION 10.2. Maintenance of Offices or Agencies . . . . . . . . . 79
SECTION 10.3. Money for Security Payments To Be Held in Trust. . . 80
SECTION 10.4. Additional Amounts . . . . . . . . . . . . . . . . . 81
SECTION 10.5. Additional Amounts . . . . . . . . . . . . . . . . . 82
SECTION 10.6. Statement by Officers as to Default. . . . . . . . . 82
SECTION 10.7. Delivery of Certain Information. . . . . . . . . . . 82
ARTICLE ELEVEN - REDEMPTION OF SECURITIES. . . . . . . . . . . . . . . . 83
SECTION 11.1. Right of Redemption. . . . . . . . . . . . . . . . . 83
SECTION 11.2. Applicability of Article . . . . . . . . . . . . . . 83
SECTION 11.3. Election to Redeem; Notice to Trustee. . . . . . . . 83
SECTION 11.4. Selection by Trustee of Securities to Be Redeemed. . 83
SECTION 11.5. Notice of Redemption . . . . . . . . . . . . . . . . 84
SECTION 11.6. Deposit of Redemption Price. . . . . . . . . . . . . 85
SECTION 11.7. Securities Payable on Redemption Date. . . . . . . . 85
SECTION 11.8. Securities Redeemed in Part. . . . . . . . . . . . . 86
SECTION 11.9. Conversion Arrangement on Call for Redemption. . . . 86
ARTICLE TWELVE - CONVERSION OF SECURITIES. . . . . . . . . . . . . . . . 87
SECTION 12.1. Conversion Privilege and Conversion Price. . . . . . 87
SECTION 12.2. Exercise of Conversion Privilege . . . . . . . . . . 87
SECTION 12.3. Fractions of Shares. . . . . . . . . . . . . . . . . 89
SECTION 12.4. Adjustment of Conversion Price . . . . . . . . . . . 89
SECTION 12.5. Notice of Adjustments of Conversion Price. . . . . . 97
SECTION 12.6. Notice of Certain Corporate Action . . . . . . . . . 98
SECTION 12.7. Issuer to Provide Common Stock . . . . . . . . . . . 99
SECTION 12.8. Taxes on Conversions . . . . . . . . . . . . . . . . 99
SECTION 12.9. Issuer Covenant as to Common Stock . . . . . . . . . 99
SECTION 12.10. Cancellation of Converted Securities. . . . . . . . 99

Note: This table of contents shall not, for any purpose, be deemed to be a
part of the Indenture.

<PAGE>

SECTION 12.11. Provision in Case of Consolidation, Merger, or
Sale of Assets of the Issuer. . . . . . . . . . . . . . . . . . . . 99
SECTION 12.12. Responsibility of Trustee for Conversion
Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . .100
ARTICLE THIRTEEN - SUBORDINATION OF SECURITIES . . . . . . . . . . . . .101
SECTION 13.1. Agreement of Subordination . . . . . . . . . . . . .101
SECTION 13.2. Payments to Noteholders. . . . . . . . . . . . . . .101
SECTION 13.3. Subrogation of Securities. . . . . . . . . . . . . .104
SECTION 13.4. Authorization to Effect Subordination. . . . . . . .105
SECTION 13.5. Notice to Trustee. . . . . . . . . . . . . . . . . .105
SECTION 13.6. Trustee's Relation to Senior Indebtedness of the
Issuer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .106
SECTION 13.7. No Impairment of Subordination . . . . . . . . . . .107
SECTION 13.8. Article Applicable to Paying Agents. . . . . . . . .107
SECTION 13.9. Senior Indebtedness of the Issuer Entitled to Rely .107
ARTICLE FOURTEEN - REPURCHASE OF SECURITIES AT THE OPTION OF
THE HOLDER UPON A FUNDAMENTAL CHANGE . . . . . . . . . . . . . . . . . .107
SECTION 14.1. Right to Require Repurchase. . . . . . . . . . . . .107
SECTION 14.2. Notices; Method of Exercising Repurchase
Right, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . .108
SECTION 14.3. Merger, Consolidation, etc.. . . . . . . . . . . . .110
ARTICLE FIFTEEN - HOLDERS LISTS AND REPORTS BY TRUSTEE AND ISSUER. . . .111
SECTION 15.1. Issuer to Furnish Trustee Names and Addresses of
Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .111
SECTION 15.1. Issuer to Furnish Trustee Names and Addresses of
Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .111
SECTION 15.2. Preservation of Information. . . . . . . . . . . . .112
SECTION 15.3. Reports by Trustee . . . . . . . . . . . . . . . . .112
SECTION 15.4. Reports by Issuer. . . . . . . . . . . . . . . . . .113
SECTION 15.5. Reports with Respect to Registration of
Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . .113

Note: This table of contents shall not, for any purpose, be deemed to be a
part of the Indenture.

<PAGE>

INDENTURE, dated as of July 31, 1997, between Wind River Systems, Inc., a
Delaware corporation (herein called the "Issuer"), and Deutsche Bank AG, New
York Branch, as Trustee hereunder (herein called the "Trustee").

RECITALS

The Issuer has duly authorized the creation of an issue of its 5%
Convertible Subordinated Notes due 2002 (herein called the "Securities") in an
aggregate principal amount not to exceed $140,000,000, and to provide therefor
the Issuer has duly authorized the execution and delivery of this Indenture.

All things necessary to make the Securities, when the Securities are
executed by the Issuer and authenticated and delivered hereunder, the valid
obligations of the Issuer, and to make this Indenture a valid agreement of the
Issuer, in accordance with their and its terms, have been done.

NOW, THEREFORE, THIS INDENTURE WITNESSETH:

For and in consideration of the premises and the purchase of the Securities
by the Holders thereof, the Issuer and the Trustee mutually covenant and agree,
for the equal and proportionate benefit of all Holders of the Securities as
follows:

ARTICLE ONE

DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION

SECTION 1.1. DEFINITIONS.

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

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

(2) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles in the United States, and, except as otherwise herein expressly
provided, the term "generally accepted accounting principles" with respect
to any computation required or permitted hereunder shall mean such
accounting principles as are generally accepted at the date of

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<PAGE>

such computation, other than for the purpose of the definition of
Indebtedness and Senior Indebtedness set forth herein; and

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

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

"Additional Amounts" has the meaning specified in Section 2.2.

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

"Agent Member" means any member of, or participant in, the Depositary.

"Applicable Price" means (i) in the event of a Fundamental Change in which
the holders of Issuer's Common Stock receive only cash, the amount of cash
received by the holder of one share of Common Stock and (ii) in the event of any
other Fundamental Change, the arithmetic average of the Closing Price for the
Issuer's Common Stock during the ten Trading Days prior to the record date for
the determination of the holders of Common Stock entitled to receive cash,
securities, property or other assets in connection with such Fundamental Change,
or, if there is no such record date, the date upon which the holders of the
Common Stock shall have the right to receive such cash, securities, property or
other assets in connection with the Fundamental Change.

"Authenticating Agent" means any Person authorized by the Trustee pursuant
to Section 6.12 to act on behalf of the Trustee to authenticate Securities.

"Authorized Newspaper" means a newspaper, in an official language of the
country of publication or in the English language, customarily published on each
Business Day, whether or not published on Saturdays, Sundays or holidays, and of
general circulation in the place in connection with which the term is used or in
the financial community of such place. Where successive publications are
required to be made in Authorized Newspapers, the successive publications may be
made in the same or in different newspapers in the same city meeting the
foregoing requirements and in each case on any Business Day.

"Board of Directors" or "Board" means either the board of directors of the
Issuer or any committee of that board empowered to act for it with respect to
this Indenture.

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

"Business Day," when used with respect to any Place of Payment, Place of
Conversion or any other place, as the case may be, means each Monday, Tuesday,
Wednesday, Thursday and Friday which is not a day on which banking institutions
in such Place of Payment, Place of Conversion or other place, as the case may
be, are authorized or obligated by law or executive order to close; PROVIDED,
HOWEVER, that a day on which banking institutions in either New York, New York
or Luxembourg are authorized or obligated by law or executive order to close
shall not be a Business Day for purposes of Section 10.1, 10.3, 11.6 or 13.5.

"Cedel" means Cedel Bank, societe anonyme.

"Certificated Individual Securities" means those Securities described in
Section 3.4(a)(2) issued to institutional accredited investors.

"Closing Price" has the meaning specified in Section 12.4(8)(a).

"Code" means the United States Internal Revenue Code of 1986, as amended.

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

"Common Stock" includes any stock or shares of any class of the Issuer
which has no preference in respect of dividends or of amounts payable in the
event of any voluntary or involuntary liquidation, dissolution or winding up of
the Issuer and which is not subject to redemption by the Issuer; PROVIDED,
HOWEVER, subject to the provisions of Section 12.11, shares issuable on
conversion of Securities shall include only shares of the class designated as
Common Stock of the Issuer at the date of this instrument or shares of any class
or classes resulting from any reclassification or reclassifications thereof and
which have no preference in respect of dividends or of amounts payable in the
event of any voluntary or involuntary liquidation, dissolution or winding up of
the Issuer and which are not subject to redemption by the Issuer; PROVIDED,
FURTHER, HOWEVER, that if at any time there shall be more than one such
resulting class, the shares of each such class then so issuable shall be
substantially in the proportion which the total number of shares of such class
resulting from all such reclassifications bears to the total number of shares of
all such classes resulting from all such reclassifications.

"Constituent Person" has the meaning specified in Section 12.11.

"Conversion Agent" means any Person authorized by the Issuer to convert
Securities in accordance with Article Twelve. The Issuer has initially
appointed (i) the Trustee as its Conversion Agent, in the Borough of Manhattan,
The City of New York, New York, and (ii) so

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long as the Securities are listed on the Luxembourg Stock Exchange and the rules
of the Luxembourg Stock Exchange shall require that a Conversion Agent be
maintained in Luxembourg, Banque de Luxembourg, as its Conversion Agent in
Luxembourg.

"Conversion Price" has the meaning specified in Section 12.1.

"Corporate Trust Office" means the office of the Trustee at which at any
particular time its corporate trust business shall be principally administered
(which at the date of this Indenture is located at 31 West 52nd Street, New
York, NY 10019), except that with respect to presentation of securities for
payment or for registration of transfer or exchange, such term shall mean the
office or agency of the Trustee at which at any particular time, its corporate
agency business shall be conducted.

"corporation" means a corporation, company, including, without limitation,
a limited liability company, association, joint-stock company or business trust.

"Defaulted Interest" has the meaning specified in Section 3.7.

"Depositary" means, with respect to any Securities issued in whole or in
part in the form of one or more Global Securities, the clearing agency that is
registered under the Exchange Act and designated to act as Depositary for such
Securities, as contemplated by Section 3.4(A), or any successor clearing agency
registered under the Exchange Act as contemplated by Section 3.4(A).

"Designated Senior Indebtedness" means the Issuer's obligations under any
particular Senior Indebtedness of the Issuer in which the instrument creating or
evidencing the same or the assumption or guarantee thereof (or related
agreements or documents to which the Issuer is a party) expressly provides that
such Senior Indebtedness shall be "Designated Senior Indebtedness" for purposes
of the Indenture (provided that such instrument, agreement or other document may
place limitations and conditions on the right of such Senior Indebtedness to
exercise the rights of the Designated Senior Indebtedness).

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

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

"Euroclear" means Euroclear System.

"Event of Default" has the meaning specified in Section 5.1.

"Exchange Act" means the United States Securities Exchange Act of 1934, as
amended from time to time.

"Expiration Time" has the meaning specified in Section 12.4(6).

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"Fundamental Change" means the occurrence of any transaction or event in
connection with which at least 90% of the then Outstanding Common Stock shall be
exchanged for, converted into, acquired for or constitute solely the right to
receive consideration (whether by means of an exchange offer, liquidation,
tender offer, consolidation, merger, combination, reclassification,
recapitalization or otherwise) which is not at least 90% common stock or shares
which are (or, upon consummation of or immediately following such transaction or
event, will be) listed on a United States national securities exchange or
approved for quotation on the Nasdaq National Market or any similar United
States system of automated dissemination of quotations of securities prices.

"Global Security" means any Security issued in the form set forth in
Section 2.2 and registered in the Security Register in the name of a Depositary
or a nominee thereof.

"Global Security Legend" means the legend substantially in the form of
legend required in the form of Security set forth in Section 2.2 to be placed
upon the Global Security.

"Holder," when used with respect to any Security, means the Person in whose
name the Security is registered in the Note Register.

"Indebtedness" means, with respect to the Issuer, and without duplication,
(a) all indebtedness, obligations and other liabilities (contingent or
otherwise) of the Issuer for borrowed money (including obligations of the Issuer
in respect of overdrafts, foreign exchange contracts, currency exchange
agreements, interest rate protection agreements, and any loans or advances from
banks, whether or not evidenced by notes or similar instruments) or evidenced by
bonds, debentures, notes or similar instruments (whether or not the recourse of
the lender is to the whole of the assets of the Issuer or to only a portion
thereof) (other than any account payable or other accrued current liability or
obligation incurred in the ordinary course of business in connection with the
obtaining of materials or services), (b) all reimbursement obligations and other
liabilities (contingent or otherwise) of the Issuer with respect to letters of
credit, bank guarantees or bankers' acceptances, (c) all obligations and
liabilities (contingent or otherwise) in respect of leases (including synthetic
leases) of the Issuer required, in conformity with generally accepted accounting
principles, to be accounted for as capitalized lease obligations on the balance
sheet of the Issuer and 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 which provides that the Issuer 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 to the lessor and the
obligations of the Issuer under such lease or related document to purchase or to
cause a third party to purchase such leased property or pay an agreed upon
residual value of the leased property to the lessor, (d) all obligations of the
Issuer (contingent or otherwise) with respect to an interest rate or other swap,
cap or collar agreement or other similar instrument or agreement or foreign
currency hedge, exchange, purchase or similar instrument or agreement, (e) all
direct or indirect guaranties or similar agreements by the Issuer in respect of,
and obligations or liabilities (contingent or otherwise) of the Issuer to
purchase or otherwise acquire or otherwise assure a creditor against loss in
respect of, indebtedness, obligations or liabilities of another Person of the
kind described

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in clauses (a) through (d), (f) any indebtedness or other obligations described
in clauses (a) through (d) secured by any mortgage, pledge, lien or other
encumbrance existing on property which is owned or held by the Issuer,
regardless of whether the indebtedness or other obligation secured thereby shall
have been assumed by the Issuer and (g) any and all deferrals, renewals,
extensions, refinancings and refundings of, or amendments, modifications or
supplements to, any indebtedness, obligation or liability of the kind described
in clauses (a) through (f).

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

"Individual Security" has the meaning specified in Section 3.4(A)(b).

"Initial Purchasers" means Deutsche Morgan Grenfell Inc., Hambrecht & Quist
LLC and Wessels, Arnold & Henderson, L.L.C.

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

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

"Issuer Notice" has the meaning specified in Section 14.2.

"Issuer Request" or "Issuer Order" means a written request or order signed
in the name of the Issuer by the President of the Issuer, and delivered to the
Trustee.

"Liquidated Damages" has the meaning specified in the Registration Rights
Agreement.

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

"Non-electing Share" has the meaning specified in Section 12.11.

"Note Register" shall have the meaning specified in Section 3.5.

"Note Registrar" has the meaning specified in Section 2.2. The Issuer has
initially appointed (i) the Trustee as its Note Registrar in New York and (ii),
so long as the Securities are listed on the Luxembourg Stock Exchange and the
Luxembourg Stock Exchange shall require, Banque de Luxembourg, as its Note
Registrar in Luxembourg.

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"Officer" with respect to the Issuer, means the Chairman of the Board, a
Vice Chairman of the Board, the Chief Executive Officer, the President or a Vice
President, the principal financial officer, the Treasurer, or Assistant
Treasurer, the Secretary or an Assistant Secretary.

"Officers' Certificate" means a certificate signed by the Chairman of the
Board, a Vice Chairman of the Board, the Chief Executive Officer, the President
or a Vice President and by the Principal Financial Officer, Treasurer, an
Assistant Treasurer, the Secretary or an Assistant Secretary of the Issuer and
delivered to the Trustee.

"Opinion of Counsel" means a written opinion of independent counsel of
recognized standing who may be counsel for the Issuer and who shall be
reasonably acceptable to the Trustee.

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

(i) Securities theretofore canceled by the Trustee or delivered to
the Trustee for cancellation;

(ii) Securities for the payment or redemption of which money in the
necessary amount has been theretofore deposited with the Trustee or any Paying
Agent (other than the Issuer) or set aside and segregated in trust by the Issuer
(if the Issuer shall act as its own Paying Agent) for the Holders of such
Securities, PROVIDED that if such Securities are to be redeemed, notice of such
redemption has been duly given pursuant to this Indenture or provision therefor
satisfactory to the Trustee has been made;

(iii) Securities which have been paid pursuant to Section 3.6 or
in exchange for or in lieu of which other Securities have been authenticated and
delivered pursuant to this Indenture, other than any such Securities in respect
of which there shall have been presented to the Trustee proof satisfactory to it
that such Securities are held by a bona fide purchaser in whose hands such
Securities are valid obligations of the Issuer; and

(iv) Securities converted into Common Stock pursuant to Article
Twelve; PROVIDED, HOWEVER, that in determining whether the Holders of the
requisite principal amount of Outstanding Securities are present at a meeting of
Holders of Securities for quorum purposes or have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Securities owned
by the Issuer or any other obligor upon the Securities or any Affiliate of the
Issuer or such other obligor shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be protected
in making such calculation or in relying upon any such determination as to the
presence of a quorum or upon any such request, demand, authorization, direction,
notice, consent or waiver, only Securities which a Responsible Officer of the
Trustee actually knows to be so owned shall be so disregarded. Securities so
owned which have been pledged in good faith may be regarded as Outstanding if
the pledgee establishes to the satisfaction of the Trustee the pledgee's right
so to act with respect to such Securities and that the pledgee is not the Issuer
or any other obligor upon the Securities or any Affiliate of the Issuer or such
other obligor.

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"Paying Agent" means any Person authorized by the Issuer to pay the
principal of or interest on any Securities on behalf of the Issuer and, except
as otherwise specifically set forth herein, such term shall include the Issuer
if it shall act as its own Paying Agent. The Issuer has initially appointed
(i) the Trustee as its Paying Agent in New York, and (ii) so long as the
Securities are listed on the Luxembourg Stock Exchange and the rules of the
Luxembourg Stock Exchange shall require that a Paying Agent be maintained in
Luxembourg, Banque de Luxembourg, as its Paying Agent in Luxembourg.

"Payment Blockage Notice" has the meaning specified in Section 13.2.

"Person" means any individual, corporation, partnership, joint venture,
association, trust, estate, unincorporated organization or government or any
agency or political subdivision thereof.

"Place of Conversion" has the meaning specified in Section 3.1.

"Place of Payment" has the meaning specified in Section 3.1.

"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 3.6 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.

"Purchase Agreement" means the Purchase Agreement, dated July 22, 1997,
between the Issuer and the Initial Purchasers, as such agreement may be amended
from time to time.

"Purchased Shares" has the meaning specified in Section 12.4(6).

"Record Date" means any Regular Record Date or Special Record Date.

"Redemption Date," when used with respect to any Security to be redeemed in
whole or in part, means the date fixed for such redemption by or pursuant to
this Indenture.

"Redemption Price," when used with respect to any Security to be redeemed,
means the price at which it is to be redeemed pursuant to this Indenture.

"Reference Market Price" means $25.67 and in the event of any adjustment to
the Conversion Price pursuant to Section 12.4, the Reference Market Price shall
also be adjusted so that the ratio of the Reference Market Price to the
Conversion Price after giving effect to any such adjustment shall always be the
same as the ratio of $25.67 to the initial Conversion Price specified in
Section 12.1 (without regard to any adjustment thereto).

"Registration Rights Agreement" means the Registration Rights Agreement,
dated as of July 31, 1997, between the Issuer and the Initial Purchasers, as
such agreement may be amended from time to time.

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"Regular Record Date" for interest payable in respect of any Security on
any Interest Payment Date means the January 15 or July 15 (whether or not a
Business Day), as the case may be, next preceding such Interest Payment Date.

"Regulation S" means Regulation S under the Securities Act (or any
successor provision), as it may be amended from time to time.

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

"Repurchase Date" has the meaning specified in Section 14.1.

"Repurchase Price" has the meaning specified in Section 14.1.

"Responsible Officer," when used with respect to the Trustee, means any
officer of the Trustee including without limitation any vice president,
assistant vice president, assistant treasurer, assistant secretary, corporate
trust officer, assistant corporate trust officer or other employee of the
Trustee customarily performing functions similar to those performed by any of
the above designated officers and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of his knowledge and familiarity with the particular subject.

"Restricted Global Security" has the meaning specified in Section 3.5(b).

"Restricted Securities" means all Securities required pursuant to
Section 3.5(c) to bear the Restricted Securities Legend. Such term includes the
Restricted Global Security and the Certificated Individual Securities.

"Restricted Securities Legend" means the legend substantially in the form
of the legend required in the form of Security set forth in Section 2.2 to be
placed upon each Restricted Security.

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

"Rule 144A Information" has the meaning specified in Section 10.7.

"Securities" has the meaning ascribed to it in the first paragraph under
the caption "Recitals."

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"Securities Act" means the United States Securities Act of 1933, as amended
from time to time.

"Senior Indebtedness" means, with respect to the Issuer, the principal of,
premium, if any, interest (including all interest accruing subsequent to the
commencement of any bankruptcy or similar proceeding, whether or not a claim for
post-petition interest is allowable as a claim in such proceeding) and rent
payable on or in connection with, and all fees, costs, expenses and other
amounts accrued or due on or in connection with, Indebtedness of the Issuer,
whether outstanding on the date of this Indenture or thereafter created,
incurred, assumed, guaranteed or in effect guaranteed by the Issuer (including
all deferrals, renewals, extensions or refundings of, or amendments,
modifications or supplements to, the foregoing), unless in the case of any
particular Indebtedness the instrument creating or evidencing the same or the
assumption or guarantee thereof expressly provides that such Indebtedness shall
not be senior in right of payment to the Securities or expressly provides that
such Indebtedness is "PARI PASSU" or "junior" to the Securities.
Notwithstanding the foregoing, Senior Indebtedness shall not include any
Indebtedness of the Issuer to any Subsidiary of the Issuer a majority of the
voting stock of which is owned, directly or indirectly, by the Issuer; PROVIDED,
HOWEVER, that the term Senior Indebtedness shall include Indebtedness to a
Subsidiary of the Issuer arising by reason of a guarantee by the Issuer of
Indebtedness of such Subsidiary to a Person that is not a Subsidiary of the
Issuer.

"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 3.7.

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

"Subsidiary" means, with respect to any Person, a corporation more than 50%
of the outstanding voting stock of which is owned, directly or indirectly, by
such Person or by one or more other Subsidiaries, or by such Person and one or
more other Subsidiaries. For the purposes of this definition, "voting stock"
means stock or other similar interests in the corporation which ordinarily has
or have voting power for the election of directors, or persons performing
similar functions, whether at all times or only so long as no senior class of
stock or other interests has or have such voting power by reason of any
contingency.

"Successor Security" of any particular Security means every Security issued
after, and evidencing all or a portion of the same debt as that evidenced by,
such particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 3.6 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.

"Tax Affected Security" means any Security that, if as a result of any Tax
Law Change, the Issuer has or will become obligated to pay Additional Amounts in
respect of such Security.

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"Taxing Jurisdiction" has the meaning specified in Section 2.2, as such
definition may be modified from time to time in accordance with Article Seven.

"Tax Law Change" means any change in, or amendment to, the laws,
regulations, treaties or rulings prevailing in the United States of America or
any political subdivision or taxing authority thereof or therein, which change
or amendment becomes effective on or after the date hereof or any application or
judicial, legislative or administrative interpretation of such laws,
regulations, treaties or rulings.

"Trading Day" has the meaning specified in Section 12.4(8)(e).

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

"Trustee" means the Person named as the "Trustee" in the first paragraph of
this instrument until a successor Trustee shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Trustee" shall mean
such successor Trustee.
"United States" means the United States of America (including the States
and the District of Columbia), its territories, its possessions and other areas
subject to its jurisdiction (its "possessions" including Puerto Rico, the U.S.
Virgin Islands, Guam, American Samoa, Wake Island and the Northern Mariana
Islands).

"Western Europe" means Austria, Belgium, Denmark, Finland, France, Germany,
Greece, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain,
Sweden, Switzerland and the United Kingdom.

SECTION 1.2. COMPLIANCE CERTIFICATES AND OPINIONS.

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

Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture (excluding certificates provided for in
Section 10.6) shall include a:

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

(2) 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;

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

(4) statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.

SECTION 1.3. FORM OF DOCUMENTS DELIVERED TO THE TRUSTEE.

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

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

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

SECTION 1.4. ACTS OF HOLDERS OF SECURITIES.

(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided or permitted by this Indenture to be given or taken by
Holders of Securities may be embodied in and evidenced by (1) one or more
instruments of substantially similar tenor signed by such Holders in person or
by agents or proxies duly appointed in writing by such Holders, (2) the record
of Holders of Securities voting in favor thereof, either in person or by proxies
duly appointed in writing, at any meeting of Holders of Securities duly called
and held in

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accordance with the provisions of Article Nine or (3) a combination of such
instruments and any such record. Such action shall become effective when such
instrument or instruments or record or both are delivered to the Trustee and,
where it is hereby expressly required, to the Issuer. The Trustee shall
promptly deliver to the Issuer copies of all such instruments and records
delivered to the Trustee with a courtesy copy to Issuer's counsel at the address
listed in Section 1.5 and if pertaining to any conversion notice, with a
courtesy copy to Issuer's common stock Transfer Agent at the address listed in
Section 1.5. Such instrument or instruments and record (and the action embodied
therein and evidenced thereby) are herein sometimes referred to as the "Act" of
the Holders of Securities signing such instrument or instruments and so voting
at such meeting. Proof of execution of any such instrument or of a writing
appointing any such agent or proxy, or of the holding by any Person of a
Security, shall be sufficient for any purpose of this Indenture and (subject to
Section 6.1) conclusive in favor of the Trustee and the Issuer if made in the
manner provided in this Section. The record of any meeting of Holders of
Securities shall be proved in the manner provided in Section 9.6.

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

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

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

(e) The Issuer may set any day as the record date for the purpose of
determining the Holders entitled to give or take any request, demand,
authorization, direction, notice, consent, waiver or other action, or to vote on
any action, authorized or permitted by this Indenture to be given or taken by
Holders. Promptly and in any case not later than ten days after setting a
record date, the Issuer shall notify the Trustee, each Paying Agent and the
Holders of such record date. If not set by the Issuer prior to the first
solicitation of a Holder made by any Person in respect of any such action, or,
in the case of any such vote, prior to such vote, the record date for any such
action or vote shall be the 30th day (or, if later, the date of the most recent
list of Holders required to be provided pursuant to Section 15.1) prior to such
first solicitation or vote, as the case may be. With regard to any record date,
the Holders on such date (or their duly appointed agents or proxies), and only
such Persons, shall be entitled to give or take, or vote on, the relevant
action, whether or not such Holders remain Holders after such record date.
Notwithstanding the foregoing, the Issuer shall not set a record date for, and
the provisions of this paragraph shall not apply with respect to, any notice,
declaration or direction referred to in the next paragraph.

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Upon receipt by the Trustee from any Holder of (i) any notice of default or
breach referred to in Section 5.1(4), if such default or breach has occurred and
is continuing and the Trustee shall not have given such a notice to the Issuer,
(ii) any declaration of acceleration referred to in Section 5.2, if an Event of
Default has occurred and is continuing and the Trustee shall not have given such
a declaration to the Issuer, or (iii) any direction referred to in Section 5.12,
if the Trustee shall not have taken the action specified in such direction, then
a record date shall automatically and without any action by the Issuer or the
Trustee be set for determining the Holders entitled to join in such notice,
declaration or direction, which record date shall be the close of business on
the tenth day (or, if such day is not a Business Day, the first Business Day
thereafter) following the day on which the Trustee receives such notice,
declaration or direction. Promptly after such receipt by the Trustee, and as
soon as practicable thereafter, the Trustee shall notify the Issuer and the
Holders of any such record date so fixed. The Holders on such record date (or
their duly appointed agents or proxies), and only such Persons, shall be
entitled to join in such notice, declaration or direction, whether or not such
Holders remain Holders after such record date; PROVIDED that, unless such
notice, declaration or direction shall have become effective by virtue of
Holders of the requisite principal amount of Securities on such record date (or
their duly appointed agents or proxies) having joined therein on or prior to the
90th day after such record date, such notice, declaration or direction shall
automatically and without any action by any Person be canceled and of no further
effect. Nothing in this paragraph shall be construed to prevent a Holder (or a
duly appointed agent or proxy thereof) from giving, before or after the
expiration of such 90-day period, a notice, declaration or direction contrary to
or different from, or, after the expiration of such period, identical to, the
notice, declaration or direction to which such record date relates, in which
event a new record date in respect thereof shall be set pursuant to this
paragraph. In addition, nothing in this paragraph shall be construed to render
ineffective any notice, declaration or direction of the type referred to in this
paragraph given at any time to the Trustee and the Issuer by Holders (or their
duly appointed agents or proxies) of the requisite principal amount of
Securities on the date such notice, declaration or direction is so given.

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

(g) The provisions of this Section 1.4 are subject to the provisions of
Section 9.5.

SECTION 1.5. NOTICES, ETC., TO TRUSTEE AND ISSUER.

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

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(1) the Trustee or the Paying Agent in New York, New York or the
Paying Agent in Luxembourg by any Holder of Securities or by the Issuer
shall be sufficient for every purpose hereunder if made, given, furnished
or filed in writing to or with the Trustee and received at its Corporate
Trust Office, 31 West 52nd Street 9th Floor, New York, New York 10019,
Attention: Corporate Trust Department - Wind River Systems (facsimile
number (212) 469-8979), or to or with the Paying Agent in Luxembourg and
received at 14 boulevard Royal, L-2449 Luxembourg, Attention: International
Department (facsimile number: (352) 46 26 68). In addition, a courtesy
copy shall be sent to Trustee's counsel (which shall not constitute notice
to the Trustee): Ziegler, Ziegler & Altman, 700 Lexington Avenue, New
York, New York 10022 (facsimile number (212) 319-7605), attention: Scott A
Ziegler, Esq., or

(2) the Issuer by the Trustee or any Paying Agent or by any Holder of
Securities shall be sufficient for every purpose hereunder (unless
otherwise herein expressly provided) if in writing, mailed, first-class
postage prepaid, or telecopied and confirmed by mail, first-class postage
prepaid, or delivered by hand or overnight courier, addressed to the Issuer
at, Wind River Systems, Inc. 1010 Atlantic Avenue, Alameda, California
94501 (facsimile number: (510) 748-4100), Attention: Chief Financial
Officer, or at any other address previously furnished in writing to the
Trustee by the Issuer. In addition, a courtesy copy shall be sent to
Issuer's counsel (which shall not constitute notice to the Issuer): Cooley
Godward LLP, Five Alto Square, 3000 El Camino Real, Palo, California 94306
(facsimile number (415) 857-0663), Attention: Andrea Vachss, Esq. and if
relating to a conversion notice as described in Section 2.2 with a copy to
Issuer's common stock Transfer Agent, American Stock Transfer & Trust Co.,
40 Wall Street, 46th floor, New York, New York 10005 (facsimile number
(718) 921-8358), attention Mr. Joseph Wolf.

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

SECTION 1.6. NOTICE TO HOLDERS OF SECURITIES; WAIVER.

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

In any case where notice to Holders of Securities is given by mail, neither
the failure to mail such notice, nor any defect in any notice so mailed, to any
particular Holder of a Security shall affect the sufficiency of such notice with
respect to other Holders of Securities given as provided above. In case by
reason of the suspension of or irregularities in regular mail service or

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by reason of any other cause it shall be impracticable to give such notice by
mail, then such notification to Holders of Securities as shall be made with the
approval of the Trustee, which approval shall not be unreasonably withheld,
shall constitute a sufficient notification to such Holders for every purpose
hereunder.

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

SECTION 1.7. EFFECT OF HEADINGS AND TABLE OF CONTENTS.

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

SECTION 1.8. SUCCESSORS AND ASSIGNS.

All covenants, stipulations, promises and agreements in this Indenture by
the Issuer shall bind such party's respective successors and assigns, whether so
expressed or not.

SECTION 1.9. SEPARABILITY CLAUSE.

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

SECTION 1.10. BENEFITS OF INDENTURE.

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

SECTION 1.11. GOVERNING LAW.

THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, THE UNITED STATES OF AMERICA,
WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS.

SECTION 1.12. LEGAL HOLIDAYS.

In any case where any Interest Payment Date, Redemption Date, Repurchase
Date or Stated Maturity of any Security or the last day on which a Holder of a
Security has a right to convert his Security shall not be a Business Day at any
Place of Payment or Place of Conversion,

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as the case may be, then (notwithstanding any other provision of this Indenture
or of the Securities) payment of interest or principal and premium, if any, or
delivery for conversion of such Security need not be made at such Place of
Payment or Place of Conversion, as the case may be, on or by such day, but may
be made on or by the next succeeding Business Day at such Place of Payment or
Place of Conversion, as the case may be, with the same force and effect as if
made on the Interest Payment Date, Redemption Date or Repurchase Date, or at the
Stated Maturity or by such last day for conversion; PROVIDED, HOWEVER, that in
the case that payment is made on such succeeding Business Day, no interest shall
accrue on the amount so payable for the period from and after such Interest
Payment Date, Redemption Date, Repurchase Date, Stated Maturity or last day for
conversion, as the case may be.

SECTION 1.13. CONFLICT WITH TRUST INDENTURE ACT.

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

SECTION 1.14. JURISDICTION.

(a) The Issuer hereby irrevocably and unconditionally submits to the
non-exclusive jurisdiction of any New York State or United States Federal court
sitting in New York City over any suit, action or proceeding arising out of or
relating to this Indenture or any Security. The Issuer irrevocably and
unconditionally waives, to the fullest extent permitted by law, any objection
which it may now or hereafter have to the laying of the venue of any such suit,
action or proceeding brought in such a court and any claim that any such suit,
action or proceeding brought in such a court has been brought in an inconvenient
forum. To the extent that the Issuer has or hereafter may acquire any immunity
from jurisdiction of any court or from any legal process with respect to itself
or its property, the Issuer irrevocably waives such immunity in respect of its
obligations under the Indenture or any Security. The Issuer agrees that final
judgment in any such suit, action or proceeding brought in such a court shall be
conclusive and binding upon the Issuer, and, to the extent permitted by
applicable law, may be enforced in any court to the jurisdiction of which the
Issuer is subject by a suit upon such judgment or in any manner provided by law;
PROVIDED that service of process is effected upon the Issuer in the manner
specified in the following subsection or as otherwise permitted by law.

(b) As long as any of the Securities remain outstanding, the Issuer will
at all times have an authorized agent in New York City, upon whom process may be
served in any legal action or proceeding arising out of or relating to this
Indenture or any Security. Service of process upon such agent and written
notice of such service mailed or delivered to the Issuer shall

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to the fullest extent permitted by law be deemed in every respect effective
service of process upon the Issuer in any such legal action or proceeding. The
Issuer hereby irrevocably appoints the CT Corporation System, 1633 Broadway, New
York, New York 10019 as its agent for such purpose, and covenants and agrees
that service of process in any suit, action or proceeding may be made upon it at
such office of such agent. Notwithstanding the foregoing, the Issuer may, with
prior written notice to the Trustee, terminate the appointment of such agent and
appoint another agent for the above purposes so that the Issuer shall at all
times have an agent for the above purposes in New York City.

SECTION 1.15. INDENTURE AND SECURITIES SOLELY CORPORATE OBLIGATIONS.

No recourse for the payment of the principal of or premium, if any, or
interest on any Security and no recourse under or upon any obligation, covenant
or agreement of the Issuer in this Indenture or in any supplemental indenture or
in any Security, or because of the creation of any indebtedness represented
thereby, shall be had against any incorporator, stockholder, employee, agent,
officer, or director or subsidiary, as such, past, present or future, of the
Issuer or of any successor corporation, whether by virtue of any constitution,
statute or rule of law, or by the enforcement of any assessment or penalty or
otherwise; it being expressly understood that all such liability is hereby
waived and released as a condition of, and as a consideration for, the execution
of this Indenture and the issue of the Securities.

SECTION 1.16. LUXEMBOURG OBLIGATIONS.

Any and all obligations of the Issuer under this Indenture (i) to maintain
a Conversion Agent, Paying Agent or Note Registrar in Luxembourg, (ii) to
maintain an office for payment and conversion of the Securities in Luxembourg
pursuant to Section 10.2, (iii) to publish notice of the occurrence of certain
events under this Indenture in Luxembourg or (iv) to take any other action under
this Indenture that is specifically required to be taken in Luxembourg (the
"Luxembourg Obligations") shall cease to exist, and any of the provisions in
this Indenture regarding such Luxembourg Obligations shall no longer have any
force or effect, if at any time the Securities are either no longer listed on
the Luxembourg Stock Exchange or such obligation is no longer required by the
Luxembourg Stock Exchange.

ARTICLE TWO

SECURITY FORMS

SECTION 2.1. FORMS GENERALLY.

The Securities shall be in substantially the forms set forth in this
Article, with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture, and may have such
letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the Securities Act
and the Exchange Act, applicable state securities law or the rules of any
securities exchange, the Code, and the treasury regulations under the Code, or
as may, consistently herewith, be determined by the Officers executing such
Securities, as evidenced by their execution thereof.

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The Assignment Form and Certificate of Transfer shall be in substantially
the form set forth in Section 2.3.

The Election of Holder to Require Repurchase Form shall be substantially in
the form set forth in Section 2.4. The Conversion Notice shall be in
substantially the form set forth in Section 2.5. The Trustee's Certificate of
Authentication shall be in substantially the form set forth in Section 2.6.

The Securities may be printed, lithographed, typewritten, mimeographed or
otherwise produced, as determined by the Officers of the Issuer executing such
Security, as evidenced by their execution thereof.

SECTION 2.2. FORM OF SECURITY.

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

THE SECURITIES EVIDENCED BY THIS GLOBAL SECURITY (OR ITS PREDECESSOR) WERE
ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND SUCH
SECURITIES AND ANY COMMON STOCK ISSUABLE UPON CONVERSION OF SUCH SECURITIES MAY
NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. SUCH SECURITIES MAY ONLY BE
OFFERED AND SOLD IN ACCORDANCE WITH THE INDENTURE, COPIES OF WHICH ARE AVAILABLE
FOR INSPECTION AT THE CORPORATE TRUST OFFICE OF THE TRUSTEE. EACH PURCHASER OF
ANY BENEFICIAL INTEREST IN THE SECURITIES IS HEREBY NOTIFIED THAT THE SELLER OF
SUCH BENEFICIAL INTEREST IN THE SECURITIES MAY BE RELYING ON THE EXEMPTION FROM
THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A
THEREUNDER.

EACH BENEFICIAL OWNER OF AN INTEREST IN ANY OF THE SECURITIES EVIDENCED BY
THIS GLOBAL SECURITY (INCLUDING ANY PARTICIPANT IN THE DEPOSITARY HOLDING THE
GLOBAL SECURITY THAT IS SHOWN AS HOLDING SUCH AN INTEREST ON THE RECORDS OF SUCH
DEPOSITARY AND EACH BENEFICIAL OWNER THAT HOLDS THROUGH ANY SUCH PARTICIPANT)
AGREES FOR THE BENEFIT OF WIND RIVER SYSTEMS, INC. (THE "COMPANY") THAT THIS
SECURITY AND ANY COMMON STOCK ISSUABLE UPON CONVERSION OF THIS SECURITY MAY NOT
BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE SECOND
ANNIVERSARY (OR SUCH SHORTER PERIOD AS MAY THEN BE APPLICABLE UNDER THE
SECURITIES ACT REGARDING THE HOLDING PERIOD FOR NOTES UNDER RULE 144 (K) OF THE
SECURITIES ACT OR ANY SUCCESSOR RULE) OF THE ISSUANCE HEREOF (OR ANY PREDECESSOR
SECURITY HERETO) OR

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(Y) BY ANY HOLDER THAT WAS AN AFFILIATE OF THE COMPANY AT ANY TIME DURING THE
THREE MONTHS PRECEDING THE DATE OF SUCH TRANSFER, IN EITHER CASE OTHER THAN
(1) TO THE COMPANY (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE
CERTIFICATE OF TRANSFER), (2) SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A") TO A PERSON WHOM
THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE
MEANING OF RULE 144A PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE OFFER, SALE,
PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A (AS INDICATED BY
THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER), (3) IN AN
OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT
(AS DEFINED BELOW) AND IF PRIOR TO THE EXPIRATION OF THE "40 DAY RESTRICTED
PERIOD" (WITHIN THE MEANING OF RULE 903(C)(3) OF REGULATION S UNDER THE
SECURITIES ACT), AS LONG AS SUCH TRANSFER IS MADE PURSUANT TO ANOTHER EXEMPTION
FROM THE SECURITIES ACT, (4) TO AN INSTITUTION THAT IS AN "ACCREDITED INVESTOR"
AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT (AS
INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER)
THAT IS ACQUIRING THIS SECURITY FOR INVESTMENT PURPOSES AND NOT FOR
DISTRIBUTION, (PROVIDED THAT CERTAIN HOLDERS SPECIFIED IN THE INDENTURE MAY NOT
TRANSFER THIS SECURITY PURSUANT TO THIS CLAUSE (4) PRIOR TO THE EXPIRATION OF
THE "40 DAY RESTRICTED PERIOD" WITHIN THE MEANING OF RULE 903(C)(3) OF
REGULATION S UNDER THE SECURITIES ACT EXCEPT PURSUANT TO AN EXEMPTION FROM THE
SECURITIES ACT (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE
CERTIFICATE OF TRANSFER), (5) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT PROVIDED BY RULE 144 (IF APPLICABLE) UNDER THE SECURITIES ACT
(AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF
TRANSFER), (6) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE
CERTIFICATE OF TRANSFER), OR (7) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AS INDICATED BY THE BOX
CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER), IN EACH CASE IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES
OR OTHER JURISDICTION.

