Exhibit 10.1

MAGMA DESIGN AUTOMATION, INC.

6.00% CONVERTIBLE SENIOR NOTES DUE 2014

INDENTURE

DATED AS OF SEPTEMBER 11, 2009

U.S. BANK NATIONAL ASSOCIATION,

AS TRUSTEE

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TABLE OF CONTENTS

 

              Page ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE    1  

Section 1.1.

   DEFINITIONS    1  

Section 1.2.

   OTHER DEFINITIONS    6  

Section 1.3.

   TRUST INDENTURE ACT PROVISIONS    6  

Section 1.4.

   RULES OF CONSTRUCTION    7 ARTICLE 2. THE SECURITIES    7  

Section 2.1.

   FORM AND DATING    7  

Section 2.2.

   EXECUTION AND AUTHENTICATION    9  

Section 2.3.

   REGISTRAR, PAYING AGENT AND CONVERSION AGENT    10  

Section 2.4.

   PAYING AGENT TO HOLD MONEY IN TRUST    10  

Section 2.5.

   HOLDERS LISTS    11  

Section 2.6.

   TRANSFER AND EXCHANGE    11  

Section 2.7.

   REPLACEMENT SECURITIES    12  

Section 2.8.

   OUTSTANDING SECURITIES    13  

Section 2.9.

   TREASURY SECURITIES    13  

Section 2.10.

   TEMPORARY SECURITIES    13  

Section 2.11.

   CANCELLATION    14  

Section 2.12.

   LEGEND; ADDITIONAL TRANSFER AND EXCHANGE REQUIREMENTS    14  

Section 2.13.

   CUSIP NUMBERS    15  

Section 2.14.

   WITHHOLDING TAXES    16 ARTICLE 3. PURCHASE OF SECURITIES AT OPTION OF THE
HOLDER UPON CHANGE IN CONTROL    16  

Section 3.1.

   PURCHASE OF SECURITIES AT OPTION OF THE HOLDER UPON CHANGE IN CONTROL    16  

Section 3.2.

   EFFECT OF CHANGE IN CONTROL PURCHASE NOTICE    19  

Section 3.3.

   DEPOSIT OF CHANGE IN CONTROL PURCHASE PRICE    19  

Section 3.4.

   SECURITIES PURCHASED IN PART    20  

Section 3.5.

   COMPLIANCE WITH SECURITIES LAWS UPON PURCHASE OF SECURITIES    20  

Section 3.6.

   REPAYMENT TO THE COMPANY    20 ARTICLE 4. CONVERSION    21  

Section 4.1.

   CONVERSION PRIVILEGE    21  

Section 4.2.

   CONVERSION PROCEDURE    23  

Section 4.3.

   FRACTIONAL SHARES    24  

Section 4.4.

   TAXES ON CONVERSION    25  

Section 4.5.

   COMPANY TO PROVIDE STOCK    25

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TABLE OF CONTENTS

(continued)

 

              Page  

Section 4.6.

   ADJUSTMENT OF CONVERSION PRICE    25  

Section 4.7.

   NO ADJUSTMENT    30  

Section 4.8.

   ADJUSTMENT FOR TAX PURPOSES    30  

Section 4.9.

   NOTICE OF ADJUSTMENT    30  

Section 4.10.

   NOTICE OF CERTAIN TRANSACTIONS    31  

Section 4.11.

   EFFECT OF RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE ON CONVERSION
PRIVILEGE    31  

Section 4.12.

   TRUSTEE’S DISCLAIMER    32 ARTICLE 5. COVENANTS    33  

Section 5.1.

   PAYMENT OF SECURITIES    33  

Section 5.2.

   SEC REPORTS    33  

Section 5.3.

   COMPLIANCE CERTIFICATES    34  

Section 5.4.

   FURTHER INSTRUMENTS AND ACTS    34  

Section 5.5.

   MAINTENANCE OF CORPORATE EXISTENCE    34  

Section 5.6.

   RESERVED    34  

Section 5.7.

   STAY, EXTENSION AND USURY LAWS    34  

Section 5.8.

   PAYMENT OF EXTENSION FEE    34   ARTICLE 6. CONSOLIDATION, MERGER,
CONVEYANCE, TRANSFER OR LEASE    35  

Section 6.1.

   COMPANY MAY CONSOLIDATE, ETC, ONLY ON CERTAIN TERMS    35  

Section 6.2.

   SUCCESSOR SUBSTITUTED    35

ARTICLE 7. DEFAULT AND REMEDIES

   36  

Section 7.1.

   EVENTS OF DEFAULT    36  

Section 7.2.

   ACCELERATION    39  

Section 7.3.

   OTHER REMEDIES    39  

Section 7.4.

   WAIVER OF DEFAULTS AND EVENTS OF DEFAULT    39  

Section 7.5.

   CONTROL BY MAJORITY    40  

Section 7.6.

   LIMITATIONS ON SUITS    40  

Section 7.7.

   RIGHTS OF HOLDERS TO RECEIVE PAYMENT AND TO CONVERT    41  

Section 7.8.

   COLLECTION SUIT BY TRUSTEE    41  

Section 7.9.

   TRUSTEE MAY FILE PROOFS OF CLAIM    41  

Section 7.10.

   PRIORITIES    42  

Section 7.11.

   UNDERTAKING FOR COSTS    42

ARTICLE 8. TRUSTEE

   42  

Section 8.1.

   DUTIES OF TRUSTEE    42  

Section 8.2.

   RIGHTS OF TRUSTEE    43  

Section 8.3.

   INDIVIDUAL RIGHTS OF TRUSTEE    44

 

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TABLE OF CONTENTS

(continued)

 

              Page  

Section 8.4.

   TRUSTEE’S DISCLAIMER    44  

Section 8.5.

   NOTICE OF DEFAULT OR EVENTS OF DEFAULT    45  

Section 8.6.

   REPORTS BY TRUSTEE TO HOLDERS    45  

Section 8.7.

   COMPENSATION AND INDEMNITY    45  

Section 8.8.

   REPLACEMENT OF TRUSTEE    46  

Section 8.9.

   SUCCESSOR TRUSTEE BY MERGER, ETC    47  

Section 8.10.

   ELIGIBILITY; DISQUALIFICATION    47  

Section 8.11.

   PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY    47

ARTICLE 9. SATISFACTION AND DISCHARGE OF INDENTURE

   48  

Section 9.1.

   SATISFACTION AND DISCHARGE OF INDENTURE    48  

Section 9.2.

   APPLICATION OF TRUST MONEY    48  

Section 9.3.

   REPAYMENT TO COMPANY    49  

Section 9.4.

   REINSTATEMENT    49

ARTICLE 10. AMENDMENTS, SUPPLEMENTS AND WAIVERS

   49  

Section 10.1.

   WITHOUT CONSENT OF HOLDERS    49  

Section 10.2.

   WITH CONSENT OF HOLDERS    50  

Section 10.3.

   COMPLIANCE WITH TRUST INDENTURE ACT    51  

Section 10.4.

   REVOCATION AND EFFECT OF CONSENTS    51  

Section 10.5.

   NOTATION ON OR EXCHANGE OF SECURITIES    52  

Section 10.6.

   TRUSTEE TO SIGN AMENDMENTS, ETC    52  

Section 10.7.

   EFFECT OF SUPPLEMENTAL INDENTURES    52

ARTICLE 11. MISCELLANEOUS

   52  

Section 11.1.

   TRUST INDENTURE ACT CONTROLS    52  

Section 11.2.

   NOTICES    52  

Section 11.3.

   COMMUNICATIONS BY HOLDERS WITH OTHER HOLDERS    53  

Section 11.4.

   CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT    53  

Section 11.5.

   RECORD DATE FOR VOTE OR CONSENT OF HOLDERS    54  

Section 11.6.

   RULES BY TRUSTEE, PAYING AGENT, REGISTRAR AND CONVERSION AGENT    55  

Section 11.7.

   LEGAL HOLIDAYS    55  

Section 11.8.

   GOVERNING LAW    55  

Section 11.9.

   NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS    55  

Section 11.10.

   NO RECOURSE AGAINST OTHERS    55  

Section 11.11.