EACH BENEFICIAL OWNER OF AN INTEREST IN ANY OF THE SECURITIES EVIDENCED BY
THIS SECURITY AGREES THAT IT WILL FURNISH TO THE COMPANY AND THE TRUSTEE SUCH
CERTIFICATES AND OTHER

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INFORMATION AS THEY MAY REASONABLY REQUIRE TO CONFIRM THAT ANY TRANSFER BY IT OF
THIS SECURITY COMPLIES WITH THE FOREGOING RESTRICTIONS. EACH BENEFICIAL OWNER
WILL, AND EACH SUBSEQUENT BENEFICIAL OWNER OF AN INTEREST IN ANY OF THE
SECURITIES EVIDENCED BY THIS SECURITY IS REQUIRED TO, NOTIFY ANY PURCHASER OF
ANY BENEFICIAL INTEREST IN THE SECURITIES OR SUCH COMMON STOCK ISSUABLE UPON
CONVERSION OF THE SECURITIES FROM IT OF THE RESALE RESTRICTIONS REFERRED TO
ABOVE.

THE BENEFICIAL OWNER OF AN INTEREST IN ANY OF THE SECURITIES EVIDENCED BY
THIS SECURITY, BY PURCHASING THIS SECURITY, REPRESENTS AND AGREES FOR THE
BENEFIT OF THE COMPANY THAT IT IS (1) A QUALIFIED INSTITUTIONAL BUYER WITHIN THE
MEANING OF RULE 144A, (2) AN INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS
DEFINED IN RULE 501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT AND THAT IT
IS HOLDING THIS SECURITY FOR INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION, OR
(3) A NON-U.S. PERSON OUTSIDE THE UNITED STATES WITHIN THE MEANING OF (OR AN
ACCOUNT SATISFYING THE REQUIREMENTS OF PARAGRAPH (O)(2) OF RULE 902) UNDER
REGULATION S UNDER THE SECURITIES ACT."

THIS SECURITY AND ANY COMMON STOCK ISSUABLE UPON CONVERSION OF THIS
SECURITY AND ANY RELATED DOCUMENTATION MAY BE AMENDED OR SUPPLEMENTED FROM TIME
TO TIME TO MODIFY THE RESTRICTIONS ON AND PROCEDURES FOR RESALES AND OTHER
TRANSFERS OF THIS SECURITY AND ANY SUCH SHARES TO REFLECT ANY CHANGE IN
APPLICABLE LAW OR REGULATION (OR THE INTERPRETATION THEREOF) OR IN PRACTICES
RELATING TO THE RESALE OR TRANSFER OF RESTRICTED SECURITIES GENERALLY. THE
HOLDER AND BENEFICIAL OWNERS OF AN INTEREST IN ANY OF THE SECURITIES EVIDENCED
BY THIS GLOBAL SECURITY AND ANY SUCH SHARES SHALL BE DEEMED BY THE ACCEPTANCE OF
THIS SECURITY AND THE BENEFICIAL INTERESTS THEREIN AND ANY SUCH SHARES TO HAVE
AGREED TO ANY SUCH AMENDMENT OR SUPPLEMENT.

THE FOLLOWING LEGENDS SHALL APPEAR ON THE FACE OF THE GLOBAL SECURITY:

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

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

UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE FOR SECURITIES IN DEFINITIVE
REGISTERED FORM IN THE LIMITED CIRCUMSTANCES REFERRED TO IN THE INDENTURE, THIS
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.

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WIND RIVER SYSTEMS, INC.

5% CONVERTIBLE SUBORDINATED NOTE
DUE 2002

No. _____________ U.S.$_____
CUSIP NO. __________

WIND RIVER SYSTEMS, INC., a Delaware corporation (herein called the
"Issuer," which term includes any successor Person under the Indenture
referred to on the reverse hereof), for value received, hereby promises to
pay to _______________, or registered assigns (the "Holder"), the principal
sum of _____________ United States Dollars (U.S.$_____) [(which amount may
from time to time be increased or decreased to such other principal amounts
(which, taken together with the principal amounts of all other Outstanding
Securities, shall not exceed $140,000,000 in the aggregate at any time) by
adjustments made on the records of the Trustee, as custodian of the Depositary,
in accordance with the rules and procedures of the Depositary)](1) on
August 1, 2002 and to pay interest thereon, from July 31, 1997, or from the
most recent Interest Payment Date (as defined below) to which interest has
been paid or duly provided for, semi-annually in arrears on February 1 and
August 1 in each year (each, an "Interest Payment Date"), commencing
February 1, 1998, at the rate of 5% per annum (together with any Additional
Amounts and Liquidated Damages that the Issuer may be required to pay) until
the principal hereof is due, and at a rate of 5% per annum on any overdue
principal and premium, if any, and, to the extent permitted by law, on any
overdue interest.

The interest so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in the Indenture, be paid to the Person
in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest, which shall be the January 15 or July 15 (whether or not a Business
Day), as the case may be, next preceding such Interest Payment Date. Except as
otherwise provided in the Indenture, any such interest not so punctually paid or
duly provided for ("Defaulted Interest") will forthwith cease to be payable to
the Holder on such Regular Record Date and may either be paid to the Person in
whose name this Security (or one or more Predecessor Securities) is registered
at the close of business on a Special Record Date for the payment of such
Defaulted Interest to be fixed by the Issuer, notice whereof shall be given to
Holders of Securities not less than 10 days prior to such Special Record Date,
or be paid at any time in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Securities may be listed,
and upon such notice as may be required by such exchange, all as more fully
provided in the Indenture. Payments of principal shall be made upon the
surrender of this Security, at the office of the Trustee in the Borough of
Manhattan, The City of New York or, subject to the right of the Issuer to
terminate such appointment, the Paying

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(1) This language shall appear on each Global Security.

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Agent in Luxembourg, or at such other office or agency of the Issuer as may be
designated by it for such purpose in the Borough of Manhattan, The City of New
York or Luxembourg in such coin or currency of the United States of America as
at the time of payment shall be legal tender for the payment of public and
private debts, or at such other offices or agencies as the Issuer may designate,
by United States Dollar check drawn on a bank in the United States, or transfer
to a United States Dollar account (such a transfer to be made only to a Holder
of an aggregate principal amount of Securities in excess of U.S. $2,000,000, and
only if such Holder shall have furnished wire instructions in writing to the
Trustee no later than 15 days prior to the relevant payment date) maintained by
the Holder with a bank in the United States. Payment of interest on this
Security may be made by United States Dollar check mailed to the address of the
Person entitled thereto as such address shall appear in the Security Register,
or, upon written application by the Holder to the Security Registrar setting
forth wire instructions not later than the relevant Record Date, by transfer to
a United States Dollar account (such a transfer to be made only to a Holder of
an aggregate principal amount of Securities in excess of U.S.$2,000,000 and only
if such Holder shall have furnished wire instructions in writing to the Trustee
no later than 15 days prior to the relevant payment date) maintained by the
Holder with a bank in the United States.

The Issuer will pay to the Holder of this Security such additional amounts
("Additional Amounts") as may be necessary in order that every net payment of
the principal of, premium, if any, and interest on this Security (including
payment on redemption or repurchase), after deduction or withholding for or on
account of any present or future tax, assessment or governmental charge imposed
upon or as a result of such payment by the United States of America or any
political subdivision or taxing authority thereof or therein (each, a "Taxing
Jurisdiction"), will not be less than the amount provided for in this Security
to be then due and payable; PROVIDED, HOWEVER, that the Issuer shall not be
obligated to pay any Additional Amounts in respect of payments becoming due on
the Securities more than 15 days after the Redemption Date with respect to any
redemption of the Tax Affected Securities pursuant to the third paragraph of the
reverse of this Security to the extent that the Issuer's obligation to pay such
Additional Amounts arises from the Tax Law Change that resulted in such
redemption; and PROVIDED, FURTHER, that the foregoing obligation to pay
Additional Amounts will not apply to:

(a) any tax, assessment or other governmental charge which would not
have been so imposed but for (i) the existence of any present or former
connection between such Holder (or between a fiduciary, settlor,
beneficiary, member, shareholder of or possessor of a power over such
Holder, if such Holder is an estate, a trust, a partnership or a
corporation) and the Taxing Jurisdiction or any political subdivision or
taxing authority thereof or therein, including, without limitation, such
Holder (or such fiduciary, settlor, beneficiary, member, shareholder or
possessor) being or having been a citizen, domiciliary or resident of the
United States of America or treated as a resident thereof, or being or
having been engaged in trade or business or present therein, or having or
having had a permanent establishment therein or (ii) such Holder's present
or former status as a personal holding company, a foreign personal holding
company with respect to the United States, or a foreign private foundation
or foreign tax exempt entity for United States federal tax purposes, or a
corporation which accumulates earnings to avoid United States federal
income tax;

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<PAGE>

(b) any tax, assessment or other governmental charge which would not
have been so imposed but for the presentation by the Holder of this
Security for payment on a date more than 15 days after the date on which
such payment became due and payable or the date on which payment thereof is
duly provided for, whichever occurs later;

(d) any tax, assessment or other governmental charge which would not
have been imposed but for the failure of such Holder (or such fiduciary,
settlor, beneficiary, member, shareholder or possessor) of such Security to
comply with a request by the Issuer addressed to such Holder (or such
fiduciary, settlor, beneficiary, member, shareholder or possessor) (A) to
provide information concerning the nationality, residence or identity of
such Holder (or such fiduciary, settlor, beneficiary, member, shareholder
or possessor) or (B) to make any declaration or other similar claim or
satisfy any information or reporting requirement, which, in the case of (A)
or (B), is required or imposed by a statute, treaty, regulation or
administrative practice of the Taxing Jurisdiction as a precondition to
exemption from all or part of such tax, assessment or other governmental
charge;

(e) any tax, assessment or other governmental charge which is payable
otherwise than by deduction or withholding from payments of principal of,
premium, if any, or interest on such Security:

(f) any tax, assessment or other governmental charge imposed on a
Holder that is a partnership or a fiduciary or other than the sole
beneficial owner of such payment, but only to the extent that any
beneficial owner or member of the partnership or beneficiary or settlor
with respect to the fiduciary would not have been entitled to the payment
of Additional Amounts had the beneficial owner, member, beneficiary or
settlor directly been the Holder of this Security; or

(g) any combination of items (a), (b), (c), (d), (e), and (f).

Except as specifically provided herein and in the Indenture, the Issuer
shall not be required to make any payment with respect to any tax, assessment or
other governmental charge imposed by any government or any political subdivision
or taxing authority thereof or therein. Whenever in this Security there is a
reference, in any context, to the payment of the principal of, premium, if any,
or interest on, or in respect of, any Security such mention shall be deemed to
include mention of the payment of Additional Amounts payable as described in the
second preceding paragraph to the extent that, in such context, Additional
Amounts are, were or would be payable in respect of such Security and express
mention of the payment of Additional Amounts (if applicable) in any provisions
of this Security shall not be construed as excluding Additional Amounts in those
provisions of this Security where such express mention is not made.

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<PAGE>

If the Issuer is consolidated or merged with or the Issuer's assets are
transferred substantially as an entirety or all of the Issuer's obligations
hereunder are transferred to a Person (the "Successor Issuer") that is not
organized and existing under the laws of the United States of America or any
political subdivision thereof and resident for tax purposes therein, the term
"Taxing Jurisdiction" shall be modified to include any nation, or any political
subdivision or territory or possession thereof, under the laws of which the
Successor Issuer is organized or in which the Successor Issuer is resident for
tax purposes or under the laws of which withholding or deduction for or on
account of any present or future taxes or duties of whatever nature is otherwise
imposed or levied.

Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place. Capitalized terms used
herein, including on the reverse hereof, and not defined herein or on the
reverse hereof shall have the respective meanings given to such terms in the
Indenture.

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

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

Dated:

WIND RIVER SYSTEMS, INC.

By:
-----------------------------------
Name:

Title:

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<PAGE>

[FORM OF REVERSE]

This Security is one of a duly authorized issue of securities of the Issuer
designated as its "5% Convertible Subordinated Notes due 2002" (herein called
the "Securities"), limited in aggregate principal amount to U.S. $140,000,000,
issued and to be issued under and pursuant to an Indenture, dated as of July 31,
1997 (herein called the "Indenture"), between the Issuer and Deutsche Bank AG,
New York Branch, Trustee (herein called the "Trustee," which term includes any
successor trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights, limitations of rights, duties and immunities thereunder of the Issuer,
the Trustee, the holders of Senior Indebtedness of the Issuer and the Holders of
the Securities and of the terms upon which the Securities are, and are to be,
authenticated and delivered. The Securities are issuable in the denomination of
U.S.$1,000 and integral multiples thereof. As provided in the Indenture and
subject to the limitations therein set forth, the Securities are exchangeable
(a) at the office of the Trustee, or at such other office or agency of the
Issuer as may be designated by it for such purpose in The City of New York or
(b) so long as the Securities are listed on the Luxembourg Stock Exchange and
the rules of the Luxembourg Stock Exchange shall so require (and to the right of
the Issuer to terminate the appointment of any Note Registrar (as defined
below)), the office of Banque de Luxembourg, International Department, 14
boulevard Royal, L-2449 Luxembourg, or at such other offices or agencies outside
the United States as the Issuer may designate (each a "Note Registrar").

No sinking fund is provided for the Securities. The Securities will not be
redeemable at the option of the Issuer prior to August 2, 2000. At any time on
or after August 2, 2000 and prior to maturity, the Securities are subject to
redemption at the option of the Issuer at any time, in whole or in part, upon
not less than 20 nor more than 60 days' notice to the Holders prior to the
Redemption Date, at the following Redemption Prices (expressed as percentages of
the principal amount thereof):

12-Month Period Redemption Price
--------------- ----------------

Beginning August 1, 2000 102%
Beginning August 1, 2001 101%

and thereafter at August 1, 2002 a Redemption Price equal to 100% of the
principal amount, together, in each case, with accrued interest to, but
excluding the Redemption Date; Securities that are Tax Affected Securities are
also redeemable, in whole but not in part, under the circumstances described in
the next succeeding paragraph, at a Redemption Price equal to 100% of the
principal amount thereof plus interest accrued to, but excluding the Redemption
Date; PROVIDED, HOWEVER, that interest installments on Securities whose Stated
Maturity is on or prior to such Redemption Date will be payable to the Holders
of such Securities, or one or more Predecessor Securities, of record at the
close of business on the relevant Record Dates referred to on the face hereof,
all as provided in the Indenture.

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<PAGE>

If the Issuer determines that, principally as a result of a Tax Law Change,
the Issuer is or would become obligated to pay to the Holder of any Security
Additional Amounts, as described in the second paragraph of the face of this
Security, and such obligation cannot be avoided by the Issuer taking reasonable
measures available to it, then the Issuer may, at its option, redeem the Tax
Affected Securities in whole, but not in part, at any time, on giving not less
than 20 days' notice to the Holders prior to the Redemption Date, at a
Redemption Price equal to 100% of the principal amount plus interest accrued to,
but excluding, the Redemption Date, and any Additional Amounts then payable;
PROVIDED, that no such notice of redemption shall be given earlier than 90 days
prior to the earliest date on which the Issuer would be obligated to pay any
such Additional Amounts were a payment in respect of the Tax Affected Securities
then made. Prior to the giving of any notice of redemption pursuant to this
paragraph, the Issuer shall deliver to the Trustee (a) an Officers' Certificate
stating that the Issuer is entitled to effect such redemption and setting forth
a statement of facts showing that the conditions precedent to the right of the
Issuer so to redeem have occurred and (b) an Opinion of Counsel of recognized
standing selected by the Issuer to the effect that the circumstances referred to
above in this paragraph exist. The Trustee shall accept such opinion as
sufficient evidence of the satisfaction of the conditions precedent described
above, in which event it shall be conclusive and binding on the Holders. The
Issuer's right to redeem the Tax Affected Securities shall continue as long as
the Issuer is obligated to pay such Additional Amounts, notwithstanding that the
Issuer shall have made payments of Additional Amounts specified in such second
paragraph.

In the event of a redemption of less than all of the Securities, the Issuer
will not be required (a) to register the transfer or exchange of Securities for
a period of 15 days immediately preceding the date notice is given identifying
the serial numbers of the Securities called for such redemption or (b) to
register the transfer or exchange of any Security, or portion thereof, called
for redemption.

In any case where the due date for the payment of the principal or premium,
if any, or interest, including Additional Amounts and Liquidated Damages on, any
Security or the last day on which a Holder of a Security has a right to convert
his Security shall be, at any Place of Payment or Place of Conversion, as the
case may be, a day on which banking institutions at such Place of Payment or
Place of Conversion are authorized or obligated by law or executive order to
close, then payment of principal, premium, if any, or interest, including
Additional Amounts and Liquidated Damages, or delivery for conversion of such
Security need not be made on or by such date at such place but may be made on or
by the next succeeding day at such place which is not a day on which banking
institutions are authorized or obligated by law or executive order to close,
with the same force and effect as if made on the date for such payment or the
date fixed for redemption or repurchase, or by such last day for conversion, and
no interest shall accrue on the amount so payable for the period after such
date.

Subject to and upon compliance with the provisions of the Indenture, the
Holder of this Security is entitled, at his option, at any time on or after the
90th day following the last original issue date of the Security and prior to the
close of business on August 1, 2002, or in case this Security or a portion
hereof is called for redemption or the Holder hereof has exercised his right to
require the Issuer to repurchase this Security or such portion hereof, then in
respect of this

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<PAGE>

Security until and including, but (unless the Issuer defaults in making the
payment due upon redemption or repurchase, as the case may be) not after, the
close of business on the Business Day next preceding the Redemption Date or the
Repurchase Date, as the case may be, to convert this Security (or any portion of
the principal amount hereof that is an integral multiple of U.S.$1,000, PROVIDED
that the unconverted portion of such principal amount is U.S.$1,000 or any
integral multiple thereof) into fully paid and nonassessable Common Stock of the
Issuer at an initial Conversion Price of U.S. $48.50 for each share of Common
Stock (or at the current adjusted Conversion Price if an adjustment has been
made as provided in the Indenture).

In order to convert such Security, a Holder must surrender this Security,
duly endorsed or assigned to the Issuer or in blank and, in case such surrender
shall be made during the period from the close of business of any Regular Record
Date next preceding any Interest Payment Date to the opening of business on such
Interest Payment Date ("Interest Period") (except Securities called for
redemption on a Redemption Date or to be repurchased on a Repurchase Date
during, in each case, such Interest Period), also accompanied by payment in New
York Clearing House or other funds acceptable to the Issuer of an amount equal
to the interest payable on such Interest Payment Date on the principal amount of
this Security then being converted, and also the conversion notice hereon duly
executed, to the Issuer at the office of the Trustee in the Borough of
Manhattan, The City of New York or the Conversion Agent in Luxembourg, or at
such other office or agency of the Issuer, subject to any laws or regulations
applicable thereto and subject to the right of the Issuer to terminate the
appointment of any Conversion Agent (as defined below) as may be designated by
it for such purpose in the Borough of Manhattan, The City of New York or
Luxembourg, or at such other offices or agencies as the Issuer may designate
(each a "Conversion Agent"), PROVIDED FURTHER, that if this Security or portion
hereof has been called for redemption on a Redemption Date or is repurchasable
on a Repurchase Date occurring, in either case, during the Interest Period and
is surrendered for conversion during such Interest Period, then the Holder of
this Security who converts this Security or a portion hereof during such
Interest Period will be entitled to receive the interest accruing hereon from
the Interest Payment Date next preceding the date of such conversion to such
succeeding Interest Payment Date and shall not be required to pay such interest
upon surrender of this Security for conversion.

Subject to the aforesaid requirement for payment and, in the case of a
conversion after the Regular Record Date next preceding any Interest Payment
Date and on or before such Interest Payment Date, to the right of the Holder of
this Security (or any Predecessor Security) of record at such Regular Record
Date to receive an installment of interest, no cash payment or adjustment is to
be made on conversion, if the date of conversion is not an Interest Payment
Date, for interest accrued hereon from the Interest Payment Date next preceding
the date of conversion, or for dividends on the Common Stock issued on
conversion hereof. The Issuer shall thereafter deliver to the Holder the fixed
number of shares of Common Stock (together with any cash adjustment, as provided
in the Indenture) into which this Security is convertible and such delivery will
be deemed to satisfy the Issuer's obligation to pay the principal amount of this
Security. No fractions of shares or scrip representing fractions of shares will
be issued on conversion, but instead of any fractional interest (calculated to
the nearest 1/100th of a share) the Issuer shall pay a cash adjustment as
provided in the Indenture. The Conversion Price is subject to adjustment as
provided in the Indenture. In addition, the Indenture provides that in case of
certain

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<PAGE>

consolidations or mergers to which the Issuer is a party (other than a
consolidation or merger which does not result in any reclassification,
conversion, exchange or cancellation of the Common Stock) or the transfer of all
or substantially all of the property and assets of the Issuer, the Indenture
shall be amended, without the consent of any Holders of Securities, so that this
Security, if then Outstanding, will be convertible thereafter, during the period
this Security shall be convertible as specified above, only into the kind and
amount of securities, cash and other property receivable upon such
consolidation, merger or transfer by a holder of the number of shares of Common
Stock of the Issuer into which this Security could have been converted
immediately prior to such consolidation, merger or transfer (assuming such
holder of Common Stock is not a Constituent Person and failed to exercise any
rights of election and received per share the kind and amount received per share
by a plurality of Non-electing Shares). No adjustment in the Conversion Price
will be made until such adjustment would require an increase or decrease of at
least one percent of such price, PROVIDED that any adjustment that would
otherwise be made will be carried forward and taken into account in the
computation of any subsequent adjustment.

Subject to certain limitations in the Indenture, at any time when the
Issuer is not subject to Section 13 or 15(d) of the United States Securities
Exchange Act of 1934, as amended, upon the request of a Holder of a Restricted
Security or the holder of Common Stock issued upon conversion thereof, the
Issuer will promptly furnish or cause to be furnished Rule 144A Information to
such Holder of Restricted Securities or such holder of Common Stock issued upon
conversion of Restricted Securities, or to a prospective purchaser of any such
security designated by any such Holder or holder, as the case may be, to the
extent required to permit compliance by such Holder or holder with Rule 144A
under the Securities Act in connection with the resale of any such security.

The Holder of this Security and the Common Stock issuable upon conversion
thereof is entitled to the benefits of a Registration Rights Agreement (subject
to the provisions thereof), dated as of July 31, 1997, between the Issuer and
the Initial Purchasers. In order to participate in any such registration,
Holders must obtain from the Trustee, and complete, sign and deliver to the
Issuer, a selling securityholder questionnaire, provide certain other
information with respect to the Holder and otherwise comply with the provisions
of the Registration Rights Agreement.

If a Fundamental Change (as defined in the Indenture) occurs at any time on
or prior to August 1, 2002, each Holder shall have the right, at such Holder's
option, to require the Issuer to repurchase the Securities on the 45th day after
notice thereof. Such payment shall be made at the Repurchase Prices (expressed
as percentages of the principal amount thereof) in the event of a Fundamental
Change occurring during the 12-month period beginning August 1:

Year Percentage
---- ----------

1997 102%
1998 102
1999 102

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<PAGE>

2000 102
2001 101

and 100% at August 1, 2002; PROVIDED in each case that if the Applicable Price
(as defined in the Indenture) is less than the Reference Market Price (as
defined in the Indenture), the Issuer shall repurchase such Securities at a
price equal to the foregoing Repurchase Price multiplied by the fraction
obtained by dividing the Applicable Price by the Reference Market Price. In
each case, the Issuer shall also pay accrued interest, if any, on such
Securities to, but excluding the Repurchase Date; PROVIDED that if such
Repurchase Date is February 1 or August 1, then the interest payable on such
date shall be paid to the Holder of record of the Securities on the Regular
Record Date. Whenever in this Security there is a reference, in any context, to
the principal of any Security as of any time, such reference shall be deemed to
include reference to the Repurchase Price payable in respect of such Security to
the extent that such Repurchase Price is, was or would be so payable at such
time, and express mention of the Repurchase Price in any provision of this
Security shall not be construed as excluding the Repurchase Price in those
provisions of this Security when such express mention is not made.

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

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

[The following paragraph shall appear in the Global Security:

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

The indebtedness evidenced by this Security and the obligations of the
Issuer under the Indenture are to the extent and in the manner provided in the
Indenture, subordinate and subject in right of payment to the prior payment in
full of all Senior Indebtedness (as defined in the Indenture) of the Issuer, and
this Security is issued subject to such provisions of the Indenture with respect
thereto. Each Holder of this Security, by accepting the same, (a) agrees to and
shall be bound by such provisions, (b) authorizes and directs the Trustee on his
behalf to take such action as may be necessary or appropriate to effectuate the
subordination so provided and (c) appoints the Trustee his attorney-in-fact for
any and all such purposes.

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

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<PAGE>

The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Securities under the Indenture at
any time by the Issuer and the Trustee with either (a) the written consent of
the Holders of not less than a majority in aggregate principal amount of the
Securities at the time Outstanding (as defined in the Indenture), or (b) by the
adoption of a resolution, at a meeting of Holders of the Outstanding Securities
at which a quorum is present, by the Holders of at least the lesser of (i) a
majority in aggregate principal amount of the Securities at the time Outstanding
and (ii) 66-2/3% in aggregate principal amount of the Outstanding Securities
represented and entitled to vote at such meeting. The Indenture also contains
provisions permitting the Holders of specified percentages in aggregate
principal amount of the Securities at the time Outstanding, on behalf of the
Holders of all the Securities, to waive compliance by the Issuer with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder of this Security
shall be conclusive and binding upon such Holder and upon all future Holders of
this Security and of any Security issued in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Security or
such other Security.

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

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

As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of Securities is registrable on the Note Register (as
defined in the Indenture) upon surrender of a Security for registration of
transfer (a) at the Corporate Trust Office of the Trustee or at such other
office or agency of the Issuer as may be designated by it for such purpose in
the Borough of Manhattan, The City of New York, or (b) subject to any laws or
regulations applicable thereto and to the right of the Issuer to terminate the
appointment of any Note Registrar (as defined in the Indenture), at the offices
of the Note Registrars described herein or at

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<PAGE>

such other offices or agencies as the Issuer may designate, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Issuer and the Note Registrar duly executed by, the Holder thereof or his
attorney duly authorized in writing, and thereupon one or more new Securities,
of authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees by the Registrar. No service
charge shall be made for any such registration of transfer or exchange, but the
Issuer may require payment of a sum sufficient to recover any tax or other
governmental charge payable in connection therewith.

No recourse for the payment of the principal (and premium, if any) or
interest on this Security and no recourse under or upon any obligation, covenant
or agreement of the Issuer in the Indenture or any indenture supplemental
thereto or in any Security, or because of the creation of any indebtedness
represented thereby, shall be had against any incorporator, stockholder,
employee, agent, officer or director or subsidiary, as such, past, present or
future, of the Issuer or of any successor corporation, either directly or
through the Issuer or any successor corporation, whether by virtue of any
constitution, statute or rule of law or by the enforcement of any assessment or
penalty or otherwise, all such liability being, by the acceptance hereof and as
part of consideration for the issue hereof, expressly waived and released.

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

THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, UNITED STATES OF AMERICA,
WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS.

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

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<PAGE>

SECTION 2.3. ASSIGNMENT FORM AND CERTIFICATE OF TRANSFER.

ASSIGNMENT FORM AND
CERTIFICATE OF TRANSFER

To assign this Security fill in the form below:
(I) or (we) assign and transfer this Security to

- --------------------------------------------------------------------------------
(Insert assignee's social security or tax I.D. no.)

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

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

and irrevocably appoint ______________ agent to transfer this Security on the
books of the Issuer. The agent may substitute another to act for him.

Your signature:
------------------------------------------------------------
(Sign exactly as your name appears on the other side of this
Security)

Date:
--------------------
Signature Guarantee: ***
--------------------------------------------------

In connection with any transfer of any of the Securities evidenced by this
certificate occurring prior to the date that is two years (or such shorter
period as may then be applicable under the Securities Act) after the later of
the date of original issuance of such Securities and the last date, if any, on
which such Securities were owned by the Issuer or any Affiliate of the Issuer,
the undersigned confirms that such Securities are being transferred:

CHECK ONE BOX BELOW

(1) / / to the Issuer; or

(2) / / pursuant to and in compliance with Rule 144A under the Securities
Act of 1933; or

(3) / / pursuant to and in compliance with Regulation S under the
Securities Act of 1933; or

- ------------
*** Signature must be guaranteed by a commercial bank, trust company or member
firm of the New York Stock Exchange.

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<PAGE>

(4) / / to an institutional "accredited investor" as defined in Rule
501(a) (1), (2), (3) or (7) under the Securities Act of 1933 that
has furnished to the Trustee a signed letter containing certain
representations and agreements (the form of which letter can be
obtained from the Trustee); or

(5) / / pursuant to Rule 144 of the Securities Act of 1933;

(6) / / pursuant to an effective registration statement under the
Securities Act of 1933; or

(7) / / pursuant to another available exemption from the registration
requirements of the Securities Act of 1933.

Unless one of the boxes 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 box (2), (3),
(4), (5), (6) or (7) is checked, the Trustee (as instructed by the Issuer) and
the Issuer may require, prior to registering any such transfer of the Securities
such legal opinions, certifications and other information as the Issuer has
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, such as the exemption provided by Rule 144 under
such Act.

------------------------------
Signature

Signature Guarantee:*

- ------------------------------ ------------------------------
Signature must be guaranteed Signature

- --------------------------------------------------------------------------------

- --------------------
* Signature must be guaranteed by a commercial bank, trust company or member
firm of the New York Stock Exchange.

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<PAGE>

SECTION 2.4. FORM OF ELECTION OF HOLDER TO REQUIRE REPURCHASE.

ELECTION OF HOLDER TO REQUIRE REPURCHASE

1. Pursuant to Section 14.1 of the Indenture, the undersigned hereby
elects to have this Security repurchased by the Issuer.

2. The undersigned hereby directs the Issuer to pay it or _______________
the Repurchase Price plus interest accrued to, but excluding, the Repurchase
Date, as provided in the Indenture.

Dated:
--------------------- --------------------------

--------------------------
Signature(s)

--------------------------
Signature Guaranteed

Principal amount to be repurchased:
--------------------

Remaining principal amount following such repurchase:
--------------

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

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<PAGE>

SECTION 2.5. FORM OF CONVERSION NOTICE.

CONVERSION NOTICE

The undersigned Holder of this Security hereby irrevocably exercises the
option to convert this Security, or any portion of the principal amount hereof
(which is an integral multiple of U.S.$1,000, PROVIDED that the unconverted
portion of such principal amount is U.S.$1,000 or any integral multiple thereof,
and that the date of exercise of this conversion is on or after 90 days from the
date of the Indenture, dated July 31, 1997) below designated, into shares of
Common Stock of the Issuer in accordance with the terms of the Indenture
referred to in this Security, and directs that such shares, together with a
check in payment for any fractional shares and any Securities representing any
unconverted principal amount hereof, be delivered to and be registered in the
name of the undersigned unless a different name has been indicated below. If
shares of Common Stock or Securities are to be registered in the name of a
Person other than the undersigned, the undersigned will pay all transfer taxes
payable with respect thereto. Any amount required to be paid by the undersigned
on account of interest accompanies this Security.

Dated:
---------------------

If shares or Securities are to be registered in the name of a Person other than
the Holder, please print such Person's name and address:

- ---------------------------
Name

- ---------------------------
Address

- ---------------------------
Social Security or other Taxpayer Identification Number, if any

- ---------------------------

- ---------------------------
*Signature(s)

If only a portion of the Security is to be converted, please indicate:

1. Principal amount to be converted:

U.S.$
---------------------

2. Principal amount and denomination of Securities representing unconverted
principal amount to be issued:

Amount: U.S.$
---------------------

Denomination: U.S.$
----------------
(any integral multiple of U.S. $1,000, provided that the unconverted portion of
such principal amount is U.S. $1,000 or any integral multiple thereof).

* Signature must be Guaranteed by a commercial bank, trust company or member
firm of the New York Stock Exchange

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<PAGE>

SECTION 2.6. FORM OF CERTIFICATE OF AUTHENTICATION.

The Trustee's certificate of authentication shall be in substantially the
following form:

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

Dated:
---------------

DEUTSCHE BANK AG, NEW YORK BRANCH
as Trustee

By:
---------------------------------
Authorized Signatory

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<PAGE>
ARTICLE THREE

THE SECURITIES

SECTION 3.1. TITLE AND TERMS.

The aggregate principal amount of Securities which may be authenticated and
delivered under this Indenture is limited to U.S.$140,000,000, except for
Securities authenticated and delivered in exchange for, or in lieu of, other
Securities pursuant to Section 3.4, 3.5, 3.6, 8.5, 11.8, 12.2 or 14.2(e).

The Securities shall be known and designated as the "5% Convertible
Subordinated Notes due 2002" of the Issuer. Their Stated Maturity shall be
August 1, 2002 and they shall bear interest on their principal amount from
July 31, 1997, payable semi-annually in arrears on February 1 and August 1 in
each year, commencing February 1, 1998, at the rate of 5% (together with any
Additional Amounts and Liquidated Damages the Issuer may be required to pay)
until the principal thereof is due, and at the rate of 5% per annum on any
overdue principal and, to the extent permitted by law, on any overdue interest;
PROVIDED, HOWEVER, that payments shall only be made on Business Days as provided
in Section 1.12.

The Securities are entitled to the benefits of registration rights as
provided by the Registration Rights Agreement.

The principal of, premium, if any, and interest on the Securities shall be
payable as provided in the form of Security set forth in Section 2.2 and the
Repurchase Price shall be payable at such places as are identified in the Issuer
Notice given pursuant to Section 15.2 (any city in which any Paying Agent is
located being herein called a "Place of Payment").

The Securities shall be redeemable at the option of the Issuer, in whole or
in part, and at the option of the Issuer or otherwise in the event of certain
developments, including, developments with respect to U.S. withholding taxes or
certification requirements, as provided in Article Eleven and in the form of
Security set forth in Section 2.2.

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

The Securities shall be subordinated in right of payment to Senior
Indebtedness of the Issuer as provided in Article Thirteen.

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

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<PAGE>

SECTION 3.2. DENOMINATIONS.

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

SECTION 3.3. EXECUTION, AUTHENTICATION, DELIVERY AND DATING.

The Securities shall be executed on behalf of the Issuer by the an Officer
of the Issuer. Any such signature may be manual or facsimile.

Securities bearing the manual or facsimile signature of an individual or
individuals who were at any time the proper officer or officers of the Issuer
shall bind the Issuer, notwithstanding that such individuals or any of them have
ceased to hold such offices prior to the authentication and delivery of such
Securities or did not hold such offices at the date of such Securities.

At any time and from time to time after the execution and delivery of this
Indenture, the Issuer may deliver Securities executed by the Issuer to the
Trustee or to its order for authentication (or to the Paying Agent), together
with an Issuer Order for the authentication and delivery of such Securities, and
the Trustee or an Authenticating Agent in accordance with such Issuer Order
shall authenticate and make available for delivery such Securities as in this
Indenture provided and not otherwise. In connection with any Issuer Order for
authentication, an Officers' Certificate and Opinion of Counsel pursuant to
Section 1.2 shall be required.

Each Security shall be dated the date of its authentication.

In authenticating the Securities and in accepting the additional
responsibilities under the Indenture in relation to such Securities, the Trustee
shall be entitled to receive and shall be fully protected in relying upon, an
Opinion of Counsel stating:

(a) that the form or forms of such Securities have been established in
conformity with the provisions of this Indenture;

(b) that the terms of such Securities have been established in conformity
with the provisions of this Indenture;

(c) that such Securities, when completed by appropriate insertions and
executed and delivered by the Issuer to the Trustee for authentication in
accordance with this Indenture, authenticated and delivered by the Trustee in
accordance with this Indenture and issued by the Issuer in the manner and
subject to any conditions specified in such Opinion of Counsel, will constitute
the legal, valid and binding obligations of the Issuer, enforceable in
accordance with their terms, subject to applicable bankruptcy, insolvency,
reorganization and other similar laws of general applicability relating to or
affecting the enforcement of creditors' rights, to general equitable principles
and to such other qualifications as such counsel shall conclude do not
materially affect the rights of Holders of such Securities;

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<PAGE>

(d) that all laws and requirements in respect of the execution and
delivery by the Issuer of such Securities and of the supplemental indentures, if
any, have been complied with and that authentication and delivery of such
Securities and the execution and delivery of the supplemental indenture, if any,
by the Trustee will not violate the terms of the Indenture;

(e) that the Issuer has the corporate power to issue such Securities, and
has duly taken all necessary corporate action with respect to such issuance; and

(f) that the issuance of such Securities will not contravene the articles
of incorporation or by-laws of the Issuer or result in any violation of any of
the terms or provisions of any law or regulation or of any indenture, mortgage
or other agreement known to such Counsel which violation would have a material
adverse effect on the Issuer by which the Issuer is bound.

The Trustee shall not be required to authenticate and deliver any such
Securities if the issue of such Securities pursuant to this Indenture will
affect the Trustee's own rights, duties or immunities under the Securities and
this Indenture or otherwise in a manner which is not reasonably acceptable to
the Trustee.

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

SECTION 3.4. GLOBAL SECURITIES; CERTIFICATED INDIVIDUAL SECURITIES.

(a) Securities Generally

(1) Notes issued to QIBs in reliance on Rule 144A and Notes offered
and sold in reliance upon Regulation S shall be issued initially in the form of
a Global Security in definitive, fully registered form without interest coupons
bearing the Restricted Securities Legend or the Global Security Legend.

(2) Notes issued to institutional "accredited investors" (as defined
in Rule 501(a)(1), (2), (3) OR (7) under the Securities Act are referred to as
"Institutional Accredited Investors") who are not QIBs will receive certificated
Individual Securities bearing the Restricted Securities Legend (each, a
"Certificated Individual Security").

(b) Global Security

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

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<PAGE>

(2) Notwithstanding any other provision in this Indenture, no Global
Security may be exchanged in whole or in part for Securities in definitive form
registered, and no transfer of a Global Security in whole or in part may be
registered, in the name of any Person other than the Depositary for such Global
Security or a nominee thereof unless (i) such Depositary (A) has notified the
Issuer that it is unwilling or unable to continue as Depositary for such Global
Security or (B) has ceased to be a clearing agency registered as such under the
Exchange Act or announces an intention permanently to cease business or does in
fact do so or (ii) there shall have occurred and be continuing an Event of
Default with respect to such Global Security. In such event, if a successor
Depositary for such Global Security is not appointed by the Issuer within 90
days after the Issuer receives such notice or becomes aware of such
ineligibility, (2) the Issuer will execute, and the Trustee, upon receipt of an
Officers' Certificate of the Issuer directing the authentication and delivery of
Securities, will authenticate and deliver, Securities in definitive, fully
registered form without interest coupons, in certificated form in denominations
of U.S. $1,000 or any integral multiple thereof, substantially in the form of
Security set forth in Section 2.2 (each, an "Individual Security"), and the
Issuer will execute and deliver to the Trustee Individual Securities in any
authorized denominations in an aggregate principal amount equal to the principal
amount of such Global Securities in exchange for such Global Securities.

(3) If any Global Security is to be exchanged for Individual
Securities or canceled in whole, it shall be surrendered by or on behalf of the
Depositary or its nominee to the Trustee, as Security Registrar, for exchange or
cancellation as provided in this Article Three. Upon any such surrender of a
Global Security, the Trustee shall, subject to this Article Three, authenticate
and deliver any Individual Security (or any portion thereof) to or upon the
order of, and registered in such names as may be directed by, the Depositary or
its authorized representative. Upon the request of the Trustee, the Issuer
shall promptly make available to the Trustee a reasonable supply of Individual
Securities. The Trustee shall be entitled to rely upon any order, direction or
request of the Depositary or its authorized representative which is given or
made pursuant to this Article Three or reasonably believed by it to be properly
given.

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

(1) Pending the preparation of definitive Securities, the Issuer may
execute, and upon Issuer Order the Trustee shall authenticate and make available
for delivery, temporary Securities which are printed, lithographed, typewritten,
mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Securities in lieu of which they
are issued and with such appropriate insertions, omissions, substitutions and
other

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<PAGE>

variations as the officers executing such Securities may determine, as evidenced
by their execution of such Securities.

(2) If temporary Securities are issued, the Issuer will cause
definitive Securities to be prepared without unreasonable delay. After the
preparation of definitive Securities, the temporary Securities shall be
exchangeable for definitive Securities upon surrender of the temporary
Securities at any office or agency of the Issuer designated pursuant to
Section 10.2, without charge to the Holder. Upon surrender for cancellation of
any one or more temporary Securities the Issuer shall execute and the Trustee
shall authenticate and make available for delivery in exchange therefor a like
principal amount of definitive Securities of authorized denominations. Until so
exchanged the temporary Securities shall in all respects be entitled to the same
benefits under this Indenture as definitive Securities.

SECTION 3.5. REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE; RESTRICTIONS
ON TRANSFER.

(a) The Issuer shall cause to be kept at the Corporate Trust Office of the
Trustee a register (the register maintained in such office and in any other
office or agency of the Issuer designated pursuant to Section 10.2 (including
the office of Deutsche Bank AG, New York Branch, in the Borough of Manhattan,
The City of New York and the office of Banque de Luxembourg, in Luxembourg)
being herein sometimes collectively referred to as the "Note Register") in
which, subject to such reasonable regulations as it may prescribe, the Issuer
shall provide for the registration of Securities and of transfers of Securities.
The Trustee is hereby appointed "Note Registrar" for the purpose of registering
Securities and transfers and exchanges of Securities as herein provided.

Upon surrender for registration of transfer of any Security at an office or
agency of the Issuer designated pursuant to Section 10.2 for such purpose, the
Issuer shall execute, and the Trustee shall authenticate and deliver, in the
name of the designated transferee or transferees, one or more new Securities of
any authorized denominations and of a like aggregate principal amount and tenor
and bearing such restrictive legends as may be required by this Indenture.

At the option of the Holder, and subject to the further provisions of this
Section 3.5, Securities may be exchanged for other Securities of any authorized
denomination and of a like aggregate principal amount, upon surrender of the
Securities to be exchanged at any such office or agency maintained by the Issuer
pursuant to Section 10.2. Whenever any Securities are so surrendered for
exchange, and subject to the further provisions of this Section 3.5, the Issuer
shall execute, and the Trustee shall authenticate and deliver, the Securities
which the Holder making the exchange is entitled to receive. Every Security
presented or surrendered for registration of transfer or for exchange shall (if
so required by the Issuer or the Security Registrar) be duly endorsed, or be
accompanied by a written instrument of transfer in form satisfactory to the
Issuer and the Security Registrar duly executed, by the Holder thereof or his
attorney duly authorized in writing.

All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Issuer, evidencing the same
debt, and, subject to the other provisions of this Section 3.5, entitled to the
same benefits, under and subject to the same restrictions

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<PAGE>

imposed by this Indenture, as the Securities surrendered upon such registration
of transfer or exchange.

Except as provided in Section 3.6, no service charge shall be made for any
registration of transfer or exchange of Securities, but the Issuer may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any registration of transfer or exchange of
Securities, other than exchanges pursuant to Section 3.4, 8.5, 11.8, 12.2 or
15.2(e) (other than, in the case of Securities, where the Common Stock are to be
issued or delivered in a name other than that of the Holder of the Security) not
involving any transfer and other than any stamp and other duties, if any, which
may be imposed in connection with any such transfer or exchange by the United
States or any political subdivision thereof or therein, which shall be paid by
the Issuer.

In the event of a redemption of the Securities in part, neither the Issuer
nor the Security Registrar will be required (a) to register the transfer of or
exchange of Securities for a period of 15 days immediately preceding the date
notice is given identifying the serial numbers of the Securities called for such
redemption or (b) to register the transfer of or exchange any Security, or
portion thereof, called for redemption.

(b) RESTRICTIONS ON TRANSFER. Upon their original issuance, the
Securities shall be Restricted Securities, shall bear the Restricted Securities
Legend and shall be issued in the form of a either a Global Security or an
Individual Security, as applicable, registered in the name of DTC, as
Depositary, or its nominee and deposited with the Trustee, as custodian for DTC,
for credit by DTC to the respective accounts of beneficial owners of the
Securities represented thereby (or such other accounts as they may direct).

(c) RESTRICTED SECURITIES LEGEND. The Securities and their
respective Successor Securities shall bear, or be subject to the provisions of,
the applicable Restricted Securities Legend, subject to the following:

(i) Subject to the following clauses of this Section 3.5(c), a
Security or any portion thereof which is exchanged in accordance with
Section 3.4(b)(2) for a Global Security or any portion thereof shall bear
the Restricted Securities Legend borne by such Global Security while
represented thereby.

(ii) Subject to the following clauses of this Section 3.5(c), a
new Security which is not a Global Security that has been issued as a
result of events set forth in Section 3.4(b)(2) and is issued in exchange
for another Security (including a Global Security) or any portion thereof,
upon transfer or otherwise, shall bear the Restricted Securities Legend, if
any, borne by such other Security.

(iii) At any time after the Securities may be freely transferred
without registration under the Securities Act or without being subject to
transfer restrictions pursuant to the Securities Act (including, without
limitation, pursuant to Rule 144(k) of the Securities Act), a (i) new
Security (other than a Global Security) which does not bear a Restricted
Securities Legend may be issued in exchange for or in lieu of a Security or

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<PAGE>

any portion thereof which bears such a Restricted Securities Legend and the
Trustee shall authenticate and deliver such a new Security in exchange for
or in lieu of such other Security as provided in this Article Three and
(ii) in the case of any beneficial interest in a Restricted Global
Security, such beneficial interest shall no longer be subject to the
provisions set forth in the Restricted Securities Legend.

(iv) A new Security which does not bear a Restricted Securities
Legend may be issued in exchange for or in lieu of a Security or any
portion thereof which bears such a Restricted Securities Legend if, in the
judgment of the Issuer, placing such a Restricted Securities Legend upon
such new Security is not necessary to ensure compliance with the
registration requirements of the Securities Act, and the Trustee, at the
direction of the Issuer, shall authenticate and deliver such a new Security
as provided in this Article Three.

(v) Any Securities which are sold or otherwise disposed of
pursuant to an effective registration statement under the Securities Act,
together with their Successor Securities shall not bear a Restricted
Securities Legend. The Issuer shall inform the Trustee in writing of the
effective date of any such registration statement registering the
Securities under the Securities Act and shall notify the Trustee at any
time when a prospectus must be delivered with respect to Securities to be
sold pursuant to such registration statement. The Trustee shall not be
liable for any action taken or omitted to be taken by it in good faith in
accordance with the aforementioned registration statement.

(d) Neither the Trustee, any Paying Agent nor any of their agents
shall (1) have any duty to monitor compliance with or with respect to any
federal or state or other securities or tax laws or (2) have any duty to obtain
documentation on any transfers or exchanges other than as specifically set forth
herein. The Trustee shall not request certificates from the Issuer or an opinion
from Counsel to the Issuer with respect to the compliance with any federal or
state securities laws relating to any transfer or assignment of the Securities
by any Holder of Securities, and the Trustee shall obtain such certificates,
opinions or other assurances solely from the transferring or assigning Holder or
from the applicable transferee or assignee.

SECTION 3.6. MUTILATED, DESTROYED, LOST OR STOLEN SECURITIES.

If any mutilated Security is surrendered to the Trustee or to a Note
Registrar outside the United States, the Issuer shall execute, the Trustee or an
Authenticating Agent shall authenticate and the Trustee or Note Registrar shall
deliver in exchange therefor a new Security of like tenor and principal amount
and bearing a number not contemporaneously outstanding.

If there be delivered to the Issuer and either to the Trustee or to a Note
Registrar outside the United States:

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

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<PAGE>

(2) such security or indemnity as may be satisfactory to the Issuer
and the Trustee and such Note Registrar to save each of them and any agent
of either of them harmless,

then, in the absence of actual notice to the Issuer, the Trustee or the Note
Registrar that such Security has been acquired by a bona fide purchaser, the
Issuer shall execute, and upon its request, the Trustee or an Authenticating
Agent shall authenticate and the Trustee or Note Registrar shall deliver in lieu
of any such destroyed, lost or stolen Security or in exchange for the Security,
a new Security of like tenor and principal amount and bearing a number not
contemporaneously outstanding.

In case any such mutilated, destroyed, lost or stolen Security has become
or is about to become due and payable, the Issuer in its discretion, but subject
to any conversion rights, may, instead of issuing a new Security, pay such
Security.

Upon the issuance of any new Security under this Section 3.6, the Issuer
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto (other than any
stamp and other duties, if any, which may be imposed in connection therewith by
the United States of America or any political subdivision thereof or therein,
which shall be paid by the Issuer) and any other expenses (including the fees
and expenses of the Trustee, any Paying Agent and any Note Registrar) connected
therewith.

Every new Security issued pursuant to this Section 3.6 in lieu of any
mutilated, destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Issuer, whether or not the mutilated,
destroyed, lost or stolen Security shall be at any time enforceable by anyone,
and such new Security shall be entitled to all the benefits of this Indenture
equally and proportionately with any and all other Securities duly issued
hereunder.

The provisions of this Section 3.6 are exclusive and shall preclude (to the
extent lawful) all other rights and remedies of any Holder with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Securities.

SECTION 3.7. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED.

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

Any interest on any Security which is payable, but is not punctually paid
or duly provided for, on any Interest Payment Date (herein called "Defaulted
Interest") shall forthwith cease to be payable to the Holder on the relevant
Regular Record Date by virtue of having been such Holder, and such Defaulted
Interest may be paid by the Issuer, at its election in each case, as provided in
Clause (1) or (2) below:

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<PAGE>

(1) The Issuer may elect to make payment of any Defaulted Interest to
the Persons in whose names the Securities (or their respective Predecessor
Securities) are registered at the close of business on a Special Record
Date for the payment of such Defaulted Interest, which shall be fixed in
the following manner. The Issuer shall notify the Trustee in writing of
the amount of Defaulted Interest proposed to be paid on each Security, and
the date of the proposed payment, and at the same time the Issuer shall
deposit with the Trustee an amount of money equal to the aggregate amount
proposed to be paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Trustee for such deposit prior to the date
of the proposed payment, such money when deposited to be held in trust for
the benefit of the Persons entitled to such Defaulted Interest as in this
Clause provided. Thereupon, the Trustee shall fix the Special Record Date
for the payment of such Defaulted Interest which shall be not more than
15 days and not less than 10 days prior to the date of the proposed payment
and not less than 10 days after the receipt by the Trustee of the notice of
the proposed payment. The Trustee shall promptly notify the Issuer of such
Special Record Date and, in the name and at the expense of the Issuer,
shall cause notice of the proposed payment of such Defaulted Interest and
the Special Record Date therefor to be mailed, first-class postage prepaid,
to each Holder of Securities at such Holder's address as it appears in the
Security Register, not less than 10 days prior to such Special Record Date.
Notice of the proposed payment of such Defaulted Interest and the Special
Record Date therefor having been so mailed, such Defaulted Interest shall
be paid to the Persons in whose names the Securities (or their respective
Predecessor Securities) are registered at the close of business on such
Special Record Date and shall no longer be payable pursuant to the
following Clause (2).

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

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

In the case of any Security which is converted after any Regular Record
Date and on or prior to the next succeeding Interest Payment Date (other than
any Security whose Maturity is prior to such Interest Payment Date), interest
whose Stated Maturity is on such Interest Payment Date shall be payable on such
Interest Payment Date notwithstanding such conversion, and such interest
(whether or not punctually paid or duly provided for) shall be paid to the
Person in whose name such Security (or one or more Predecessor Securities) is
registered at the close of business on such Regular Record Date. Except as
otherwise expressly provided in the immediately preceding sentence, in the case
of any Security which is converted, interest whose Stated Maturity is after the
date of conversion of such Security shall not be payable.

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SECTION 3.8. PERSONS DEEMED OWNERS.

Prior to due presentment of a Security for registration of transfer, the
Issuer or the Trustee and any agent of the Issuer or the Trustee may treat the
Person in whose name such Security is registered as the owner of such Security
for the purpose of receiving payment of principal of, premium, if any, and
(subject to Section 3.7) interest on such Security and for all other purposes
whatsoever, whether or not such Security be overdue, and neither the Issuer, the
Trustee nor any agent of the Issuer or the Trustee shall be affected by notice
to the contrary.

None of the Issuer, the Trustee, any Paying Agent or the Security Registrar
will have any responsibility or liability for any aspect of the records relating
to or payments made on account of beneficial ownership interests of a Security
in global form or for maintaining, supervising or reviewing any records relating
to such beneficial ownership interests.

Notwithstanding the foregoing, with respect to any Global Security, nothing
herein shall prevent the Issuer, the Trustee, or any agent of the Issuer or the
Trustee, from giving effect to any written certification, proxy or other
authorization furnished by any Depositary, as a Holder, with respect to such
Global Security or impair, as between such depositary and owners of beneficial
interests in such Global Security, the operation of customary practices
governing the exercise of the rights of such depositary (or its nominee) as
Holder of such Global Security.

SECTION 3.9. CANCELLATION.

All Securities surrendered for payment, redemption, repurchase,
registration of transfer or exchange or conversion shall, if surrendered to any
Person other than the Trustee, be delivered to the Trustee. All Securities so
delivered to the Trustee shall be cancelled promptly by the Trustee. No
Securities shall be authenticated in lieu of or in exchange for any Securities
cancelled as provided in this Section 3.9. The Trustee shall destroy all
cancelled Securities in accordance with applicable law and its customary
practices in effect from time to time.

SECTION 3.10. COMPUTATION OF INTEREST.

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

SECTION 3.11. CUSIP NUMBERS.

The Issuer in issuing Securities may use "CUSIP" numbers (if then generally
in use) in addition to serial numbers; if so, the Trustee shall use such "CUSIP"
numbers in addition to serial numbers in notices of redemption and repurchase as
a convenience to Holders; PROVIDED that any such notice may state that no
representation is made as to the correctness of such CUSIP numbers either as
printed on the Securities or as contained in any notice of a redemption or
repurchase and that reliance may be placed only on the serial or other
identification numbers printed on the Securities, and any such redemption or
repurchase shall not be affected by any defect in or omission of such CUSIP
numbers.

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ARTICLE FOUR

SATISFACTION AND DISCHARGE

SECTION 4.1. SATISFACTION AND DISCHARGE OF INDENTURE.

This Indenture shall, upon Issuer Request, cease to be of further effect
(except as to any surviving rights of conversion, or registration of transfer or
exchange, or replacement of Securities herein expressly provided for and any
right to receive Additional Amounts and Liquidated Damages, if any, as provided
in the form of Security set forth in Section 2.2 and the Issuer's obligations to
the Trustee pursuant to Section 6.7), and the Trustee, at the expense of the
Issuer, shall execute proper instruments in form and substance satisfactory to
the Trustee acknowledging satisfaction and discharge of this Indenture, when

(1) either

(A) all Securities theretofore authenticated and delivered (other
than (i) Securities which have been destroyed, lost or stolen and which have
been replaced or paid as provided in Section 3.6 and (ii) Securities for whose
payment money has theretofore been deposited with the Trustee or the Paying
Agent in trust or segregated and held in trust by the Issuer and thereafter
repaid to the Issuer or discharged from such trust, as provided in Section 10.3)
have been delivered to the Trustee for cancellation; or

(B) all such Securities not theretofore delivered to the Trustee or
the Paying Agent or its agent for cancellation (other than Securities referred
to in clauses (i) and (ii) of clause (1)(A) above)

(i) have become due and payable, or

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

(iii) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the Issuer,

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

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

(3) the Issuer has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent herein
provided for relating to the satisfaction and discharge of this Indenture have
been complied with.

Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Issuer to the Trustee under Section 6.7, the obligations of
the Issuer to any Authenticating Agent under Section 6.12, the obligation of the
Issuer to pay Additional Amounts and, if money shall have been deposited with
the Trustee pursuant to clause (1)(B) of this Section 4.1, the obligations of
the Trustee under Section 4.2 and the last paragraph of Section 10.3 shall
survive. Funds held in trust pursuant to this Section are not subject to the
provisions of Article Thirteen or Article Fourteen.

SECTION 4.2. APPLICATION OF TRUST MONEY.

Subject to the provisions of the last paragraph of Section 10.3, all money
deposited with the Trustee pursuant to Section 4.1 shall be held in trust and
applied by it, in accordance with the provisions of the Securities and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Issuer acting as its own Paying Agent) as the Trustee may
determine to the Persons entitled thereto, of the principal, premium, if any,
and interest for whose payment such money has been deposited with the Trustee;
but such money need not be segregated from other funds except to the extent
required by law.

All moneys deposited with the Trustee pursuant to Section 4.1 (and held by
it or any Paying Agent) for the payment of Securities subsequently converted
shall be returned to the Issuer upon an Issuer Request.

ARTICLE FIVE

REMEDIES

SECTION 5.1. EVENTS OF DEFAULT.

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

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

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

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

(4) the entry by a court having jurisdiction in the premises of (A) a
decree or order for relief in respect of the Issuer in an involuntary case
or proceeding under any applicable bankruptcy, moratorium of payments,
insolvency, reorganization or other similar law or (B) a decree or order
adjudging the Issuer a bankrupt or insolvent, or approving as properly
filed a petition seeking reorganization, arrangement, adjustment or
composition of or in respect of the Issuer under any applicable Federal or
State law, or appointing a custodian, receiver, liquidator, assignee,
trustee, sequestrator or other similar official of the Issuer or of
substantially all of its property, or ordering the winding up or
liquidation of its affairs, and the continuance of any such decree or order
unstayed and in effect for a period of 60 consecutive days; or

(5) the commencement by the Issuer of a voluntary case or proceeding
under any applicable bankruptcy, moratorium of payments, insolvency,
reorganization or other similar law or of any other case or proceeding to
be adjudicated a bankrupt or insolvent or to be granted moratorium of
payment, or the consent by it to the entry of a decree or order for relief
in respect of the Issuer in an involuntary case or proceeding under any
applicable bankruptcy, moratorium of payment, insolvency, reorganization or
other similar law or to the commencement of any bankruptcy, moratorium of
payment or insolvency proceedings against it, or the filing by it of a
petition or consent seeking reorganization or similar relief under any
applicable law, or the consent by it to the filing of such petition or to
the appointment of or taking possession by a custodian, receiver,
liquidator, assignee, trustee, sequestrator or other similar official of
the Issuer or of substantially all of its property, or the making by it of
an assignment for the benefit of creditors, or the admission by it in
writing of its inability to pay its debts generally as they become due, or
the taking of corporate action by the Issuer in furtherance of any such
action.

SECTION 5.2. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.

If an Event of Default (other than an Event of Default specified in
Section 5.1(4) or (5)) occurs and is continuing, then in every such case the
Trustee or the Holders of not less than 25%

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in aggregate principal amount of the Outstanding Securities may declare the
principal of all the Securities to be due and payable immediately, by a notice
in writing to the Issuer (and to the Trustee if given by the Holders), and upon
any such declaration such principal and all accrued interest thereon shall
become immediately due and payable. If an Event of Default specified in
Section 5.1(4) or (5) occurs, the principal of, and accrued interest on, all the
Securities shall ipso facto become immediately due and payable without any
declaration or other Act of the Holders or any act on the part of the Trustee.

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

(1) The Issuer has paid or deposited with the Trustee a sum sufficient to
pay

(A) all overdue interest (including any Additional Amounts and
Liquidated Damages) on all Securities,

(B) the principal of and premium, if any, on any Securities which
have become due otherwise than by such declaration of acceleration and any
interest thereon at the rate borne by the Securities,

(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel; and

(2) all Events of Default, other than the nonpayment of the principal of,
and any interest on, Securities which have become due solely by such declaration
of acceleration, have been cured or waived as provided in Section 5.13.

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

SECTION 5.3. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY TRUSTEE.

The Issuer covenants that if

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

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

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The Issuer will, upon demand of the Trustee, pay to it, for the benefit of
the Holders of such Securities, the whole amount then due and payable on such
Securities for principal and interest (including any Additional Amounts and
Liquidated Damages) and interest on any overdue principal and premium, if any,
and on any overdue interest (including any Additional Amounts and Liquidated
Damages), to the extent permitted by law, at a rate of 5% per annum, and in
addition thereto, such further amount as shall be sufficient to cover the costs
and expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.

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

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

SECTION 5.4. TRUSTEE MAY FILE PROOFS OF CLAIM.

In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, moratorium of payments, reorganization, arrangement, adjustment,
composition or other judicial proceeding relative to the Issuer or any other
obligor upon the Securities or the property of the Issuer or of such other
obligor or the creditors of either, the Trustee (irrespective of whether the
principal of, and any interest on, the Securities shall then be due and payable
as therein expressed or by declaration or otherwise and irrespective of whether
the Trustee shall have made any demand on the Issuer for the payment of overdue
principal or interest) shall be entitled and empowered, by intervention in such
proceeding or otherwise,

(1) to file and prove a claim for the whole amount of principal,
premium, if any, and interest owing and unpaid in respect of the Securities
and take such other actions, including participating as a member, voting or
otherwise, of any official committee of creditors appointed in such matter,
and to file such other papers or documents, in each of the foregoing cases,
as may be necessary or advisable in order to have the claims of the Trustee
(including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and of
the Holders of Securities allowed in such judicial proceeding, and

(2) to collect and receive any moneys or other property payable or
deliverable on any such claim and to distribute the same;

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and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder of Securities to make such payments to the Trustee and, in the event
that the Trustee shall consent to the making of such payments directly to the
Holders of Securities to pay to the Trustee any amount due to it for the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel and any other amounts due the Trustee under Section 6.7.

Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder of a Security
any plan of reorganization, arrangement, adjustment or composition affecting the
Securities or the rights of any Holder thereof or to authorize the Trustee to
vote in respect of the claim of any Holder of a Security in any such proceeding;
PROVIDED, HOWEVER, that the Trustee may, on behalf of such Holders, vote for the
election of a trustee in bankruptcy or similar official.

SECTION 5.5. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF SECURITIES.

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

SECTION 5.6. APPLICATION OF MONEY COLLECTED.

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

FIRST: To the payment of all amounts due the Trustee under
Section 6.7;

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

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

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SECTION 5.7. LIMITATION ON SUITS.

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

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

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

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

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

(5) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a majority
in aggregate principal amount of the Outstanding Securities;

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

SECTION 5.8. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL, PREMIUM AND
INTEREST AND TO CONVERT.

Notwithstanding any other provision in this Indenture, the Holder of any
Security shall have the right, which is absolute and unconditional, to receive
payment of the principal of, premium, if any, and (subject to Section 3.7)
interest on such Security on the respective Stated Maturities expressed in such
Security (or, in the case of redemption or repurchase, on the Redemption Date or
Repurchase Date, as the case may be), and to convert such Security in accordance
with Article Twelve, and to institute suit for the enforcement of any such
payment and right to convert, and such rights shall not be impaired without the
consent of such Holder.

SECTION 5.9. RESTORATION OF RIGHTS AND REMEDIES.

If the Trustee or any Holder of a Security has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Issuer, the Trustee and the

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Holders of Securities shall be restored severally and respectively to their
former positions hereunder and thereafter all rights and remedies of the Trustee
and such Holders shall continue as though no such proceeding had been
instituted.

SECTION 5.10. RIGHTS AND REMEDIES CUMULATIVE.

Except as otherwise provided with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Securities in the last paragraph of
Section 3.6, no right or remedy herein conferred upon or reserved to the Trustee
or to the Holders of Securities is intended to be exclusive of any other right
or remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.

SECTION 5.11. DELAY OR OMISSION NOT WAIVER.

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

SECTION 5.12. CONTROL BY HOLDERS OF SECURITIES.

Subject to Section 6.3(6), the Holders of a majority in aggregate
principal amount of the Outstanding Securities shall have the right to
direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee or exercising any trust or power conferred
on the Trustee, PROVIDED that

(1) such direction shall not be in conflict with any rule of law or
with this Indenture;

(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction;

(3) the Trustee need not take any action which might result in
personal liability or be unjustly prejudicial to the Holders of Securities
not consenting; and

(4) such direction shall be presented by such Holders to the Trustee
in a timely manner.

SECTION 5.13. WAIVER OF PAST DEFAULTS.

The Holders, either (a) through the written consent of not less than a
majority in aggregate principal amount of the Outstanding Securities, or (b) by
the adoption of a resolution,

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at a meeting of Holders of the Outstanding Securities at which a quorum is
present, by the Holders of the lessor of (x) not less than a majority in
aggregate principal amount of Outstanding Securities and (y) at least 66-2/3%
in aggregate principal amount of the Outstanding Securities represented at such
meeting, may on behalf of the Holders of all the Securities waive any past
default hereunder and its consequences, except a default (1) in the payment of
the principal of, premium, if any, or interest on any Security, or (2) in
respect of a covenant or provision hereof which under Article Eight cannot be
modified or amended without the consent of the Holder of each Outstanding
Security affected.

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

SECTION 5.14. UNDERTAKING FOR COSTS.

All parties to this Indenture agree, and each Holder of any Security by his
or her acceptance thereof shall be deemed to have agreed, that any court may in
its discretion require, in any suit for the enforcement of any right or remedy
under this Indenture, or in any suit against the Trustee for any action taken,
suffered or omitted by it as Trustee, the filing by any party litigant in such
suit of an undertaking to pay the costs of such suit, and that such court may in
its discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant.

SECTION 5.15. WAIVER OF STAY, EXTENSION AND USURY LAWS.

The Issuer covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay, extension law or usury law or other
law that would prohibit or forgive the Issuer from paying all or any portion of
its obligations on the Securities as provided herein, wherever enacted, now or
at any time hereafter in force, which may affect the covenants or the
performance of this Indenture; and the Issuer (to the extent it may lawfully do
so) hereby expressly waives all benefit or advantage of any such law and
covenants that it will not hinder, delay or impede the execution of any power
herein granted to the Trustee, but will suffer and permit the execution of every
such power as though no such law had been enacted.

ARTICLE SIX

THE TRUSTEE

SECTION 6.1. CERTAIN DUTIES AND RESPONSIBILITIES.

(a) Except during the continuance of an Event of Default,

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(1) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture, and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and

(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee 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
be under a duty to examine the same to determine whether or not they
conform to the requirements of this Indenture, but not to verify the
contents thereof.

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

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

(1) this paragraph (c) shall not be construed to limit the effect of
paragraph (a) of this Section;

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

(3) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the direction
of the Holders of a majority in aggregate principal amount of the
Outstanding Securities or such lesser percentage as provided in this
Indenture relating to the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust
or power conferred upon the Trustee, under this Indenture.

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

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

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SECTION 6.2. NOTICE OF DEFAULTS.

Within 90 days after the occurrence of any default hereunder as to which
the Trustee has received written notice, the Trustee shall give to all Holders
of Securities, in the manner provided in Section 1.6, notice of such default,
unless such default shall have been cured or waived; PROVIDED, HOWEVER, that,
except in the case of a default in the payment of the principal of, premium, if
any, or interest on any Security, the Trustee shall be protected in withholding
such notice if and so long as the board of directors, the executive committee or
a trust committee of directors or Responsible Officers of the Trustee in good
faith determine that the withholding of such notice is in the interest of the
Holders; and PROVIDED, FURTHER, that in the case of any default of the character
specified in Section 5.1(4), no such notice to Holders of Securities shall be
given until at least 30 days after the occurrence thereof. For the purpose of
this Section, the term "default" means any event which is, or after notice or
lapse of time or both would become, an Event of Default.

SECTION 6.3. CERTAIN RIGHTS OF TRUSTEE.

Subject to the provisions of Section 6.1:

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

(2) any request or direction of the Issuer mentioned herein shall be
sufficiently evidenced by an Issuer Request or Issuer Order, and any
resolution of the Board shall be sufficiently evidenced by a Board
Resolution;

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

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

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

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(6) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, coupon, other evidence of indebtedness or other
paper or document, but the Trustee in its sole discretion may make such
further inquiry or investigation into such facts or matters as it may see
fit, and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and
premises of the Issuer, personally or by agent or attorney;

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

(8) the permissive right of the Trustee to take or refrain from
taking any actions enumerated in this Indenture shall not be construed as a
duty and the Trustee shall not be answerable in such actions other than for
its own negligence, bad faith or willful misconduct in exercising any such
right; and

(9) the Trustee shall not be liable for any action taken, suffered or
omitted to be taken by it in good faith and reasonably believed by it to be
authorized or within the discretion or rights or powers conferred upon it
by the Indenture.

SECTION 6.4. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES.

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

SECTION 6.5. MAY HOLD SECURITIES, ACT AS TRUSTEE UNDER OTHER INDENTURES.

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

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

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SECTION 6.6. MONEY HELD IN TRUST.

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

SECTION 6.7. COMPENSATION AND REIMBURSEMENT.

The Issuer agrees

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

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

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

When the Trustee incurs expenses or renders services in connection with an
Event of Default specified in Section 5.1(5) or Section 5.1(6), the expenses
(including the reasonable charges of its counsel) and the compensation for the
services are intended to constitute expenses of the administration under any
applicable Federal or state bankruptcy, insolvency or other similar law.

Any Paying Agent or Authenticating Agent appointed hereunder shall be
entitled to the benefits of Section 6.7(3) as if the indemnity set forth
therefor were specifically afforded to such Paying Agent or Authenticating
Agent.

The provisions of this Section shall survive the termination of this
Indenture or the earlier resignation or removal of the Trustee, any Paying Agent
or any Authenticating Agent, as the case may be.

The obligations of the Issuer under this Section to compensate the Trustee,
to pay or reimburse the Trustee for expenses, disbursements and advances and to
indemnify and hold harmless the Trustee shall constitute additional indebtedness
hereunder and shall survive the

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satisfaction and discharge of this Indenture. As security for the performance
of such obligations of the Issuer, the Trustee shall have a claim prior to the
Securities upon all property and funds held or collected by the Trustee as such,
except funds held in trust for the payment of principal of (and premium, if any)
or interest on particular Securities.

SECTION 6.8. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.

There shall at all times be a Trustee hereunder which shall be a Person
that is eligible pursuant to the Trust Indenture Act to act as such, having (or
if the Trustee is a member of a bank holding company, its bank holding company
has) a combined capital and surplus of at least U.S.$50,000,000, subject to
supervision or examination by Federal or state authority, in good standing. If
such corporation publishes reports of condition at least annually, pursuant to
law or to the requirements of said supervising or examining authority, then for
the purposes of this Section, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. If at any time the Trustee
shall cease to be eligible in accordance with the provisions of this Section, it
shall resign immediately in the manner and with the effect hereinafter specified
in this Article and a successor shall be appointed pursuant to Section 6.9.

SECTION 6.9. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.

(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 6.10.

(b) The Trustee may resign at any time by giving written notice thereof to
the Issuer. If the instrument of acceptance by a successor Trustee required by
Section 6.10 shall not have been delivered to the Trustee within 30 days after
the giving of such notice of resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a successor Trustee.

(c) The Trustee may be removed at any time by Act of the Holders of a
majority in aggregate principal amount of the Outstanding Securities, delivered
to the Trustee and the Issuer. If the instrument of acceptance by a successor
Trustee required by Section 6.10 shall not have been delivered to the Trustee
within 30 days after the giving of such notice of removal, the removed Trustee
may petition any court of competent jurisdiction for the appointment of a
successor Trustee.

(d) If at any time:

(1) the Trustee shall cease to be eligible under Section 6.8 and
shall fail to resign after written request therefor by the Issuer or by any
Holder of a Security who has been a bona fide Holder of a Security for at
least six months, or

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

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

then, in any such case (i) the Issuer by a Board Resolution may remove the
Trustee, or (ii) subject to Section 5.14, any Holder of a Security who has been
a bona fide Holder of a Security for at least six months may, on behalf of
himself and all others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee.

(e) If the Trustee shall resign, be removed or become incapable of acting,
or if a vacancy shall occur in the office of Trustee for any cause, the Issuer,
by a Board Resolution, shall promptly appoint a successor Trustee and shall
comply with the applicable requirements of this Section and Section 6.10. If,
within one year after such resignation, removal or incapability, or the
occurrence of such vacancy, a successor Trustee shall be appointed by Act of the
Holders of a majority in aggregate principal amount of the Outstanding
Securities delivered to the Issuer and the retiring Trustee, the successor
Trustee so appointed shall, forthwith upon its acceptance of such appointment in
accordance with the applicable requirements of Section 6.10, become the
successor Trustee and supersede the successor Trustee appointed by the Issuer.
If no successor Trustee shall have been so appointed by the Issuer or the
Holders of Securities and accepted appointment in the manner required by this
Section and Section 6.10, any Holder of a Security who has been a bona fide
Holder of a Security for at least six months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee.

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

SECTION 6.10. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.

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

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

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SECTION 6.11. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.

Any corporation into which the Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
PROVIDED such corporation shall be otherwise eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Securities shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Securities so authenticated with the same
effect as if such successor Trustee had itself authenticated such Securities.

SECTION 6.12. AUTHENTICATING AGENTS.

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

Securities authenticated by an Authenticating Agent shall be entitled to
the benefits of this Indenture and shall be valid and obligatory for all
purposes as if authenticated by the Trustee hereunder, and every reference in
this Indenture to the authentication and delivery of Securities by the Trustee
or the Trustee's certificate of authentication shall be deemed to include
authentication and delivery on behalf of the Trustee by an Authenticating Agent
and a certificate of authentication executed on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent shall be acceptable to the
Issuer and shall at all times be a corporation organized and doing business
under the laws of the United States of America, any State thereof, the District
of Columbia, or Luxembourg authorized under such laws to act as Authenticating
Agent and subject to supervision or examination by government or other fiscal
authority. If at any time an Authenticating Agent shall cease to be eligible in
accordance with the provisions of this Section 6.12, such Authenticating Agent
shall resign immediately in the manner and with the effect specified in this
Section 6.12.

Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, PROVIDED such corporation shall be otherwise eligible
under this Section 6.12, without the execution or filing of any paper or any
further act on the part of the Trustee or the Authenticating Agent.

An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Issuer. The Trustee may at any time terminate
the agency of an Authenticating Agent by giving written notice thereof to such
Authenticating Agent and to the Issuer. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of

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this Section 6.12, the Trustee may appoint a successor Authenticating Agent
which shall be subject to acceptance by the Issuer. Any successor
Authenticating Agent upon acceptance of its appointment hereunder shall become
vested with all the rights, powers and duties of its predecessor hereunder, with
like effect as if originally named as an Authenticating Agent. No successor
Authenticating Agent shall be appointed unless eligible under the provisions of
this Section 6.12.

The Issuer agrees to pay to each Authenticating Agent from time to time
reasonable compensation for its services under this Section 6.12 and the Trustee
shall be entitled to be reimbursed for such payments, subject to the provisions
of Section 6.7.

If an Authenticating Agent is appointed with respect to the Securities
pursuant to this Section 6.12, the Securities may have endorsed thereon, in
addition to or in lieu of the Trustee's certification of authentication, an
alternative certificate of authentication in the following form:

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

Dated: DEUTSCHE BANK AG, NEW YORK BRANCH,

as Trustee
By [Authenticating Agent],
as Authenticating Agent

By
---------------------------
Authorized Signatory

SECTION 6.13. DISQUALIFICATION; CONFLICTING INTERESTS.

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

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SECTION 6.14. PREFERENTIAL COLLECTION OF CLAIMS AGAINST ISSUER.

If and when the Trustee shall be or become a creditor of the Issuer (or any
other obligor upon the Securities), the Trustee shall be subject to the
provisions of Section 311 of the Trust Indenture Act regarding the collection of
claims against the Issuer (or any such other obligor).

ARTICLE SEVEN

CONSOLIDATION, MERGER, TRANSFER OR LEASE

SECTION 7.1. ISSUER MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS.

The Issuer shall not consolidate or merge into any other corporation or
convey or transfer its properties and assets substantially as an entirety to any
Person, and shall not transfer and assign all its obligations of, and position
as, the Issuer hereunder, except for a consolidation or merger in which the
Issuer is the surviving party, unless:

(a) the Person formed by such consolidation or into which the Issuer
is merged or which acquires by conveyance or transfer the properties and
assets of the Issuer substantially as an entirety, or to which obligations
of, and position as, the Issuer hereunder are transferred and assigned (the
"Successor") (i) shall be a corporation, limited liability company,
partnership or trust organized and existing under the laws of, and resident
for tax purposes in, the United States of America or any political
subdivision thereof, and (ii) shall expressly assume, by an indenture
supplemental hereto, executed and delivered to the Trustee, in form
satisfactory to the Trustee, due and punctual payment of the principal of
and interest (including Additional Amounts, if any, and Liquidated Damages,
if any) on all of the Securities and the performance of every covenant of
this Indenture and in the Securities on the part of the Issuer to be
performed or observed;

(b) immediately after giving effect to any such consolidation,
merger, conveyance or transfer, or such transfer and assignment, no default
and no Event of Default shall have occurred and be continuing;

(c) the Issuer has delivered to the Trustee an Officer's Certificate
and an Opinion of Counsel, each stating that such consolidation, merger,
conveyance or transfer, or such transfer and assignment, and such
supplemental indenture comply with this Article and that all conditions
precedent herein provided for relating to such transaction have been
compiled with; and

(d) in the case of any consolidation, merger, conveyance or transfer
or such transfer and assignment involving the Issuer, the Issuer or the
Successor has delivered to the Trustee an Officer's Certificate and an
Opinion of Counsel, each stating that immediately after giving effect
thereto, the Issuer or Successor is not any "investment company" under the
United States Investment Company act of 1940, as amended.

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SECTION 7.2. SUCCESSOR SUBSTITUTED.

Upon any consolidation, merger or any conveyance or transfer of the
properties and assets of the Issuer substantially as an entirety, or upon
transfer and assignment of all obligations of, and position as, the Issuer
hereunder, in accordance with Section 7.1, the Successor shall succeed to and be
substituted for, and may exercise every right and power of, the Issuer under
this Indenture with the same effect as if such Successor had been named as the
Issuer herein, and thereafter, the predecessor Person shall be relieved of all
obligations and covenants under the Indenture and the Securities.

ARTICLE EIGHT

SUPPLEMENTAL INDENTURES

SECTION 8.1. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS OF SECURITIES.

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

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

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

(3) to add any additional Events of Default;

(4) to secure the Securities; or

(5) to make provision with respect to the conversion rights of
Holders of Securities pursuant to Section 12.11 or the repurchase rights of
Holders of Securities pursuant to Section 14.3; or

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

(7) to cure any ambiguity, to correct or supplement any provision
herein which may be inconsistent with any other provision herein or which
is otherwise defective, or to make any other provisions with respect to
matters or questions arising under this Indenture as the Issuer and the
Trustee may deem necessary or desirable,

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PROVIDED, such action pursuant to this clause (6) shall not adversely
affect the interests of the Holders of Securities in any material respect.

Upon Issuer Request, accompanied by a Board Resolution authorizing the
execution of any such supplemental indenture, and subject to and upon receipt by
the Trustee of the documents described in Section 8.3 hereof, the Trustee shall
join with the Issuer in the execution of any supplemental indenture authorized
or permitted by the terms of this Indenture and to make any further appropriate
agreements and stipulations which may be therein contained.

SECTION 8.2. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS OF SECURITIES.

With either (a) the written consent of the Holders of not less than a
majority in aggregate principal amount of the Outstanding Securities, by the Act
of said Holders delivered to the Issuer and the Trustee, or (b) by the adoption
of a resolution, at a meeting of Holders of the Outstanding Securities at which
a quorum is present, by the Holders of the lesser of (x) not less than a
majority in aggregate principal amount of the Outstanding Securities and
(y) 66-2/3% in aggregate principal amount of the Outstanding Securities
represented at such meeting, the Issuer, when authorized by a Board Resolution,
and the Trustee may enter into an indenture or indentures supplemental hereto
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Indenture or of modifying in any
manner the rights of the Holders of Securities under this Indenture; PROVIDED,
HOWEVER, that no such supplemental indenture shall, without the consent or
affirmative vote of the Holder of each Outstanding Security,

(1) change the Stated Maturity of the principal of, or any
installment of interest on, any Security, or reduce the principal amount or
the rate of interest payable thereon or any premium payable upon redemption
or mandatory repurchase thereof, or change the obligation of the Issuer to
pay Additional Amounts pursuant to Section 10.4 in a manner adverse to the
Holders, or change the Place of Payment or coin or currency in which any
Security or the interest or any premium thereon or any other amount in
respect thereof is payable, or impair the right to institute suit for the
enforcement of any payment in respect of any Security on or after the
Stated Maturity thereof (or, in the case of redemption or any repurchase,
on or after the Redemption Date or Repurchase Date, as the case may be) or,
except as permitted by Section 12.11, adversely affect the right to convert
any Security as provided in Article Twelve, or modify the provisions of
this Indenture with respect to the subordination of the Securities in a
manner adverse to the Holders of Securities, or

(2) reduce the requirements of Section 9.4 for quorum or voting, or
reduce the percentage in aggregate principal amount of the Outstanding
Securities the consent of whose Holders is required for any such
supplemental indenture or the consent of whose Holders is required for any
waiver (of compliance with certain provisions of this Indenture or certain
defaults hereunder and their consequences) provided for in this Indenture,
or

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(3) modify any of the provisions of this Section or Section 5.13,
except to increase any percentage contained herein or therein or to provide
that certain other provisions of this Indenture cannot be modified or
waived without the consent of the Holder of each Outstanding Security
affected thereby; or

(4) modify the provisions of Article Fourteen in a manner adverse to
the Holders; or

(5) modify any of the provisions of Section 10.7 or 10.8 in a manner
adverse to the Holders.