   SUCCESSORS.    55  

Section 11.12.

   MULTIPLE COUNTERPARTS    55  

Section 11.13.

   SEPARABILITY    55  

Section 11.14.

   TABLE OF CONTENTS, HEADINGS, ETC    56

 

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CROSS-REFERENCE TABLE*

 

TIA SECTION

       

INDENTURE SECTION

Section 310(a)(1)

    

8.10

(a)(2)

    

8.10

(a)(3)

    

N.A.†

(a)(4)

    

N.A.

(a)(5)

    

8.10

(b)

    

8.8; 8.10

(c)

    

N.A.

Section 311(a)

    

8.11

(b)

    

8.11

(c)

    

N.A.

Section 312(a)

    

2.5

(b)

    

11.3

(c)

    

11.3

Section 313(a)

    

8.6

(b)(1)

    

N.A.

(b)(2)

    

8.6

(c)

    

8.6; 11.2

(d)

    

8.6

Section 314(a)

    

6.2; 6.4; 11.2

(b)

    

N.A.

(c)(1)

    

11.4(a)

(c)(2)

    

11.4(a)

(c)(3)

    

N.A.

(d)

    

N.A.

(e)

    

11.4(b)

(f)

    

N.A.

Section 315(a)

    

8.1(b)

(b)

    

8.5; 11.2

(c)

    

8.1(a)

(d)

    

8.1(c)

(e)

    

7.11

Section 316(a)(last sentence)

    

2.9

(a)(1)(A)

    

7.5

(a)(1)(B)

    

7.4

(a)(2)

    

N.A.

(b)

    

7.7

(c)

    

11.5

Section 317(a)(1)

    

7.8

(a)(2)

    

7.9

(b)

    

2.4

 

*

This Cross-Reference Table shall not, for any purpose, be deemed a part of this
Indenture.

†

N.A. means Not Applicable.

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THIS INDENTURE dated as of September 11, 2009 is between Magma Design
Automation, Inc., a corporation duly organized under the laws of the State of
Delaware (the “Company”), and U.S. Bank National Association, a national banking
association organized and existing under the laws of the United States, as
Trustee (the “Trustee”).

In consideration of the premises and the purchase of the Securities by the
Holders thereof, both parties agree as follows for the benefit of the other and
for the equal and ratable benefit of the registered Holders of the Company’s
6.00% Convertible Senior Notes due 2014.

ARTICLE 1.

DEFINITIONS AND INCORPORATION BY REFERENCE

Section 1.1. DEFINITIONS.

“Affiliate” means, with respect to any specified person, 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 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” means any Registrar, Paying Agent or Conversion Agent.

“Applicable Procedures” means, with respect to any transfer or exchange of
beneficial ownership interests in a Global Security, the rules and procedures of
the Depositary, in each case to the extent applicable to such transfer or
exchange.

“Board of Directors” means either the board of directors of the Company or any
committee of the Board of Directors authorized to act for it with respect to
this Indenture.

“Business Day” means each day that is not a Legal Holiday.

“Capital Stock” or “capital stock” of any Person means any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents of or interests in (however designated) equity of such Person, but
excluding any debt securities convertible into such equity.

“Cash” or “cash” means such coin or currency of the United States as at any time
of payment is legal tender for the payment of public and private debts.

“Certificated Security” means a Security that is in substantially the form
attached hereto as Exhibit A and that does not include the information or the
schedule called for by footnotes 1, 2 and 3 thereof.

“Change in Control” shall have the meaning set forth in Section 3.1(a).

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“Closing Price” means for each day the last reported sales price or, in case no
such reported sale takes place on such date, the average of the reported closing
bid and asked prices in either case on the Nasdaq Global Market or, if the
Common Stock is not listed or admitted to trading on the Nasdaq Global Market,
on the principal national securities exchange on which the Common Stock is
listed or admitted to trading or, if not listed or admitted to trading on the
Nasdaq Global Market or any other national securities exchange, the closing
sales price or, in case no reported sale takes place, the average of the closing
bid and asked prices, as furnished by any two members of the National
Association of Securities Dealers, Inc. selected from time to time by the
Company for that purpose.

“Common Stock” means the common stock of the Company, $0.0001 par value per
share, as it exists on the date of this Indenture and any shares of any class or
classes of capital stock of the Company resulting from any reclassification or
reclassifications thereof and which have no preference in respect of dividends
or of amounts payable in the event of any voluntary or involuntary liquidation,
dissolution or winding-up of the Company and which are not subject to redemption
by the Company; provided, however, that if at any time there shall be more than
one such resulting class, the shares of each such class then so issuable on
conversion of Securities shall be substantially in the proportion which the
total number of shares of such class resulting from all such reclassifications
bears to the total number of shares of all such classes resulting from all such
reclassifications.

“Company” means the party named as such in the first paragraph of this Indenture
until a successor replaces it pursuant to the applicable provisions of this
Indenture, and thereafter “Company” shall mean such successor Company.

“Continuing Directors” means, as of any date of determination, any individual
who on the date of this Indenture was a member of the Board of Directors,
together with any directors whose election, or, solely to fill the vacancy of a
Continuing Director, appointment by the Board of Directors or whose nomination
for election by the Company’s stockholders is duly approved by the vote of a
majority of the directors on the Board of Directors (or such lesser number
comprising a majority of a nominating committee if authority for such
nominations or elections has been delegated to a nominating committee whose
authority and composition have been approved by at least a majority of the
directors who were Continuing Directors at the time such committee was formed)
then still in office who were either directors on the date of this Indenture or
whose election, appointment (in the case of a vacancy of a Continuing Director),
or nomination for election was previously approved by a majority of the
Continuing Directors, either by specific vote or by approval of the proxy
statement issued by the Company in which such individual is named as a nominee
for director.

“Conversion Rate” per $1,000 principal amount of Securities as of any day means
the result obtained by dividing (i) $1,000 by (ii) the then applicable
Conversion Price, rounded to the nearest ten-thousandth.

“Corporate Trust Office” means the principal office of the Trustee at which at
any particular time its corporate trust business shall be administered which
office at the date of the execution of

 

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this Indenture is located at 633 West Fifth Street, 24th Floor, Los Angeles, CA
90071, Attention: Corporate Trust Services (Magma Design Automation, Inc. —
6.00% Convertible Senior Notes due 2014) or at any other time at such other
address as the Trustee may designate from time to time by notice to the Company.

“Default” or “default” means, when used with respect to the Securities, any
event which is or, after notice or passage of time or both, would be an Event of
Default.

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

“Exchange Offer” means the exchange offer of the Securities for the outstanding
2.00% Convertible Senior Notes due May 15, 2010 pursuant to the Prospectus.

“Final Maturity Date” means May 15, 2014.

“GAAP” means generally accepted accounting principles in the United States of
America as in effect as of the date of this Indenture, including those set forth
in (1) the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants, (2) the statements and
pronouncements of the Financial Accounting Standards Board, (3) such other
statements by such other entity as approved by a significant segment of the
accounting profession and (4) the rules and regulations of the SEC governing the
inclusion of financial statements (including pro forma financial statements) in
registration statements filed under the Securities Act and periodic reports
required to be filed pursuant to Section 13 of the Exchange Act, including
opinions and pronouncements in staff accounting bulletins and similar written
statements from the accounting staff of the SEC.

“Global Security” means a permanent Global Security that is in substantially the
form attached hereto as Exhibit A and that includes the information and schedule
called for by footnotes 1, 2 and 3 thereof and which is deposited with the
Depositary or its custodian and registered in the name of the Depositary or its
nominee.

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

“Indenture” means this Indenture as amended or supplemented from time to time
pursuant to the terms of this Indenture.

“Interest Payment Date” means May 15 and November 15 of each year, commencing
May 15, 2010; provided, however, that, except for an Interest Payment Date
coinciding with the Final Maturity Date or earlier Change in Control Purchase
Date, if any Interest Payment Date is a day that is not a Business Day, that
Interest Payment Date will be postponed to the next succeeding Business Day.

 

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

“Officers’ Certificate” means a certificate signed by two Officers; provided,
however, that for purposes of Sections 4.11 and 5.3, “Officers’ Certificate”
means a certificate signed by the principal executive officer, principal
financial officer or principal accounting officer of the Company and by one
other Officer.

“Opinion of Counsel” means a written opinion from legal counsel. The counsel may
be an employee of or counsel to the Company or the Trustee.

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

“Principal” or “principal” of a debt security, including the Securities, means
the principal of the security plus, when appropriate, the premium, if any, on
the security.

“Prospectus” means that certain prospectus dated September 10, 2009 with respect
to the Exchange Offer.

“Record Date” for interest payable in respect of any Security on any Interest
Payment Date means the May 1 or November 1 (whether or not a Business Day), as
the case may be, immediately preceding such Interest Payment Date.

“SEC” means the Securities and Exchange Commission.

“Securities” means the 6.00% Convertible Senior Notes due 2014 or any of them
(each, a “Security”), as amended or supplemented from time to time, that are
issued under this Indenture.

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

“Securities Custodian” means the Trustee, as custodian with respect to the
Securities in global form, or any successor thereto.

“Significant Subsidiary” means, in respect of any Person, a Subsidiary of such
Person that would constitute a “significant subsidiary” as such term is defined
under Rule 1-02 of Regulation S-X under the Securities Act and the Exchange Act.

“Subsidiary” means, in respect of any Person, any corporation, association,
partnership or other business entity of which more than 50% of the total voting
power of shares of Capital Stock or other interests (including partnership
interests) entitled (without regard to the occurrence of any

 

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contingency) to vote in the election of directors, managers, general partners or
trustees thereof is at the time owned or controlled, directly or indirectly, by
(i) such Person; (ii) such Person and one or more Subsidiaries of such Person;
or (iii) one or more Subsidiaries of such Person.

“TIA” means the Trust Indenture Act of 1939, as amended, and the rules and
regulations thereunder as in effect on the date of this Indenture, except as
provided in Section 10.3, and except to the extent any amendment to the Trust
Indenture Act expressly provides for application of the Trust Indenture Act as
in effect on another date.

“Trading Day” means a day during which trading in securities generally occurs on
the Nasdaq Global Market (or, if the Common Stock is not listed on the Nasdaq
Global Market, on the principal market on which the Common Stock is then
traded), other than a day on which a half hour or more suspension of or
limitation on trading is imposed that affects either the Nasdaq Global Market
(or, if applicable, such other market) in its entirety or only the shares of
Common Stock (by reason of movements in price exceeding limits permitted by the
relevant market on which the shares are traded or otherwise) or on which the
Nasdaq Global Market (or, if applicable, such other market) cannot clear the
transfer of shares due to an event beyond the Company’s control.

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

“Trust Officer” means, with respect to the Trustee, any officer assigned to the
Corporate Trust Office, and also, with respect to a particular matter, any other
officer to whom such matter is referred because of such officer’s knowledge of
and familiarity with the particular subject.

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

“Volume Weighted Average Price” per share of Common Stock on any Trading Day
means such price as displayed on Bloomberg (or any successor service) page “LAVA
EQUITY VAP” in respect of the period from 9:30 a.m. to 4:00 p.m., New York City
time, on such Trading Day; or, if such price is not available, the Volume
Weighted Average Price means the market value per share of Common Stock on such
day as determined by a nationally recognized independent investment banking firm
retained for this purpose by the Company.

“Voting Stock” of a Person means all classes of Capital Stock or other interests
(including partnership interests) of such Person then outstanding and normally
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof.

 

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Section 1.2. OTHER DEFINITIONS.

 

Term

  

Defined in Section

“Agent Members”

  

2.1(b)

“Bankruptcy Law”

  

7.1

“Change in Control Purchase Date”

  

3.1(a)

“Change in Control Purchase Notice”

  

3.1(c)

“Change in Control Purchase Price”

  

3.1(a)

“Closing Price”

  

4.6(f)

“Company Order”

  

2.2

“Conversion Agent”

  

2.3

“Conversion Date”

  

4.2

“Conversion Price”

  

4.6

“Current Market Price”

  

4.6(f)

“CUSIP”

  

2.13

“Custodian”

  

7.1

“Depositary”

  

2.1(a)

“Determination Date”

  

4.6(d)

“DTC”

  

2.1(a)

“Event of Default”

  

7.1

“Expiration Date”

  

4.6(e)

“Expiration Time”

  

4.6(e)

“Extension Fee”

  

7.1

“Filing Failure”

  

7.1(8)

“Instrument”

  

7.1(7)

“Legal Holiday”

  

11.7

“Notice of Default”

  

7.1(8’)

“Paying Agent”

  

2.3

“Primary Registrar”

  

2.3

“Purchased Shares”

  

4.6(e)

“Registrar”

  

2.3

“Rights”

  

4.6(c)

“Rights Plan”

  

4.6(c)

“Trigger Event”

  

4.6(c)

“Triggering Distribution”

  

4.6(d)

“Unissued Shares”

  

3.1(a)

Section 1.3. TRUST INDENTURE ACT PROVISIONS.

Whenever this Indenture refers to a provision of the TIA, that provision is
incorporated by reference in and made a part of this Indenture. The Indenture
shall also include those provisions of the TIA required to be included herein by
the provisions of the Trust Indenture Reform Act of 1990. The following TIA
terms used in this Indenture have the following meanings:

“indenture securities” means the Securities;

“indenture security holder” means a Securityholder;

 

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“indenture to be qualified” means this Indenture;

“indenture trustee” or “institutional trustee” means the Trustee; and “obligor”
on the indenture securities means the Company or any other obligor on the
Securities.

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

Section 1.4. RULES OF CONSTRUCTION.

Unless the context otherwise requires:

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

(b) an accounting term not otherwise defined has the meaning assigned to it in
accordance with GAAP;

(c) words in the singular include the plural, and words in the plural include
the singular;

(d) provisions apply to successive events and transactions;

(e) the term “merger” includes a statutory share exchange and the term “merged”
has a correlative meaning;

(f) the masculine gender includes the feminine and the neuter;

(g) references to agreements and other instruments include subsequent amendments
thereto; and

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

ARTICLE 2.

THE SECURITIES

Section 2.1. FORM AND DATING.

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

 

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(a) Initial Global Securities. All of the Securities are being issued to
existing holders of the Company’s 2.0% Convertible Senior Notes due May 15, 2010
pursuant to the Exchange Offer and shall be issued initially in the form of one
or more Global Securities, which shall be deposited on behalf of the Holders of
the Securities represented thereby with the Trustee, at its Corporate Trust
Office, as custodian for the depositary, The Depository Trust Company (“DTC”)
(such depositary, or any successor thereto, being hereinafter referred to as the
“Depositary”), and registered in the name of its nominee, Cede & Co., for the
accounts of participation in the Depositary duly executed by the Company and
authenticated by the Trustee as hereinafter provided. The aggregate principal
amount of the Global Securities may from time to time be increased or decreased
by adjustments made on the records of the Securities Custodian as hereinafter
provided, subject in each case to compliance with the Applicable Procedures.

(b) Global Securities In General. Each Global Security shall represent such of
the outstanding Securities as shall be specified therein and each shall provide
that it shall represent the aggregate amount of outstanding Securities from time
to time endorsed thereon and that the aggregate amount of outstanding Securities
represented thereby may from time to time be reduced or increased, as
appropriate, to reflect replacements, exchanges, purchases or conversions of
such Securities. Any adjustment of the aggregate principal amount of a Global
Security to reflect the amount of any increase or decrease in the amount of
outstanding Securities represented thereby shall be made by the Trustee in
accordance with instructions given by the Holder thereof as required by
Section 2.12 hereof and shall be made on the records of the Trustee and the
Depositary.

Members of, or participants in, the Depositary (“Agent Members”) shall have no
rights under this Indenture with respect to any Global Security held on their
behalf by the Depositary or under the Global Security, and the Depositary
(including, for this purpose, its nominee) may be treated by the Company, the
Trustee and any agent of the Company or the Trustee as the absolute owner and
Holder of such Global Security for all purposes whatsoever. Notwithstanding the
foregoing, nothing herein shall (A) prevent the Company, the Trustee or any
agent of the Company or the Trustee from giving effect to any written
certification, proxy or other authorization furnished by the Depositary or
(B) impair, as between the Depositary and its Agent Members, the operation of
customary practices governing the exercise of the rights of a Holder of any
Security.