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

SECTION 8.3. EXECUTION OF SUPPLEMENTAL INDENTURES.

In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Sections 6.1 and 6.3) shall be fully protected in relying upon,
an Opinion of Counsel stating that the execution of such supplemental indenture
is authorized or permitted by this Indenture, and that such supplemental
indenture has been duly authorized, executed and delivered by the Issuer and
constitutes a valid and legally binding obligation of the Issuer enforceable
against the Issuer in accordance with its terms. The Trustee may, but shall not
be obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.

SECTION 8.4. EFFECT OF SUPPLEMENTAL INDENTURES.

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

SECTION 8.5. REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURES.

Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Issuer shall so determine,
new Securities so modified as to conform, in the opinion of the Issuer and the
Trustee, to any such supplemental indenture may be prepared and executed by the
Issuer and authenticated and delivered by the Trustee in exchange for
Outstanding Securities.

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SECTION 8.6. NOTICE OF SUPPLEMENTAL INDENTURES.

Promptly after the execution by the Issuer and the Trustee of any
supplemental indenture pursuant to the provisions of Section 8.2, the Issuer
shall give notice to all Holders of Securities of such fact, setting forth in
general terms the substance of such supplemental indenture, in the manner
provided in Section 1.6. Any failure of the Issuer to give such notice, or any
defect therein, shall not in any way impair or affect the validity of any such
supplemental indenture.

So long as the Securities are listed on the Luxembourg Stock Exchange and
the rules of the Luxembourg Stock Exchange shall require, notice of any
supplemental indenture pursuant to this Article Eight will be given by
publication in a Authorized Newspaper in Luxembourg, or, if not practicable in
Luxembourg, elsewhere in a Western European city. Any failure of the Issuer to
give such notice, or any defect therein, shall not in any way impair or affect
the validity of any such supplemental indenture.

ARTICLE NINE

MEETINGS OF HOLDERS OF SECURITIES

SECTION 9.1. PURPOSES FOR WHICH MEETINGS MAY BE CALLED.

A meeting of Holders of Securities may be called at any time and from time
to time pursuant to this Article to make, give or take any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be made, given or taken by Holders of Securities.

SECTION 9.2. CALL, NOTICE AND PLACE OF MEETINGS.

(a) The Trustee may at any time call a meeting of Holders of Securities
for any purpose specified in Section 9.1, to be held at such time and at such
place in the Borough of Manhattan, The City of New York, or in Luxembourg, as
the Trustee shall determine. Notice of every meeting of Holders of Securities,
setting forth the time and the place of such meeting and in general terms the
action proposed to be taken at such meeting, shall be given, in the manner
provided in Section 1.6, not less than 21 nor more than 180 days prior to the
date fixed for the meeting.

(b) In case at any time the Issuer, pursuant to a Board Resolution, or the
Holders of at least 25% in aggregate principal amount of the Outstanding
Securities shall have requested the Trustee to call a meeting of the Holders of
Securities for any purpose specified in Section 9.1, by written request setting
forth in reasonable detail the action proposed to be taken at the meeting, and
the Trustee shall not have made the first publication of the notice of such
meeting within 21 days after receipt of such request or shall not thereafter
proceed to cause the meeting to be held as provided herein, then the Issuer or
the Holders of Securities in the amount specified, as the case may be, may
determine the time and the place in the Borough of Manhattan, The City of New
York, or, so long as the Securities are listed on the Luxembourg Stock Exchange
and the

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Luxembourg Stock Exchange shall require, in Luxembourg, for such meeting and may
call such meeting for such purposes by giving notice thereof as provided in
paragraph (a) of this Section.

SECTION 9.3. PERSONS ENTITLED TO VOTE AT MEETINGS.

To be entitled to vote at any meeting of Holders of Securities, a Person
shall be (a) a Holder of one or more Outstanding Securities on the applicable
record date, or (b) a Person appointed by an instrument in writing as proxy for
a Holder or Holders of one or more Outstanding Securities by such Holder or
Holders. The only Persons who shall be entitled to be present or to speak at
any meeting of Holders shall be the Persons entitled to vote at such meeting and
their counsel, any representatives of the Trustee and its counsel and any
representatives of the Issuer and its counsel.

SECTION 9.4. QUORUM; ACTION.

The Persons entitled to vote a majority in aggregate principal amount of
the Outstanding Securities shall constitute a quorum. In the absence of a
quorum within 30 minutes of the time appointed for any such meeting, the meeting
shall, if convened at the request of Holders of Securities, be dissolved. In
any other case, the meeting may be adjourned for a period of not less than
10 days as determined by the chairman of the meeting prior to the adjournment of
such meeting. In the absence of a quorum at any such adjourned meeting, such
adjourned meeting may be further adjourned for a period not less than 10 days as
determined by the chairman of the meeting prior to the adjournment of such
adjourned meeting (subject to repeated applications of this sentence). Notice
of the reconvening of any adjourned meeting shall be given as provided in
Section 9.2(a), except that such notice need be given only once not less than
five days prior to the date on which the meeting is scheduled to be reconvened.
Notice of the reconvening of an adjourned meeting shall state expressly the
percentage of the principal amount of the Outstanding Securities which shall
constitute a quorum.

Subject to the foregoing, at the reconvening of any meeting adjourned for a
lack of a quorum, the Persons entitled to vote 25% in aggregate principal amount
of the Outstanding Securities at the time shall constitute a quorum for the
taking of any action set forth in the notice of the original meeting.

At a meeting or an adjourned meeting duly reconvened and at which a quorum
is present as aforesaid, any resolution and all matters (except as limited by
the proviso to Section 8.2) shall be effectively passed and decided if passed or
decided by the lesser of (i) not less than a majority in aggregate principal
amount of the Outstanding Securities and (ii) Persons entitled to vote not less
than 66-2/3% in aggregate principal amount of Outstanding Securities represented
and entitled to vote at such meeting.

Any resolution passed or decisions taken at any meeting of Holders of
Securities duly held in accordance with this Section shall be binding on all the
Holders of Securities, whether or not present or represented at the meeting.
The Trustee shall, in the name and at the expense of the Issuer, notify all the
Holders of Securities of any such resolutions or decisions pursuant to
Section 1.6.

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SECTION 9.5. DETERMINATION OF VOTING RIGHTS; CONDUCT AND ADJOURNMENT OF
MEETINGS.

(a) Notwithstanding any other provisions of this Indenture, the Trustee
may make such reasonable regulations as it may deem advisable for any meeting of
Holders of Securities in regard to proof of the holding of Securities and of the
appointment of proxies and in regard to the appointment and duties of inspectors
of votes, the submission and examination of proxies, certificates and other
evidence of the right to vote, and such other matters concerning the conduct of
the meeting as it shall deem appropriate. Except as otherwise permitted or
required by any such regulations, the holding of Securities shall be proved in
the manner specified in Section 1.4 and the appointment of any proxy shall be
proved in the manner specified in Section 1.4.

(b) The Trustee shall, by an instrument in writing, appoint a temporary
chairman (which may be the Trustee) of the meeting, unless the meeting shall
have been called by the Issuer or by Holders of Securities as provided in
Section 9.2(b), in which case the Issuer or the Holders of Securities calling
the meeting, as the case may be, shall in like manner appoint a temporary
chairman. A permanent chairman and a permanent secretary of the meeting shall
be elected by vote of the Persons entitled to vote a majority in aggregate
principal amount of the Outstanding Securities represented at the meeting.

(c) At any meeting, each Holder of a Security or proxy shall be entitled
to one vote for each U.S.$1,000 principal amount of Securities held or
represented by him; PROVIDED, HOWEVER, that no vote shall be cast or counted at
any meeting in respect of any Security challenged as not Outstanding and ruled
by the chairman of the meeting to be not Outstanding. The chairman of the
meeting shall have no right to vote, except as a Holder of a Security or proxy.

(d) Any meeting of Holders of Securities duly called pursuant to
Section 9.2 at which a quorum is present may be adjourned from time to time by
Persons entitled to vote a majority in aggregate principal amount of the
Outstanding Securities represented at the meeting, and the meeting may be held
as so adjourned without further notice.

SECTION 9.6. COUNTING VOTES AND RECORDING ACTION OF MEETINGS.

The vote upon any resolution submitted to any meeting of Holders of
Securities shall be by written ballots on which shall be subscribed the
signatures of the Holders of Securities or of their representatives by proxy and
the principal amounts at Stated Maturity and serial numbers of the Outstanding
Securities held or represented by them. The permanent chairman of the meeting
shall appoint two inspectors of votes who shall count all votes cast at the
meeting for or against any resolution and who shall make and file with the
secretary of the meeting their verified written reports in duplicate of all
votes cast at the meeting. A record, at least in duplicate, of the proceedings
of each meeting of Holders of Securities shall be prepared by the secretary of
the meeting and there shall be attached to said record the original reports of
the inspectors of votes on any vote by ballot taken thereat and affidavits by
one or more Persons having knowledge of the facts setting forth a copy of the
notice of the meeting and showing that said notice was given as provided in
Section 9.2 and, if applicable, Section 9.4. Each copy shall

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be signed and verified by the affidavits of the permanent chairman and secretary
of the meeting and one such copy shall be delivered to the Issuer and another to
the Trustee to be preserved by the Trustee, the latter to have attached thereto
the ballots voted at the meeting. Any record so signed and verified shall be
conclusive evidence of the matters therein stated.

ARTICLE TEN

COVENANTS

SECTION 10.1. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST.

The Issuer covenants and agrees that it will duly and punctually pay the
principal of and premium, if any, and interest (including Additional Amounts, if
any, or Liquidated Damages, if any) on the Securities in accordance with the
terms of the Securities and this Indenture. The Issuer will deposit or cause to
be deposited with the Trustee on or prior to the due date for any installment of
interest thereon or on the Stated Maturity of any Security all payments so due,
which payments shall be in immediately available funds on the date of such due
date or Stated Maturity, as the case may be.

SECTION 10.2. MAINTENANCE OF OFFICES OR AGENCIES.

The Issuer hereby appoints (a) an office or agency of the Trustee in the
Borough of Manhattan, The City of New York, where Securities may be presented or
surrendered for payment, where Securities may be surrendered for registration of
transfer or exchange, where Securities may be surrendered for conversion, and
where notices and demands to or upon the Issuer in respect of the Securities and
this Indenture may be served, and (b) (i), so long as the Securities are listed
on Luxembourg Stock Exchange and the Luxembourg Stock Exchange shall require,
the office of Banque de Luxembourg, 14 Boulevard Royal, L-2449 Luxembourg, as
its agent outside of the United States where, subject to any applicable laws or
regulations, Securities may be surrendered for payment, where Securities may be
surrendered for registration of transfer or exchange and where Securities may be
surrendered for conversion.

The Issuer may at any time and from time to time vary or terminate the
appointment of any such agent or appoint any additional agents for any or all of
such purposes; PROVIDED, HOWEVER, that until all of the Securities have been
delivered to the Trustee for cancellation, or moneys sufficient to pay the
principal of, premium, if any, and interest on the Securities have been made
available for payment and either paid or returned to the Issuer pursuant to the
provisions of Section 10.3, the Issuer will maintain (1) in the Borough of
Manhattan, The City of New York, an office or agency where Securities may be
presented or surrendered for payment and conversion, where Securities may be
surrendered for registration of transfer or exchange and where notices and
demands to or upon the Issuer in respect of the Securities and this Indenture
may be served, and (2), so long as the Securities are listed on the Luxembourg
Stock Exchange and the Luxembourg Stock Exchange shall require, subject to any
laws or regulations applicable thereto, in Luxembourg, an office or agency where
Securities may be presented and surrendered for payment, where Securities may be
presented for registration of transfer or exchange or conversion. The Issuer
will give prompt written notice to the Trustee, and notice to the Holders

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in accordance with Section 1.6, of the appointment or termination of any such
agents and of the location and any change in the location of any such office or
agency.

If at any time the Issuer shall fail to maintain any such required office
or agency, or shall fail to furnish the Trustee with the address thereof,
presentations and surrenders may be made and notices and demands may be served
on the office or agency of the Trustee in the Borough of Manhattan, the City of
New York, or other Paying Agent or Conversion Agent outside the United States,
and the Issuer hereby appoints the Paying Agent in Luxembourg as its agent to
receive such respective presentations, surrenders, notices and demands.

SECTION 10.3. MONEY FOR SECURITY PAYMENTS TO BE HELD IN TRUST.

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

Whenever the Issuer shall have one or more Paying Agents, it will, on or
prior to each due date of the principal of, premium, if any, or interest on any
Securities, deposit with such Paying Agent a sum sufficient to pay the
principal, premium, if any, or interest so becoming due, such sum to be held for
the benefit of the Persons entitled to such principal, premium, if any, or
interest, and (unless such Paying Agent is the Trustee) the Issuer will promptly
notify the Trustee of its action or any failure so to act.

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

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

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

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

The Issuer may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, pay, or by Issuer
Order direct any Paying Agent to pay, to the Trustee all sums held in trust by
the Issuer or such

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Paying Agent, such sums to be held by the Trustee upon the same trusts as those
upon which such sums were held by the Issuer or such Paying Agent; and, upon
such payment by any Paying Agent to the Trustee, such Paying Agent shall be
released from all further liability with respect to such sums.

Any money deposited with the Trustee or any Paying Agent, or then held by
the Issuer, in trust for the payment of the principal of, premium, if any, or
interest on any Security and remaining unclaimed for the earlier of ten days
prior to the time such money would escheat to the State or two years after such
principal, premium, if any, or interest has become due and payable shall be paid
to the Issuer or (if then held by the Issuer) shall be discharged from such
trust; and the Holder of such Security shall thereafter, as an unsecured general
creditor, look only to the Issuer for payment thereof, and all liability of the
Trustee or such Paying Agent with respect to such trust money, and all liability
of the Issuer as trustee thereof, shall thereupon cease.

SECTION 10.4. ADDITIONAL AMOUNTS.

The Issuer will pay to the Holder of any Security Additional Amounts
as provided in the form of Security, as set forth in Section 2.2. Whenever in
this Indenture there is mentioned, in any context, the payment of the principal
of, premium, if any, or interest on, or in respect of, any Security, such
mention shall be deemed to include mention of the payment of Additional Amounts
provided for in this Section to the extent that, in such context, Additional
Amounts are, were or would be payable in respect thereof pursuant to the
provisions of this Section and express mention of the payment of Additional
Amounts (if applicable) in any provisions hereof shall not be construed as
excluding Additional Amounts in those provisions hereof where such express
mention is not made.

At least 10 days prior to February 1, 1998, or an earlier Redemption
Date or Repurchase Date (and at least 10 days prior to each date of payment of
principal, premium, if any, or interest after February 1, 1998, or such earlier
Redemption Date or Repurchase Date), the Issuer shall furnish the Trustee and
the Paying Agent in Luxembourg and the Paying Agent in the Borough of Manhattan,
The City of New York, if other than the Trustee, with an Officers' Certificate
instructing the Trustee and such Paying Agents whether or not such payment of
principal of, premium, if any, or interest on the Securities shall be made to
the Holders of Securities subject to withholding or deduction. If any
withholding or deduction shall be required, such Officers' Certificate shall
specify the amount required to be withheld or deducted with respect to such
payments to such Holders of Securities and the Issuer will pay to the Trustee or
the applicable Paying Agent the Additional Amounts, if any, required to be paid
as set forth in the first sentence of this Section 10.4. The Issuer covenants
to indemnify the Trustee and any Paying Agent for, and to hold them harmless
against, any loss, liability or expense reasonably incurred without negligence,
bad faith or willful misconduct arising on their part arising out of or in
connection with actions taken or omitted by any of them in reliance on any
Officers' Certificate furnished pursuant to this Section. In the absence of any
such Officers Certificates with respect to withholding, the Trustee can
conclusively rely on the fact that there is no such withholding.

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SECTION 10.5. CORPORATE EXISTENCE.

Subject to Article Seven, the Issuer will do or cause to be done all things
necessary to preserve and keep in full force and effect its existence.

SECTION 10.6. STATEMENT BY OFFICERS AS TO DEFAULT.

The Issuer will deliver to the Trustee within 120 days after the end of
each fiscal year of the Issuer an Officers' Certificate stating that in the
course of performance by the signers of their duties as such officers of the
Issuer they would normally obtain knowledge of whether any default exists in the
performance and observance of any of the terms, provisions and conditions of
this Indenture and whether the Issuer has kept, observed, performed and
fulfilled its obligations under this Indenture. Such Certificate shall further
state, as to each such officer signing such Certificate, to the best of the
knowledge of such officer, as of the date of such Officers' Certificate,
(a) whether any such default exists, (b) whether the Issuer (as applicable)
during the preceding fiscal year kept, observed, performed and fulfilled each
and every covenant and obligation of the Issuer under this Indenture and
(c) whether there was any default in the performance and observance of any of
the terms, provisions or conditions of this Indenture during such preceding
fiscal year. If the officer or officers signing the Certificate know of such a
default, whether then existing or occurring during such preceding fiscal year,
the Officers' Certificate shall describe such default and its status with
particularity. The Issuer shall also promptly notify the Trustee if the
Issuer's fiscal year is changed so that the end thereof is on any date other
than the then current fiscal year end date.

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

Any notice required to be given under this Section 10.6 shall be delivered
to the Trustee at its Corporate Trust Office.

SECTION 10.7. DELIVERY OF CERTAIN INFORMATION.

At any time when the Issuer is not subject to Section 13 or 15(d) of the
Exchange Act, upon the request of a Holder of a Restricted Security or the
holder of Common Stock issued upon conversion thereof, the Issuer will promptly
furnish or cause to be furnished Rule 144A Information (as defined below) to
such Holder of Restricted Securities or such holder of Common Stock issued upon
conversion of Restricted Securities, or to a prospective purchaser of any such
security designated by any such Holder or holder, as the case may be, to the
extent required to permit compliance by such Holder or holder with Rule 144A
under the Securities Act (or any successor provision thereto) in connection with
the resale of any such security; PROVIDED, HOWEVER, that the Issuer shall not be
required to furnish such information in connection with any request made on or
after the date which is two years from the later of (i) the date such a

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security (or any such predecessor security) was last acquired from the Issuer or
(ii) the date such a security (or any such predecessor security) was last
acquired from an "affiliate" of the Issuer within the meaning of Rule 144 under
the Securities Act (or any successor provision thereto). "Rule 144A
Information" shall be such information as is specified pursuant to
Rule 144A(d)(4) under the Securities Act (or any successor provision thereto).

ARTICLE ELEVEN

REDEMPTION OF SECURITIES

SECTION 11.1. RIGHT OF REDEMPTION.

The Securities may be redeemed in accordance with the provisions of the
form of Security set forth in Section 2.2.

SECTION 11.2. APPLICABILITY OF ARTICLE.

Redemption of Securities at the election of the Issuer or otherwise, as
permitted or required by any provision of the Securities or this Indenture,
shall be made in accordance with such provision and this Article Eleven.

SECTION 11.3. ELECTION TO REDEEM; NOTICE TO TRUSTEE.

The election of the Issuer to redeem any Securities shall be evidenced by a
Board Resolution. In case of any redemption at the election of the Issuer of
any of the Securities, the Issuer shall, at least 60 days prior to the
Redemption Date fixed by the Issuer (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee in writing of such Redemption
Date. If the Securities are to be redeemed pursuant to an election of the
Issuer which is subject to a condition specified in the form of Security set
forth in Section 2.2, the Issuer shall furnish the Trustee with an Officers'
Certificate stating that the Issuer is entitled to effect such redemption and
setting forth a statement of facts showing that the conditions precedent to the
right of the Issuer so to redeem have occurred.

SECTION 11.4. SELECTION BY TRUSTEE OF SECURITIES TO BE REDEEMED.

If less than all the Securities are to be redeemed (other than pursuant to
the fourth paragraph on the reverse of the form of Security in Section 2.2), the
particular Securities to be redeemed shall be selected by the Trustee within
seven Business Days after it receives the notice described in 11.3, from the
Outstanding Securities not previously called for redemption, by such method as
the Trustee may deem fair and appropriate.

If any Security selected for partial redemption is converted in part before
termination of the conversion right with respect to the portion of the Security
so selected, the converted portion of such Security shall be deemed (so far as
may be) to be the portion selected for redemption. Securities which have been
converted during a selection of Securities to be redeemed may be treated by the
Trustee as Outstanding for the purpose of such selection.

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The Trustee shall promptly notify the Issuer and each Security Registrar in
writing of the securities selected for redemption and, in the case of any
Securities selected for partial redemption, the principal amount thereof to be
redeemed.

For all purposes of this Indenture, unless the context otherwise requires,
all provisions relating to the redemption of Securities shall relate, in the
case of any Securities redeemed or to be redeemed only in part, to the portion
of the principal amount of such Securities which has been or is to be redeemed.

SECTION 11.5. NOTICE OF REDEMPTION.

Notice of redemption shall be given in the manner provided in Section 1.6
to the Holders of Securities to be redeemed not less than 20 nor more than
60 days prior to the Redemption Date, and such notice shall be irrevocable.

All notices of redemption shall state:

(1) the Redemption Date,

(2) the Redemption Price,

(3) if less than all Outstanding Securities are to be redeemed, the
aggregate principal amount of Securities to be redeemed and the aggregate
principal amount of Securities which will be outstanding after such partial
redemption,

(4) that on the Redemption Date the Redemption Price, and accrued
interest, if any, will become due and payable upon each such Security to be
redeemed, and that interest thereon shall cease to accrue on and after said
date,

(5) the Conversion Price then in effect, the date on which the right
to convert the Securities to be redeemed will terminate and the places
where such Securities, may be surrendered for conversion,

(6) the place or places where such Securities maturing after the
Redemption Date are to be surrendered for payment of the Redemption Price
and accrued interest, if any, and

(7) in the case of a notice of redemption pursuant to the fourth
paragraph on the reverse of the form of Security in Section 2.2, a form of
written certification of each beneficial owner of a Security as to such
beneficial owner's entitlement to Additional Amounts.

In case of a partial redemption, the notice shall specify the serial and
CUSIP numbers (if any) and the portions thereof called for redemption and that
transfers and exchanges may occur on or prior to the Redemption Date.

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Notice of redemption of Securities to be redeemed at the election of the
Issuer shall be given by the Issuer or, at the Issuer's written request, by the
Trustee in the name of and at the expense of the Issuer. Notice of redemption
of Securities to be redeemed at the election of the Issuer received by the
Trustee shall be given by the Trustee to each Paying Agent in the name of and at
the expense of the Issuer.

So long as the Securities are listed on the Luxembourg Stock Exchange and
the rules of the Luxembourg Stock Exchange shall require, notice of redemption
will be given by publication in a Authorized Newspaper in Luxembourg, or, if not
practicable in Luxembourg, elsewhere in a Western European city. Notice to the
Holders shall be given once not less than 20 nor more than 60 days prior to the
Redemption Date, and such notice shall be irrevocable.

SECTION 11.6. DEPOSIT OF REDEMPTION PRICE.

By 10:00 a.m. (New York time) on any Redemption Date of the Securities, the
Issuer shall deposit with the Trustee or with the Paying Agent so directed by
the Trustee (or, if the Issuer is acting as its own Paying Agent, segregate and
hold in trust as provided in Section 10.3) an amount of money (which shall be in
immediately available funds on such Redemption Date) sufficient to pay the
Redemption Price of, and accrued interest on, all the Securities which are to be
redeemed on that date other than any Securities called for redemption on that
date which have been converted prior to the date of such deposit.

If any Security called for redemption is converted, any money deposited
with the Trustee or with a Paying Agent or so segregated and held in trust for
the redemption of such Security shall (subject to any right of the Holder of
such Security, if a Security, or any Predecessor Security to receive interest as
provided in the last paragraph of Section 3.7) be paid to the Issuer on Issuer
Request as soon as administratively practicable after the Trustee receives such
Issuer Request or, if then held by the Issuer, shall be discharged from such
trust.

SECTION 11.7. SECURITIES PAYABLE ON REDEMPTION DATE.

Notice of redemption having been given as aforesaid, the Securities so to
be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified and from and after such date (unless the
Issuer shall default in the payment of the Redemption Price, including accrued
interest) such Securities shall cease to bear interest. Upon surrender of any
Security for redemption in accordance with said notice, such Security shall be
paid by the Issuer at the Redemption Price together with accrued and unpaid
interest to the Redemption Date; PROVIDED, HOWEVER, that installments of
interest on Securities whose Stated Maturity is on or prior to the Redemption
Date shall be payable to the Holders of such Securities, or one or more
Predecessor Securities, registered as such on the relevant Record Date according
to their terms and the provisions of Section 3.7.

If any Security called for redemption shall not be so paid upon surrender
thereof for redemption, the principal amount of, premium, if any, and, to the
extent permitted by applicable law, accrued interest on such Security shall,
until paid, bear interest from the Redemption Date at a rate of 5% per annum and
such Security shall remain convertible into Common Stock until the

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principal of such Security (or portion thereof, as the case may be) shall have
been paid or duly provided for.

SECTION 11.8. SECURITIES REDEEMED IN PART.

Any Security which is to be redeemed only in part shall be surrendered at
an office or agency of the Issuer designated for that purpose pursuant to
Section 10.2 (with, if the Issuer or the Trustee so requires, due endorsement
by, or a written instrument of transfer in form satisfactory to the Issuer and
the Trustee duly executed by, the Holder thereof or his attorney duly authorized
in writing), and the Issuer 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, in aggregate principal amount equal to and in exchange
for the unredeemed portion of the principal of the Security so surrendered.

SECTION 11.9. CONVERSION ARRANGEMENT ON CALL FOR REDEMPTION.

In connection with any redemption of Securities, the Issuer may arrange for
the purchase and conversion of any Securities by an agreement with one or more
investment bankers or other purchasers (the "Purchasers") to purchase such
securities by paying to the Trustee in trust for the Holders, on or before the
Redemption Date, an amount not less than the applicable Redemption Price,
together with interest accrued to the Redemption Date, of such Securities.
Notwithstanding anything to the contrary contained in this Article Eleven, the
obligation of the Issuer to pay the Redemption Price, together with interest
accrued to, but excluding the Redemption Date, shall be deemed to be satisfied
and discharged to the extent such amount is so paid by such Purchasers. If such
an agreement is entered into (a copy of which shall be filed with the Trustee
prior to the close of business on the Business Day immediately prior to the
Redemption Date), any Securities called for redemption that are not duly
surrendered for conversion by the Holders thereof may, at the option of the
Issuer, be deemed, to the fullest extent permitted by law, and consistent with
any agreement or agreements with such Purchasers, to be acquired by such
Purchasers from such Holders and (notwithstanding anything to the contrary
contained in Article Twelve) surrendered by such Purchasers for conversion, all
as of immediately prior to the close of business on the Redemption Date (and the
right to convert any such Securities shall be extended though such time),
subject to payment of the above amount as aforesaid. At the direction of the
Issuer, the Trustee shall hold and dispose of any such amount paid to it to the
Holders in the same manner as it would monies deposited with it by the Issuer
for the redemption of Securities. Without the Trustee's prior written consent,
no arrangement between the Issuer and such Purchasers for the purchase and
conversion of any Securities shall increase or otherwise affect any of the
powers, duties, responsibilities or obligations of the Trustee as set forth in
this Indenture, and the Issuer agrees to indemnify the Trustee from, and hold it
harmless against, any loss, liability or expense arising out of or in connection
with any such arrangement for the purchase and conversion of any Securities
between the Issuer and such Purchasers, including the costs and expenses,
including reasonable legal fees, 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.

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ARTICLE TWELVE

CONVERSION OF SECURITIES

SECTION 12.1. CONVERSION PRIVILEGE AND CONVERSION PRICE.

Subject to and upon compliance with the provisions of this Article Twelve,
at the option of the Holder thereof, the Holder of any Security is entitled at
his option, at any time on or after the 90th day following the last original
issue date of the Security and prior to the close of business on August 1, 2002,
to convert such Security into fully paid and nonassessable shares (calculated as
to each conversion to the nearest 1/100th of a share) of Common Stock of the at
the Conversion Price, determined as hereinafter provided, in effect at the time
of conversion. Such conversion right shall be subject, in the case of the
conversion of any Global Security, to any applicable book-entry procedures of
the Depositary therefor and the following sentence. In case a Security or
portion thereof is called for redemption or is delivered for repurchase, such
conversion right in respect of the Security or portion so called shall expire at
the close of business on the Business Day prior to the Redemption Date or the
Repurchase Date (as defined in Article Fourteen), as the case may be, unless the
Issuer defaults in making the payment due upon redemption or repurchase, as the
case may be.

The price at which shares of Common Stock shall be delivered upon
conversion (herein called the "Conversion Price") shall be initially U.S.$48.50
per share of Common Stock. The Conversion Price shall be adjusted in certain
instances as provided in this Article Twelve.

SECTION 12.2. EXERCISE OF CONVERSION PRIVILEGE.

Beneficial owners of interests in a Global Security may exercise their
right of conversion by delivering to the Depositary the appropriate instruction
form for conversion pursuant to the Depositary's conversion program and, in the
case of conversions through Euroclear or Cedel, in accordance with Euroclear's
or Cedel's normal operating procedures. To convert an Individual Security into
shares of Common Stock, a Holder must (i) complete and manually sign the
conversion notice in the form set forth in Section 2.4 on the back of the
Individual Security (or complete and manually sign a facsimile thereof) and
deliver such notice to the Trustee at the office of Deutsche Bank AG, New York
Branch, in New York, New York or the Conversion Agent in Luxembourg, (ii)
surrender the Individual Security to the Trustee at the office of Deutsche Bank
AG, New York Branch, in New York, New York or to the Conversion Agent in
Luxembourg, (iii) if required, furnish appropriate endorsements and transfer
documents, (iv) if required, pay all transfer or similar taxes, and (v) if
required, pay funds equal to interest payable on the next interest payment date.
The date on which all of the foregoing requirements have been satisfied is the
date of surrender for conversion. The Trustee shall promptly deliver to the
Issuer and the Issuer's Common Stock Transfer Agent notification of such notice
of conversion at the address described in Section 1.5. Such notice of
conversion can be obtained from the Trustee at the Corporate Trust Office or the
office of any Conversion Agent. Each Security surrendered for conversion will
be converted into Common Stock in registered form. Each Security surrendered
for conversion (in whole or in part) during the period from the close of

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business on any Regular Record Date to the opening of business on the next
succeeding Interest Payment Date (except Notes called for redemption on a
Redemption Date or to be repurchased on a Repurchase Date during, in each case,
such period) shall be accompanied by payment in New York Clearing House funds or
other funds acceptable to the Issuer of an amount equal to the interest payable
on such Interest Payment Date on the principal amount of such Security (or part
thereof, as the case may be) being surrendered for conversion. The interest so
payable on such Interest Payment Date with respect to any Security (or portion
thereof, if applicable) which has been called for redemption on a Redemption
Date, or is repurchasable on a Repurchase Date, occurring, in either case,
during the period from the close of business on any Record Date next preceding
any Interest Payment Date to the opening of business on such Interest Payment
Date, which Security (or portion thereof, if applicable) is surrendered for
conversion during such period, shall be paid to the Holder of such Security
being converted in an amount equal to the interest that would have been payable
on such Security if such Security had been converted as of the close of business
on such Interest Payment Date. The interest so payable on such Interest Payment
Date in respect of any Security (or portion thereof, as the case may be) which
has not been called for redemption on a Redemption Date, or is not eligible for
repurchase on a Repurchase Date, occurring, in either case, during the period
from the close of business on any Record Date next preceding any Interest
Payment Date, which Security (or portion thereof, as the case may be) is
surrendered for conversion during such period, shall be paid to the Holder of
such Security as of such Regular Record Date. Except as provided in this
paragraph and subject to the last paragraph of Section 3.7, no cash payment or
adjustment shall be made upon any conversion on account of, if the date of
conversion is not an Interest Payment Date, any interest accrued from the
Interest Payment Date next preceding the conversion date, in respect of any
Security (or part thereof, as the case may be) surrendered for conversion, or on
account of any dividends on the shares of Common Stock issued upon conversion.
The Issuer's delivery to the Holder of the number of shares of Common Stock (and
cash in lieu of fractions thereof, as provided in this Indenture) into which a
Security is convertible will be deemed to satisfy the Issuer's obligation to pay
the principal amount of the Security.

Securities shall be deemed to have been converted immediately prior to the
close of business on the day of surrender of such Securities for conversion, in
accordance with the foregoing provisions, and at such time the rights of the
Holders of such Securities as Holders shall cease, and the Person or Persons
entitled to receive the shares of Common Stock issuable upon conversion shall be
treated for all purposes as the record holder or holders of such Common Stock at
such time. As promptly as practicable on or after the conversion date, the
Issuer shall issue and deliver to the Trustee, for delivery to the Holder, a
certificate or certificates for the number of full shares of Common Stock
issuable upon conversion, together with payment in lieu of any fraction of a
share, as provided in Section 12.3.

Subject to Section 3.5(d), all shares of Common Stock delivered upon such
conversion of Restricted Securities shall bear restrictive legends substantially
in the form of the legends required to be set forth on the Restricted Securities
pursuant to Section 3.5(c) and shall be subject to the restrictions on transfer
provided in such legends. Neither the Trustee nor any agent maintained for the
purpose of such conversion shall have any responsibility for the inclusion or
content of any such restrictive legends on such shares of Common Stock;
PROVIDED, HOWEVER, that

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the Trustee or Conversion Agent shall have provided, to the Issuer or to the
Note Registrar for such shares of Common Stock, prior to or concurrently with a
request to the Issuer to deliver such shares of Common Stock, written notice
that the Securities delivered for conversion are Restricted Securities.

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

SECTION 12.3. FRACTIONS OF SHARES.

No fractional shares of Common Stock shall be issued upon conversion of any
Securities. If more than one Security shall be surrendered for conversion at
one time by the same Holder, the number of full shares which shall be issuable
upon conversion thereof shall be computed on the basis of the aggregate
principal amount of the Securities (or specified portions thereof) so
surrendered. Instead of any fractional share of Common Stock which would
otherwise be issuable upon conversion of any Securities (or specified portions
thereof), the Issuer shall calculate and pay a cash adjustment in respect of
such fraction (calculated to the nearest 1/100th of a share) in an amount equal
to the same fraction of the Current Market Price per share of Common Stock
(calculated in accordance with Section 12.4(8) below) at the close of business
on the day of conversion.

SECTION 12.4. ADJUSTMENT OF CONVERSION PRICE.

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

(1) In case the Issuer shall hereafter pay a dividend or make a
distribution to all holders of the outstanding Common Stock in shares of Common
Stock, the Conversion Price in effect at the opening of business on the date
following the date fixed for the determination of shareholders entitled to
receive such dividend or other distribution shall be reduced by multiplying such
Conversion Price by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding at the close of business on the date fixed
for such determination and the denominator of which shall be the sum of such
number of shares and the total number of shares constituting such dividend or
other distribution, such reduction to become effective immediately after the
opening of business on the day following the date fixed for such determination.
If any dividend or distribution of the type described in this Section 12.4(1) is
declared but not so paid or made, the Conversion Price shall again be adjusted
to the Conversion Price which would then be in effect if such dividend or
distribution had not been declared.

(2) In case the Issuer shall issue rights or warrants to all holders of
its outstanding Common Stock entitling them (for a period expiring within
45 days after the date fixed for determination of shareholders entitled to
receive such rights or warrants) to subscribe for or

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

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

(4) In case the Issuer shall, by dividend or otherwise, distribute to all
holders of its Common Stock shares of any class of capital stock of the Issuer
(other than any dividends or distributions to which Section 12.4(1) applies) or
evidences of its indebtedness or assets (including securities, but excluding any
rights or warrants referred to in Section 12.4(2), and excluding any dividend or
distribution (x) paid exclusively in cash or (y) referred to in Section 12.4(1)
(any of the foregoing hereinafter in this Section 12.4(4) called the
"Distribution Securities")), then, in each such case, the Conversion Price shall
be reduced so that the same shall be equal to the price determined by
multiplying the Conversion Price in effect on the

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Distribution Record Date with respect to such distribution by a fraction the
numerator of which shall be the Current Market Price per share of Common Stock
on such Distribution Record Date less the fair market value (as determined by
the Board whose determination shall be conclusive, and described in a resolution
of the Board) on the Distribution Record Date of the portion of the Distribution
Securities so distributed applicable to one share of Common Stock and the
denominator of which shall be the Current Market Price per share of Common
Stock, such reduction to become effective immediately prior to the opening of
business on the day following such Distribution Record Date; PROVIDED, HOWEVER,
that in the event the then fair market value (as so determined) of the portion
of the Distribution Securities so distributed applicable to one share of Common
Stock is equal to or greater than the Current Market Price of the Common Stock
on the Distribution Record Date, in lieu of the foregoing adjustment, adequate
provision shall be made so that each Holder shall have the right to receive upon
conversion the amount of Distribution Securities such Holder would have received
had such Holder converted each Security on the Distribution Record Date. In the
event that such dividend or distribution is not so paid or made, the Conversion
Price shall again be adjusted to be the Conversion Price which would then be in
effect if such dividend or distribution had not been declared. If the Issuer's
Board determines the fair market value of any distribution for purposes of this
Section 12.4(4) by reference to the actual or when issued trading market for any
securities, it must in doing so consider the prices in such market over the same
period used in computing the Current Market Price of the Common Stock.

Rights or warrants distributed by the Issuer to all holders of Common Stock
entitling the holders thereof to subscribe for or purchase shares of the
Issuer's capital stock (either initially or under certain circumstances), which
rights or warrants, until the occurrence of a specified event or events
("Trigger Event"): (i) are deemed to be transferred with such shares of Common
Stock; (ii) are not exercisable; and (iii) are also issued in respect of future
issuances of shares of Common Stock, shall be deemed not to have been
distributed for purposes of this Section 12.4 (and no adjustment to the
Conversion Price under this Section 12.4 will be required) until the occurrence
of the earliest Trigger Event, whereupon such rights and warrants shall be
deemed to have been distributed and an appropriate adjustment (if any is
required) to the Conversion Price shall be made under this Section 12.4(4). If
any such right or warrant, including any such existing rights or warrants
distributed prior to the date of this Indenture, are subject to events, upon the
occurrence of which such rights or warrants become exercisable to purchase
different securities, evidences of indebtedness or other assets, then the date
of the occurrence of any and each such event shall be deemed to be the date of
distribution and record date with respect to new rights or warrants with such
rights (and a termination or expiration of the existing rights or warrants
without exercise by any of the holders thereof). In addition, in the event of
any distribution (or deemed distribution) of rights or warrants, or any Trigger
Event or other event (of the type described in the preceding sentence) with
respect thereto that was counted for purposes of calculating a distribution
amount for which an adjustment to the Conversion Price under this Section 12.4
was made, (1) in the case of any such rights or warrants which shall all have
been redeemed or repurchased without exercise by any holders thereof, the
Conversion Price shall be readjusted upon such final redemption or repurchase to
give effect to such distribution or Trigger Event, as the case may be, as though
it were a cash distribution, equal to the per share redemption or repurchase
price received by a holder or holders of shares of Common Stock with

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respect to such rights or warrants (assuming such holder had retained such
rights or warrants), made to all holders of shares of Common Stock as of the
date of such redemption or repurchase, and (2) in the case of such rights or
warrants which shall have expired or been terminated without exercise by any
holders thereof, the Conversion Price shall be readjusted as if such rights and
warrants had not been issued.

Notwithstanding the foregoing, in the event that the Issuer shall
distribute rights or warrants to subscribe for additional shares of the Common
Stock (other than rights or warrants described in Section 12.4(2)), pro rata to
holders of Common Stock, the Issuer may, in lieu of making any adjustment
pursuant to this Section 12.4(4), make proper provision so that each holder of a
Security who converts such Security (or any portion thereof) after the
Distribution Record Date for such distribution and prior to the expiration or
redemption of such rights or warrants 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 or warrants to be
determined as follows: (i) if such conversion occurs on or prior to the date
for the distribution of the holders of such rights or warrants of separate
certificates evidencing such rights or warrants (the "Distribution Date"), the
same number of rights or warrants to which a holder of a number of shares of
Common Stock equal to the number of Conversion Shares is entitled at the time of
such conversion in accordance with the terms and provisions of and applicable to
such rights or warrants; and (ii) if such conversion occurs after the
Distribution Date, the same number of rights or warrants to which a holder of
the number of shares of Common Stock into which the principal amount of 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 such rights or warrants.