(c) Book Entry Provisions. The Company shall execute and the Trustee shall, in
accordance with this Section 2.1(c), authenticate and deliver initially one or
more Global Securities that (i) shall be registered in the name of the
Depositary or its nominee, (ii) shall be delivered by the Trustee to the
Depositary or pursuant to the Depositary’s instructions and (iii) shall bear
legends substantially to the following effect:

“UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY TO MAGMA DESIGN AUTOMATION, INC. (THE “COMPANY”) OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND
ANY PAYMENT

 

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HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. THIS SECURITY
IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO
AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS
SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER
THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED
IN THE INDENTURE AND, UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR
SECURITIES IN DEFINITIVE FORM, THIS 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.”

Section 2.2. EXECUTION AND AUTHENTICATION.

An Officer shall sign the Securities for the Company by manual or facsimile
signature attested by the manual or facsimile signature of the Secretary or an
Assistant Secretary of the Company. Typographic and other minor errors or
defects in any such facsimile signature shall not affect the validity or
enforceability of any Security which has been authenticated and delivered by the
Trustee.

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

A Security shall not be valid until an authorized signatory of the Trustee
manually signs the certificate of authentication on the Security. The signature
shall be conclusive evidence that the Security has been authenticated under this
Indenture.

The Trustee shall authenticate and make available for delivery Securities for
original issue in the aggregate principal amount of $26,689,000 upon receipt of
a written order or orders of the Company signed by two Officers of the Company
(a “Company Order”). The Company Order shall specify the amount of Securities to
be authenticated, shall provide that all such Securities will be represented by
a Global Security and the date on which each original issue of Securities is to
be authenticated. The aggregate principal amount of Securities outstanding at
any time may not exceed $26,689,000 except as provided in Section 2.7.

The Trustee shall act as the initial authenticating agent. Thereafter, the
Trustee may appoint an authenticating agent acceptable to the Company to
authenticate Securities. An authenticating agent may authenticate Securities
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent shall have the same rights as an Agent to deal with the
Company or an Affiliate of the Company.

 

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

Section 2.3. REGISTRAR, PAYING AGENT AND CONVERSION AGENT.

The Company shall maintain one or more offices or agencies where Securities may
be presented for registration of transfer or for exchange (each, a “Registrar”),
one or more offices or agencies where Securities may be presented for payment
(each, a “Paying Agent”), one or more offices or agencies where Securities may
be presented for conversion (each, a “Conversion Agent”) and one or more offices
or agencies where notices and demands to or upon the Company in respect of the
Securities and this Indenture may be served. The Company will at all times
maintain a Paying Agent, Conversion Agent, Registrar and an office or agency
where notices and demands to or upon the Company in respect of the Securities
and this Indenture may be served in the Borough of Manhattan, The City of New
York. One of the Registrars (the “Primary Registrar”) shall keep a register of
the Securities and of their transfer and exchange.

The Company shall enter into an appropriate agency agreement with any Agent not
a party to this Indenture. The agreement shall implement the provisions of this
Indenture that relate to such Agent. The Company shall notify the Trustee of the
name and address of any Agent not a party to this Indenture. If the Company
fails to maintain a Registrar, Paying Agent, Conversion Agent or agent for
service of notices and demands in any place required by this Indenture, or fails
to give the foregoing notice, the Trustee shall act as such. The Company or any
Affiliate of the Company may act as Paying Agent (except for the purposes of
Section 5.1 and Article 9).

The Company hereby initially designates the Trustee as Paying Agent, Registrar,
Securities Custodian and Conversion Agent, and each of the Corporate Trust
Office of the Trustee and the office or agency of the Trustee in the Borough of
Manhattan, The City of New York (which shall initially be the Trustee), one such
office or agency of the Company for each of the aforesaid purposes.

Section 2.4. PAYING AGENT TO HOLD MONEY IN TRUST.

Prior to 11:00 a.m., New York City time, on each due date of the principal of or
interest (including any Extension Fee), if any, on any Securities, the Company
shall deposit with a Paying Agent a sum sufficient to pay such principal or
interest (including any Extension Fee), if any, so becoming due. Subject to
Section 9.2, a Paying Agent shall hold in trust for the benefit of Holders or
the Trustee all money held by the Paying Agent for the payment of principal of
or interest (including any Extension Fee), if any, on the Securities, and shall
notify the Trustee of any default by the Company (or any other obligor on the
Securities) in making any such payment. If the Company or an Affiliate of the
Company acts as Paying Agent, it shall, before 11:00 a.m., New York City time,
on each due date of the principal of or interest (including any Extension Fee),
if any,

 

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on any Securities, segregate the money and hold it as a separate trust fund. The
Company at any time may require a Paying Agent to pay all money held by it to
the Trustee, and the Trustee may at any time during the continuance of any
default, upon written request to a Paying Agent, require such Paying Agent to
pay forthwith to the Trustee all sums so held in trust by such Paying Agent.
Upon doing so, the Paying Agent (other than the Company) shall have no further
liability for the money.

Section 2.5. HOLDERS LISTS.

The Trustee shall preserve in as current a form as is reasonably practicable the
most recent list available to it of the names and addresses of Holders. If the
Trustee is not the Primary Registrar, the Company shall furnish to the Trustee
on or before any Interest Payment Date, if any, and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of Holders.

Section 2.6. TRANSFER AND EXCHANGE.

(a) Subject to compliance with any applicable additional requirements contained
in Section 2.12, when a Security is presented to a Registrar with a request to
register a transfer thereof or to exchange such Security for an equal principal
amount of Securities of other authorized denominations, the Registrar shall
register the transfer or make the exchange as requested; provided, however, that
every Security presented or surrendered for registration of transfer or exchange
shall be duly endorsed or accompanied by an assignment form and, if applicable,
a transfer certificate each in the form included in Exhibit A, and in form
satisfactory to the Registrar duly executed by the Holder thereof or its
attorney duly authorized in writing. To permit registration of transfers and
exchanges, upon surrender of any Security for registration of transfer or
exchange at an office or agency maintained pursuant to Section 2.3, the Company
shall execute and the Trustee shall authenticate Securities of a like aggregate
principal amount at the Registrar’s request. Any exchange or transfer shall be
without charge, except that the Company or the Registrar may require payment of
a sum sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto, and provided, that this sentence shall not apply to
any exchange pursuant to Section 2.1, 3.4, 4.2 (penultimate paragraph) or 10.5.

Neither the Company, any Registrar nor the Trustee shall be required to exchange
or register a transfer of any Securities or portions thereof in respect of which
a Change in Control Purchase Notice has been delivered and not withdrawn by the
Holder thereof (except, in the case of the purchase of a Security in part, the
portion thereof not to be purchased).

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

(b) Any Registrar appointed pursuant to Section 2.3 hereof shall provide to the
Trustee such information as the Trustee may reasonably require in connection
with the delivery by such Registrar of Securities upon transfer or exchange of
Securities.

 

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(c) Each Holder of a Security agrees to indemnify the Company and the Trustee
against any liability that may result from the transfer, exchange or assignment
of such Holder’s Security in violation of any provision of this Indenture and/or
applicable United States federal or state securities law.

The Trustee shall have no obligation or duty to monitor, determine or inquire as
to compliance with any restrictions on transfer imposed under this Indenture or
under applicable law with respect to any transfer of any interest in any
Security (including any transfers between or among Agent Members or other
beneficial owners of interests in any Global Security) other than to require
delivery of such certificates and other documentation or evidence as are
expressly required by, and to do so if and when expressly required by the terms
of, this Indenture, and to examine the same to determine substantial compliance
as to form with the express requirements hereof.

Section 2.7. REPLACEMENT SECURITIES.

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

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

Upon the issuance of any new Securities under this Section 2.7, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other reasonable expenses
(including the reasonable fees and expenses of the Trustee or the Registrar) in
connection therewith.