For purposes of this Section 12.4(4) and Sections 12.4(1) and (2), any
dividend or distribution to which this Section 12.4(4) is applicable that also
includes shares of Common Stock, or rights or warrants to subscribe for or
purchase shares of Common Stock (or both), shall be deemed instead to be (1) a
dividend or distribution of the evidences of indebtedness, assets or shares of
capital stock other than such shares of Common Stock or rights or warrants (and
any Conversion Price reduction required by this Section 12.4(4) with respect to
such dividend or distribution shall then be made) immediately followed by (2) a
dividend or distribution of such shares of Common Stock or such rights or
warrants (and any further Conversion Price reduction required by
Sections 12.4(1) and (2) with respect to such dividend or distribution shall
then be made), except (A) the Distribution Record Date of such dividend or
distribution shall be substituted as "the date fixed for the determination of
shareholders entitled to receive such dividend or other distribution" and "the
date fixed for such determination" within the meaning of Sections 12.4(1) and
(2) and (B) any shares of Common Stock included in such dividend or distribution
shall not be deemed "outstanding at the close of business on the date fixed for
such determination" within the meaning of Section 12.4(1).

(5) In case the Issuer shall, by dividend or otherwise, distribute to all
holders of its Common Stock cash (excluding (x) any semi-annual cash dividend on
the Common Stock to the extent the aggregate cash dividend per share of Common
Stock in any semi-annual period does not exceed the greater of (A) the amount
per share of Common Stock of the next preceding semi-

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annual cash dividend on the Common Stock to the extent that such preceding
semi-annual dividend did not require any adjustment of the Conversion Price
pursuant to this Section 12.4(5) (as adjusted to reflect subdivisions or
combinations of the Common Stock), and (B) 7.5% of the arithmetic average of the
Closing Prices (determined as set forth in Section 12.4(8)) during the ten
Trading Days immediately prior to the date of declaration of such dividend,
(y) any dividend or distribution in connection with the liquidation, dissolution
or winding up of the Issuer, whether voluntary or involuntary and (z) any cash
that is distributed as part of a distribution requiring a Conversion Price
Adjustment pursuant to Section 12.4(4)), then, in such case, the Conversion
Price shall be reduced so that the same shall equal the price determined by
multiplying the Conversion Price in effect immediately prior to the close of
business on such Distribution Record Date by a fraction of which the numerator
shall be the Current Market Price of the Common Stock on the Distribution Record
Date less the amount of cash so distributed (and not excluded as provided above)
applicable to one share of Common Stock and the denominator shall be such
Current Market Price of the Common Stock, such reduction to be effective
immediately prior to the opening of business on the day following the
Distribution Record Date; PROVIDED, HOWEVER, that in the event the portion of
the cash so distributed applicable to one share of Common Stock is equal to or
greater than the Current Market Price of the Common Stock on the Distribution
Record Date, in lieu of the foregoing adjustment, adequate provision shall be
made so that each Holder shall have the right to receive upon conversion the
amount of cash such Holder would have received had such Holder converted each
Security on the Distribution Record Date. In the event that such dividend or
distribution is not so paid or made, the Conversion Price shall again be
adjusted to be the Conversion Price which would then be in effect if such
dividend or distribution had not been declared. If any adjustment is required
to be made as set forth in this Section 12.4(5) as a result of a distribution
that is a semi-annual dividend, such adjustment shall be based upon the amount
by which such distribution exceeds the amount of the semi-annual cash dividend
permitted to be excluded pursuant hereto. If an adjustment is required to be
made as set forth in this Section 12.4(5) above as a result of a distribution
that is not a quarterly dividend, such adjustment shall be based upon the full
amount of the distribution.

(6) In case a tender or exchange offer made by the Issuer or any
subsidiary of the Issuer for all or any portion of the Common Stock shall expire
and such tender or exchange offer (as amended upon the expiration thereof) shall
require the payment to shareholders of consideration per share of Common Stock
having a fair market value (as determined by the Board, whose determination
shall be conclusive and described in a Board Resolution) that as of the last
time (the "Expiration Time") tenders or exchanges may be made pursuant to such
tender or exchange offer (as it may be amended) that exceeds the Current Market
Price of the Common Stock on the Trading Day next succeeding the Expiration
Time, the Conversion Price shall be reduced so that the same shall equal the
price determined by multiplying the Conversion Price in effect immediately prior
to the Expiration Time by a fraction of which the numerator shall be the number
of Common Stock outstanding (including any tendered or exchanged shares) on the
Expiration Time multiplied by the Current Market Price of the Common Stock on
the Trading Day next succeeding the Expiration Time and the denominator shall be
the sum of (x) the fair market value (determined as aforesaid) of the aggregate
consideration payable to shareholders based on the acceptance (up to any maximum
specified in the terms of the tender or exchange

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

(7) In case of a tender or exchange offer made by a Person other than the
Issuer or any subsidiary of the Issuer for an amount which increases the
offeror's ownership of Common Stock to more than 25% of the Common Stock
outstanding and shall involve the payment by such Person of consideration per
share of Common Stock having a fair market value (as determined by the Board,
whose determination shall be conclusive, and described in a resolution of the
Board) at the last time (the "Expiration Time") tenders or exchanges may be made
pursuant to such tender or exchange offer (as it shall have been amended) that
exceeds the Current Market Price of the Common Stock on the Trading Day next
succeeding the Expiration Time, and in which, as of the Expiration Time the
Board is not recommending rejection of the offer, the Conversion Price shall be
reduced so that the same shall equal the price determined by multiplying the
Conversion Price in effect immediately prior to the Expiration Time by a
fraction of which the numerator shall be the number of shares of Common Stock
outstanding (including any tendered or exchanged shares) on the Expiration Time
multiplied by the Current Market Price of the Common Stock on the Trading Day
next succeeding the Expiration Time and the denominator shall be the sum of
(x) the fair market value (determined as aforesaid) of the aggregate
consideration payable to shareholders based on the acceptance (up to any maximum
specified in the terms of the tender 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) on the Expiration Time and the Current Market Price
of the Common Stock on the Trading Day next succeeding the Expiration Time, such
reduction to become effective immediately prior to the opening of business on
the day following the Expiration Time. In the event that such person is
obligated to purchase shares pursuant to any such tender or exchange offer, but
such person is permanently prevented by applicable law from effecting any such
purchases or all such purchases are rescinded, the Conversion Price shall again
be adjusted to be the Conversion Price which would then be in effect if such
tender or exchange offer had not been made. Notwithstanding the foregoing, the
adjustment described in this Section 12.4(7) shall not be made if, as of the
Expiration Time, the offering documents with respect to such offer disclose a
plan or intention to cause the Issuer to engage in any transaction described in
Sections 7.1 or 7.2

(8) For purposes of this Section 12.4, the following terms shall have the
meaning indicated:

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(a) "Closing Price" with respect to any securities on any day shall
mean the closing sale price regular way on such day or, in case no such
sale takes place on such day, the average of the reported closing bid and
asked prices, regular way, in each case on the New York Stock Exchange, or,
if such security is not listed or admitted to trading on such Exchange, on
the principal security exchange or quotation system in the United States on
which such security is quoted or listed or admitted to trading, or, the
average of the closing bid and asked prices of such security on the
over-the-counter market on the day in question as reported by the Nasdaq
National Market or a similar generally accepted reporting service, or if
not so available, in such manner as furnished by any New York Stock
Exchange member firm selected from time to time by the Board for that
purpose, or a price determined in good faith by the Board or, to the extent
permitted by applicable law, a duly authorized committee thereof, whose
determination shall be conclusive.

(b) "Current Market Price" shall mean the average of the daily
Closing Prices per share of Common Stock for the ten consecutive Trading
Days immediately prior to the date in question; PROVIDED, HOWEVER, that
(1) if the "ex" date (as hereinafter defined) for any event (other than the
issuance or distribution or Fundamental Change requiring such computation)
that requires an adjustment to the Conversion Price pursuant to
Section 12.4(1), (2), (3), (4), (5), (6) or (7) occurs during such ten
consecutive Trading Days, the Closing Price for each Trading Day prior to
the "ex" date for such other event shall be adjusted by multiplying such
Closing Price by the same fraction by which the Conversion Price is so
required to be adjusted as a result of such other event, (2) if the "ex"
date for any event (other than the issuance, distribution or Fundamental
Change requiring such computation) that requires an adjustment to the
Conversion Price pursuant to Section 12.4(1), (2), (3), (4), (5), (6) or
(7) occurs on or after the "ex" date for the issuance or distribution
requiring such computation and prior to the day in question, the Closing
Price for each Trading Day on and after the "ex" date for such other event
shall be adjusted by multiplying such Closing Price by the reciprocal of
the fraction by which the Conversion Price is so required to be adjusted as
a result of such other event, and (3) if the "ex" date for the issuance,
distribution or Fundamental Change requiring such computation is prior to
the day in question, after taking into account any adjustment required
pursuant to clause (1) or (2) of this proviso, the Closing Price for each
Trading Day on or after such "ex" date shall be adjusted by adding thereto
the amount of any cash and the fair market value (as determined by the
Board in a manner consistent with any determination of such value for
purposes of Section 12.4(4), (6) or (7) whose determination shall be
conclusive and described in a resolution of the Board) of the evidences of
indebtedness, shares of capital stock or assets being distributed
applicable to one Common Share as of the close of business on the day
before such "ex" date. For purposes of any computation under
Section 12.4(6) or (7), the Current Market Price of the Common Stock on any
date shall be deemed to be the average of the daily Closing Prices per
Common Share for such day and the next two succeeding Trading Days;
PROVIDED, HOWEVER, that if the "ex" date for any event (other than the
tender or exchange offer requiring such computation) that requires an
adjustment to the Conversion Price pursuant to Section 12.4(1), (2), (3),
(4), (5), (6) or (7) occurs on or after the Expiration Time for

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the tender or exchange offer requiring such computation and prior to the
day in question, the Closing Price for each Trading Day on and after the
"ex" date for such other event shall be adjusted by multiplying such
Closing Price by the reciprocal of the fraction by which the Conversion
Price is so required to be adjusted as a result of such other event. For
purposes of this paragraph, the term "ex" date, (1) when used with respect
to any issuance or distribution, means the first date on which the Common
Stock trades regular way on the relevant exchange or in the relevant market
from which the Closing Price was obtained without the right to receive such
issuance or distribution, (2) when used with respect to any subdivision or
combination of shares of Common Stock, means the first date on which the
Common Stock trades regular way on such exchange or in such market after
the time at which such subdivision or combination becomes effective, and
(3) when used with respect to any tender or exchange offer means the first
date on which the Common Stock trades regular way on such exchange or in
such market after the Expiration Time of such offer.

(c) "fair market value" shall mean the amount which a willing buyer
would pay a willing seller in an arm's length transaction.

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

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

(9) No adjustment in the Conversion Price shall be required unless such
adjustment (plus any adjustments not previously made by reason of this
paragraph (9)) would require an increase or decrease of at least one percent in
such price; PROVIDED, HOWEVER, that any adjustments which by reason of this
paragraph (9) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under this Article
shall be made to the nearest cent or to the nearest one-hundredth of a share, as
the case may be.

(10) The Issuer may, at its option, make such reductions in the Conversion
Price as the Board deems advisable, in addition to those required by paragraphs
(1), (2), (3), (4), (5), (6) or (7) of this Section 12.4 in order to avoid or
diminish any income tax to any holders of Common

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Stock or rights to purchase Common Stock resulting from any dividend or
distribution on Common Stock (or rights to acquire such shares) or from any
event treated as such for income tax purposes, resulting from any dividend or
distribution of shares or issuance of rights or warrants to purchase or
subscribe for shares or from any event treated as such for income tax purposes.

To the extent permitted by applicable law, the Issuer from time to time may
reduce the Conversion Price by any amount for any period of time if the period
is (i) at least twenty (20) days, (ii) the reduction is irrevocable during the
period and (iii) the Board shall have made a determination that such reduction
would be in the best interests of the Issuer, which determination shall be
conclusive. Whenever the Conversion Price is reduced pursuant to the preceding
sentence, the Issuer shall give notice of the reduction to the Holders of
Securities in the manner provided in Section 1.6 at least fifteen (15) days
prior to the date the reduced Conversion Price takes effect, and such notice
shall state the reduced Conversion Price and the period during which it will be
in effect.

(11) No adjustment of the Conversion Price will result in zero or a
negative number.

SECTION 12.5. NOTICE OF ADJUSTMENTS OF CONVERSION PRICE.

Whenever the Conversion Price is adjusted as herein provided:

(1) the Issuer shall compute the adjusted Conversion Price in
accordance with Section 12.4 and shall prepare a certificate signed by the
President, Treasurer, Chief Financial Officer or Vice President of Finance
of the Issuer setting forth the adjusted Conversion Price and showing in
reasonable detail the facts upon which such adjustment is based, and such
certificate shall promptly be filed with the Trustee and with each
Conversion Agent; and

(2) a notice stating that the Conversion Price has been adjusted and
setting forth the adjusted Conversion Price shall promptly be prepared and
as soon as practicable thereafter, such notice shall be provided by the
Issuer to all Holders in accordance with Section 1.6.

Neither the Trustee nor any Conversion Agent shall be under any duty or
responsibility with respect to any such certificate or the information and
calculations contained therein, except to exhibit the same to any Holder of
Securities desiring inspection thereof at its office during normal business
hours.

So long as the Securities are listed on the Luxembourg Stock Exchange and
the rules of the Luxembourg Stock Exchange shall require, notice of any
adjustment of the Conversion Price pursuant to this Article Twelve will be given
by publication in a Authorized Newspaper in Luxembourg, or, if not practicable
in Luxembourg, elsewhere in a Western European city. Any failure of the Issuer
to give such notice, or any defect therein, shall not in any way impair or
affect the validity of any such Conversion Price adjustment.

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SECTION 12.6. NOTICE OF CERTAIN CORPORATE ACTION.

In case:

(a) the Issuer shall declare a dividend (or any other distribution)
on all or substantially all of its Common Stock payable (i) otherwise than
exclusively in cash or (ii) exclusively in cash in an amount that would
require any adjustment pursuant to Section 12.4; or

(b) the Issuer shall authorize the granting to the holders of its
Common Stock of rights, options or warrants to subscribe for or purchase
any shares of capital stock of any class or of any other rights that would
require any adjustment pursuant to Section 12.4; or

(c) of any reclassification of the Common Stock of the Issuer (other
than a subdivision or combination of its outstanding Common Stock), or of
any consolidation or merger to which the Issuer is a party and for which
approval of any shareholders of the Issuer is required, or of the sale or
transfer of all or substantially all of the assets of the Issuer; or

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

(e) the Issuer or any subsidiary of the Issuer shall commence a
tender offer for all or a portion of the Issuer's outstanding Common Stock
(or shall amend any such tender offer);

then the Issuer shall cause to be filed at each office or agency maintained for
the purpose of conversion of Securities pursuant to Section 10.2, and shall
cause to be provided to all Holders in accordance with Section 1.6, at least
20 days (or 10 days in any case specified in clause (a) or (b) above) prior to
the applicable record, expiration or effective date hereinafter specified, a
notice stating (x) the date on which a record is to be taken for the purpose of
such dividend, distribution, rights, options or warrants, or, if a record is not
to be taken, the date as of which the holders of Common Stock of record to be
entitled to such dividend, distribution, rights, options or warrants are to be
determined, (y) the date on which the right to make tenders under such tender
offer expires or (z) the date on which such reclassification, consolidation,
merger, share exchange, transfer, sale, dissolution, liquidation or winding up
is expected to become effective, and the date as of which it is expected that
holders of shares of Common Stock of record shall be entitled to exchange their
shares of Common Stock for securities, cash or other property deliverable upon
such reclassification, consolidation, merger, share exchange, conveyance,
transfer, sale, lease, dissolution, liquidation or winding up. If at the time
the Trustee shall not be the Conversion Agent, a copy of such notice and any
notice referred to in the following paragraph shall also forthwith be filed by
the Issuer with the Trustee.

The preceding paragraph to the contrary notwithstanding, the Issuer shall
cause to be filed at each office or agency maintained for the purpose of
conversion of Securities pursuant to

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Section 10.2, and shall cause to be provided to all Holders in accordance with
Section 1.6, notice of any tender offer by the Issuer or any subsidiary of the
Issuer for all or any portion of the Common Stock at or about the time that such
notice of tender offer is provided to the public generally (such notice to be
sent to all Holders within five days after receipt of such notice by the Trustee
or Conversion Agent from the Issuer).

SECTION 12.7. ISSUER TO PROVIDE COMMON STOCK.

The Issuer shall ensure that the Issuer has, free from preemptive rights,
out of its authorized but unissued Common Stock, the full number of shares of
Common Stock for the purpose of effecting the conversion of Securities.

SECTION 12.8. TAXES ON CONVERSIONS.

The Issuer will pay any and all taxes and duties that may be payable in
respect of the issue or delivery of Common Stock on conversion of Securities
pursuant hereto. The Issuer shall not, however, be required to pay any tax or
duty which may be payable in respect of any transfer involved in the issue and
delivery of Common Stock in a name other than that of the Holder of the Security
or Securities to be converted, and no such issue or delivery shall be made
unless and until the Person requesting such issue has paid to the Issuer the
amount of any such tax or duty, or has established to the satisfaction of the
Issuer that such tax or duty has been paid.

SECTION 12.9. ISSUER COVENANT AS TO COMMON STOCK.

The Issuer covenants that all Common Stock which may be delivered upon
conversion of Securities, upon such delivery, will have been duly authorized and
validly issued and will be fully paid and nonassessable and, except as provided
in Section 12.8, the Issuer will pay all taxes, liens and charges with respect
to the issue thereof.

SECTION 12.10. CANCELLATION OF CONVERTED SECURITIES.

All Securities delivered for conversion shall be delivered to the
Trustee or the Paying Agent in Luxembourg or its agent to be canceled by or at
the direction of the Trustee, which shall dispose of the same as provided in
Section 3.9.

SECTION 12.11. PROVISION IN CASE OF CONSOLIDATION, MERGER, OR SALE OF ASSETS OF
THE ISSUER.

In case of any consolidation of the Issuer with, or merger of the Issuer
into, any other Person, or any merger of another Person into the Issuer (other
than a merger which does not result in any reclassification, conversion,
exchange or cancellation of outstanding Common Stock of the Issuer) or any sale
or transfer of all or substantially all of the assets of the Issuer, the Issuer
and the Person formed by such consolidation or resulting from such merger or
which acquires such assets shall execute and deliver to the Trustee a
supplemental indenture providing that the Holder of each Security then
Outstanding shall have the right thereafter, during the period such Security
shall be convertible as specified in Section 12.1, to convert such Security only
into the kind and amount of securities, cash and other property receivable upon
such

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consolidation, merger, sale or transfer by a holder of the number of shares of
Common Stock of the Issuer into which such Security might have been converted
immediately prior to such consolidation, merger, sale or transfer, assuming such
holder of Common Stock of the Issuer (i) is not a Person with which the Issuer
consolidated or into which the Issuer merged or which merged into the Issuer or
to which such sale or transfer was made, as the case may be (a "Constituent
Person"), or an Affiliate of a Constituent Person and (ii) failed to exercise
his rights of election, if any, as to the kind or amount of securities, cash and
other property receivable upon such consolidation, merger, sale or transfer
(PROVIDED that if the kind or amount of securities, cash and other property
receivable upon such consolidation, merger, sale or transfer is not the same for
each share of Common Stock of the Issuer held immediately prior to such
consolidation, merger, sale or transfer by others than a Constituent Person or
an Affiliate thereof and in respect of which such rights of election shall not
have been exercised ("Non-electing Share"), then for the purposes of this
Section 12.11 the kind and amount of securities, cash and other property
receivable upon such consolidation, merger, sale or transfer by the holders of
each Non-electing Share shall be deemed to be the kind and amount so receivable
per share by a plurality of the Non-electing Shares). Such supplemental
indenture shall provide for adjustments which, for events subsequent to the
effective date of such supplemental indenture, shall be as nearly equivalent as
may be practicable to the adjustments provided for in this Article. The above
provisions of this Section 12.11 shall similarly apply to successive
consolidations, mergers, sales or transfers. Notice of the execution of such a
supplemental indenture shall be given by the Issuer to the Holder of each
Security as provided in Section 1.6 promptly upon such execution.

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

SECTION 12.12. RESPONSIBILITY OF TRUSTEE FOR CONVERSION PROVISIONS.

The Trustee, subject to the provisions of Section 6.1, and any Conversion
Agent shall not at any time be under any duty or responsibility to any Holder of
Securities to determine whether any facts exist which may require any adjustment
of the Conversion Price, or with respect to the nature or extent of any such
adjustment when made, or with respect to the method employed, or herein or in
any supplemental indenture provided to be employed, in making the same, or
whether a supplemental indenture need be entered into. Neither the Trustee,
subject to the provisions of Section 6.1, nor any Conversion Agent shall be
accountable with respect to the validity or value (or the kind or amount) of any
Common Stock, or of any other securities or property or cash, which may at any
time be issued or delivered upon the conversion of any Security; and it or they
do not make any representation with respect thereto. Neither the Trustee,
subject to the provisions of Section 6.1, nor any Conversion Agent shall be
responsible for any

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failure of the Issuer to make or calculate any cash payment or to issue,
transfer or deliver any Common Stock or share certificates or other securities
or property or cash upon the surrender of any Security for the purpose of
conversion; and the Trustee, subject to the provisions of Section 6.1, and any
Conversion Agent shall not be responsible for any failure of the Issuer to
comply with any of the covenants of the Issuer contained in this Article.

ARTICLE THIRTEEN

SUBORDINATION OF SECURITIES

SECTION 13.1. AGREEMENT OF SUBORDINATION.

The Issuer covenants and agrees, and each Holder of Securities issued
hereunder by his acceptance thereof likewise covenants and agrees, that all
Securities shall be issued subject to the provisions of this Article Thirteen;
and each Person holding any Security, whether upon original issue or upon
transfer, assignment or exchange thereof, accepts and agrees to be bound by such
provisions.

The payment of the principal of, premium, if any, and interest on all
Securities (including, but not limited to, the Redemption Price with respect to
the Securities called for redemption in accordance with Article Eleven, or the
Repurchase Price with respect to Securities submitted for repurchase in
accordance with Article Fourteen, as the case may be, as provided in this
Indenture and Additional Amounts, if any, and Liquidated Damages, if any) issued
hereunder shall, to the extent and in the manner hereinafter set forth, be
subordinated and subject in right of payment to the prior payment in full of all
Senior Indebtedness of the Issuer, whether outstanding at the date of this
Indenture or thereafter incurred.

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

SECTION 13.2. PAYMENTS TO NOTEHOLDERS.

No payment shall be made with respect to the principal of, or premium, if
any, or interest on the Securities by the Issuer (including, but not limited to,
the Redemption Price with respect to the Securities to be called for redemption
in accordance with Article Eleven or the Repurchase Price with respect to
Securities submitted for repurchase in accordance with Article Fourteen, as the
case may be, as provided in this Indenture, Additional Amounts, if any,
Liquidated Damages, if any, and payments on account of a Fundamental Change, if
any), except payments and distributions made by the Trustee as permitted by the
first or second paragraph of Section 13.5, if:

(i) a default in the payment of principal, premium, interest, rent or
other obligations due on any Senior Indebtedness of the Issuer has occurred
and is continuing (or, in the case of Senior Indebtedness of the Issuer for
which there is a period of grace, in the event of such a default that
continues beyond the period of grace, if any, specified in

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the instrument or lease evidencing such Senior Indebtedness of the Issuer),
unless and until such default shall have been cured or waived or shall have
ceased to exist; or

(ii) a default, other than a payment default, on Designated Senior
Indebtedness occurs and is continuing that then permits holders of such
Designated Senior Indebtedness to accelerate its maturity and the Trustee
receives a notice of the default (a "Payment Blockage Notice") from a
Representative of Designated Senior Indebtedness or the Issuer.

If the Trustee receives any Payment Blockage Notice pursuant to clause (ii)
above, no subsequent Payment Blockage Notice shall be effective for purposes of
this Section unless and until (A) at least 365 days shall have elapsed since the
initial effectiveness of the immediately prior Payment Blockage Notice, and
(B) all scheduled payments of principal, premium, if any, and interest on the
Securities that have come due have been paid in full in cash. No nonpayment
default that existed or was continuing on the date of delivery of any Payment
Blockage Notice to the Trustee (unless such default was waived, cured or
otherwise ceased to exist and thereafter subsequently reoccurred) shall be, or
be made, the basis for a subsequent Payment Blockage Notice.

The Issuer may and shall resume payments on and distributions in respect of
the Securities upon the earlier of:

(1) in the case of a payment default, the date upon which the default
is cured or waived or ceases to exist, or

(2) in the case of a default referred to in clause (ii) above, the
earlier of the date on which such default is cured or waived or ceases to
exist or 179 days after the date on which the applicable Payment Blockage
Notice is received if the maturity of such Designated Senior Indebtedness
has not been accelerated, unless this Article Thirteen otherwise prohibits
the payment or distribution at the time of such payment or distribution
(including without limitation, in the case of default referred to in clause
(ii) above, as a result of a payment default with respect to the applicable
Senior Indebtedness as a consequence of the acceleration of the maturity
thereof or otherwise).

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

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bankruptcy, insolvency, receivership or other proceeding, any payment by the
Issuer, or distribution of assets of the Issuer of any kind or character,
whether in cash, property or securities, to which the Holders or the Trustee
would be entitled, except for the provision of this Article Thirteen, shall
(except as aforesaid) be paid by the Issuer or by any receiver, trustee in
bankruptcy, moratorium of payments, liquidating trustee, agent or other Person
making such payment or distribution, or by the Holders or by the Trustee under
this Indenture if received by them or it, directly to the holders of Senior
Indebtedness of the Issuer (pro rata to such holders on the basis of the
respective amounts of Senior Indebtedness of the Issuer held by such holders, or
as otherwise required by law or a court order) or their Representative or
Representatives, or to the trustee or trustees under any indenture pursuant to
which any instruments evidencing any Senior Indebtedness of the Issuer may have
been issued, as their respective interests may appear, to the extent necessary
to pay all Senior Indebtedness of the Issuer in full, in cash or other payment
satisfactory to the holders of such Senior Indebtedness of the Issuer, after
giving effect to any concurrent payment or distribution to or for the holders of
Senior Indebtedness of the Issuer, before any payment or distribution is made to
the Holders or to the Trustee.

For purposes of this Article Thirteen, the words, "cash, property or
securities" shall not be deemed to include shares of stock of the Issuer as
reorganized or readjusted, or securities of the Issuer or any other corporation
provided for by a plan of reorganization or readjustment, the payment of which
is subordinated at least to the extent provided in this Article Thirteen with
respect to the Securities to the payment of all Senior Indebtedness of the
Issuer which may at the time be outstanding; PROVIDED that (i) the Senior
Indebtedness of the Issuer is assumed by the new corporation, if any, resulting
from any reorganization or readjustment, and (ii) the rights of the holders of
Senior Indebtedness of the Issuer (other than leases which are not assumed by
the Issuer or the new corporation, as the case may be) are not, without the
consent of such holders, altered by such reorganization or readjustment. The
merger of the Issuer into another corporation or the liquidation or dissolution
of the Issuer following the conveyance or transfer of its property as an
entirety, or substantially as an entirety, to another corporation upon the terms
and conditions provided for in Article Seven shall not be deemed a dissolution,
winding-up, liquidation or reorganization for the purposes of this Section 13.2
if such other corporation shall, as a part of such merger, conveyance or
transfer, comply with the conditions stated in Article Seven.

In the event of the acceleration of the Securities because of an Event of
Default, no payment or distribution shall be made to the Trustee or any Holder
of Securities in respect of the principal of, premium, if any, or interest on
the Securities by the Issuer (including, but not limited to, the Redemption
Price with respect to the Securities called for redemption in accordance with
Article Eleven or the Repurchase Price with respect to Securities submitted for
repurchase in accordance with Article Fourteen as the case may be, as provided
in this Indenture and Additional Amounts, if any, and Liquidated Damages, if
any, and payments on account of a Fundamental Change, if any), except payments
and distributions made by the Trustee as permitted by the first or second
paragraph of Section 13.5, until all Senior Indebtedness of the Issuer has been
paid in full in cash or other payment satisfactory to the holders of Senior
Indebtedness of the Issuer or such acceleration is rescinded in accordance with
the terms of this

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

In the event that, notwithstanding the foregoing provisions, any payment or
distribution of assets of the Issuer of any kind or character, whether in cash,
property or securities (including, without limitation, by way of setoff or
otherwise), prohibited by the foregoing, shall be received by the Trustee or the
Holders of the Securities before all Senior Indebtedness of the Issuer is paid
in full in cash or other payment satisfactory to the holders of such Senior
Indebtedness of the Issuer, or provision is made for such payment thereof in
accordance with its terms in cash or other payment satisfactory to the holders
of such Senior Indebtedness of the Issuer, such payment or distribution shall be
held in trust for the benefit of and shall be paid over or delivered to the
holders of Senior Indebtedness of the Issuer or their Representative or
Representatives, or to the trustee or trustees under any indenture pursuant to
which any instruments evidencing any Senior Indebtedness of the Issuer may have
been issued, as their respective interests may appear, as calculated by the
Issuer, for application to the payment of all Senior Indebtedness of the Issuer
remaining unpaid to the extent necessary to pay all Senior Indebtedness of the
Issuer in full in cash or other payment satisfactory to the holders of such
Senior Indebtedness of the Issuer, after giving effect to any concurrent payment
or distribution, or provision therefor, to or for the holders of such Senior
Indebtedness of the Issuer.

Nothing in this Article Thirteen shall apply to claims of, or payments to,
the Trustee under or pursuant to Section 6.7. This Section 13.2 shall be
subject to the further provisions of Section 13.5.

SECTION 13.3. SUBROGATION OF SECURITIES.

Subject to the payment in full of all Senior Indebtedness of the Issuer,
the Holders of the Securities shall be subrogated to the extent of the payments
or distributions made to the holders of such Senior Indebtedness of the Issuer
pursuant to the provisions of this Article Thirteen (equally and ratably with
the holders of all indebtedness of the Issuer which by its express terms is
subordinated to other indebtedness of the Issuer to substantially the same
extent as the Securities are subordinated and is entitled to like rights of
subrogation) to the rights of the holders of Senior Indebtedness of the Issuer
to receive payments or distributions of cash, property or securities of the
Issuer applicable to the Senior Indebtedness of the Issuer until the principal,
premium, if any, and interest on the Securities shall be paid in full; and, for
the purposes of such subrogation, no payments or distributions to the holders of
the Senior Indebtedness of the Issuer of any cash, property or securities to
which the Holders of the Securities or the Trustee would be entitled except for
the provisions of this Article Thirteen, and no payment over pursuant to the
provisions of this Article Thirteen, to or for the benefit of the holders of
Senior Indebtedness of the Issuer by Holders of the Securities or the Trustee,
shall, as between the Issuer, its creditors other than holders of Senior
Indebtedness of the Issuer, and the Holders of the Securities, be deemed to be a
payment by the Issuer to or on account of the Senior Indebtedness of the Issuer.
It is understood that the provisions of this Article Thirteen are and are
intended solely for the purposes of defining the relative rights of the Holders
of the

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Securities, on the one hand, and the holders of the Senior Indebtedness of the
Issuer, on the other hand.

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

Upon any payment or distribution of assets of the Issuer referred to in
this Article Thirteen, the Trustee, subject to the provisions of Section 6.1,
and the Holders of the Securities shall be entitled to rely upon any order or
decree made by any court of competent jurisdiction in which such bankruptcy,
dissolution, winding-up, liquidation or reorganization proceedings are pending,
or a certificate of the receiver, trustee in bankruptcy, liquidating trustee,
agent or other person making such payment or distribution, delivered to the
Trustee or to the Holders of the Securities, for the purpose of ascertaining the
persons entitled to participate in such distribution, the holders of the Senior
Indebtedness of the Issuer and other indebtedness of the Issuer, the amount
thereof or payable thereon and all other facts pertinent thereto or to this
Article Thirteen.

SECTION 13.4. AUTHORIZATION TO EFFECT SUBORDINATION.

Each Holder of a Security by the Holder's acceptance thereof authorizes and
directs the Trustee on the Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in this
Article Thirteen and appoints the Trustee to act as the Holder's
attorney-in-fact for any and all such purposes. If the Trustee does not file a
proper proof of claim or proof of debt in the form required in any proceeding
referred to in Section 5.4 hereof at least 30 days before the expiration of the
time to file such claim, the holders of any Senior Indebtedness of the Issuer or
their Representatives are hereby authorized to file an appropriate claim for and
on behalf of the Holders of the Securities.

SECTION 13.5. NOTICE TO TRUSTEE.

The Issuer shall give prompt written notice in the form of an Officers'
Certificate to a Responsible Officer of the Trustee and to any Paying Agent of
any fact known to the Issuer which would prohibit the making of any payment of
monies deposited by the Issuer to or by the Trustee or any Paying Agent in
respect of the Securities pursuant to the provisions of this Article Thirteen.
Notwithstanding the provisions of this Article Thirteen or any other provision
of this Indenture, the Trustee shall not be charged with knowledge of the
existence of any facts

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which would prohibit the making of any payment of monies deposited by the Issuer
to or by the Trustee in respect of the Securities pursuant to the provisions of
this Article Thirteen, unless and until a Responsible Officer of the Trustee
shall have received written notice thereof at the Corporate Trust Office from
the Issuer (in the form of an Officers' Certificate) or a Representative of a
holder or holders of Senior Indebtedness of the Issuer or from any trustee
thereof; and before the receipt of any such written notice, the Trustee, subject
to the provisions of Section 6.1, shall be entitled in all respects to assume
that no such facts exist; PROVIDED that if on a date not fewer than two Business
Days prior to the date upon which by the terms hereof any such monies may become
payable for any purpose (including, without limitation, the payment of the
principal of, or premium, if any, or interest on any Security) the Trustee shall
not have received, with respect to such monies, the notice provided for in this
Section 13.5, then, anything herein contained to the contrary notwithstanding,
the Trustee shall have full power and authority to receive such monies deposited
by the Issuer and to apply the same to the purpose for which they were received,
and shall not be affected by any notice to the contrary which may be received by
it on or after such prior date.

Notwithstanding anything in this Article Thirteen to the contrary, nothing
shall prevent any payment by the Trustee to the Holders of monies deposited with
it pursuant to Section 4.1, and any such payment shall not be subject to the
provisions of Section 13.1 or 13.2.

The Trustee, subject to the provisions of Section 6.1, shall be entitled to
rely on the delivery to it of a written notice by a Representative or a person
representing himself to be a holder of Senior Indebtedness of the Issuer (or a
trustee on behalf of such holder) to establish that such notice has been given
by a Representative or a holder of Senior Indebtedness of the Issuer or a
trustee on behalf of any such holder or holders. In the event that the Trustee
determines in good faith that further evidence is required with respect to the
right of any person as a holder of Senior Indebtedness of the Issuer to
participate in any payment or distribution pursuant to this Article Thirteen,
the Trustee may request such person to furnish evidence to the reasonable
satisfaction of the Trustee as to the amount of Senior Indebtedness of the
Issuer held by such person, the extent to which such person is entitled to
participate in such payment or distribution and any other facts pertinent to the
rights of such person under this Article Thirteen, and if such evidence is not
furnished the Trustee may defer any payment to such person pending judicial
determination as to the right of such person to receive such payment.

SECTION 13.6. TRUSTEE'S RELATION TO SENIOR INDEBTEDNESS OF THE ISSUER.

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

With respect to the holders of Senior Indebtedness of the Issuer, the
Trustee undertakes to perform or to observe only such of its covenants and
obligations as are specifically set forth in this Article Thirteen, and no
implied covenants or obligations with respect to the holders of Senior
Indebtedness of the Issuer shall be read into this Indenture against the
Trustee. The

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Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior
Indebtedness of the Issuer and, subject to the provisions of Section 6.1, the
Trustee shall not be liable to any holder of Senior Indebtedness of the Issuer
if it shall pay over or deliver to Holders of Securities, the Issuer or any
other person money or assets to which any holder of Senior Indebtedness of the
Issuer shall be entitled by virtue of this Article Thirteen or otherwise.

SECTION 13.7. NO IMPAIRMENT OF SUBORDINATION.

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

SECTION 13.8. ARTICLE APPLICABLE TO PAYING AGENTS.

If at any time any Paying Agent other than the Trustee shall have been
appointed by the Issuer and be then acting hereunder, the term "Trustee" as used
in this Article shall (unless the context otherwise requires) be construed as
extending to and including such Paying Agent within its meaning as fully for all
intents and purposes as if such paying agent were named in this Article in
addition to or in place of the Trustee; PROVIDED, HOWEVER, that the first
paragraph of Section 13.5 shall not apply to the Issuer or any Affiliate of the
Issuer if it or such Affiliate acts as Paying Agent.

SECTION 13.9. SENIOR INDEBTEDNESS OF THE ISSUER ENTITLED TO RELY.

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

ARTICLE FOURTEEN

REPURCHASE OF SECURITIES AT THE OPTION OF THE HOLDER UPON A FUNDAMENTAL CHANGE

SECTION 14.1. RIGHT TO REQUIRE REPURCHASE.

In the event that a Fundamental Change (as hereinafter defined) shall
occur, then each Holder shall have the right, at the Holder's option, to require
the Issuer to repurchase, and upon the exercise of such right the Issuer shall
repurchase, all of such Holder's Securities, or any portion of the principal
amount thereof that is equal to U.S.$1,000 or any integral multiple thereof
(PROVIDED that no single Security may be repurchased in part unless the portion
of the principal amount of such Security to be Outstanding after such repurchase
is equal to U.S.$5,000 or integral multiples of U.S.$1,000 in excess thereof),
on the date (the "Repurchase Date") that is

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45 days after the date of the Issuer Notice (as defined in Section 15.2) at the
following prices (expressed as percentages of the principal amount thereof) (the
"Repurchase Price") in the event of a Fundamental Change occurring during the
12-month period beginning August 1 (plus interest accrued to, but excluding, the
Repurchase Date):

Year Percentage

1997 102%
1998 102%
1999 102%
2000 102%
2001 101%

and 100% at August 1, 2002; PROVIDED that if the Applicable Price with respect
to the Fundamental Change is less than the Reference Market Price, the Issuer
shall repurchase such Notes at a price equal to the foregoing Repurchase Price
multiplied by the fraction obtained by dividing the Applicable Price by the
Reference Market Price; and PROVIDED, FURTHER, that installments of interest on
Securities whose Stated Maturity is on or prior to the Repurchase Date shall be
payable to the Holders of such Securities, or one or more Predecessor
Securities, registered as such on the Regular Record Date according to their
terms and the provisions of Section 3.7. Such right to require the repurchase
of the Securities shall not continue after a discharge of the Issuer from its
obligations with respect to the Securities in accordance with Article Four,
unless a Fundamental Change shall have occurred prior to such discharge.
Whenever in this Indenture (including Sections 2.2, 3.1, 5.1(1) and 5.8) there
is a reference, in any context, to the principal of any Security as of any time,
such reference shall be deemed to include reference to the Repurchase Price
payable in respect of such Security to the extent that such Repurchase Price is,
was or would be so payable at such time, and express mention of the Repurchase
Price in any provision of this Indenture shall not be construed as excluding the
Repurchase Price in those provisions of this Indenture when such express mention
is not made.

SECTION 14.2. NOTICES; METHOD OF EXERCISING REPURCHASE RIGHT, ETC.

(a) Unless the Issuer shall have theretofore called for redemption all of
the Outstanding Securities, on or before the 30th day after the occurrence of a
Fundamental Change, the Issuer or, at the request and expense of the Issuer, the
Trustee, shall give to all Holders of Securities, in the manner provided in
Section 1.6, notice (the "Issuer Notice") of the occurrence of the Fundamental
Change and of the repurchase right set forth herein arising as a result thereof.
The Issuer shall also deliver a copy of such notice of a repurchase right to the
Trustee.

Each notice of a repurchase right shall state:

(1) the Repurchase Date,

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

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(3) the Repurchase Price,

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

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

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

So long as the Securities are listed on the Luxembourg Stock Exchange
and the Luxembourg Stock Exchange shall require, on or before the 30th day after
the occurrence of a Fundamental Change, the Issuer or, at the request of the
Issuer, the Paying Agent in Luxembourg, will provide notice of such Fundamental
Change by publishing such notice in a Authorized Newspaper in Luxembourg, or, if
not practicable in Luxembourg, elsewhere in a Western European city. No failure
of the Issuer to give the foregoing notices or defect therein shall limit any
Holder's right to exercise a repurchase right or affect the validity of the
proceedings for the repurchase of Securities.

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

(b) To exercise a repurchase right, a Holder shall deliver to the
Trustee or any Paying Agent on or before the 30th day after the date of the
Issuer Notice (i) written notice of the Holder's exercise of such right,
which notice shall set forth the name of the Holder, the principal amount
of the Securities to be repurchased (and, if any Security is to repurchased
in part, the serial number thereof, the portion of the principal amount
thereof to be repurchased and the name of the Person in which the portion
thereof to remain Outstanding after such repurchase is to be registered)
and a statement that an election to exercise the repurchase right is being
made thereby, and (ii) the Securities with respect to which the repurchase
right is being exercised. Such written notice shall be irrevocable, except
that the right of the Holder to convert the Securities with respect to
which the repurchase right is being exercised shall continue until the
close of business on the Business Day prior to the Repurchase Date.