Every new Security issued pursuant to this Section 2.7 in lieu of any mutilated,
destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the mutilated, destroyed,
lost or stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all benefits of this Indenture equally and proportionately with any
and all other Securities duly issued hereunder.

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

 

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Section 2.8. OUTSTANDING SECURITIES.

Securities outstanding at any time are all Securities authenticated by the
Trustee, except for those canceled by it, those converted pursuant to Article 4,
those delivered to it for cancellation or surrendered for transfer or exchange
and those described in this Section 2.8 as not outstanding.

If a Security is replaced pursuant to Section 2.7, it ceases to be outstanding
unless the Company receives proof satisfactory to it that the replaced Security
is held by a bona fide purchaser.

If a Paying Agent (other than the Company or an Affiliate of the Company) holds
on a Change in Control Purchase Date or the Final Maturity Date money sufficient
to pay the principal of (including premium, if any) and interest (including any
Extension Fee), if any, on Securities (or portions thereof) payable on that
date, then on and after such Change in Control Purchase Date or the Final
Maturity Date, as the case may be, such Securities (or portions thereof, as the
case may be) shall cease to be outstanding and interest (including any Extension
Fee), if any, on them shall cease to accrue.

Subject to the restrictions contained in Section 2.9, a Security does not cease
to be outstanding because the Company or an Affiliate of the Company holds the
Security.

Section 2.9. TREASURY SECURITIES.

In determining whether the Holders of the required principal amount of
Securities have concurred in any notice, direction, waiver or consent,
Securities owned by the Company or any other obligor on the Securities or by any
Affiliate of the Company or of such other obligor shall be disregarded, except
that, for purposes of determining whether the Trustee shall be protected in
relying on any such notice, direction, waiver or consent, only Securities which
a Trust Officer of the Trustee actually knows are so owned shall be so
disregarded. Securities so owned which have been pledged in good faith shall not
be disregarded if the pledgee establishes to the satisfaction of the Trustee the
pledgee’s right so to act with respect to the Securities and that the pledgee is
not the Company or any other obligor on the Securities or any Affiliate of the
Company or of such other obligor.

Section 2.10. TEMPORARY SECURITIES.

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

 

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Section 2.11. CANCELLATION.

The Company at any time may deliver Securities to the Trustee for cancellation.
The Registrar, the Paying Agent and the Conversion Agent shall forward to the
Trustee or its agent any Securities surrendered to them for transfer, exchange,
payment or conversion. The Trustee and no one else shall cancel, in accordance
with its standard procedures, all Securities surrendered for transfer, exchange,
payment, conversion or cancellation and shall deliver the canceled Securities to
the Company. All Securities which are purchased or otherwise acquired by the
Company or any of its Subsidiaries prior to the Final Maturity Date shall be
delivered to the Trustee for cancellation, and the Company may not hold or
resell such Securities or issue any new Securities to replace any such
Securities or any Securities that any Holder has converted pursuant to Article
4.

Section 2.12. LEGEND; ADDITIONAL TRANSFER AND EXCHANGE REQUIREMENTS.

(a) A Global Security may not be transferred, in whole or in part, to any Person
other than the Depositary or a nominee or any successor thereof, and no such
transfer to any such other Person may be registered; provided that the foregoing
shall not prohibit any transfer of a Security that is issued in exchange for a
Global Security but is not itself a Global Security. No transfer of a Security
to any Person shall be effective under this Indenture or the Securities unless
and until such Security has been registered in the name of such Person.
Notwithstanding any other provisions of this Indenture or the Securities,
transfers of a Global Security, in whole or in part, shall be made only in
accordance with this Section 2.12.

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

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

 

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(ii) Securities issued in exchange for a Global Security or any portion thereof
shall be issued in definitive, fully registered form, without interest coupons,
shall have an aggregate principal amount equal to that of such Global Security
or portion thereof to be so exchanged, shall be registered in such names and be
in such authorized denominations as the Depositary shall designate and shall
bear the applicable legends provided for herein. Any Global Security to be
exchanged in whole shall be surrendered by the Depositary to the Trustee, as
Registrar. With regard to any Global Security to be exchanged in part, either
such Global Security shall be so surrendered for exchange or, if the Trustee is
acting as custodian for the Depositary or its nominee with respect to such
Global Security, the principal amount thereof shall be reduced, by an amount
equal to the portion thereof to be so exchanged, by means of an appropriate
adjustment made on the records of the Trustee. Upon any such surrender or
adjustment, the Trustee shall authenticate and deliver the Security issuable on
such exchange to or upon the order of the Depositary or an authorized
representative thereof.

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

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

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

Section 2.13. CUSIP NUMBERS.

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

 

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Section 2.14. WITHHOLDING TAXES.

The Company or any agent of the Company shall be entitled to deduct and withhold
amounts required to be deducted and withheld under the Internal Revenue Code of
1986, as amended, or any provision of any federal, state, local or foreign tax
law. To the extent that amounts are so deducted and withheld, such deducted and
withheld amounts shall be treated for all purposes of this Indenture as having
been paid to such holder in respect of whom such deduction and withholding was
made.

ARTICLE 3.

PURCHASE OF SECURITIES AT OPTION OF THE HOLDER UPON CHANGE IN CONTROL

Section 3.1. PURCHASE OF SECURITIES AT OPTION OF THE HOLDER UPON CHANGE IN
CONTROL.

(a) If at any time that Securities remain outstanding there shall occur a Change
in Control, Securities shall be purchased by the Company at the option of the
Holders, as of the date that is 30 Business Days after the occurrence of the
Change in Control (the “Change in Control Purchase Date”) at a purchase price
equal to 100% of the principal amount of the Securities to be repurchased,
together with accrued and unpaid interest (including any Extension Fee), if any,
to, but excluding, the Change in Control Purchase Date (the “Change in Control
Purchase Price”), subject to satisfaction by or on behalf of any Holder of the
requirements set forth in subsection (c) of this Section 3.1.

A “Change in Control” shall be deemed to have occurred if any of the following
occurs after the date hereof:

(1) any “person” or “group” (as such terms are defined below) is or becomes the
“beneficial owner” (as defined below), directly or indirectly, of shares of
Voting Stock of the Company representing 50% or more of the total voting power
of all outstanding Voting Stock of the Company or has the power, directly or
indirectly, to elect a majority of the members of the Board of Directors of the
Company; or

(2) the Company consolidates with, or merges with or into, another Person or the
Company sells, assigns, conveys, transfers, leases or otherwise disposes of all
or substantially all of the assets of the Company, or any Person consolidates
with, or merges with or into, the Company, in any such event other than pursuant
to a transaction in which the Persons that “beneficially owned” (as defined
below), directly or indirectly, shares of Voting Stock of the Company
immediately prior to such transaction “beneficially own” (as defined below),
directly or indirectly, shares of Voting Stock of the Company representing at
least a majority of the total voting power of all outstanding Voting Stock of
the surviving or transferee Person;

 

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(3) the holders of capital stock of the Company approve any plan or proposal for
the liquidation or dissolution of the Company (whether or not otherwise in
compliance with the terms hereof); or

(4) any time the Continuing Directors do not constitute a majority of the Board
of Directors.

For the purpose of the definition of “Change in Control,” (i) “person” and
“group” have the meanings given such terms under Section 13(d) and 14(d) of the
Exchange Act or any successor provision to either of the foregoing, and the term
“group” includes any group acting for the purpose of acquiring, holding or
disposing of securities within the meaning of Rule 13d-5(b)( 1) under the
Exchange Act (or any successor provision thereto), (ii) a “beneficial owner”
shall be determined in accordance with Rule 13d-3 under the Exchange Act, as in
effect on the date of this Indenture, except that the number of shares of Voting
Stock of the Company shall be deemed to include, in addition to all outstanding
shares of Voting Stock of the Company and Unissued Shares deemed to be held by
the “person” or “group” (as such terms are defined above) or other Person with
respect to which the Change in Control determination is being made, all Unissued
Shares deemed to be held by all other Persons, and (iii) the terms “beneficially
owned” and “beneficially own” shall have meanings correlative to that of
“beneficial owner.” The term “Unissued Shares” means shares of Voting Stock not
outstanding that are subject to options, warrants, rights to purchase or
conversion privileges exercisable within 60 days of the date of determination of
a Change in Control.

Notwithstanding anything to the contrary set forth in this Section 3.1, a Change
in Control under (1) or (2) above will not be deemed to have occurred if in the
case of a merger or consolidation, all of the consideration (excluding cash
payments for fractional shares and cash payments pursuant to dissenters’
appraisal rights) in the merger or consolidation constituting the Change in
Control consists of common stock traded on a United States national securities
exchange or listed on the Nasdaq Global Market (or which will be so traded or
listed when issued or exchanged in connection with such Change in Control) and
as a result of such transaction or transactions the Securities become
convertible solely into such common stock.

(b) Within 10 Business Days after the occurrence of a Change in Control, the
Company shall mail a written notice of the Change in Control to the Trustee and
to each Holder (and to beneficial owners as required by applicable law). The
notice shall include the form of a Change in Control Purchase Notice to be
completed by the Holder and shall state:

(1) the date of such Change in Control and, briefly, the events causing such
Change in Control;

(2) the date by which the Change in Control Purchase Notice pursuant to this
Section 3.1 must be given;

(3) the Change in Control Purchase Date;

(4) the Change in Control Purchase Price;

 

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(5) the Holder’s right to require the Company to purchase the Securities;

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

(7) the name and address of each Paying Agent and Conversion Agent;

(8) the Conversion Price and any adjustments thereto;

(9) that Securities as to which a Change in Control Purchase Notice has been
given may be converted into Common Stock pursuant to Article 4 of this Indenture
only to the extent that the Change in Control Purchase Notice has been withdrawn
in accordance with the terms of this Indenture;

(10) the procedures that the Holder must follow to exercise rights under this
Section 3.1;

(11) the procedures for withdrawing a Change in Control Purchase Notice,
including a form of notice of withdrawal;

and

(12) that the Holder must satisfy the requirements set forth in the Securities
in order to convert the Securities.

If any of the Securities is in the form of a Global Security, then the Company
shall modify such notice to the extent necessary to accord with the procedures
of the Depositary applicable to the repurchase of Global Securities.

(c) A Holder may exercise its rights specified in subsection (a) of this
Section 3.1 upon delivery of a written notice (which shall be in substantially
the form included in Exhibit A hereto and which may be delivered by letter,
overnight courier, hand delivery, facsimile transmission or in any other written
form and, in the case of Global Securities, may be delivered electronically or
by other means in accordance with the Depositary’s customary procedures) of the
exercise of such rights (a “Change in Control Purchase Notice”) to any Paying
Agent at any time prior to the close of business on the Business Day next
preceding the Change in Control Purchase Date.

The delivery of such Security to any Paying Agent (together with all necessary
endorsements) at the office of such Paying Agent shall be a condition to the
receipt by the Holder of the Change in Control Purchase Price therefor.

The Company shall purchase from the Holder thereof, pursuant to this
Section 3.1, a portion of a Security if the principal amount of such portion is
$1,000 or an integral multiple of $1,000. Provisions of the Indenture that apply
to the purchase of all of a Security pursuant to Sections 3.1 through 3.6 also
apply to the purchase of such portion of such Security.

 

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Notwithstanding anything herein to the contrary, any Holder delivering to a
Paying Agent the Change in Control Purchase Notice contemplated by this
subsection (c) shall have the right to withdraw such Change in Control Purchase
Notice in whole or in a portion thereof that is a principal amount of $1,000 or
in an integral multiple thereof at any time prior to the close of business on
the Business Day next preceding the Change in Control Purchase Date by delivery
of a written notice of withdrawal to the Paying Agent in accordance with
Section 3.2.

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

Anything herein to the contrary notwithstanding, in the case of Global
Securities, any Change in Control Purchase Notice may be delivered or withdrawn
and such Securities may be surrendered or delivered for purchase in accordance
with the Applicable Procedures as in effect from time to time.

Section 3.2. EFFECT OF CHANGE IN CONTROL PURCHASE NOTICE.

Upon receipt by any Paying Agent of the Change in Control Purchase Notice
specified in Section 3.1(c), the Holder of the Security in respect of which such
Change in Control Purchase Notice was given shall (unless such Change in Control
Purchase Notice is withdrawn as specified below) thereafter be entitled to
receive the Change in Control Purchase Price with respect to such Security. Such
Change in Control Purchase Price shall be paid to such Holder promptly following
the later of (a) the Change in Control Purchase Date with respect to such
Security (provided the conditions in Section 3.1(c) have been satisfied) and
(b) the time of delivery of such Security to a Paying Agent by the Holder
thereof in the manner required by Section 3.1(c). Securities in respect of which
a Change in Control Purchase Notice has been given by the Holder thereof may not
be converted into shares of Common Stock pursuant to Article 4 on or after the
date of the delivery of such Change in Control Purchase Notice unless such
Change in Control Purchase Notice has first been validly withdrawn.

A Change in Control Purchase Notice may be withdrawn by means of a written
notice (which may be delivered by mail, overnight courier, hand delivery,
facsimile transmission or in any other written form and, in the case of Global
Securities, may be delivered electronically or by other means in accordance with
the Depositary’s customary procedures) of withdrawal delivered by the Holder to
a Paying Agent at any time prior to the close of business on the Business Day
immediately preceding the Change in Control Purchase Date, specifying the
principal amount of the Security or portion thereof (which must be a principal
amount of $1,000 or an integral multiple of $1,000 in excess thereof) with
respect to which such notice of withdrawal is being submitted.

Section 3.3. DEPOSIT OF CHANGE IN CONTROL PURCHASE PRICE.

On or before 11:00 a.m. New York City time on the Change in Control Purchase
Date, the Company shall deposit with the Trustee or with a Paying Agent (other
than the Company or an Affiliate of the Company) an amount of money (in
immediately available funds if deposited on such

 

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Change in Control Purchase Date) sufficient to pay the aggregate Change in
Control Purchase Price of all the Securities or portions thereof that are to be
purchased as of such Change in Control Purchase Date. The manner in which the
deposit required by this Section 3.3 is made by the Company shall be at the
option of the Company, provided that such deposit shall be made in a manner such
that the Trustee or a Paying Agent shall have immediately available funds on the
Change in Control Purchase Date.

If a Paying Agent holds, in accordance with the terms hereof, money sufficient
to pay the Change in Control Purchase Price of any Security for which a Change
in Control Purchase Notice has been tendered and not withdrawn in accordance
with this Indenture then, on the Change in Control Purchase Date, such Security
will cease to be outstanding and the rights of the Holder in respect thereof
shall terminate (other than the right to receive the Change in Control Purchase
Price as aforesaid). The Company shall publicly announce the principal amount of
Securities purchased as a result of such Change in Control on or as soon as
practicable after the Change in Control Purchase Date.

Section 3.4. SECURITIES PURCHASED IN PART.

Any Security that is to be purchased only in part shall be surrendered at the
office of a Paying Agent, and promptly after the Change in Control Purchase Date
the Company shall execute and the Trustee shall authenticate and deliver to the
Holder of such Security, without service charge, a new Security or Securities,
of such authorized denomination or denominations as may be requested by such
Holder, in aggregate principal amount equal to, and in exchange for, the portion
of the principal amount of the Security so surrendered that is not purchased.

Section 3.5. COMPLIANCE WITH SECURITIES LAWS UPON PURCHASE OF SECURITIES.

In connection with any offer to purchase or purchase of Securities under
Section 3.1, the Company shall (a) comply with Rule 13e-4 and Rule 14e-1 (or any
successor to either such Rule), if applicable, under the Exchange Act, (b) file
the related Schedule TO (or any successor or similar schedule, form or report)
if required under the Exchange Act, and (c) otherwise comply with all federal
and state securities laws in connection with such offer to purchase or purchase
of Securities, all so as to permit the rights of the Holders and obligations of
the Company under Sections 3.1 through 3.4 to be exercised in the time and in
the manner specified therein.

Section 3.6. REPAYMENT TO THE COMPANY.