(c) In the event a repurchase right shall be exercised in accordance
with the terms hereof, the Issuer shall pay or cause to be paid to the
Trustee or the Paying Agent the Repurchase Price in cash, as provided
above, for payment to the Holder on the Repurchase Date together with
accrued and unpaid interest to the Repurchase Date payable with respect to
the Securities as to which their purchase right has been exercised;
PROVIDED, HOWEVER, that installments of interest that mature on or prior to
the Repurchase

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<PAGE>

Date shall be payable in cash, in the case of Securities, to the Holders of
such Securities, or one or more Predecessor Securities, registered as such
at the close of business on the relevant Regular Record Date.

(d) If any Security (or portion thereof) surrendered for repurchase
shall not be so paid on the Repurchase Date, the principal amount of such
Security (or portion thereof, as the case may be) shall, until paid, bear
interest to the extent permitted by applicable law from the Repurchase Date
at the rate of 5% per annum, and each Security shall remain convertible
into Common Stock until the principal of such Security (or portion thereof,
as the case may be) shall have been paid or duly provided for.

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

(f) All securities delivered for repurchase shall be delivered to the
Trustee, the Paying Agent or any other agents (as shall be set forth in the
Issuer Notice) to be canceled by or at the direction of the Trustee, which
shall dispose of the same as provided in Section 3.9.

SECTION 14.3. MERGER, CONSOLIDATION, ETC.

In the case of any merger, consolidation, sale or transfer of all or
substantially all of the assets of the Issuer to which Section 12.11 applies, in
which the Common Stock of the Issuer is changed or exchanged as a result into
the right to receive shares of stock and other securities or property or assets
(including cash) which includes Common Stock of the Issuer or common stock of
another Person that are, or upon issuance will be, traded on a United States
national securities exchange or approved for trading on an established automated
over-the-counter trading market in the United States and such shares constitute
at the time such change or exchange becomes effective in excess of 50% of the
aggregate fair market value of such shares of stock and other securities,
property and assets (including cash) (as determined by the Issuer, which
determination shall be conclusive and binding), then the Issuer and the Person
resulting from such merger or consolidation or which acquires the properties or
assets (including cash) of the Issuer, as the case may be, shall execute and
deliver to the Trustee a supplemental indenture (which shall comply with the
Trust Indenture Act as in force at the date of execution of such supplemental
indenture) modifying the provisions of this Indenture relating to the right of
Holders to cause the Issuer to repurchase the Securities following a Fundamental
Change, including without limitation the applicable provisions of this Article
Fourteen and the definitions of the Common Stock and Fundamental Change, as
appropriate, and such other related definitions set forth herein as

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determined in good faith by the Issuer and the Issuer (which determination shall
be conclusive and binding), to make such provisions apply in the event of a
subsequent Fundamental Change to the common stock and the issuer thereof if
different from the Issuer and the Common Stock of the Issuer.

ARTICLE FIFTEEN

HOLDERS LISTS AND REPORTS BY TRUSTEE AND ISSUER

SECTION 15.1. ISSUER TO FURNISH TRUSTEE NAMES AND ADDRESSES OF HOLDERS.

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

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

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

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

SECTION 15.2. TRUSTEE TO FURNISH ISSUER NAMES AND ADDRESSES OF HOLDERS.

The Trustee will furnish or cause to be furnished to the Issuer, or to
Issuer's counsel:

(a) within 10 days from the date of this Indenture, an updated Note
Register,

(b) semi-annually, not more than 15 days after the Regular Record
Date, an updated Note Register, in such form as the Issuer may reasonably
require, of the names and addresses of the Holders of Securities as of such
Regular Record Date,

(c) During the preparation, pendancy and effectiveness of the Shelf
Registration Statement (described in the Registration Rights Agreement)
beginning thirty days after the date of this Indenture until such time as
the Issuer is no longer required to maintain the effectiveness of such
Shelf Registration Statement, the Trustee shall provide the Issuer on the
first and fifteenth date of every month (unless such date is a weekend or
holiday, and then on the preceding Business Day) during such period with an
updated copy of the Note Transfer Register detailing the holders of the
Securities for the preceding week, and

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

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<PAGE>

PROVIDED, HOWEVER, that no such list need be furnished so long as the Trustee is
not acting as Security Registrar.

SECTION 15.3. PRESERVATION OF INFORMATION.

(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 15.1, if any, and the names
and addresses of Holders received by the Trustee in its capacity as Security
Registrar. The Trustee may destroy any list furnished to it pursuant to
Section 15.1 upon receipt of a new list so furnished.

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

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

SECTION 15.4. REPORTS BY TRUSTEE.

(a) If and when this Indenture becomes qualified under the Trust Indenture
Act, the Trustee shall transmit to Holders such reports concerning the Trustee
and its actions under this Indenture as may be required pursuant to the Trust
Indenture Act at the times and in the manner provided pursuant thereto.

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

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<PAGE>

SECTION 15.5. REPORTS BY ISSUER.

If and when this Indenture becomes qualified under the Trust Indenture Act,
the Issuer shall file with the Trustee and the Commission, and transmit to
Holders, such information, documents and other reports, and such summaries
thereof, as may be required pursuant to the Trust Indenture Act at the times and
in the manner provided pursuant to such Act; PROVIDED that any such information,
documents or reports required to be filed with the Commission pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 shall be filed with
the Trustee within 15 days after the same is so required to be filed with the
Commission.

SECTION 15.5. REPORTS WITH RESPECT TO REGISTRATION OF SECURITIES.

The Issuer shall provide to the Trustee a form of Selling Securityholder
Questionnaire, within forty five (45) days of the date of this Indenture.
Within ten (10) Business Days following the receipt of such Selling
Securityholder Questionnaire, the Trustee shall deliver to each Holder of
Securities at such time a copy of the Selling Securityholder Questionnaire in
the form provided to the Trustee by the Issuer. Thereafter, and until such time
as the Issuer is no longer required to maintain the effectiveness of the Shelf
Registration Statement (as defined in the Registration Rights Agreement), the
Trustee shall deliver, upon request of any Holder of Securities, a Selling
Securityholder Questionnaire in the form provided to the Trustee by the Issuer.

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---------------------

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

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

WIND RIVER SYSTEMS, INC.

By
------------------------------
Name:

Title:

DEUTSCHE BANK AG, NEW YORK BRANCH
Trustee

By
------------------------------
Name:

Title:

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Exhibit 10.17

WIND RIVER SYSTEMS, INC.

PURCHASE AGREEMENT

July 22, 1997

Deutsche Morgan Grenfell Inc.
31 West 52nd Street
New York, NY 10019

Ladies and Gentlemen:

Wind River Systems, Inc., a corporation incorporated under the law of the
State of Delaware (the "COMPANY"), proposes to issue and sell to you (the
"MANAGER") and the other several purchasers named in SCHEDULE 1 hereto
(collectively with the Manager, the "INITIAL PURCHASERS") $125,000,000 principal
amount of its 5% Convertible Subordinated Notes due 2002 (the "FIRM OFFERED
SECURITIES") to be issued pursuant to the provisions of an Indenture to be dated
as of July 29, 1997 (the "INDENTURE") between the Company and Deutsche Bank AG,
New York Branch, as Trustee (the "TRUSTEE").

The Company also proposes to issue and sell and deliver to the Initial
Purchasers not more than an additional $15,000,000 principal amount of its 5%
Convertible Subordinated Notes Due 2002 (the "ADDITIONAL OFFERED SECURITIES") if
and to the extent that you, as Manager, shall have determined to exercise on
behalf of the Initial Purchasers the right to purchase such 5% Convertible
Subordinated Notes due 2002 granted to the Initial Purchasers in Section 3
hereof. The Firm Offered Securities and the Additional Offered Securities are
hereinafter collectively referred to as the "OFFERED SECURITIES." The Offered
Securities will be convertible into Common Stock, par value $0.001 per share, of
the Company (the "UNDERLYING SECURITIES" and, together with the Offered
Securities, the "SECURITIES").

The sale of the Securities to you will be made without registration under
the Securities Act of 1933, as amended (the "SECURITIES ACT"), in reliance on
the exemptions from the registration requirements of the Securities Act under
Section 4(2) thereof. Investors that acquire such Securities may only resell or
otherwise transfer such Securities if such Securities are hereafter registered
under the Securities Act or if an exemption from the registration requirements
of the Securities Act is available.

In connection with the offer, sale and delivery of the Securities, the
Company has prepared a preliminary offering memorandum (the "PRELIMINARY
MEMORANDUM") and will prepare a final offering memorandum (the "FINAL
MEMORANDUM" and, with the Preliminary Memorandum, each a "MEMORANDUM") setting
forth or including a description of the terms of the Securities, the terms of
the offering, a description of the Company and any material

<PAGE>

developments relating to the Company occurring after the date of the most recent
financial statements included or incorporated by reference therein. As used
herein, the term "Memorandum" shall include in each case the documents
incorporated by reference therein. The terms "supplement," "amendment" and
"amend" as used herein shall include all documents deemed to be incorporated by
reference in the Preliminary Memorandum or Final Memorandum that are filed
subsequent to the date of such Memorandum with the Securities and Exchange
Commission (the "COMMISSION") pursuant to the Securities Exchange Act of 1934,
as amended (the "EXCHANGE ACT").

1. REPRESENTATIONS AND WARRANTIES. The Company represents and warrants
to, and agrees with, you that as of the date hereof:

(a) (i) Each document, if any, filed or to be filed pursuant to the
Exchange Act and incorporated by reference in either Memorandum complied or will
comply when so filed in all material respects with the Exchange Act and the
applicable rules and regulations thereunder and (ii) the Preliminary Memorandum
does not, and the Final Memorandum, in the form used by the Initial Purchasers
to confirm sales will not on the Closing Date (as defined in Section 3 hereof),
contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, except that the representations and
warranties set forth in this Section 1(a) do not apply to statements or
omissions in either Memorandum based upon information relating to any Initial
Purchaser furnished to the Company in writing by such Initial Purchaser through
you expressly for use therein.

(b) The Company has been duly incorporated and is validly existing as
a corporation under the laws of the State of Delaware, has the corporate power
and authority to own its property and to conduct its business as described in
each Memorandum and is duly qualified to transact business and is in good
standing in each jurisdiction in which the conduct of its business or its
ownership or leasing of property requires such qualification, except to the
extent that the failure to be so qualified or be in good standing would not have
a material adverse effect on the Company and its subsidiaries, taken as a whole.

(c) Each subsidiary of the Company has been duly incorporated, is
validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and authority to own
its property and to conduct its business as described in each Memorandum and is
duly qualified to transact business and is in good standing in each jurisdiction
in which the conduct of its business or its ownership or leasing of property
requires such qualification, except to the extent that the failure to be so
qualified or be in good standing would not have a material adverse effect on the
Company and its subsidiaries, taken as a whole.

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<PAGE>

(d) The Company and its subsidiaries have good and valid title to all
the properties and assets owned by them or reflected as owned by them in either
Memorandum, which are material to the business of the Company, subject to no
lien, mortgage, pledge, charge or encumbrance of any kind except: (i) those, if
any, reflected in the Memorandum; or (ii) those which are not material in amount
or do not materially and adversely affect the use made and proposed to be made
of such property by the Company or such subsidiary. The Company and its
subsidiaries hold their leased properties under valid and binding leases, with
such exceptions as are not material in relation to the business of the Company
and its subsidiaries taken as a whole. Except as disclosed in the Memorandum,
the Company and its subsidiaries own or lease all such properties as are
necessary to their combined operations as now conducted, or as proposed to be
conducted, in each case as discussed in or contemplated by either Memorandum.

(e) The authorized capital stock of the Company conforms as to legal
matters in all material respects to the description thereof contained in the
Final Memorandum.

(f) The shares of Common Stock, par value $0.001 per share, of the
Company (the "COMMON STOCK"), outstanding immediately prior to the issuance of
the Offered Securities have been duly authorized and are validly issued, fully
paid and nonassessable.

(g) This Agreement has been duly authorized, executed and delivered
by the Company.

(h) The Offered Securities have been duly authorized and, when
executed, authenticated and delivered to and paid for by the Initial Purchasers
in accordance with the terms of this Agreement and the Indenture will be:
(i) validly issued, fully paid and nonassessable and will not be subject to any
preemptive or similar rights; (ii) valid and binding obligations of the Company,
enforceable in accordance with their terms, except as (A) the enforceability
thereof may be limited by bankruptcy, insolvency or similar laws affecting
creditors' rights generally and (B) rights of acceleration, if applicable, and
the availability of equitable remedies may be limited by equitable principles of
general applicability; and (iii) entitled to the benefits of the Indenture
pursuant to which such securities are to be issued.

(i) The Underlying Securities reserved for issuance upon conversion
of the Offered Securities have been duly authorized and reserved in sufficient
numbers for such issue by the Company and, when executed and issued upon
conversion of such Offered Securities in accordance with the terms of such
Offered Securities, will be validly issued, fully paid and non-assessable and
will not be subject to any preemptive rights or similar rights.

(j) Each of the Indenture and the Registration Rights Agreement to be
dated as of July 29, 1997, among the Company and the Initial Purchasers (the
"REGISTRATION RIGHTS AGREEMENT"), has been duly authorized and, when executed
and delivered by the Company and the other parties thereto, will be a valid and
binding agreement of the Company, enforceable in

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<PAGE>

accordance with its terms except: (i) as (A) the enforceability thereof may be
limited by bankruptcy, insolvency or similar laws affecting creditors' rights
generally and (B) rights of acceleration, if applicable, and the availability of
equitable remedies may be limited by equitable principles of general
applicability; and (ii) as the enforceability of indemnification and
contribution provisions in the Registration Rights Agreement may be limited by
public policy limitations.

(k) The execution and delivery by the Company of, and the performance
by the Company of its obligations under, this Agreement, the Indenture, the
Registration Rights Agreement and the Offered Securities will not contravene any
provision of applicable law or the Certificate of Incorporation of the Company
or, except as set forth in the Final Memorandum, any agreement or other
instrument binding upon the Company or any of its subsidiaries that is material
to the Company and its subsidiaries, taken as a whole, or any judgment, order or
decree of any governmental body, agency or court having jurisdiction over the
Company or any subsidiary, and no consent, approval, authorization or order of,
or qualification with, any governmental body or agency is required for the
performance by the Company of its obligations under this Agreement, the
Indenture or the Offered Securities, except such as may be required by the
securities or Blue Sky laws of the various states in connection with the offer
and sale of the Securities and except as may be required under federal
securities laws with respect to the Company's obligations under the Registration
Rights Agreement.

(l) Except as expressly identified in the Final Memorandum, there has
not occurred any material adverse change, or any development involving a
prospective material adverse change, in the condition, financial or otherwise,
or in the earnings, business or operations of the Company and its subsidiaries,
taken as a whole, from that set forth in the Preliminary Memorandum.

(m) There are no legal or governmental proceedings pending or, to the
Company's knowledge, threatened to which the Company or any of its subsidiaries
is a party or to which any of the properties of the Company or any of its
subsidiaries is subject other than proceedings accurately described in all
material respects in each Memorandum and proceedings that would not have a
material adverse effect on the Company and its subsidiaries, taken as a whole,
or on the power or ability of the Company to perform its obligations under this
Agreement, the Indenture or the Offered Securities or to consummate the
transactions contemplated by the Final Memorandum.

(n) Each of the Company and its subsidiaries has all necessary
consents, authorizations, approvals, orders, certificates and permits of and
from, and has made all declarations and filings with, all federal, state, local
and other governmental authorities, all self-regulatory organizations and all
courts and other tribunals, which are necessary to own, lease, license and use
its properties and assets and to conduct its business in the manner described in

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<PAGE>

the Final Memorandum, except to the extent that the failure to obtain or file
would not have a material adverse effect on the Company and its subsidiaries,
taken as a whole.

(o) No default exists in the due performance or observance of any
material obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or other instruments binding on
the Company or any of its subsidiaries, except such defaults that would not have
a material adverse effect on the Company and its subsidiaries, taken as a whole.

(p) Price Waterhouse, LLP (the "ACCOUNTANTS"), who have certified
certain financial statements of the Company and its subsidiaries, are
independent public accountants within the meaning of the Securities Act; the
consolidated financial statements of the Company and the other financial data of
the Company and its subsidiaries set forth in the Final Memorandum fairly
present in all material respects the financial condition of the entities to
which they relate as of the dates indicated, subject, in the case of any interim
statements, to year-end audit adjustments.

(q) Neither the Company nor any affiliate (as defined in Rule 501(b)
of Regulation D under the Securities Act, an "AFFILIATE") of the Company has
directly, or through any agent: (i) sold, offered for sale, solicited offers to
buy or otherwise negotiated in respect of, any security (as defined in the
Securities Act) which is or will be integrated with the sale of the Offered
Securities in a manner that would require the registration under the Securities
Act of the Offered Securities; or (ii) engaged in any form of general
solicitation or general advertising in connection with the offering of the
Offered Securities (as those terms are used in Regulation D under the Securities
Act), or in any manner involving a public offering within the meaning of
Section 4(2) of the Securities Act.

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

(s) Assuming the accuracy of the representations of the Initial
Purchasers in Section 6, it is not necessary in connection with the offer, sale
and delivery of the Offered Securities to the Initial Purchasers in the manner
contemplated by this Agreement to register the Offered Securities under the
Securities Act or to qualify the Indenture under the Trust Indenture Act of
1939, as amended.

(t) The Company and its subsidiaries: (i) are in material compliance
with any and all applicable foreign, federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("ENVIRONMENTAL LAWS"); (ii) have received all permits, licenses or
other approvals required of them under applicable Environmental Laws to conduct
their

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<PAGE>

respective businesses; and (iii) are in compliance with all terms and conditions
of any such permit, license or approval, except, in each case, where such
noncompliance with Environmental Laws, failure to receive required permits,
licenses or other approvals or failure to comply with the terms and conditions
of such permits, licenses or approvals would not reasonably be expected to,
individually or in the aggregate, have a material adverse effect on the Company
and its subsidiaries, taken as a whole.

(u) The effect of Environmental Laws on the business, operations and
properties of the Company and its subsidiaries as currently conducted or as
proposed to be conducted (including, without limitation, any capital or
operating expenditures required for clean-up, closure of properties or
compliance with Environmental Laws or any permit, license or approval, any
related constraints on operating activities and any potential liabilities to
third parties) would not, individually or in the aggregate, have a material
adverse effect on the Company and its subsidiaries, taken as a whole.

(v) Except as disclosed in the Final Memorandum, the Company and each
of its subsidiaries owns or possesses, or can acquire on reasonable terms, all
patents, patent rights, licenses, inventions, copyrights, know-how (including
trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trademarks, service marks,
currently employed by the Company in connection with the conduct of the business
as described in the Memorandum by them, except to the extent that the failure to
own, possess or acquire any of the foregoing would not have a material adverse
effect on the Company and its subsidiaries taken as a whole. The expiration of
any trademarks, trade names, patent rights, copyrights, licenses, approvals or
governmental authorizations would not have a material adverse effect on the
Company and its subsidiaries, taken as a whole. The Company has no knowledge of
any material infringement by it of trademarks, trade name rights, patent rights,
copyrights, licenses, trade secrets or similar rights of others and, except as
disclosed in the Final Memorandum, neither the Company nor any of its
subsidiaries has received any notice of infringement of or conflict with
asserted rights of others with respect to any of the foregoing which, singly or
in the aggregate, would have a material adverse effect on the Company and its
subsidiaries, taken as a whole.

(w) None of the Company, its Affiliates or any person acting on its
or their behalf (other than the Initial Purchasers) has engaged in any directed
selling efforts (as that term is defined in Regulation S under the Securities
Act ("REGULATION S") with respect to the Offered Securities and the Company and
its Affiliates and any person acting on its or their behalf (other than the
Initial Purchasers) has complied with the offering restrictions requirement of
Regulation S.

(x) The Final Memorandum contains all information specified in, and
meeting the requirements of, Rule 144A(d)(4) under the Securities Act; and the
Offered Securities satisfy the eligibility requirements set forth in Rule
144A(d)(3) under the Securities Act.

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<PAGE>

(y) To the extent separately agreed by the parties, each of the
Company's directors and executive officers has entered into a written agreement
with the Company in the form of EXHIBIT A hereto (each such agreement, a "LOCK-
UP AGREEMENT"), and executed originals of each Lock-up Agreement have been
delivered to you.

2. OFFERING. You have advised the Company that the Initial Purchasers
will make an offering of the Offered Securities purchased by the Initial
Purchasers hereunder on the terms to be set forth in the Final Memorandum, as
soon as practicable after this Agreement is entered into as in your judgment is
advisable.

3. PURCHASE AND DELIVERY. The Company hereby agrees to sell to the
several Initial Purchasers, and each of the Initial Purchasers, upon the basis
of the representations and warranties herein contained, but subject to the
conditions hereinafter stated, agree, severally and not jointly, to purchase
from the Company the respective principal amount of Firm Offered Securities set
forth in SCHEDULE 1 hereto opposite their names at a purchase price of 96.875%
of the principal amount thereof plus accrued interest, if any, from July 29,
1997 to the date of payment and delivery.

On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, for a period thirty (30)
days from the date hereof the Company agrees to sell and deliver to the Initial
Purchasers the Additional Offered Securities, and the Initial Purchasers shall
have a one-time right to purchase, severally and not jointly, up to $15,000,000
Additional Offered Securities at a purchase price of 96.875% of the principal
amount thereof plus accrued interest, if any. Additional Offered Securities may
be purchased as provided in this Section 3 solely for the purpose of covering
over-allotments made in connection with the offering of the Firm Offered
Securities. If any Additional Offered Securities are to be purchased, each
Initial Purchaser agrees, severally and not jointly, to purchase the number of
Additional Offered Securities (subject to such adjustments to eliminate
fractional portions as the Manager shall determine) that bears the same
proportion to the total number of Additional Offered Securities to be purchased
as the number of Firm Offered Securities set forth in SCHEDULE 1 opposite the
name of such Initial Purchaser bears to the total number of Firm Offered
Securities.

The Company agrees that, without your prior written consent, it will
not offer, sell, contract to sell or otherwise dispose of any shares of Common
Stock or any securities convertible into or exercisable or exchangeable for
shares of Common Stock for a period of ninety (90) days after the date of this
Agreement, other than: (i) the Offered Securities to be sold hereunder;
(ii) the Underlying Securities; (iii) options to purchase Common Stock, and
Common Stock issued by the Company upon the exercise of such options, granted
under the Company's existing equity incentive plans; and (iv) Common Shares
issued pursuant to employee stock

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<PAGE>

purchase plans and (v) the warrant to purchase shares of Common Stock issued to
Innotech Corporation.

Payment for the Firm Offered Securities shall be made against delivery
of the Firm Offered Securities at a closing to be held at the office of Cooley
Godward LLP, Palo Alto, California at 10:00 A.M., New York City time, on
July 29, 1997, or at such other time on the same or such other date, not later
than August 10, 1997, as the Initial Purchasers and the Company shall agree.
The time and date of such payment are herein referred to as the Closing Date.
Payment for the Firm Offered Securities shall be made in same day funds.

Payment for any Additional Offered Securities shall be made against
delivery of the Additional Offered Securities at a closing to be held at the
office of Cooley Godward LLP, Palo Alto, California on such date (which may be
the same as the Closing Date but shall in no event be earlier than the Closing
Date nor later than ten (10) business days after the giving of the notice
hereinafter referred to) as shall be designated in a written notice from the
Manager to the Company of the Manager's determination, on behalf of the Initial
Purchasers, to purchase a number, specified in said notice, of Additional
Offered Securities, or on such other date, in any event not later than
August 21, 1997 as shall be designated in writing by the Manager. The time and
date of such payment are hereinafter referred to as the "OPTION CLOSING DATE."
Payment for the Additional Offered Securities shall be made in same day funds.
The notice of the determination to exercise the option to purchase Additional
Offered Securities and of the Option Closing Date may be given at any time
within thirty (30) days after the date of this Agreement.

Certificates for the Offered Securities shall be in global form and
registered in such names and in such denominations as you shall request in
writing not less than two (2) full business days prior to the Closing Date or
the Option Closing Date, as the case may be. The certificates evidencing the
Offered Securities shall be delivered to you on the Closing Date or the Option
Closing Date, as the case may be, for the respective accounts of the several
Initial Purchasers, with any transfer taxes payable in connection with the
transfer of the Offered Securities to the Initial Purchasers duly paid, against
payment of the purchase price therefor. The Company will deliver the portion of
the Offered Securities represented by one or more definitive global Offered
Securities in book-entry form to the Manager's account by causing Depository
Trust Company ("DTC") to credit such Offered Securities to the Manager's account
at DTC.

4. CONDITIONS TO CLOSING. The several obligations of the Initial
Purchasers under this Agreement to purchase the Firm Offered Securities will be
subject to the accuracy of the representations and warranties on the part of the
Company herein, to the performance and observance by the Company in all material
respects of all covenants and agreements herein contained on its part to be
performed and observed and the following conditions:

(a) Subsequent to the date of this Agreement and prior to the Closing
Date,

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<PAGE>

(i) there shall not have occurred any downgrading, nor shall any
notice have been given of any intended or potential downgrading or of any review
for a possible change that does not indicate the direction of the possible
change, in the rating accorded any of the Company's securities by any
"nationally recognized statistical rating organization," as such term is defined
for purposes of Rule 436(g)(2) under the Securities Act; and

(ii) there shall not have occurred any change, or any development
involving a prospective change, in the condition, financial or otherwise, or in
the earnings, business or operations, of the Company and its subsidiaries, taken
as a whole, from that set forth in the Preliminary Memorandum that, in your
judgment, is material and adverse and that makes it, in your judgment,
impracticable to market the Offered Securities on the terms and in the manner
contemplated in the Final Memorandum.

(b) You shall have received on the Closing Date a certificate, dated
the Closing Date and signed by an executive officer of the Company, to the
effect set forth in clause (a)(i) and (a)(ii) above and to the effect that the
representations and warranties of the Company contained in this Agreement are
true and correct as of the Closing Date and that the Company has complied with
all of the agreements and satisfied all of the conditions on its part to be
performed or satisfied on or before the Closing Date.

The officer signing and delivering such certificate may rely upon
the best of his knowledge as to proceedings threatened.

(c) You shall have received on the Closing Date an opinion of
independent counsel for the Company, an opinion for each of the Material
Subsidiaries (as defined in Exhibit C hereto) from the applicable special
foreign counsel qualified to give such opinion, and an opinion of special New
York counsel to the Company, each dated the Closing Date, to the effect set
forth in EXHIBIT B, EXHIBIT C, and EXHIBIT D, respectively.

(d) You shall have received on the Closing Date opinions of Venture
Law Group, A Professional Corporation, counsel for the Initial Purchasers, and
an opinion of special New York counsel to the Initial Purchasers, dated the
Closing Date, to the effect set forth in EXHIBIT E and EXHIBIT F, respectively.

(e) You shall have received, on each of the date hereof and the
Closing Date a letter, dated the date hereof or the Closing Date, as the case
may be, in form and substance satisfactory to you, from the Company's
independent public accountants, containing statements and information of the
type ordinarily included in accountants' "comfort letters" to underwriters with
respect to the financial statements and certain financial information contained
in or incorporated by reference into each Memorandum.

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<PAGE>

(f) You shall have received written waivers in form satisfactory to
your counsel of all rights, if any, to have securities registered as part of the
registrations required to be effected by the Company pursuant to the
Registration Rights Agreement

(g) The Registration Rights Agreement and the Indenture shall have
been executed and delivered by all of the parties thereto.

The Initial Purchasers' obligation to purchase Additional Offered
Securities hereunder is subject to the delivery to you on the Option Closing
Date of such documents as you may reasonably request with respect to the good
standing of the Company, the due authorization and issuance of the Additional
Offered Securities and other matters related to the issuance of the Additional
Offered Securities.

5. COVENANTS OF THE COMPANY. In further consideration of the agreements
of the Initial Purchasers contained in this Agreement, the Company covenants as
follows:

(a) To furnish to you, without charge, during the period mentioned in
paragraph (c) below, as many copies of the Final Memorandum, any documents
incorporated by reference therein and any supplements and amendments thereto as
you may reasonably request and, in the case of the Final Memorandum, to furnish
copies of the Final Memorandum in New York City, prior to 3:00 P.M. on the
business day following the date of this Agreement, or at such other time as the
parties shall agree, in such quantities as you reasonably request.

(b) Before amending or supplementing either Memorandum, other than by
filing documents under the Securities Exchange Act of 1934, as amended, that are
incorporated by reference therein, to furnish to you a copy of each such
proposed amendment or supplement and not to use any such proposed amendment or
supplement to which you reasonably object.

(c) If, during such period after the date hereof and prior to the
date on which all of the Offered Securities shall have been sold by the Initial
Purchasers, any event shall occur or condition exist as a result of which it is
necessary in your good faith judgment to amend or supplement the Final
Memorandum in order to make the statements therein, in the light of the
circumstances when such Memorandum is delivered to a purchaser, not misleading,
or if, with the opinion of counsel to the Initial Purchasers it is necessary to
amend or supplement such Memorandum to comply with applicable law, forthwith to
prepare and furnish, at its own expense, to the Initial Purchasers, either
amendments or supplements to such Memorandum so that the statements in such
Memorandum as so amended or supplemented will not, in the light of the
circumstances when such Memorandum is delivered to a purchaser, be misleading or
so that such Memorandum, as so amended or supplemented, will comply with
applicable law.

(d) To endeavor to qualify the Securities for offer and sale under
the securities or Blue Sky laws of such jurisdictions as you shall reasonably
request; provided, however the

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<PAGE>

Company shall not be required to file any general consent to service of process
or to qualify as a foreign corporation or as a dealer in securities in any
jurisdiction in which it is not otherwise so subject.

(e) Whether or not any sale of such Offered Securities is
consummated, to pay all expenses incident to the performance of its obligations
under this Agreement, including: (i) the preparation of each Memorandum and all
amendments and supplements thereto; (ii) the preparation, issuance and delivery
of the Securities; (iii) the fees and disbursements of the Company's counsel and
accountants, the Trustee and its counsel and the listing agent; (iv) the
qualification of such Securities under securities or Blue Sky laws in accordance
with the provisions of Section 5(d), including filing fees and the fees and
disbursements of counsel for the Initial Purchasers in connection therewith and
in connection with the preparation of any Blue Sky or legal investment
memoranda, which fees and expenses shall not exceed $5,000 in the aggregate;
(v) the printing and delivery to the Initial Purchasers in quantities as herein
above stated of copies of the Memorandum and any amendments or supplements
thereto; (vi) the fees and expenses, if any, incurred in connection with the
admission of such Securities for trading in any appropriate market system; and
(vii) the fees and expenses of Euroclear, CEDEL and any other depository used in
connection with the Offered Securities and of any transfer or conversion agent
or registrar for the Offered Securities or the Underlying Securities issuable
upon conversion of the Offered Securities.

(f) Not to sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in the Securities Act), or
permit any Affiliate to do any of the foregoing, which could be integrated with
the sale of the Offered Securities in a manner which would require the
registration under the Securities Act of such Securities.

(g) Not to solicit any offer to buy or offer or sell the Offered
Securities by means of any form of general solicitation or general advertising
(as those terms are used in Regulation D under the Securities Act) or in any
manner involving a public offering within the meaning of Section 4(2) of the
Securities Act.

(h) While any of the Offered Securities remain "restricted
securities" within the meaning of the Securities Act, to make available, upon
request, to any seller of such Offered Securities the information specified in
Rule 144A(d)(4) under the Securities Act, unless the Company is then subject to
Section 13 or 15(d) of the Exchange Act.

(i) To include information substantially in the form set forth in
EXHIBIT E in each Memorandum.

(j) To use its best efforts to: (i) permit the Offered Securities to
be designated PORTAL securities in accordance with the rules and regulations
adopted by the National

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<PAGE>

Association of Securities Dealers, Inc. relating to trading in the PORTAL
Market; and (ii) to list for quotation the Underlying Securities on the Nasdaq
National Market.

(k) Not to engage, or permit any Affiliate or any person acting on
its behalf (other than the Initial Purchasers) to engage in any directed selling
efforts (as that term is defined in Regulation S) with respect to the Offered
Securities, and the Company will and the Company will use its best efforts to
cause its Affiliates and each person acting on its or their behalf (other than
the Initial Purchasers) to comply with the offering restrictions of Regulation
S.

6. OFFERING OF SECURITIES; RESTRICTIONS ON TRANSFER.

(a) Each Initial Purchaser, severally and not jointly, represents and
warrants that it is a qualified institutional buyer as defined in Rule 144A
under the Securities Act (a "QIB") or an "institutional accredited investor"
within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act.
Each Initial Purchaser, severally and not jointly, agrees with the Company that:
(a) it has not and will not solicit offers for, or offer to sell, such Offered
Securities by any form of general solicitation or general advertising (as those
terms are used in Regulation D under the Securities Act) or in any manner
involving a public offering within the meaning of Section 4(2) of the Securities
Act; and (b) it will solicit offers for such Offered Securities only from, and
will offer such Offered Securities only to, persons that it reasonably believes
to be: (A) in the case of offers inside the United States, QIBs; and (B) in the
case of offers outside the United States, persons other than U.S. persons
("FOREIGN PURCHASERS," which term shall include dealers or other professional
fiduciaries in the United States acting on a discretionary basis for foreign
beneficial owners (other than an estate or trust to the extent provided in
Regulation S)) that, in each case, in purchasing such Offered Securities are
deemed to have represented and agreed as provided in EXHIBIT E. To the extent
necessary to comply with the terms of this Agreement, the Manager agrees to act
as selling agent for the other Initial Purchasers with respect to offers and
sales of the Offered Securities pursuant to this Agreement.

(b) Each Initial Purchaser, severally and jointly, represents,
warrants, and agrees with respect to offers and sales outside the United States
that:

(i) it understands that no action has been or will be taken in
any jurisdiction by such Initial Purchaser that would permit a public offering
of the Offered Securities, or possession or distribution of either Memorandum or
any other offering or publicity material relating to the Offered Securities, in
any country or jurisdiction where action for that purpose is required;

(ii) such Initial Purchaser has and will comply with all
applicable laws and regulations in each jurisdiction in which it acquires,
offers, sells or delivers Offered Securities or has in its possession or
distributes either Memorandum or any such other material, in all cases at its
own expense;

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<PAGE>

(iii) the Offered Securities have not been and will not be
registered under the Securities Act and may not be offered or sold within the
United States or to, or for the account or benefit of, U.S. persons except in
accordance with Regulation S under the Securities Act or pursuant to another
exemption from the registration requirements of the Securities Act;

(iv) such Initial Purchaser has offered the Offered Securities
and will offer and sell the Offered Securities: (A) as part of their
distribution at any time; and (B) otherwise until 40 days after the later of the
commencement of the Offering and the latest original issue date of the Offered
Securities (the "RESTRICTED PERIOD"), only in accordance with Rule 903 of
Regulation S. Accordingly, none of such Initial Purchaser, its Affiliates or
any persons acting on its or their behalf has engaged or will engage in any
directed selling efforts (within the meaning of Regulation S) with respect to
the Offered Securities, and such Initial Purchaser, its Affiliates and any such
persons have complied and will comply with the offering restrictions requirement
of Regulation S;

(v) such Initial Purchaser has: (A) not offered or sold or
invited any person to offer to purchase and, prior to the expiration of the
period six months from the date the Offered Securities are purchased by the
Initial Purchaser will not offer or sell or invite any person to offer to
purchase, any Offered Securities or Common Shares issuable upon conversion
thereof in the United Kingdom except to persons whose ordinary activities
involve them in acquiring, holding, managing or disposing of investments (as
principal or agent) for the purposes of their businesses or otherwise in
circumstances which have not resulted and will not result in an offer to the
public in the United Kingdom within the meaning of the Public Offers of
Securities Regulations 1995 ("REGULATIONS"); and (B) complied and will comply
with all applicable provisions of the Financial Services Act 1986 and the
Regulations with respect to anything done by it in relation to the Offered
Securities or Common Shares issuable upon conversion thereof, to a person who is
of a kind described in Article 11(3) of the Financial Services Act of 1986
(Investment Advertisements) (Exemptions) Order 1996 of Great Britain or is a
person to whom such document may otherwise lawfully be issued or passed on;

(vi) such Initial Purchaser understands that the Offered
Securities have not been and will not be registered under the Securities and
Exchange Law of Japan, and represents that it has not offered or sold, and
agrees that it will not offer or sell, any Offered Securities, directly or
indirectly in Japan or to or from any resident of Japan except: (A) pursuant to
an exemption from the registration requirements of the Securities and Exchange
Law of Japan; and (B) in compliance with any other applicable requirements of
Japanese law; and

(vii) such Initial Purchaser agrees that, at or prior to
confirmation of sales of the Offered Securities, it will have sent to each
distributor, dealer or person receiving a selling concession, fee or other
remuneration that purchases Offered Securities from it during the restricted
period a confirmation or notice to substantially the following effect:

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<PAGE>

The Securities covered hereby have not been registered under the U.S.
Securities Act of 1933, as amended, (the "SECURITIES ACT") and may not
be offered and sold within the United States or to, or for the account
or benefit of, U.S. persons: (a) as part of their distribution at any
time or (b) otherwise until 40 days after the later of the
commencement of the offering and the latest original issue date of the
Notes, except in either case in accordance with Regulation S (or
Rule 144A if available) under the Securities Act. Terms used above
have the meaning given to them by Regulation S.

Terms used in Sections 6(a) and 6(b) hereof have the meanings given to them by
Regulation S.

7. INDEMNIFICATION AND CONTRIBUTION.

(a) The Company agrees to indemnify and hold harmless each Initial
Purchaser, and each person, if any, who controls such Initial Purchaser within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act, or is under common control with, or is controlled by, such Initial
Purchaser, from and against any and all losses, claims, damages and liabilities
(including, without limitation, any legal or other expenses reasonably incurred
by any Initial Purchaser or any such controlling of affiliated person in
connection with defending or investigating any such action or claim) caused by
any untrue statement or alleged untrue statement of a material fact contained in
either Memorandum (as amended or supplemented if the Company shall have
furnished any amendments or supplements thereto), or caused by any omission or
alleged omission to state therein a material fact necessary to make the
statements therein in light of the circumstances under which they were made not
misleading, except insofar as such losses, claims, damages or liabilities are
caused by any such untrue statement or omission or alleged untrue statement or
omission based upon information furnished to the Company in writing by such
Initial Purchaser through you expressly for use therein.

(b) Each Initial Purchaser, severally and not jointly, agrees to
indemnify and hold harmless the Company, its directors, its officers and each
person, if any, who controls the Company within the meaning of either Section 15
of the Securities Act or Section 20 of the Exchange Act to the same extent as
the foregoing indemnity from the Company to such Initial Purchaser, but only
with reference to information furnished to the Company in writing by such
Initial Purchaser through you expressly for use in either Memorandum or any
amendments or supplements thereto.

(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to either paragraph (a) or (b) above, such person (the
"INDEMNIFIED PARTY") shall promptly notify the

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<PAGE>

person against whom such indemnity may be sought (the "INDEMNIFYING PARTY") in
writing and the indemnifying party, upon request of the indemnified party, shall
retain counsel reasonably satisfactory to the indemnified party to represent the
indemnified party and any others the indemnifying party may designate in such
proceeding and shall pay the reasonable fees and disbursements of such counsel
related to such proceeding. In any such proceeding, any indemnified party shall
have the right to retain its own counsel, but the fees and expenses of such
counsel shall be at the expense of such indemnified party unless: (i) the
indemnifying party and the indemnified party shall have mutually agreed to the
retention of such counsel; or (ii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them.
It is understood that the indemnifying party shall not, in connection with any
proceeding or related proceedings in the same jurisdiction, be liable for the
fees and expenses of more than one separate firm (in addition to any local
counsel) for all such indemnified parties and that all such fees and expenses
shall be reimbursed as they are incurred. Such firm shall be designated in
writing by the Manager in the case of parties indemnified pursuant to paragraph
(a) above and by the Company in the case of parties indemnified pursuant to
paragraph (b) above. The indemnifying party shall not be liable for any
settlement of any proceeding effected without its written consent, but if
settled with such consent or if there be a final judgment for the plaintiff, the
indemnifying party agrees to indemnify the indemnified party from and against
any loss or liability by reason of such settlement or judgment. No indemnifying
party shall, without the prior written consent of the indemnified party, effect
any settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding.

(d) To the extent the indemnification provided for in paragraph (a)
or (b) of this Section 7 is unavailable to an indemnified party or insufficient
in respect of any losses, claims, damages or liabilities, then each indemnifying
party under such paragraph, in lieu of indemnifying such indemnified party
thereunder, shall contribute to the amount paid or payable by such indemnified
party as a result of such losses, claims, damages or liabilities: (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the Initial Purchasers on the other hand from the
offering of such Offered Securities; or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and the Initial
Purchasers on the other hand in connection with the statements or omissions that
resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative benefits received by the
Company on the one hand and the Initial Purchasers the other hand in connection
with the offering of such Offered Securities shall be deemed to be in the same
respective proportions as the net proceeds from the offering of such Offered
Securities (before deducting

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<PAGE>

expenses) received by the Company and the total discounts and commissions
received by the Initial Purchasers in respect thereof, in each case as set forth
in the Final Memorandum, bear to the aggregate offering price of such Offered
Securities. The relative fault of the Company on the one hand and of the
Initial Purchasers on the other hand shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company or by the Initial Purchasers and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Initial Purchasers'
respective obligations to contribute pursuant to this Section 7 are several in
proportion to the respective principal amount of Offered Securities they have
purchased hereunder, and not joint.