To the extent that the aggregate amount of cash deposited by the Company
pursuant to Section 3.3 exceeds the aggregate Change in Control Purchase Price
together with interest (including any Extension Fee), if any, thereon of the
Securities or portions thereof that the Company is obligated to purchase, then
promptly after the Change in Control Purchase Date the Trustee or a Paying
Agent, as the case may be, shall return any such excess cash to the Company.

 

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ARTICLE 4.

CONVERSION

Section 4.1. CONVERSION PRIVILEGE.

(a) Subject to the other provisions of this Article 4, and upon compliance with
the provisions of this Indenture, each Holder shall have the right, at his or
her option, at any time on or before the close of business on the last Business
Day prior to the Final Maturity Date (except that, with respect to any Security
or portion thereof subject to a duly completed election for repurchase in
connection with a Change in Control, such right shall terminate at the close of
business on the last Business Day prior to the Change in Control Purchase Date
(unless the Company defaults in the payment due upon such repurchase, or such
Holder elects to withdraw the submission of such election to repurchase in
accordance with Section 3.1(c))) to convert the principal amount of any Security
held by such Holder, or any portion of such principal amount which is $1,000 or
an integral multiple thereof, into that number of fully paid and non-assessable
shares of Common Stock obtained by dividing the principal amount of the Security
or portion thereof to be converted by the Conversion Price in effect at such
time.

(b) The conversion rights pursuant to this Article 4 shall commence on the
initial issuance date of the Securities and expire at the close of business on
the Business Day immediately preceding the Final Maturity Date. If a Security is
submitted or presented for purchase upon a Change in Control pursuant to
Section 3.1, such conversion right shall terminate at the close of business on
the Business Day immediately preceding the Change in Control Purchase Date, as
applicable, for such Security (unless the Company shall default in the payment
due upon such repurchase, in which case the conversion right shall terminate at
the close of business on the date such failure is cured and such Security is
purchased). Securities in respect of which a Change in Control Purchase Notice
has been delivered may not be surrendered for conversion pursuant to this
Article 4 prior to a valid withdrawal of such Change in Control Purchase Notice
in accordance with the provisions of Section 3.1(c).

(c) Provisions of this Indenture that apply to conversion of all of a Security
also apply to conversion of a portion of a Security.

(d) A Holder of Securities is not entitled to any rights of a holder of Common
Stock until such holder has converted its Securities into Common Stock, and only
to the extent such Securities are deemed to have been converted into Common
Stock pursuant to this Article 4.

(e) If there shall have occurred a Change in Control, then the Conversion Rate
per $1,000 principal amount of Securities otherwise in effect in respect of
Securities for which a conversion notice is received by the Conversion Agent
during the period beginning 15 Trading Days before the date announced by the
Company as the anticipated Change in Control Date and ending at the close of
business on the Trading Day immediately preceding the Change in Control Purchase
Date shall be increased by the amount, if any, determined by reference to the
table below, based on the Change in Control Date and the Stock Price of such
Change in Control; provided that if the Stock

 

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Price or Change in Control Date are not set forth on the table: (i) if the
actual Stock Price on the Change in Control Date is between two Stock Prices on
the table or the actual Change in Control Date is between two Change in Control
Dates on the table, the amount of the Conversion Rate adjustment will be
determined by a straight-line interpolation between the adjustment amounts set
forth for the two Stock Prices and the two Change in Control Dates on the table
based on a 365-day year, as applicable, (ii) if the Stock Price on the Change in
Control Date exceeds $15.00 per share, subject to adjustment as set forth
herein, no adjustment to the applicable Conversion Rate will be made, and
(iii) if the Stock Price on the Change in Control Date is less than $1.56 per
share, subject to adjustment as set forth herein, no adjustment to the
applicable Conversion Rate will be made. If holders of the Common Stock receive
only cash in the Change in Control, the Stock Price shall be the cash amount
paid per share of the Common Stock in connection with the Change in Control.
Otherwise, the Stock Price shall be equal to the Volume Weighted Average Price
of the Common Stock for each of the 10 Trading Days immediately preceding, but
not including, the applicable Change in Control Date.

The following table shows the amount, if any, by which the applicable Conversion
Rate will increase for each Stock Price and Change in Control Date set forth
below:

Make Whole Premium Upon a Change in Control

(Increase in Applicable Conversion Rate)

 

Stock Price on

Effective Date

 

September 4,

2009

 

May 15,

2010

 

May 15,

2011

 

May 15,

2012

 

May 15,

2013

 

May 15,

2014

$1.56

  106.8376   106.8376   106.8376   106.8376   106.8376   106.8376

$2.00

    83.6605     80.8970     75.45 10     65.9380     46.6330       0.0000

$3.00

    41.2887     38.5927     33.1737     24.4473     10.1153       0.0000

$4.00

    24.0040     22.1040     18.3975     12.7523       4.5658       0.0000

$5.00

    15.0028     13.7108     11.2866       7.7436       2.8482       0.0000

$6.00

      9.6662       8.7822       7.1962       4.9527       1.8930       0.0000

$7.00

      6.2590       5.6469       4.6039       3.1706       1.2334       0.0000

$8.00

      3.9873       3.5609       2.8749       1.9586       0.7416       0.0000

$9.00

      2.4389       2.1380       1.6908       1.1104       0.3601       0.0000

$10.00

      1.3828       1.1554       0.8702       0.5119       0.0730       0.0000

$15.00

      0.0000       0.0000       0.0000       0.0000       0.0000       0.0000

The Stock Prices set forth in the first column of the table above will be
adjusted as of any date on which the Conversion Rate of the Securities is
adjusted. The adjusted Stock Prices will equal the Stock Prices applicable
immediately prior to such adjustment multiplied by a fraction, the numerator of
which is the Conversion Rate immediately prior to the adjustment giving rise to
the Stock Price adjustment and the denominator of which is the Conversion Rate
as so adjusted. The Conversion Rate adjustment amounts set forth in the table
above will be adjusted in the same manner as the Conversion Rate as set forth in
Section 4.6 hereof, other than as a result of an adjustment of the Conversion
Rate by virtue of the provisions of this Section 4.1(e).

 

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Notwithstanding the foregoing, in no event will the Conversion Price be reduced
to less than $1.56, other than on account of proportional adjustments to the
Conversion Price in the manner set forth in Section 4.6 below.

(f) Except as set forth in Section 4.2, by delivering the number of shares of
Common Stock issuable on conversion to the Trustee, the Company will be deemed
to have satisfied its obligation to pay the principal amount of the Securities
so converted and its obligation to pay accrued and unpaid interest attributable
to the period from the most recent Interest Payment Date through the Conversion
Date (which amount will be deemed paid in full rather than cancelled,
extinguished or forfeited).

(g) If a Holder has delivered a Notice that it wishes to have its Securities
repurchased in accordance with Section 3.1, the Holder may not surrender such
Security for conversion until the holder has withdrawn such notice in accordance
with Section 3.1(c).

Section 4.2. CONVERSION PROCEDURE.

To convert a Security, a Holder must (a) complete and manually sign the
conversion notice on the back of the Security and deliver such notice to a
Conversion Agent, (b) surrender the Security to a Conversion Agent, (c) furnish
appropriate endorsements and transfer documents if required by a Registrar or a
Conversion Agent, and (d) pay any transfer or similar tax, if required. The date
on which the Holder satisfies all of those requirements is the “Conversion
Date.” As soon as practicable after the later of the Conversion Date and the
date all calculations necessary to make such delivery have been made, but in no
event later than five Trading Days after the later of such dates, the Company
shall (i) pay to the Holders the cash in respect of any fractional interest in
respect of a share of Common Stock arising upon such conversion and (ii) issue
and shall deliver to such Holder at the office or agency maintained by the
Company for such purpose, a certificate or certificates for the number of whole
shares of Common Stock issuable upon the conversion. Anything herein to the
contrary notwithstanding, in the case of Global Securities, conversion notices
may be delivered and such Securities may be surrendered for conversion in
accordance with the Applicable Procedures as in effect from time to time.