(e) The Company and the Initial Purchasers agree that it would not be
just or equitable if contribution pursuant to this Section 7 were determined by
PRO RATA allocation (even if the Initial Purchasers were treated as one entity
for such purpose) or by any other method of allocation that does not take
account of the equitable considerations referred to in paragraph (d) above. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in paragraph (d) above shall be
deemed to include, subject to the limitations set forth above, any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 7, no Initial Purchaser shall be required to
contribute any amount in excess of the amount by which the total price at which
the Offered Securities resold by it in the initial placement of such Offered
Securities were offered to investors exceeds the amount of any damages that such
Initial Purchaser has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The indemnity and contribution
provisions contained in this Section 7 and the representations and warranties of
the Company contained in this Agreement shall remain operative and in full force
and effect regardless of: (i) any termination of this Agreement; (ii) any
investigation made by or on behalf of the Initial Purchasers or any person
controlling any Initial Purchaser or by or on behalf of the Company, its
officers or directors or any person controlling the Company; and
(iii) acceptance of and payment for any of the Offered Securities. The remedies
provided for in this Section 7 are not exclusive and shall not limit any rights
or remedies which may otherwise be available to any indemnified party at law or
in equity.

8. TERMINATION. This Agreement shall be subject to termination by notice
given by you to the Company, if: (a) after the execution and delivery of this
Agreement and prior to the Closing Date or the Option Closing Date, as the case
may be: (i) trading generally shall have been suspended or materially limited
on or by, as the case may be, any of the New York Stock Exchange, the American
Stock Exchange, the National Association of Securities Dealers, Inc., the
Luxembourg Stock Exchange, the Chicago Board of Options Exchange, the Chicago

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<PAGE>

Mercantile Exchange or the Chicago Board of Trade; (ii) trading of any
securities of the Company shall have been suspended on any exchange or in any
over-the-counter market; (iii) a general moratorium on commercial banking
activities in New York shall have been declared by either Federal or New York
State authorities; or (iv) there shall have occurred any outbreak or escalation
of hostilities or any change in financial markets or any calamity or crisis
that, in your judgment, is material and adverse; and (b) in the case of any of
the events specified in clauses (a)(i) through (iv), such event singly or
together with any other such event makes it, in your judgment, impracticable to
market the Offered Securities on the terms and in the manner contemplated in the
Final Memorandum.

9. MISCELLANEOUS. If, on the Closing Date, or the Option Closing Date,
as the case may be, any one or more of the Initial Purchasers shall fail or
refuse to purchase Offered Securities that it or they have agreed to purchase
hereunder on such date, and the aggregate principal amount of Offered Securities
which such defaulting Initial Purchaser or Initial Purchasers agreed but failed
or refused to purchase is not more than one-tenth of the aggregate principal
amount of Offered Securities to be purchased on such date, the other Initial
Purchasers shall be obligated severally in the proportions that the principal
amount of Firm Offered Securities set forth opposite their respective names in
SCHEDULE 1 bears to the aggregate principal amount of Firm Offered Securities
set forth opposite the names of all such non-defaulting Initial Purchasers, or
in such other proportions as you may specify, to purchase the Offered Securities
which such defaulting Initial Purchaser or Initial Purchasers agreed but failed
or refused to purchase on such date; provided that in no event shall the
principal amount of Offered Securities that any Initial Purchaser has agreed to
purchase pursuant to Section 3 be increased pursuant to this Section 11 by an
amount in excess of one-ninth of such principal amount of Offered Securities
without the written consent of such Initial Purchaser. If, on the Closing Date
or the Option Closing Date, as the case may be, any Initial Purchaser or Initial
Purchasers shall fail or refuse to purchase Offered Securities which it or they
have agreed to purchase hereunder on such date and the aggregate principal
amount of Offered Securities with respect to which such default occurs is more
than one-tenth of the aggregate principal amount of Offered Securities to be
purchased on such date and arrangements satisfactory to you and the Company for
the purchase of such Offered Securities are not made within 36 hours after such
default, this Agreement shall terminate without liability on the part of any
non-defaulting Initial Purchaser or of the Company. In any such case either you
or the Company shall have the right to postpone the Closing Date, or the Option
Closing Date, as the case may be, but in no event for longer than seven days, in
order that the required changes if any, in the Final Memorandum or in any other
documents or arrangements may be effected. Any action taken under this
paragraph shall not relieve any defaulting Initial Purchaser from liability in
respect of any default of such Initial Purchaser under this Agreement. This
Agreement may be signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were upon
the same instrument.

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<PAGE>

If this Agreement shall be terminated by the Initial Purchasers, or
any of them, because of any failure or refusal on the part of the Company to
comply with the terms or to fulfill any of the conditions of this Agreement, or
if for any reason the Company shall be unable to perform its obligations under
this Agreement, the Company will reimburse the Initial Purchasers or such
Initial Purchasers as have so terminated this Agreement with respect to
themselves, severally, for all out-of-pocket expenses (including the fees and
disbursements of their counsel) reasonably incurred by such Initial Purchaser in
connection with this Agreement or the offering contemplated hereunder.

This Agreement shall be governed by and construed in accordance with
the internal laws of the State of New York.

The headings of the sections of this Agreement have been inserted for
convenience of reference only and shall not be deemed a part of this Agreement.

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<PAGE>

Please confirm your agreement to the foregoing by signing in the space
provided below for that purpose and returning to us a copy hereof, whereupon
this Agreement shall constitute a binding agreement between us.

Very truly yours,

WIND RIVER SYSTEMS, INC.

By:
------------------------------------
Name:
------------------------------------
Title:
------------------------------------
Agreed, July 22, 1997
DEUTSCHE MORGAN GRENFELL INC.
Acting severally on behalf of itself
and the several Initial Purchasers named herein.

By: DEUTSCHE MORGAN GRENFELL INC.

By:
-------------------------------
Name:
-------------------------------
Title:
-------------------------------

<PAGE>

SCHEDULE 1

Principal Amount
Initial Purchaser Offered Securities to Be Purchased
----------------- ----------------------------------

Deutsche Morgan Grenfell Inc. $112,000,000
Hambrecht & Quist LLC 14,000,000
Wessels, Arnold & Henderson, L.L.C 14,000,000

------------
Total $140,000,000
------------
------------

<PAGE>

EXHIBIT A

WIND RIVER SYSTEMS, INC.
LOCK-UP AGREEMENT

July __, 1997

Deutsche Morgan Grenfell Inc.
Hambrecht & Quist LLC
Wessels, Arnold & Henderson, L.L.C.
c/o Deutsche Morgan Grenfell Inc.
31 West 52nd Street, 6th Floor
New York, NY 10019

Ladies and Gentlemen:

The undersigned understands that you, as initial purchasers (the "Initial
Purchasers"), propose to enter into a Purchase Agreement with Wind River
Systems, Inc. (the "Company"), with regard to the issuance by the Company of its
Convertible Subordinated Notes due 2002 (the "Convertible Notes"), which will be
convertible into shares of Common Stock, par value $0.001 per share (the "Common
Stock"), of the Company at the conversion price set forth therein.

In consideration of the agreement of the Initial Purchasers to purchase and
make an offering of the Convertible Notes, and for other good and valuable
consideration, receipt of which is hereby acknowledged, the undersigned hereby
agrees, for a period of ninety (90) days after the last date of original
issuance of the Convertible Notes to the Initial Purchasers (the "Lockup
Period"), not to offer to sell, contract to sell or otherwise sell, dispose of,
loan, pledge or grant any rights with respect to (collectively, a "Disposition")
any shares of Common Stock, any options or warrants to purchase any shares of
Common Stock or any securities convertible into or exchangeable for shares of
Common Stock (collectively, "Securities"), now owned or hereafter acquired
directly by the undersigned or with respect to which the undersigned has or
hereafter acquires the power of disposition, otherwise than (i) as to any
individual, during his or her lifetime or upon death, by gift, will or
intestacy, to his or her immediate family or to a trust the beneficiaries of
which are exclusively the undersigned and/or a member or members of his or her
immediate family; provided any donee or transferee thereof agree in writing to
be bound by this Lockup Agreement, or (ii) with the prior written consent of
Deutsche Morgan Grenfell Inc. The foregoing restriction is expressly agreed to
preclude the holder of the Securities from engaging in any hedging or other
transaction which is designed to or reasonably expected to lead to or result in
a Disposition of Securities during the Lockup Period even if such Securities
would be disposed of by someone other than the undersigned. Such prohibited
hedging or other

<PAGE>

transactions would include without limitation any short sale (whether or not
against the box) or any purchase, sale or grant of any right (including without
limitation any put or call option) with respect to any Securities or with
respect to any security (other than a broad-based market basket or index) that
includes, relates to or derives any significant part of its value from
Securities.

Notwithstanding the foregoing restriction, the undersigned may participate
in a Disposition with respect to a maximum aggregate of fifty thousand (50,000)
shares of Common Stock during the Lockup Period without the prior written
consent of Deutsche Morgan Grenfell Inc.

Furthermore, the undersigned hereby agrees and consents to the entry of
stop transfer instructions with the Company's transfer agent against the
transfer of the Securities held by the undersigned except in compliance with
this Lockup Agreement. In the event that the Convertible Notes shall not have
been issued on or before September 30, 1997, this Lockup Agreement shall be of
no further force or effect.

Very truly yours,

Name:
---------------------------------------
Address:
------------------------------------

------------------------------------

The Company requests that this Lockup Agreement be completed and delivered to
counsel for the Initial Purchasers, Venture Law Group, 2800 Sand Hill Road,
Menlo Park, CA 94025, Attn: Tamara L. Thompson, Esq.

-2-
<PAGE>

EXHIBIT B

OPINION OF COOLEY GODWARD LLP

The opinion of Cooley Godward LLP, counsel for the Company, to be
delivered pursuant to Section 4(c) of the Purchase Agreement, shall be to the
effect that:

1. Each of the Purchase Agreement, the Indenture and the Registration
Rights Agreement, has been duly authorized, executed and delivered by the
Company.

2. The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the State of Delaware, has the
corporate power and authority to own its property and to conduct its business as
described in the Final Memorandum (references herein to the Final Memorandum
being taken to mean the same, as amended or supplemented), and is duly qualified
to transact business and is in good standing in each jurisdiction in which the
conduct of its business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or be in
good standing would not have a material adverse effect on the Company and its
subsidiaries taken as a whole;

3. The Offered Securities have been duly authorized by all necessary
corporate action on the part of the Company and have been executed and
authenticated.

4. The Common Stock initially issuable on conversion of the Offered
Securities has been duly authorized and reserved by the Company for issuance
upon such conversion and, when issued upon conversion in accordance with the
terms of the Indenture, will have been validly issued, fully paid and non-
assessable, and there are no preemptive or, to such counsel's knowledge, other
rights to subscribe for or purchase any of the Common Stock issuable upon
conversion of the Offered Securities pursuant to the Company's Certificate of
Incorporation or, to the knowledge of such counsel, any Reviewed Agreement
(defined as any agreement which would be required to be filed as an exhibit to
the Company's filings under the Securities Exchange Act of 1934, as amended (the
"Exchange Act").)

5. The execution and delivery by the Company of, and the performance
by the Company of its obligations under, this Agreement, the Indenture and the
Offered Securities and the Registration Rights Agreement will not contravene any
provision of applicable U.S. federal or state law, or of the Certificate of
Incorporation or Bylaws of the Company, or, to the knowledge of such counsel and
except as set forth in each Memorandum, any Reviewed Agreement binding upon the
Company or any of its subsidiaries, or any judgment, order or decree of any U.S.
federal or state governmental body, agency or court having jurisdiction over the
Company or any of its properties or any of its subsidiaries or any of their
property, and no consent, approval, authorization or order of or qualification
with any U.S. federal or state governmental body or agency is required for the
performance by the Company of its obligations under this Agreement,

<PAGE>

the Indenture and the Offered Securities except such as are specified and have
been obtained and such as may be required by the securities or Blue Sky laws of
the various states in connection with the purchase and distribution of the
Offered Securities by you.

6. Such counsel does not know of any legal or governmental proceedings
pending to which the Company or any of its subsidiaries is a party or to which
any of the properties of the Company or any of its subsidiaries is subject other
than proceedings fairly summarized in all material respects in each Memorandum
and, to such counsel's knowledge, proceedings that would not have a material
adverse effect on the Company and its subsidiaries, taken as a whole, or on the
power or ability of the Company to perform its obligations under this Agreement,
the Indenture or the Offered Securities.

7. The statements in the Final Memorandum under the captions
"Description of Notes," "Description of Capital Stock," and "Notice to
Investors", insofar as such statements constitute a summary of the legal
matters, documents or proceedings referred to therein, fairly summarize in all
material respects the matters referred to therein to the extent required if the
Final Memorandum were a prospectus in a registration statement on Form S-3 under
the Securities Act of 1933, as amended.

8. The statements in the Final Memorandum under the caption "Certain
Federal Income Tax Considerations," insofar as such statements represent matters
of law or legal conclusions, are accurate and fairly summarize the material
federal income tax consequences relevant to an investment in the Notes, subject
to the qualifications and limitations contained in such statements.

9. Each document incorporated by reference in the Final Memorandum
(except for financial statements and schedules and other financial data and
statistical data included therein as to which such counsel need not express any
opinion), complied as to form when filed with the Commission in all material
respects with the Exchange Act and the rules and regulations of the Commission
thereunder.

10. Based upon the representations, warranties and agreements of the
Company in Sections 1(q), 1(w), 1(x), 5(f), 5(g), 5(h) and 5(k) of the Purchase
Agreement and of the Initial Purchasers (as defined in the Final Memorandum) in
Section 6 of the Purchase Agreement and on the representations and agreements of
the Initial Purchasers and each of the purchasers of the Offered Securities and
the Shares in the initial resale by the Initial Purchasers contained in the
Final Memorandum, and assuming compliance therewith, the offer and sale of the
Offered Securities and the Shares to the Initial Purchasers under the Purchase
Agreement and the initial resale of such Offered Securities and the Shares by
the Initial Purchasers in accordance with Section 6 of the Purchase Agreement is
exempt from or not subject to the registration requirements of the Securities
Act of 1933, as amended, and the Indenture is exempt from the qualification
requirements of the Trust Indenture Act of 1939, as amended, it being understood
that no opinion is expressed as to any subsequent resale of any Offered Security
or Shares.

-2-
<PAGE>

In addition, such counsel shall state that nothing has come to the
attention of such counsel which causes such counsel to believe that (except for
financial statements and schedules and other financial data and statistical data
included or incorporated by reference therein as to which such counsel need not
express any belief) the Final Memorandum when issued contained, or as of the
date such opinion is delivered contains, any untrue statement of a material fact
or omitted or omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. With respect to this paragraph, counsel may state their
opinion and belief are based upon their participation in the preparation of the
Final Memorandum and review and discussion of the contents thereof, including
incorporated documents, but are without independent check or verification except
as specified.

Such counsel's opinions may include such assumptions, qualifications,
exceptions and limitations as are customary for opinions with respect to the
foregoing matters.

Such counsel's opinions shall relate to California, Delaware corporate and
United States federal law.

-3-
<PAGE>

EXHIBIT C

MATERIAL SUBSIDIARY OPINIONS

The opinions of qualified counsel to be delivered pursuant to Section 4(c)
of the Purchase Agreement shall be to the effect that each Material Subsidiary
of the Company has been duly incorporated, is validly existing as a corporation
in good standing under the laws of the jurisdiction of its incorporation, has
the corporate power and authority to own its property and to conduct its
business as described in the Final Memorandum, and is duly qualified to transact
business and is in good standing in each jurisdiction in which the conduct of
its business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or be in
good standing would not have a material adverse effect on the Company and its
subsidiaries taken as a whole. For purposes of the Purchase Agreement and this
Exhibit to the Purchase Agreement, Wind River Systems K.K., Wind River Systems
UK Ltd. and Wind River Systems GmbH, Germany, are each a "Material Subsidiary".

<PAGE>

EXHIBIT D

OPINION OF ZIEGLER, ZIEGLER & ALTMAN

The opinion of Ziegler, Ziegler & Altman, special New York counsel for the
Company, to be delivered pursuant to Section 4(c) of the Purchase Agreement
shall be to the effect that:

1. The Purchase Agreement is a valid and binding agreement of the
Company enforceable against the Company in accordance with its terms (assuming
due execution and delivery by the Initial Purchasers).

2. The Indenture is a valid and binding agreement of the Company
enforceable against the Company in accordance with its terms (assuming due
execution and delivery by the Trustee).

3. The Offered Securities when executed and authenticated in
accordance with the provisions of the Indenture and delivered and paid for by
the Initial Purchasers, will be valid and binding obligations of the Company and
the Initial Purchasers will be entitled to the benefits of the Indenture.

Such counsel's opinions may include such assumptions, qualifications,
exceptions and limitations as are customary for opinions with respect to the
foregoing matters.

Such counsel's opinions shall relate solely to New York law.

<PAGE>

EXHIBIT E

OPINION OF VENTURE LAW GROUP

The opinion of Venture Law Group, A Professional Corporation, to be
delivered pursuant to Section 4(d) of the Purchase Agreement shall be to the
effect that:

1. Based upon the representations, warranties and agreements of the
Company in sections 1(q), 1(w), 1(x), 5(f), 5(g), 5(h) and 5(k) of the Purchase
Agreement and of the Initial Purchasers (as defined in the Final Memorandum) in
Section 6 of the Purchase Agreement and on the representations and agreements
contained in the Final Memorandum, it is not necessary in connection with the
offer, sale and delivery of the Offered Securities to the Initial Purchasers
under the Purchase Agreement or in connection with the initial resale of such
Offered Securities by the Initial Purchasers in accordance with Section 6 of the
Purchase Agreement to register the Offered Securities or the Shares under the
Securities Act of 1933, as amended, or to qualify the Indenture under the Trust
Indenture Act of 1939, as amended, it being understood that no opinion is
expressed as to any subsequent resale of any Offered Security or Share.

2. The statements in the Final Memorandum under the captions "Description
of Notes," "Description of Capital Stock," "Plan of Distribution," and "Notice
to Investors," insofar as such statements constitute a summary of the legal
matters, documents or proceedings referred to therein, fairly summarize in all
material respects the matters referred to therein.

3. The statements in the Final Memorandum under the caption "Taxation"
insofar as such statements constitute a summary of the United States federal tax
laws referred to therein, are accurate and fairly summarize in all material
respects the United States federal tax laws referred to therein.

In addition, such counsel shall state that nothing has come to the
attention of such counsel which causes such counsel to believe that (except for
financial statements and schedules and other financial data included therein as
to which such counsel need not express any belief) the Final Memorandum when
issued contained, or as of the date such opinion is delivered contains, any
untrue statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. With respect to this
paragraph, counsel may state their opinion and belief are based upon their
participation in the preparation of the Final Memorandum (and any amendments or
supplements thereto) and the documents incorporated therein by reference and
review and discussion of the contents thereof, including incorporated documents,
but are without independent check or verification except as specified.

<PAGE>

Such counsel's opinions may include such assumptions, qualifications,
exceptions and limitations as are customary for opinions with respect to the
foregoing matters.

Such counsel's opinions shall relate to California, Delaware corporate and
United States federal law.

-2-
<PAGE>

EXHIBIT F

OPINION OF CLEARY, GOTTLIEB, STEEN & HAMILTON

The opinion of Cleary, Gottlieb, Steen & Hamilton, special New York
counsel for the Initial Purchasers, to be delivered pursuant to Section 4(d) of
the Purchase Agreement, shall be to the effect that:

1. The Purchase Agreement has been duly executed and delivered by the
Company under the law of the State of New York.

2. The Indenture has been duly executed and delivered by the Company
under the law of the State of New York, and is a valid, binding and enforceable
agreement of the Company.

3. Upon the execution of the Notes by the Company and the authentication
of the Notes by the Trustee in accordance with the Indenture, and upon delivery
of the Notes in accordance with the Purchase Agreement, the Notes will be the
valid, binding and enforceable obligations of the Company, entitled to the
benefits of the Indenture.

4. The statements set forth under the headings "Description of Notes" in
the Offering Memorandum, insofar as such statements purport to summarize certain
provisions of the Notes and the Indenture, provide a fair summary of such
provisions.

Such counsel's opinions may include such assumptions, qualifications,
exceptions and limitations as are customary for opinions with respect to the
foregoing matters.

Such counsel's opinions shall relate solely to New York law.

<PAGE>

EXHIBIT G

Each Memorandum shall contain language to the following effect:

"Each purchaser of Notes will be deemed to have represented and agreed as
follows (terms used in this paragraph that are defined in Rule 144A or
Regulation S under the Securities Act are used herein as defined therein):

(1) The purchaser is either (A) a qualified institutional buyer (a "QIB"),
is aware that the sale of the Notes to it is being made in reliance on Rule 144A
and is acquiring such Notes for its own account or for the account of a QIB, as
the case may be, (B) to an institution that is an accredited investor within the
meaning of 501(a)(1), (2), (3) or (7) under the Securities Act in a transaction
exempt from the registration requirements thereof, or (C) a person other than a
U.S. Person (including dealers or the professional fiduciaries) acting on a
discretionary basis for foreign beneficial owners (other than an estate or
trust) and is acquiring the Notes in reliance upon Regulation S under the
Securities Act.

(2) The purchaser understands that the Restricted Notes are being offered
only in a transaction not involving any public offering in the U.S. within the
meaning of the Securities Act, that such Notes and the Common Stock issuable
upon conversion thereof have not been registered under the Securities Act and
that (A) it may not resell, pledge or otherwise transfer any such Notes or
Common Stock except (i) to a person who the seller reasonably believes is a QIB
in a transaction meeting the requirements of Rule 144A, (ii) in an offshore
transaction complying with Rule 903 or Rule 904 of Regulation S, (iii) to an
institution that is an accredited investor within the meaning of Rule
501 (a)(1), (2), (3) or (7) under the Securities Act in a transaction exempt
from the registration requirements thereof, (iv) pursuant to the exemption from
registration under the Securities Act provided by Rule 144 thereunder (if
available), or (v) pursuant to an effective registration statement under the
Securities Act, and in each of cases (i) through (v) in accordance with any
applicable securities laws of the States and other jurisdictions of the U.S.,
and (B) the purchaser will, and each subsequent holder of such Notes or holder
of such Common Stock is required to, notify any purchaser of such Notes or
Common Stock from it of the resale restrictions referred to in (A) above.

(3) The purchaser understands that the Restricted Notes will bear legends
to the following effect unless the Company determines otherwise in compliance
with applicable law:

THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION
EXEMPT FROM REGISTRATION UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND THIS NOTE AND ANY COMMON STOCK ISSUABLE UPON ITS
CONVERSION MAY NOT BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF
SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. THIS NOTE MAY ONLY BE
SOLD IN ACCORDANCE WITH THE INDENTURE, COPIES OF WHICH ARE AVAILABLE FOR
INSPECTION AT THE CORPORATE TRUST OFFICE OF THE

<PAGE>

TRUSTEE. EACH PURCHASER OF THIS NOTE IS HEREBY NOTIFIED THAT THE SELLER OF THIS
NOTE MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.

THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF WIND RIVER SYSTEMS, INC.
(THE "COMPANY") THAT (A) THIS NOTE AND ANY COMMON STOCK ISSUABLE UPON ITS
CONVERSION MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (I) TO A PERSON
WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (II) IN AN OFFSHORE TRANSACTION COMPLYING WITH THE
PROVISIONS OF RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT,
(III) TO AN INSTITUTION THAT IS AN "ACCREDITED INVESTOR" WITHIN THE MEANING OF
RULE 501 (a) (1), (2), (3) or (7) UNDER THE SECURITIES ACT IN A TRANSACTION
EXEMPT FROM THE REGISTRATION REQUIREMENTS THEREOF, (IV) PURSUANT TO THE
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER (IF AVAILABLE), OR (V) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT, AND IN EACH OF CASES (I) THROUGH (V) IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF THE STATES AND OTHER
JURISDICTIONS OF THE U.S., AND THAT (B) THE HOLDER WILL, AND EACH SUBSEQUENT
HOLDER OF THIS NOTE OR ANY COMMON STOCK ISSUABLE UPON ITS CONVERSION IS REQUIRED
TO, NOTIFY ANY PURCHASER OF THIS NOTE OR SUCH COMMON STOCK ISSUABLE UPON ITS
CONVERSION FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN CLAUSE (A) ABOVE.

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

Common Stock issuable upon conversion of Notes will bear comparable
legends.

NO REPRESENTATION CAN BE MADE AS TO AVAILABILITY OF THE EXEMPTION PROVIDED
BY RULE 144 UNDER THE SECURITIES ACT FOR THE RESALE OF THE NOTES OR ANY COMMON
STOCK ISSUABLE UPON CONVERSION THEREOF."

Each Memorandum shall also contain language to the following effect:

<PAGE>

"Each person receiving this Offering Memorandum acknowledges that (i) such
person has been afforded an opportunity to request from the Company and to
review, and has received, all additional information considered by it to be
necessary to verify the accuracy of, or to supplement, the information herein,
(ii) it has not relied on the Initial Purchasers or any person affiliated with
the Initial Purchasers in connection with its investigation of the accuracy of
such information or its investment decision and (iii) no person has been
authorized to give any information or to make any representation concerning the
Company or the Notes or the Common Stock offered hereby other than as contained
herein and information given by duly authorized officers and employees of the
Company in connection with investors' examination of the Company and the terms
of the offering, and, if given or made, such other information or
representations should not be relied upon as having been authorized by the
Company or the Initial Purchasers."

Each Memorandum shall also contain language to the following effect:

"Each purchaser of Notes offered hereby will be deemed to have represented
and agreed that such purchaser understands that the Notes (and the Common Stock
issuable upon conversion thereof) have not been registered under the Securities
Act and may not be offered, sold or delivered in the United States or to, or for
the account of, any U.S. Person, unless the Notes (and such Common Stock) are
registered under the Securities Act or an exemption from the registration
requirements thereof is available and the Notes and such Common Stock will bear
a legend to this effect, unless the Company determines otherwise in compliance
with applicable laws (terms used above that are defined in Regulation S are used
above as therein defined)."

<PAGE>

Exhibit 10.18

REGISTRATION RIGHTS AGREEMENT

THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and entered
into as of July 31, 1997, by and among Wind River Systems, Inc., a Delaware
corporation (the "Company"), and Deutsche Morgan Grenfell Inc., Hambrecht &
Quist LLC and Wessels, Arnold & Henderson, L.L.C. (the "Initial Purchasers")
pursuant to the Purchase Agreement, dated July 31, 1997 (the "Purchase
Agreement"), among the Company and The Initial Purchasers. In order to
induce the Initial Purchasers to enter into the Purchase Agreement, the
Company has agreed to provide the registration rights set forth in this
Agreement. The execution of this Agreement is a condition to the closing
under the Purchase Agreement.

The Company agrees with the Initial Purchasers, (i) for their benefit as
Initial Purchasers and (ii) for the benefit of the holders from time to time
of the Notes (including the Initial Purchasers) and the holders from time to
time of the Common Stock issued upon conversion of the Notes (each of the
foregoing a "Holder" and together the "Holders"), as follows:

1. DEFINITIONS. Capitalized terms used herein without definition shall
have their respective meanings set forth in the Purchase Agreement. As used
in this Agreement, the following terms shall have the following meanings:

AFFILIATE: "Affiliate" means, with respect to any specified person,
(i) any other person directly or indirectly controlling or controlled by, or
under direct or indirect common control with, such specified person or (ii)
any executive officer or director of such other person. For purposes of this
definition, the term "control" (including the terms "controlling,"
"controlled by" and "under common control with") of a person means the
possession, direct or indirect, of the power (whether or not exercised) to
direct or cause the direction of the management and policies of a person,
whether through the ownership of voting securities, by contract, or otherwise.

BUSINESS DAY: Each Monday, Tuesday, Wednesday, Thursday and Friday
that is not a day on which banking institutions in The City of New York are
authorized or obligated by law or executive order to close.

COMMON STOCK: The shares of common stock, par value $.001 per share,
of the Company and any other shares of common stock as may constitute "Common
Stock" for purposes of the Indenture, in each case, as issuable or issued
upon conversion of the Notes.

DAMAGES ACCRUAL PERIOD: See Section 2(c) hereof.

DAMAGES PAYMENT DATE: Each of the semi-annual interest payment
dates provided in the Indenture.

DEFERRAL PERIOD: See Section 2(d) hereof.

1.
<PAGE>

EFFECTIVENESS PERIOD: The period commencing with the date hereof
and ending on the earlier of the date that is two years after the latest date
of original issuance of the Notes and the date that all Registrable
Securities have ceased to be Registrable Securities.

EVENT: See Section 2(e) hereof.

EVENT DATE: See Section 2(e) hereof.

EXCHANGE ACT: The Securities Exchange Act of 1934, as amended, and
the Rules and Regulations of the SEC promulgated thereunder.

FILING DATE: See Section 2(a) hereof.

HOLDER: See the second paragraph of this Agreement.

INDENTURE: The Indenture, dated as of July 31, 1997, among the
Company and Deutsche Bank AG, New York Branch, as trustee, pursuant to which
the Notes are being issued, as amended or supplemented from time to time in
accordance with the terms hereof.

INITIAL PURCHASERS: See the first paragraph of this Agreement.

INITIAL SHELF REGISTRATION: See Section 2(a) hereof.

LIQUIDATED DAMAGES: See Section 2(e) hereof.

LOSSES: See Section 6 hereof.

MANAGER: As such term is defined in the Purchase Agreement.

MANAGING UNDERWRITERS: The investment banking firm or firms that
shall manage or co-manage an Underwritten Offering.

NOTES: The 5% Convertible Subordinated Notes due 2002 of the
Company being issued and sold pursuant to the Purchase Agreement and the
Indenture.

NOTICE HOLDER: See Section 2(d)(i) hereof.

PURCHASE AGREEMENT: See the first paragraph of this Agreement.

PROSPECTUS: The prospectus included in any Registration Statement
(including, without limitation, a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any amendment or prospectus
supplement,

2.
<PAGE>

including post-effective amendments, and all material incorporated by
reference or deemed to be incorporated by reference in such Prospectus.

RECORD HOLDER: (i) with respect to any Damages Payment Date
relating to any Note as to which any such Liquidated Damages have accrued,
the registered holder of such Note on the record date with respect to the
interest payment date under the Indenture on which such Damages Payment Date
shall occur and (ii) with respect to any Damages Payment Date relating to any
Common Stock as to which any such Liquidated Damages have accrued, the
registered holder of such Common Stock 15 days prior to the next succeeding
Damages Payment Date.

REGISTRABLE SECURITIES: The Notes and the Common Stock into which
the Notes are convertible or converted, whether or not such Notes have been
converted, and any Common Stock issued with respect thereto upon any stock
dividend, split or similar event until, in the case of any such Note or any
such Common Stock, (i) it is effectively registered under the Securities Act
and disposed of in accordance with the Registration Statement covering it,
(ii) it is saleable by the holder thereof pursuant to Rule 144(k) or (iii) it
is sold to the public pursuant to Rule 144, and the legends with respect to
transfer restrictions required under the Indenture (other than any such
legends required solely as the consequence of the fact that the Registrable
Securities (or the Notes, upon the conversion of which, such Registrable
Securities were issued or are issuable) are owned by, or were previously
owned by, the Company or an Affiliate of the Company) are removed or
removable in accordance with the terms of the Indenture.

REGISTRATION EXPENSES: See Section 5 hereof.

REGISTRATION STATEMENT: Any registration statement of the Company
which covers any of the Registrable Securities pursuant to the provisions of
this Agreement, including the Prospectus, amendments and supplements to such
registration statement, including post-effective amendments, all exhibits,
and all material incorporated by reference or deemed to be incorporated by
reference in such registration statement.

RULE 144: Rule 144 under the Securities Act, as such Rule may be
amended from time to time, or any similar rule or regulation hereafter
adopted by the SEC.

RULE 144A: Rule 144A under the Securities Act, as such Rule may be
amended from time to time, or any similar rule or regulation hereafter
adopted by the SEC.

SEC: The Securities and Exchange Commission.

SECURITIES ACT: The Securities Act of 1933, as amended, and the
rules and regulations promulgated by the SEC thereunder.

SELLING PERIOD: See Section 2(d)(i) hereof.

SHELF REGISTRATION: See Section 2(a) hereof.

3.
<PAGE>

SPECIAL COUNSEL: Venture Law Group, A Professional Corporation, or
such other successor counsel as shall be specified by the holders of a
majority of the Registerable Securities, the fees and expenses of which will
be paid by the Company pursuant to Section 5 hereof.

SUBSEQUENT SHELF REGISTRATION: See Section 2(b) hereof.

TIA: The Trust Indenture Act of 1939, as amended.

TRUSTEE: The Trustee under the Indenture.

UNDERWRITTEN REGISTRATION OR UNDERWRITTEN OFFERING: A registration
in which securities of the Company are sold to an underwriter for reoffering
to the public, PROVIDED, that the Managing Underwriters of an Underwritten
Offering shall be approved by the Company, which approval shall not be
unreasonably withheld.

2. SHELF REGISTRATION.

(a) SHELF REGISTRATION. The Company shall prepare and file with
the SEC, as soon as practicable but in any event on or prior to the date
ninety (90) days following the latest date of original issuance of the Notes
(the "Filing Date"), a Registration Statement for an offering to be made on a
continuous basis pursuant to Rule 415 of the Securities Act (a "Shelf
Registration") registering the resale from time to time by Holders thereof of
all of the Registrable Securities (the "Initial Shelf Registration"). The
Initial Shelf Registration shall be on Form S-3 or another appropriate form
permitting registration of such Registrable Securities for resale by such
Holders in the manner or manners designated by them (including, without
limitation, one or more Underwritten Offerings). Each Holder who first
becomes a Holder prior to the Filing Date may include its Registrable
Securities in the Shelf Registration by obtaining from the Trustee or the
Company a selling securityholder questionnaire in such form provided by the
Company (a "Selling Securityholder Questionnaire") and, not later than 10
days prior to the Filing Date, returning to the Company a duly completed
Selling Securityholder Questionnaire (a) providing such information with
respect to such Holder and its Registrable Securities required to be included
in the Shelf Registration (the "Requisite Information") and (b) agreeing to
be named as a Selling Securityholder therein in accordance with the terms
hereof. Failure of any Holder to return a completed Selling Securityholder
Questionnaire prior to the Filing Date shall not affect such Holder's rights
under Section 2(d) hereof. The Company shall use its reasonable efforts to
cause the Initial Shelf Registration to be declared effective under the
Securities Act as soon as practicable and, in any event, within one hundred
and eighty (180 )days following the latest date of original issuance of the
Notes and to keep the Initial Shelf Registration effective under the
Securities Act until the earlier of the expiration of the Effectiveness
Period or the date a Subsequent Shelf Registration, as defined below,
covering all of the Registrable Securities has been declared effective under
the Securities Act.

(b) If the Initial Shelf Registration or any Subsequent Shelf
Registration, as

4.
<PAGE>

defined below, ceases to be effective for any reason as a result of the
issuance of a stop order by the SEC at any time during the Effectiveness
Period, the Company shall use its reasonable efforts to obtain the prompt
withdrawal of any order suspending the effectiveness thereof, and in any
event shall within thirty (30) days of such cessation of effectiveness amend
the Shelf Registration in a manner reasonably expected to obtain the
withdrawal of the order suspending the effectiveness thereof, or file an
additional Shelf Registration covering all of the then Registrable Securities
(a "Subsequent Shelf Registration"). If a Subsequent Shelf Registration is
filed, the Company shall use its reasonable efforts to cause the Subsequent
Shelf Registration to be declared effective as soon as practicable after such
filing and to keep such Registration Statement continuously effective until
the end of the Effectiveness Period.

(c) The Company shall supplement and amend the Shelf Registration
if required by the rules, regulations or instructions applicable to the
registration form used by the Company for such Shelf Registration, if
required by the Securities Act, or if reasonably requested by the Initial
Purchasers or by the Trustee on behalf of a majority of the Holders of the
Registrable Securities covered by such Registration Statement or by any
Managing Underwriter of such Registrable Securities in the event of an
Underwritten Offering of the Registrable Securities.

(d) Each Holder of Registrable Securities agrees that if such
Holder wishes to sell its Registrable Securities pursuant to a Shelf
Registration and related Prospectus, it will do so only in accordance with
this Section 2(d). To effect a sale of Registrable Securities pursuant to a
Shelf Registration, each Holder included in the Shelf Registration as a
Selling Securityholder of Registrable Securities must, at least 10 Business
Days prior to any intended distribution of Registrable Securities, deliver
written notice to the Company specifying the date upon which the Holder
intends to begin such distribution and providing any additional or modified
Requisite Information or a statement that the Requisite Information
previously provided remains true and correct as of the date of such notice.
A Holder of Registrable Securities not included in the Shelf Registration
that wishes to have its Registrable Securities included in a Shelf
Registration must, simultaneously with or prior to delivery of the notice
specified in the preceding sentence, obtain a Selling Securityholder
Questionnaire from the Trustee or the Company and deliver to the Company a
completed Selling Securityholder Questionnaire (a) providing Requisite
Information and (b) agreeing to be named as a Selling Securityholder in the
Shelf Registration in accordance with the terms hereof. Each Holder may
deliver a maximum of three (3) notices pursuant to this Section 2(d) in any
12-month period. As soon as practicable after the date such notice is
provided, and in any event within five Business Days after such date, the
Company shall either:

(i) (A) If necessary, prepare and file with the Commission a
post-effective amendment to the Shelf Registration or a supplement to the
related Prospectus or a supplement or amendment to any document incorporated
therein by reference or file any other required document so that such
Registration Statement will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, and so that, as
thereafter delivered to purchasers of the Registrable Securities being sold
thereunder, such Prospectus will not contain an untrue

5.
<PAGE>

statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; (B) provide the
Notice Holders (as defined below) copies of any documents filed pursuant to
Section 2(d)(i)(A); and (C) inform the Notice Holders that the Company has
complied with its obligations in Section 2(d)(i)(A) (or that, if the Company
has filed a post-effective amendment to the Shelf Registration which has not
yet been declared effective, the Company will notify the Notice Holders to
that effect, will use its reasonable efforts to secure the effectiveness of
such post-effective amendment and will immediately notify the Notice Holders
when the amendment has become effective); each Holder who has given notice of
intention to distribute such Holder's Registrable Securities in accordance
with Section 2(d) hereof (a "Notice Holder") will sell all or any of such
Registrable Securities pursuant to the Shelf Registration and related
Prospectus only during the 30-day period commencing with the date on which
the Company gives notice, pursuant to Section 2(d)(i)(C), that the
Registration Statement and Prospectus may be used for such purpose (such
30-day period is referred to as a "Selling Period"). The Notice Holders will
not sell any Registrable Securities pursuant to such Registration Statement
or Prospectus after such Selling Period without giving a new notice of
intention to sell pursuant to Section 2(d) hereof and receiving a further
notice from the Company pursuant to Section 2(d)(i)(C) hereof.

(ii) in the event (A) of the happening of any event of the kind
described in Section 3(c)(ii), 3(c)(iii), 3(c)(iv), 3(c)(v) or 3(c)(vi)
hereof or (B) that, in the judgment of the Company, it is advisable to
suspend use of the Prospectus for a discrete period of time due to pending
material corporate developments or similar material events that have not yet
been publicly disclosed and as to which the Company believes public
disclosure will be prejudicial to the Company, the Company shall deliver a
certificate in writing, signed by an authorized executive officer of the
Company, to the Notice Holders, the Special Counsel and the Managing
Underwriters, if any, to the effect of the foregoing and, upon receipt of
such certificate, each such Notice Holder's Selling Period will not commence
or, if commenced, will be suspended, until such Notice Holder's receipt of
copies of the supplemented or amended Prospectus provided for in Section
2(d)(i)(A) hereof, or until it is advised in writing by the Company that the
Prospectus may be used, and has received copies of any additional or
supplemental filings that are incorporated or deemed incorporated by
reference in such Prospectus. The Company will use its reasonable efforts to
ensure that the use of the Prospectus may be resumed, and the Selling Period
will commence, as soon as practicable and, in the case of a pending
development or event referred to in Section 2(d)(ii)(B) hereof, as soon as
practicable following public disclosure of such pending material corporate
development or similar material event. Notwithstanding the foregoing, (A) the
Company shall not under any circumstances be entitled to exercise its right
under this Section 2(d)(ii) to defer the commencement of a Selling Period
more than one (1) time in any three (3) month period and the period in which
a Selling Period is suspended shall not exceed fifteen (15) days unless the
Company shall deliver to such Notice Holders a second notice to the effect
set forth above, which shall have the effect of extending the period during
which such Selling Period is deferred or suspended by up to an additional
fifteen (15) days, or such shorter period of time as is specified in such
second notice, and (B) in no event shall the Company be permitted to extend

6.
<PAGE>

the period during which such Selling Period is deferred from and after the
date a Notice Holder provides notice to the Company in accordance with this
Section 2(d) of its intention to distribute Registrable Securities (a
"Deferral Period") beyond such thirty (30) day period, PROVIDED, that the
Company may suspend the use of such Prospectus for longer periods so long as
the Company complies with its obligations, if any, to pay Liquidated Damages
in accordance with Section 2(e) hereof.

(e) The parties hereto agree that the Holders of Registrable
Securities will suffer damages, and that it would not be feasible to
ascertain the extent of such damages with precision, if (i) the Initial Shelf
Registration has not been filed on or prior to the Filing Date (unless the
delay in filing is caused by failure of Holders to provide Requisite
Information and agree to be named as Selling Securityholders in the Shelf
Registration or by objections received pursuant to Section 3(a) hereof), (ii)
prior to the end of the Effectiveness Period, the SEC shall have issued a
stop order suspending the effectiveness of the Shelf Registration or
proceedings have been initiated with respect to the Shelf Registration under
Section 8(d) or 8(e) of the Securities Act, (iii) the aggregate number of
days in any one Deferral Period exceeds the periods permitted pursuant to
Section 2(d)(ii) hereof or (iv) the number of Deferral Periods exceeds the
number permitted pursuant to Section 2(d)(ii) hereof (each of the events of a
type described in any of the foregoing clauses (i) through (iv) are
individually referred to herein as an "Event," and the Filing Date in the
case of clause (i), the date on which the effectiveness of the Shelf
Registration has been suspended or proceedings with respect to the Shelf
Registration under Section 8(d) or 8(e) of the Securities Act have been
commenced in the case of clause (ii), the date on which the duration of a
Deferral Period exceeds the periods permitted by Section 2(d)(ii) hereof in
the case of clause (iii), and the date of the commencement of a Deferral
Period that causes the limit on the number of Deferral Periods under Section
2(d)(ii) hereof to be exceeded in the case of clause (iv), being referred to
herein as an "Event Date"). Events shall be deemed to continue until the
date of the termination of such Event, which shall be the following dates
with respect to the respective types of Events: the date the Initial
Registration Statement is filed in the case of an Event of the type described
in clause (i), the date that all stop orders suspending effectiveness of the
Shelf Registration have been removed and the proceedings initiated with
respect to the Shelf Registration under Section 8(d) or 8(e) of the
Securities Act have terminated, as the case may be, in the case of Events of
the types described in clause (ii), termination of the Deferral Period which
caused the aggregate number of days in any one Deferral Period to exceed the
number permitted by Section 2(d)(ii) to be exceeded in the case of Events of
the type described in clause (iii), and termination of the Deferral Period
the commencement of which caused the number of Deferral Periods permitted by
Section 2(d)(ii) to be exceeded in the case of Events of the type described
in clause (iv).

Accordingly, upon the occurrence of any Event and until such time as
there are no Events which have occurred and are continuing (a "Damages
Accrual Period"), commencing on the Event Date on which such Damages Accrual
Period began, the Company agrees to pay, as liquidated damages, and not as a
penalty, an additional amount (the "Liquidated Damages"): (A)(i) to each
holder of a Note that is a Notice Holder, accruing at a rate equal to
one-quarter of one percent per annum (25 basis points) on the aggregate
principal amount of Notes held by such

7.
<PAGE>

Notice Holder and (ii) to each holder of Common Stock that is a Notice
Holder, accruing at a rate equal to one-quarter of one percent per annum (25
basis points) calculated on an amount equal to the product of (x) the
then-applicable Conversion Price (as defined in the Indenture), times (y) the
number of shares of Common Stock held by such holder; and (B) if the Damages
Accrual Period continues for a period in excess of thirty (30) days from the
Event Date, from and after the end of such thirty (30) days until such time
as there are no Events which have occurred and are continuing, (i) to each
holder of a Note (whether or not a Notice Holder), accruing at a rate equal
to one-quarter of one percent per annum (25 basis points) on the aggregate
principal amount of Notes held by such holder and (ii) to each holder of
Common Stock (whether or not a Notice Holder), accruing at a rate equal to
one-quarter of one percent per annum (25 basis points) calculated on an
amount equal to the product of (x) the then-applicable Conversion Price (as
defined in the Indenture), times (y) the number of shares of Common Stock
held by such holder. Notwithstanding the foregoing, no Liquidated Damages
shall accrue under clause (A) for the preceding sentence during any period
for which Liquidated Damages accrue under clause (B) of the preceding
sentence or as to any Registrable Securities from and after the earlier of
(x) the date such securities are no longer Registrable Securities, and (y)
the expiration of the Effectiveness Period. The rate of accrual of the
Liquidated Damages with respect to any period shall not exceed the rate
provided for in this paragraph notwithstanding the occurrence of multiple
concurrent Events.

The Company shall pay the Liquidated Damages due on any Notes or Common
Stock by depositing with the Trustee under the Indenture, in trust, for the
benefit of the holders of Notes or Common Stock or Notice Holder, as the case
may be, entitled thereto, on or prior to the applicable Damages Payment Date,
sums sufficient to pay the Liquidated Damages accrued or accruing since the
last preceding Damages Payment Date through such Damages Payment Date. The
Liquidated Damages shall be paid by the Company to the Record Holders on
each Damages Payment Date by wire transfer of immediately available funds to
the accounts specified by them or by mailing checks to their registered
addresses as they appear in the Note register (as defined in the Indenture),
in the case of the Notes, and in the register of the Company for the Common
Stock, in the case of the Common Stock, if no such accounts have been
specified on or before the Damage Payment Date; PROVIDED, HOWEVER, that any
Liquidated Damages accrued with respect to any Note or portion thereof called
for redemption on a redemption date, redeemed or repurchased in connection
with a Fundamental Change (as defined in the Indenture) on a repurchase date,
or converted into Common Stock on a conversion date prior to the Damages
Payment Date, shall, in any such event, be paid instead to the holder who
submitted such Note or portion thereof for redemption, repurchase or
conversion on the applicable redemption date, repurchase date or conversion
date, as the case may be, on such date (or promptly following the conversion
date, in the case of conversion of a Note). The Trustee shall be entitled, on
behalf of the holders of Notes, Common Stock and Notice Holder, to seek any
available remedy for the enforcement of this Agreement, including for the
payment of such Liquidated Damages. Notwithstanding the foregoing, the
parties agree that the sole damages payable for a violation of the terms of
this Agreement with respect to which Liquidated Damages are expressly
provided shall be such Liquidated Damages. Nothing shall preclude a Notice
Holder or holder of Registrable Securities from pursuing or obtaining
specific performance or other equitable relief

8.
<PAGE>

with respect to this Agreement.

All of the Company's obligations set forth in this Section 2(e) which are
outstanding with respect to any Registrable Securities at the time such
security ceases to be a Registrable Security shall cease to accrue at such
time such security ceases to be a Registrable Security but shall survive
until such time as all such obligations with respect to such security have
been satisfied in full (notwithstanding termination of the Agreement pursuant
to Section 8(o)).

The parties hereto agree that the Liquidated Damages provided for in this
Section 2(e) constitute a reasonable estimate of the damages that may be
incurred by holders of Registrable Securities (other than the Initial
Purchasers) by reason of the failure of the Shelf Registration to be filed or
declared effective or unavailable (absolutely or as a practical matter) for
effecting resales of Registrable Securities, as the case may be, in
accordance with the provisions hereof.

3. REGISTRATION PROCEDURES. In connection with the Company's
registration obligations under Section 2 hereof, the Company shall effect
such registrations to permit the sale of the Registrable Securities in
accordance with the intended method or methods of disposition thereof, and
pursuant thereto the Company shall as expeditiously as possible:

(a) Prepare and file with the SEC a Registration Statement or
Registration Statements on any appropriate form under the Securities Act
available for the sale of the Registrable Securities by the Holders thereof
in accordance with the intended method or methods of distribution thereof,
and use its reasonable efforts to cause each such Registration Statement to
become effective and remain effective as provided herein; PROVIDED, that
before filing any such Registration Statement or Prospectus or any amendments
or supplements thereto (other than documents that would be incorporated or
deemed to be incorporated therein by reference and that the Company is
required by applicable securities laws or stock exchange requirements to
file) the Company shall furnish to the Manager, the Special Counsel and the
Managing Underwriters of such offering, if any, copies of all such documents
proposed to be filed, which documents will be subject to the review of the
Manager, the Special Counsel and such Managing Underwriters, and the Company
shall not file any such Registration Statement or amendment thereto or any
Prospectus or any supplement thereto (other than such documents which, upon
filing, would be incorporated or deemed to be incorporated by reference
therein and that the Company is required by applicable securities laws or
stock exchange requirements to file) to which the Holders of a majority of
the Registrable Securities covered by such Registration Statement, the
Initial Purchasers or the Special Counsel shall reasonably object in writing
within two full Business Days.

(b) Prepare and file with the SEC such amendments and
post-effective amendments to each Registration Statement as may be necessary
to keep such Registration Statement continuously effective for the applicable
period specified in Section 2; cause the related Prospectus to be
supplemented by any required Prospectus supplement, and as so supplemented to
be filed pursuant to Rule 424 (or any similar provisions then in force) under
the Securities Act; and comply with the provisions of the Securities Act with
respect to the disposition of all

9.
<PAGE>

securities covered by such Registration Statement during the applicable
period in accordance with the intended methods of disposition by the sellers
thereof set forth in such Registration Statement as so amended or such
Prospectus as so supplemented.

(c) Notify the Notice Holders, the Manager, the Special Counsel and
the Managing Underwriters, if any, promptly, and (if requested by any such
person) confirm such notice in writing, (i) when a Prospectus, any Prospectus
supplement, a Registration Statement or a post-effective amendment to a
Registration Statement has been filed with the SEC, and, with respect to a
Registration Statement or any post-effective amendment, when the same has
become effective, (ii) of any request by the SEC or any other federal or
state governmental authority for amendments or supplements to a Registration
Statement or related Prospectus or for additional information, (iii) of the
issuance by the SEC or any other federal or state governmental authority of
any stop order suspending the effectiveness of a Registration Statement or
the initiation or threatening of any proceedings for that purpose, (iv) of
the receipt by the Company of any notification with respect to the suspension
of the qualification or exemption from qualification of any of the
Registrable Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose, (v) of the existence of any
fact or happening of any event which makes any statement of a material fact
in such Registration Statement or related Prospectus or any document
incorporated or deemed to be incorporated therein by reference untrue or
which would require the making of any changes in the Registration Statement
or Prospectus in order that, in the case of the Registration Statement, it
will not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading, and that in the case of the Prospectus, it
will not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, and (vi) of the Company's determination that a
post-effective amendment to a Registration Statement would be appropriate.

(d) Use its reasonable efforts to obtain the withdrawal of any
order suspending the effectiveness of a Registration Statement, or the
lifting of any suspension of the qualification (or exemption from
qualification) of any of the Registrable Securities for sale in any
jurisdiction, at the earliest possible moment.

(e) If reasonably requested by the Manager or the Managing
Underwriters, if any, or the Holders of a majority of the Registrable
Securities being sold, (i) promptly incorporate in a Prospectus supplement or
post-effective amendment to a Registration Statement such information as the
Manager, the Special Counsel, the Managing Underwriters, if any, or such
Holders, in connection with any offering of Registrable Securities, agree
should be included therein as required by applicable law, and (ii) make all
required filings of such Prospectus supplement or such post-effective
amendment as soon as practicable after the Company has received notification
of the matters to be incorporated in such Prospectus supplement or
post-effective amendment; PROVIDED, that the Company shall not be required to
take any actions under this Section 3(e) that are not, in the reasonable
opinion of counsel for the Company, in compliance with applicable law.

10.
<PAGE>

(f) Furnish to each selling Holder (if so requested), the Special
Counsel and the Manager, and each Managing Underwriter, if any, without
charge, at least one conformed copy of the Registration Statement or
Statements and any amendment thereto, including financial statements but
excluding schedules, all documents incorporated or deemed to be incorporated
therein by reference and all exhibits (unless requested in writing by such
selling Holder, counsel, the Manager or underwriter).

(g) Deliver to each selling Holder, the Special Counsel and the
Manager and each Managing Underwriter, if any, in connection with any
offering of Registrable Securities, without charge, as many copies of the
Prospectus or Prospectuses relating to such Registrable Securities (including
each preliminary prospectus) and any amendment or supplement thereto as such
persons may reasonably request; and the Company hereby consents to the use of
such Prospectus or each amendment or supplement thereto by each of the
selling Holders of Registrable Securities and the Underwriters, if any, in
connection with any offering and sale of the Registrable Securities covered
by such Prospectus or any amendment or supplement thereto.

(h) Prior to any public offering of Registrable Securities, to
register or qualify or cooperate with the selling Holders, the Managing
Underwriters, if any, and the Special Counsel in connection with the
registration or qualification (or exemption from such registration or
qualification) of such Registrable Securities for offer and sale under the
securities or Blue Sky laws of such jurisdictions within the United States as
any selling Holder or Managing Underwriter reasonably requests in writing;
keep each such registration or qualification (or exemption therefrom)
effective during the period such Registration Statement is required to be
kept effective and do any and all other acts or things necessary or advisable
to enable the disposition in such jurisdictions of the Registrable Securities
covered by the applicable Registration Statement; PROVIDED, that the Company
will not be required to (i) qualify generally to do business in any
jurisdiction where it is not then so qualified or (ii) take any action that
would subject it to general service of process in suits or to taxation in any
such jurisdiction where it is not then so subject.

(i) Cause the Registrable Securities covered by the applicable
Registration Statement to be registered with or approved by such other
governmental agencies or authorities within the United States, except as may
be required solely as a consequence of the nature of such selling Holder, in
which case the Company will cooperate in all reasonable respects with the
filing of such Registration Statement and the granting of such approvals, as
may be necessary to enable the selling Holder or Holders thereof or the
Managing Underwriters, if any, to consummate the disposition of such
Registrable Securities.

(j) During any Selling Period (other than during a Deferral
Period), immediately upon the existence of any fact or the occurrence of any
event as a result of which a Registration Statement shall contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein not misleading,
or a Prospectus shall contain any untrue statement of a material fact or omit
to state

11.
<PAGE>

any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, promptly prepare and file a post-effective amendment to
each Registration Statement or a supplement to the related Prospectus or any
document incorporated therein by reference or file any other required
document (such as a Current Report on Form 8-K) that would be incorporated by
reference into the Registration Statement so that the Registration Statement
shall not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading, and so that the Prospectus will not
contain any untrue statement of a material fact or omit to state any material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, as thereafter delivered to the
purchasers of the Registrable Securities being sold thereunder, and, in the
case of a post-effective amendment to a Registration Statement, use its
reasonable efforts to cause it to become effective as soon as practicable.

(k) In the event of an Underwritten Offering, enter into such
agreements and take all such other actions in connection therewith (including
those reasonably requested by the Managing Underwriters, if any, or the
Holders of a majority of the Registrable Securities being sold) in order to
expedite or facilitate the disposition of such Registrable Securities and in
such connection, whether or not an underwriting agreement is entered into,
and if the registration is an underwritten registration, (i) make such
representations and warranties, subject to the Company's ability to do so, to
the Holders of such Registrable Securities and the underwriters with respect
to the business of the Company and its subsidiaries, the Registration
Statement, Prospectus and documents incorporated by reference or deemed
incorporated by reference, if any, in each case, in form, substance and scope
as are customarily made by issuers to underwriters in underwritten offerings
and confirm the same if and when requested; (ii) use its reasonable efforts
to obtain opinions of counsel to the Company and updates thereof (which
counsel and opinions (in form, scope and substance) shall be reasonably
satisfactory to the Managing Underwriters, if any, Special Counsel and the
Holders of a majority of the Registrable Securities being sold) addressed to
each of the underwriters covering the matters customarily covered in opinions
requested in underwritten offerings and such other matters as may be
reasonably requested by such Special Counsel and Managing Underwriters; (iii)
use its reasonable efforts to obtain "cold comfort" letters and updates
thereof from the independent certified public accountants of the Company
(and, if necessary, any other certified public accountants of any subsidiary
of the Company or any business acquired or to be acquired by the Company for
which financial statements and financial data are, or are required to be,
included in the Registration Statement), addressed to each of the Managing
Underwriters, if any, such letters to be in customary form and covering
matters of the type customarily covered in "cold comfort" letters in
connection with Underwritten Offerings; and (iv) deliver such documents and
certificates as may be reasonably requested by the Holders of a majority of
the Registrable Securities being sold, the Special Counsel and the Managing
Underwriters, if any, to evidence the continued validity of the
representations and warranties of the Company and its subsidiaries made
pursuant to clause (i) above and to evidence compliance with any customary
conditions contained in the underwriting agreement or other agreement entered
into by the Company. The

12.
<PAGE>

above shall be done at each closing under such underwriting or similar
agreement as and to the extent required thereunder.

(l) If requested in connection with a disposition of Registrable
Securities pursuant to a Registration Statement, make available for
inspection by a representative of the Holders of Registrable Securities being
sold, any Managing Underwriter participating in any disposition of
Registrable Securities, if any, and any attorney or accountant retained by
such selling holders or underwriter, financial and other records, pertinent
corporate documents and properties of the Company and its subsidiaries, and
cause the executive officers, directors and employees of the Company and its
subsidiaries to supply all information reasonably requested by any such
representative, Managing Underwriter, attorney or accountant in connection
with such disposition; subject to reasonable assurances by each such person
that such information will only be used in connection with matters relating
to such Registration Statement, PROVIDED, HOWEVER, that such persons shall
first agree in writing with the Company that any information that is
reasonably and in good faith designated by the Company in writing as
confidential at the time of delivery of such information shall be kept
confidential by such persons, unless (i) disclosure of such information is
required by court or administrative order or is necessary to respond to
inquiries of regulatory authorities, (ii) disclosure of such information is
required by law (including any disclosure requirements pursuant to Federal
securities laws in connection with the filing of any Registration Statement
or the use of any prospectus referred to in this Agreement), (iii) such
information becomes generally available to the public other than as a result
of a disclosure or failure to safeguard by any such person or (iv) such
information becomes available to any such person from a source other than the
Company and such source is not bound by a confidentiality agreement.

(m) Comply with all applicable rules and regulations of the SEC
and make generally available to its securityholders earning statements (which
need not be audited) satisfying the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder (or any similar rule promulgated under
the Securities Act) no later than 45 days after the end of any 12-month
period (or 90 days after the end of any 12-month period if such period is a
fiscal year) (i) commencing at the end of any fiscal quarter in which
Registrable Securities are sold to underwriters in a firm commitment or best
efforts underwritten offering and (ii) if not sold to underwriters in such an
offering, commencing on the first day of the first fiscal quarter of the
Company commencing after the effective date of a Registration Statement,
which statements shall cover said 12-month periods.

(n) Cooperate with the selling holders of Registrable Securities to
facilitate the timely preparation and delivery of certificates representing
Registrable Securities to be sold and not bearing any restrictive legends;
and enable such Registrable Securities to be in such denominations and
registered in such names as the holders may request.

(o) Provide the transfer agent for the Common Stock with printed
certificates for the Registrable Securities which are in a form eligible for
deposit with The Depository Trust Company.

13.
<PAGE>

(p) Cause all shares of Common Stock covered by the Registration
Statement to be listed on each securities exchange or quotation system on
which the Company's Common Stock is then listed no later than the date the
Registration Statement is declared effective and, in connection therewith, to
the extent applicable, to make such filings under the Exchange Act as may be
required and to have such filings declared effective thereunder.

(q) Cooperate and assist in any filings required to be made with
the National Association of Securities Dealers, Inc.

(r) Notwithstanding any provision of this Agreement to the
contrary, the Company shall not be required to amend or supplement the Shelf
Registration pursuant to the Agreement if (i) such amendment or supplement
would require the Company to disclose a material financing, acquisition or
corporate transaction and the Company shall have determined that such
disclosure is not in the best interests of the Company and the holders of its
outstanding Common Stock or (ii) the Company shall have determined in good
faith that there is a valid business purpose or reason for suspending the use
of the Prospectus included in such Shelf Registration in accordance herewith
instead of making such amendment or supplement; PROVIDED, that in each such
case the Company complies with its obligations, if any, to pay Liquidated
Damages.

4. HOLDER'S OBLIGATIONS. Each Holder agrees, by acquisition of the
Notes and Registrable Securities, that no Holder of Registrable Securities
shall be entitled to sell any of such Registrable Securities pursuant to a
Registration Statement or to receive a Prospectus relating thereto, unless
such Holder has furnished the Company with the Selling Securityholder
Questionnaire required pursuant to Section 2(a) hereof and the notice
required pursuant to Section 2(d) hereof and such other information regarding
such Holder and the distribution of such Registrable Securities as may be
required to be included in the Registration Statement or the Prospectus or as
the Company may from time to time reasonably request. The Company may
exclude from such registration the Registrable Securities of any Holder who
does not furnish such information provided above for so long as such
information is not so furnished. Each Holder of Registrable Securities as to
which any Registration Statement is being effected agrees promptly to furnish
to the Company all information required to be disclosed in order to make the
information previously furnished to the Company by such Holder not
misleading. Any sale of any Registrable Securities by any Holder shall
constitute a representation and warranty by such Holder that the information
relating to such Holder and its plan of distribution is as set forth in the
Prospectus delivered by such Holder in connection with such disposition, that
such Prospectus does not as of the time of such sale contain any untrue
statement of a material fact relating to such Holder or its plan of
distribution and that such Prospectus does not as of the time of such sale
omit to state any material fact relating to such Holder or its plan of
distribution necessary to make the statements in such Prospectus, in light of
the circumstances under which they were made, not misleading.

5. REGISTRATION EXPENSES. All fees and expenses incident to the
Company's

14.
<PAGE>

performance of or compliance with this Agreement shall be borne by the
Company whether or not any of the Registration Statements become effective.
Such fees and expenses shall include, without limitation, (i) all
registration and filing fees (including, without limitation, fees and
expenses (x) with respect to filings required to be made with the National
Association of Securities Dealers, Inc. and (y) of compliance with federal
securities or Blue Sky laws (including, without limitation, fees and
disbursements of Special Counsel in connection with Blue Sky qualifications
of the Registrable Securities in such jurisdictions as the Managing
Underwriters, if any, or Holders of a majority of the Registrable Securities
being sold may designate)), (ii) printing expenses (including, without
limitation, expenses of printing certificates for Registrable Securities in a
form eligible for deposit with The Depository Trust Company and of printing
prospectuses if the printing of prospectuses is requested by the Special
Counsel or the holders of a majority of the Registrable Securities included
in any Registration Statement), (iii) messenger, telephone and delivery
expenses, (iv) reasonable fees and disbursements of counsel for the Company
and the Special Counsel (not to exceed $5,000) in connection with the Shelf
Registration (provided that the Company shall not be liable for the fees and
expenses of more than one separate firm for all parties participating in any
transaction hereunder), (v) fees and disbursements of all independent
certified public accountants referred to in Section 3(k)(iii) hereof
(including the expenses of any special audit and "cold comfort" letters
required by or incident to such performance) and (vi) Securities Act
liability insurance obtained by the Company in its sole discretion. In
addition, the Company shall pay its internal expenses (including, without
limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expense of any annual audit, the
fees and expenses incurred in connection with the listing of the securities
to be registered on any securities exchange on which similar securities
issued by the Company are then listed and the fees and expenses of any
person, including special experts, retained by the Company. Notwithstanding
the provisions of this Section 5, each seller of Registrable Securities shall
pay all selling expenses and all registration expenses to the extent that the
Company is prohibited by applicable Blue Sky laws from paying for or on
behalf of such seller of Registrable Securities, and the Managing
Underwriters shall pay the fees of their counsel in connection with any
Underwritten Offering (other than Blue Sky qualifications).

6. INDEMNIFICATION.

(a) INDEMNIFICATION BY THE COMPANY. The Company shall indemnify
and hold harmless each Initial Purchaser, each Holder and each person, if
any, who controls the Initial Purchasers or any Holder (within the meaning of
either Section 15 of the Securities Act or Section 20(a) of the Exchange Act)
from and against all losses, liabilities, damages and expenses (including,
without limitation, any legal or other expenses reasonably incurred in
connection with defending or investigating any such action or claim)
(collectively, "Losses"), caused by any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement or
Prospectus or in any amendment or supplement thereto or in any preliminary
prospectus, or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein in light of the circumstances in which they were made not
misleading, except insofar as such Losses are caused

15.
<PAGE>

by the information furnished to the Company in writing by the Initial
Purchasers or such Holder expressly for use therein; PROVIDED, that the
Company shall not be liable to any Holder of Registrable Securities (or any
person controlling such Holder) to the extent that any such Losses are caused
by an untrue statement or alleged untrue statement or omission or alleged
omission made in any preliminary prospectus if either (A)(i) such Holder
failed to send or deliver a copy of the Prospectus with or prior to the
delivery of written confirmation of the sale by such Holder to the person
asserting the claims from which such Losses result and (ii) the Prospectus
would have corrected such untrue statement or alleged untrue statement or
such omission or alleged omission, (B)(x) such untrue statement or alleged
untrue statement, omission or alleged omission is corrected in an amendment
or supplement to the Prospectus and (y) having previously been furnished by
or on behalf of the Company with copies of the Prospectus as so amended or
supplemented, such holder thereafter fails to deliver such Prospectus as so
amended or supplemented, with or prior to the delivery of written
confirmation of the sale of a Registrable Security to the person asserting
the claim from which such Losses result or (C) such Holder effected
transactions pursuant to a Registration Statement or Prospectus during any
suspension or delay of a Selling Period in accordance with Section 2(d)(ii)
hereof. The Company shall also indemnify each underwriter and each person
who controls such person (within the meaning of Section 15 of the Securities
Act or Section 20(a) of the Exchange Act) to the same extent and with the
same limitations as provided above with respect to the indemnification of the
Initial Purchasers or the holders of Registrable Securities.

(b) INDEMNIFICATION BY HOLDER OF REGISTRABLE SECURITIES. Each
Holder agrees, and such agreement shall be evidenced by the Holder delivering
the notice described in Section 2(d) hereof, severally and not jointly to
indemnify and hold harmless the Initial Purchasers, the other selling
Holders, the Company, its directors, its officers who sign a Registration
Statement, and each person, if any, who controls the Company, the Initial
Purchasers and any other selling Holder (within the meaning of either Section
15 of the Securities Act or Section 20 of the Exchange Act), from and against
all losses arising out of or based upon any untrue statement of a material
fact contained in any Registration Statement, Prospectus or preliminary
prospectus or arising out of or based upon any omission of a material fact
required to be stated therein or necessary to make the statements therein not
misleading, to the extent, but only to the extent, that such untrue statement
or omission is contained in any information relating to such Holder so
furnished in writing by such Holder to the Company expressly for use in such
Registration Statement or Prospectus. In no event shall the liability of any
selling holder of Registrable Securities hereunder be greater in amount than
the dollar amount of the proceeds received by such holder upon the sale of
the Registrable Securities giving rise to such indemnification obligation.

(c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. In case any proceeding
(including any governmental investigation) shall be instituted involving any
person in respect of which indemnity may be sought pursuant to either of the
two preceding paragraphs, such person (the "indemnified party") shall
promptly notify the person against whom such indemnity may be sought (the
"indemnifying party") in writing and the indemnifying party, upon request of
the indemnified party, shall retain counsel reasonably satisfactory to the
indemnified party to

16.
<PAGE>

represent the indemnified party and any others the indemnifying party may
designate in such proceeding and shall pay the reasonable fees and
disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties)
include both the indemnifying party and the indemnified party and
representation of both parties by the same counsel would be inappropriate due
to actual or potential differing interests between them. It is understood
that the indemnifying party shall not, in respect of the legal expenses of
any indemnified party in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for (a) the fees and expenses
of more than one separate firm (in addition to any local counsel) for the
Initial Purchasers and all persons, if any, who control the Initial
Purchasers within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, (b) the fees and expenses of more than one
separate firm (in addition to any local counsel) for all Holders and all
persons, if any, who control any Holder within the meaning of either Section
15 of the Securities Act or Section 20 of the Exchange Act, and (c) the fees
and expenses of more than one separate firm (in addition to any local
counsel) for the Company, its directors, its officers who sign a Registration
Statement and each person, if any, who controls the Company within the
meaning of either such Section, and that all such fees and expenses shall be
reimbursed as they are incurred. In the case of any such separate firm for
the Company, and such directors, officers and control persons of the Company,
such firm shall be designated in writing by the Company. In such case
involving the Initial Purchasers and persons who control the Initial
Purchasers, such firm shall be designated in writing by Deutsche Morgan
Grenfell Inc. In such case involving the Holders and such persons who
control Holders, such firm shall be designated in writing by the holders of
the majority of Registrable Securities sold pursuant to the Registration
Statement. The indemnifying party shall not be liable for any settlement of
any proceeding effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party from and against any loss or
liability by reason of such settlement or judgment. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes
an unconditional release of such indemnified party from all liability on
claims that are the subject matter of such proceeding.

(d) CONTRIBUTION. If the indemnification provided for in this
Section 6 is unavailable to an indemnified party under Section 6(a) or 6(b)
hereof in respect of any Losses or is insufficient to hold such indemnified
party harmless, then each applicable indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such Losses, (i) in such
proportion as is appropriate to reflect the relative benefits received by the
indemnifying party or parties on the one hand and the indemnified party or
parties on the other hand or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of the

17.
<PAGE>

indemnifying party or parties on the one hand and of the indemnified party or
parties on the other hand in connection with the statements or omissions that
resulted in such Losses, as well as any other relevant equitable
considerations. Benefits received by the Company shall be deemed to be equal
to the total net proceeds from the initial placement (before deducting
expenses) of the Notes pursuant to the Purchase Agreement. Benefits received
by the Initial Purchasers shall be deemed to be equal to the total purchase
discounts and commissions received by it pursuant to the Purchase Agreement,
and benefits received by any other Holders shall be deemed to be equal to the
value of receiving Notes registered under the Securities Act. Benefits
received by any underwriter shall be deemed to be equal to the total
underwriting discounts and commissions, as set forth on the cover page of the
Prospectus forming a part of the Registration Statement which resulted in
such Losses. The relative fault of the Holders on the one hand and the
Company on the other hand shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or
the omission or alleged omission to state a material fact relates to
information supplied by the Holders or by the Company and the parties'
relative intent, knowledge, access to information and opportunity to correct
or prevent such statement or omission. The Holders' respective obligations
to contribute pursuant to this paragraph are several in proportion to the
respective number of Registrable Securities they have sold pursuant to a
Registration Statement, and not joint.

The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 6(d) were determined by PRO RATA
allocation or by any other method or allocation that does not take into
account the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified party as a result of
the Losses referred to in the immediately preceding paragraph shall be deemed
to include, subject to the limitations set forth above, any reasonable legal
or other expenses reasonably incurred by such indemnified party in connection
with investigating or defending any such action or claim. Notwithstanding
this Section 6(d), an indemnifying party that is a selling Holder of
Registrable Securities shall not be required to contribute any amount in
excess of the amount by which the total price at which the Registrable
Securities sold by such indemnifying party and distributed to the public were
offered to the public exceeds the amount of any damages which such
indemnifying party has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.

The indemnity, contribution and expense reimbursement obligations of the
Company hereunder shall be in addition to any liability the Company may
otherwise have hereunder, under the Purchase Agreement or otherwise. The
provisions of this Section 6 shall survive so long as Registrable Securities
remain outstanding, notwithstanding any transfer of the Registrable
Securities by any holder or any termination of this Agreement.

The indemnity and contribution provisions contained in this Section 6
shall remain operative and in full force and effect regardless of (i) any
termination of this Agreement, (ii) any investigation made by or on behalf of
the Initial Purchasers, any Holder or any person

18.
<PAGE>

controlling any Holder, or the Company, its officers or directors or any
person controlling the Company and (iii) the sale of any Registrable
Securities by any Holder.

7. INFORMATION REQUIREMENTS.

(a) The Company shall file the reports required to be filed by it
under the Securities Act and the Exchange Act, and if at any time the Company
is not required to file such reports, it will, upon the request of any holder
of Registrable Securities, make publicly available other information so long
as necessary to permit sales pursuant to Rule 144 and Rule 144A under the
Securities Act. The Company further covenants that it will cooperate with
any holder of Registrable Securities and take such further reasonable action
as any holder of Registrable Securities may reasonably request (including,
without limitation making such reasonable representations as any such holder
may reasonably request), all to the extent required from time to time to
enable such holder to sell Registrable Securities without registration under
the Securities Act within the limitation of the exemptions provided by Rule
144 and Rule 144A under the Securities Act. Upon the request of any holder
of Registrable Securities, the Company shall deliver to such holder a written
statement as to whether it has complied with such filing requirements.
Notwithstanding the foregoing, nothing in this Section 7 shall be deemed to
require the Company to register any of its securities under any section of
the Exchange Act.

(b) The Company shall file the reports required to be filed by it
under the Exchange Act and shall comply with all other requirements set forth
in the instructions to Form S-3 in order to allow the Company to be eligible
to file registration statements on Form S-3.

8. MISCELLANEOUS.

(a) REMEDIES. In the event of a breach by the Company of its
obligations under this Agreement, each holder of Registrable Securities, in
addition to being entitled to exercise all rights granted by law, including
recovery of damages, will be entitled to specific performance of its rights
under this Agreement, provided that the sole damages payable for a violation
of the terms of this Agreement for which Liquidated Damages are expressly
provided pursuant to Section 2(e) hereof shall be such Liquidated Damages.
The Company agrees that monetary damages would not be adequate compensation
for any loss incurred by reason of a breach by it of any of the provisions of
this Agreement and hereby further agrees that, in the event of any action for
specific performance in respect of such breach, it shall waive the defense
that a remedy at law would be adequate.

(b) NO CONFLICTING AGREEMENTS. The Company has not, as of the date
hereof and shall not, on or after the date of this Agreement, enter into any
agreement with respect to its securities which conflicts with the rights
granted to the holders of Registrable Securities in this Agreement. The
Company represents and warrants that the rights granted to the holders of
Registrable Securities hereunder do not in any way conflict with the rights
granted to the holders of the Company's securities under any other agreements.

19.
<PAGE>

(c) AMENDMENTS AND WAIVERS. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions
hereof may not be given, unless the Company has obtained the written consent
of holders of a majority of the then outstanding Common Stock constituting
Registrable Securities (with holders of Notes deemed to be the holders, for
purposes of this Section, of the number of outstanding shares of Common Stock
into which such Notes are convertible). Notwithstanding the foregoing, a
waiver or consent to depart from the provisions hereof with respect to a
matter that relates exclusively to the rights of holders of Registrable
Securities whose securities are being sold pursuant to a Registration
Statement and that does not directly or indirectly affect the rights of other
holders of Registrable Securities may be given by holders of at least a
majority of the Registrable Securities being sold by such holders; PROVIDED,
that the provisions of this sentence may not be amended, modified, or
supplemented except in accordance with the provisions of the immediately
preceding sentence.

(d) NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing and shall be deemed given (i)
when made, if made by hand delivery, (ii) upon confirmation, if made by
telecopier or (iii) one business day after being deposited with a reputable
next-day courier, postage prepaid, to the parties as follows:

(w) if to a holder of Registrable Securities, at the most
current address given by such holder to the Company in accordance with the
provisions of Section 8(e);

(x) if to the Company, to:

Wind River Systems, Inc.
1010 Atlantic Avenue
Alameda, CA 94501
Attention: Corporate Counsel
Telecopy No.: (510) 749-2526

with a copy to:

Cooley Godward LLP
Five Palo Alto Square, 3000 El Camino Real
Palo Alto, California 94306-2155
Attention: Andrea Vachss
Telecopy No.: (415) 857-0663

(y) if to the Special Counsel to:

Venture Law Group
A Professional Corporation
2800 Sand Hill Road
Menlo Park, CA 94025

20.
<PAGE>

Attention: Joshua L. Green
Telecopy No.: (415) 854-1121

and

(z) if to the Manager to:

Deutsche Morgan Grenfell Inc.
31 West 52nd Street
New York, NY 10019
Attention: Thomas Curtis, Esq.
Telecopy No.: (212) 469-8560

or to such other address as such person may have furnished to the other
persons identified in this Section 8(d) in writing in accordance herewith.

(e) OWNER OF REGISTRABLE SECURITIES. The Company will maintain, or
will cause its registrar and transfer agent to maintain, a register with
respect to the Registrable Securities in which all transfers of Registrable
Securities of which the Company has received notice will be recorded. The
Company may deem and treat the person in whose name Registrable Securities
are registered in such register of the Company as the owner thereof for all
purposes, including, without limitation, the giving of notices under this
Agreement.

(f) APPROVAL OF HOLDERS. Whenever the consent or approval of
holders of a specified percentage of Registrable Securities is required
hereunder, Registrable Securities held by the Company or its affiliates (as
such term is defined in Rule 405 under the Securities Act) (other than the
Initial Purchasers or subsequent holders of Registrable Securities if such
subsequent holders are deemed to be such affiliates solely by reason of their
holdings of such Registrable Securities) shall not be counted in determining
whether such consent or approval was given by the holders of such required
percentage.

(g) SUCCESSORS AND ASSIGNS. Any person who purchases any
Registerable Securities from an Initial Purchaser shall be deemed, for
purposes of this Agreement, to be an assignee of such Initial Purchaser. The
Agreement shall inure to the benefit of and be binding upon the successors
and assigns of each of the parties and shall inure to the benefit of and be
binding upon each holder of any Registrable Securities.

(h) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be original and all of which taken
together shall constitute one and the same agreement.

(i) HEADINGS. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.

21.
<PAGE>

(j) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO
CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK WITHOUT REGARD TO
PRINCIPLES OF CONFLICT OF LAWS.

(k) SEVERABILITY. If any term, provision, covenant or restriction
of this Agreement is held to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth
herein shall remain in full force and effect and shall in no way be affected,
impaired or invalidated thereby, and the parties hereto shall use their best
efforts to find and employ an alternative means to achieve the same or
substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such which
may be hereafter declared invalid, illegal void or unenforceable.

(l) ENTIRE AGREEMENT. This Agreement is intended by the parties as
a final expression of their agreement and is intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein and the registration rights
granted by the Company with respect to the Common Stock of the Company into
which Notes are convertible sold pursuant to the Purchase Agreement. Except
as provided in the Purchase Agreement, there are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein,
with respect to the registration rights granted by the Company with respect
to the Common Stock of the Company to which the Notes are convertible. This
Agreement supersedes all prior agreements and understandings among the
parties with respect to such registration rights.

(m) ATTORNEYS' FEES. In any action or proceeding brought to
enforce provision of this Agreement, or where any provision hereof is validly
asserted as a defense, the prevailing party, as determined by the court,
shall be entitled to recover reasonable attorneys' fees in addition to any
other available remedy.

(n) FURTHER ASSURANCES. Each of the parties hereto shall use all
reasonable efforts to take, or cause to be taken, all appropriate action, do
or cause to be done all things reasonably necessary, proper or advisable
under applicable law, and execute and deliver such documents and other
papers, as may be required to carry out the provisions of this Agreement and
the other documents contemplated hereby and consummate and make effective the
transactions contemplated hereby.

(o) TERMINATION. This Agreement and the obligations of the parties
hereunder shall terminate upon the end of the Effectiveness Period, except
for any liabilities or obligations under Sections 4, 5 or 6 hereof and the
obligations to make payments of and provide for Liquidated Damages under
Section 2(e) hereof to the extent such damages accrue prior to the end of the
Effectiveness Period, each which shall remain in effect in accordance with
their terms.

22.
<PAGE>

IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.

WIND RIVER SYSTEMS, INC.

By:
-------------------------------
Name:
Title:

Accepted as of the date first above written:

By: DEUTSCHE MORGAN GRENFELL INC.
Acting severally on behalf of itself and the
several Initial Purchasers named in the first
paragraph of the Agreement

By:
----------------------------
Name: John Hodge
Title: Managing Director

23.

<PAGE>

Exhibit 11

Wind River Systems, Inc.

Computation of Earnings per Share

(in thousands, except per share amounts)
(unaudited)

Three months ended
July 31,
1997 1996
---- ----
<S> <C> <C>
Primary:
Weighted average shares outstanding $ 25,384 $ 21,607
Net effect of dilutive stock options 2,813 3,026
------------------------
Total shares $ 28,197 $ 24,633
------------------------
------------------------
Net income $ 3,870 $ 2,090
------------------------
------------------------
Net income per share $ 0.14 $ 0.08
------------------------
------------------------

Fully Diluted:
Weighted average shares outstanding $ 25,384 $ 21,607
Net effect of dilutive stock options 2,989 3,121
"If converted" conversion of convertible subordinated notes 0 0
(Note 1)
------------------------
Total shares $ 28,373 $ 24,728
------------------------
------------------------

Net income $ 3,870 $ 2,090
Add:
Convertible subordinated notes interest, net of taxes 0 0
Expenses attributable to convertible notes issued, net of taxes 0 0
------------------------
Adjusted net income $ 3,870 $ 2,090
------------------------
------------------------
Net income per share $ 0.14 $ 0.08
------------------------
------------------------
</TABLE>

Note 1 The effect of potential conversion of the 5% Convertible Subordinated
Notes have not been included in the fully diluted EPS calculation for
second fiscal quarters of 1998 and 1997 because they are
anti-dilutive.

<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFOMRATION EXTRACTED FROM CONSOLIDATED
BALANCE SHEETS AND CONSOLIDATED INCOME STATEMENTS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> 6-MOS
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