The person in whose name the Common Stock certificate is registered shall be
deemed to be a stockholder of record on the Conversion Date; provided, however,
that no surrender of a Security on any date when the stock transfer books of the
Company shall be closed shall be effective to constitute the person or persons
entitled to receive the shares of Common Stock upon such conversion as the
record holder or holders of such shares of Common Stock on such date, but such
surrender shall be effective to constitute the person or persons entitled to
receive such shares of Common Stock as the record holder or holders thereof for
all purposes at the close of business on the next succeeding day on which such
stock transfer books are open; provided, further, that such conversion shall be
at the Conversion Price in effect on the Conversion Date as if the stock
transfer

 

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books of the Company had not been closed. Upon conversion of a Security, such
person shall no longer be a Holder of such Security. No payment or adjustment
will be made for dividends or distributions on shares of Common Stock issued
upon conversion of a Security.

Securities so surrendered for conversion (in whole or in part) during the period
from the close of business on any Record Date to the opening of business on the
next succeeding Interest Payment Date, if any (excluding Securities or portions
thereof presented for purchase upon a Change in Control on a Change in Control
Purchase Date during the period beginning at the close of business on a Record
Date and ending at the opening of business on the first Business Day after the
next succeeding Interest Payment Date, if any, or if such Interest Payment Date,
if any, is not a Business Day, the second such Business Day) shall also be
accompanied by payment in funds acceptable to the Company of an amount equal to
the interest (including any Extension Fee), if any, payable on such Interest
Payment Date on the principal amount of such Security then being converted, and
such interest (including any Extension Fee), if any, shall be payable to such
registered Holder notwithstanding the conversion of such Security, subject to
the provisions of this Indenture relating to the payment of defaulted interest,
if any, by the Company. Except as otherwise provided in this Section 4.2, no
payment or adjustment will be made for accrued interest (including any Extension
Fee), if any, on a converted Security. If the Company defaults in the payment of
interest (including any Extension Fee), if any, payable on such Interest Payment
Date, the Company shall promptly repay such funds to such Holder.

Nothing in this Section shall affect the right of a Holder in whose name any
Security is registered at the close of business on a record date to receive the
interest (including any Extension Fee), if any, payable on such Security on the
related Interest Payment Date, if any, in accordance with the terms of this
Indenture and the Securities. If a Holder converts more than one Security at the
same time, the number of shares of Common Stock issuable upon the conversion
shall be based on the aggregate principal amount of Securities converted.

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

Upon the Company’s determination that a holder is or will be entitled to convert
its Securities into shares of Common Stock pursuant to this Article 4, the
Company will promptly notify such Holder in the manner provided in Section 11.2
of this Indenture.

Section 4.3. FRACTIONAL SHARES.

The Company will not issue fractional shares of Common Stock upon conversion of
Securities. In lieu thereof, the Company will pay an amount in cash for the
current market value of the fractional shares. The current market value of a
fractional share shall be determined (calculated to the nearest 1/1000th of a
share) by multiplying the Closing Price (determined as set forth in
Section 4.6(d)) of the Common Stock on the Trading Day immediately prior to the
Conversion Date by such fractional share and rounding the product to the nearest
whole cent.

 

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Section 4.4. TAXES ON CONVERSION.

If a Holder converts a Security, the Company shall pay any documentary, stamp or
similar issue or transfer tax due on the issue of shares of Common Stock upon
such conversion. However, the Holder shall pay any such tax which is due because
the Holder requests the shares to be issued in a name other than the Holder’s
name. The Conversion Agent may refuse to deliver the certificate representing
the Common Stock being issued in a name other than the Holder’s name until the
Conversion Agent receives a sum sufficient to pay any tax which will be due
because the shares are to be issued in a name other than the Holder’s name.
Nothing herein shall preclude any tax withholding required by law or regulation.

Section 4.5. COMPANY TO PROVIDE STOCK.

The Company shall, prior to issuance of any Securities hereunder, and from time
to time as may be necessary, reserve, out of its authorized but unissued Common
Stock, a sufficient number of shares of Common Stock to permit the conversion of
all outstanding Securities into shares of Common Stock.

All shares of Common Stock delivered upon conversion of the Securities shall be
newly issued shares, shall be duly authorized, validly issued, fully paid and
nonassessable and shall be free from preemptive or similar rights and free of
any lien or adverse claim.

The Company will endeavor promptly to comply with all federal and state
securities laws regulating the offer and delivery of shares of Common Stock upon
conversion of Securities, if any, and will list or cause to have quoted such
shares of Common Stock on each national securities exchange or on the Nasdaq
Global Market or other over-the-counter market or such other market on which the
Common Stock is then listed or quoted; provided, however, that if rules of such
automated quotation system or exchange permit the Company to defer the listing
of such Common Stock until the first conversion of the Securities into Common
Stock in accordance with the provisions of this Indenture, the Company covenants
to list such Common Stock issuable upon conversion of the Securities in
accordance with the requirements of such automated quotation system or exchange
at such time.

Section 4.6. ADJUSTMENT OF CONVERSION PRICE.

The conversion price as stated in paragraph 6 of the Securities (the “Conversion
Price”) shall be adjusted from time to time by the Company as follows:

(a) In case the Company shall (i) pay a dividend on its Common Stock in shares
of Common Stock, (ii) make a distribution on its Common Stock in shares of
Common Stock, (iii) subdivide its outstanding Common Stock into a greater number
of shares, or (iv) combine its outstanding Common Stock into a smaller number of
shares, the Conversion Price in effect immediately prior thereto shall be
adjusted so that the Holder of any Security thereafter surrendered for
conversion shall be entitled to receive that number of shares of Common Stock
which it would have owned had such Security been converted immediately prior to
the happening of such event. An

 

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adjustment made pursuant to this subsection (a) shall become effective
immediately after the record date in the case of a dividend or distribution and
shall become effective immediately after the effective date in the case of
subdivision or combination.

(b) In case the Company shall issue rights or warrants to all or substantially
all holders of its Common Stock entitling them (for a period of not more than 60
days after such issuance) to subscribe for or purchase shares of Common Stock
(or securities convertible into Common Stock) at a price per share (or having a
Conversion Price per share) less than the Current Market Price per share of
Common Stock (as determined in accordance with subsection (f) of this
Section 4.6) on the record date for the determination of stockholders entitled
to receive such rights or warrants, the Conversion Price in effect immediately
prior thereto shall be adjusted so that the same shall equal the price
determined by multiplying the Conversion Price in effect immediately prior to
such record date by a fraction of which the numerator shall be the number of
shares of Common Stock outstanding on such record date plus the number of shares
which the aggregate offering price of the total number of shares of Common Stock
so offered (or the aggregate conversion price of the convertible securities so
offered, which shall be determined by multiplying the number of shares of Common
Stock issuable upon conversion of such convertible securities by the conversion
price per share of Common Stock pursuant to the terms of such convertible
securities) would purchase at the Current Market Price per share (as defined in
subsection (f) of this Section 4.6) of Common Stock on such record date, and of
which the denominator shall be the number of shares of Common Stock outstanding
on such record date plus the number of additional shares of Common Stock offered
(or into which the convertible securities so offered are convertible). Such
adjustment shall be made successively whenever any such rights or warrants are
issued, and shall become effective immediately after such record date. If at the
end of the period during which such rights or warrants are exercisable not all
rights or warrants shall have been exercised, the adjusted Conversion Price
shall be immediately readjusted to what it would have been based upon the number
of additional shares of Common Stock actually issued (or the number of shares of
Common Stock issuable upon conversion of convertible securities actually
issued).

(c) In case the Company shall distribute to all or substantially all holders of
its Common Stock any shares of capital stock of the Company (other than Common
Stock), evidences of indebtedness or other non-cash assets (including securities
of any person other than the Company but excluding (1) dividends or
distributions paid exclusively in cash or (2) dividends or distributions
referred to in subsection (a) of this Section 4.6), or shall distribute to all
or substantially all holders of its Common Stock rights or warrants to subscribe
for or purchase any of its securities (excluding those rights and warrants
referred to in subsection (b) of this Section 4.6 and also excluding the
distribution of rights to all holders of Common Stock pursuant to a Rights Plan
(as defined below) adopted before or after the date of this Indenture), then in
each such case the Conversion Price shall be adjusted so that the same shall
equal the price determined by multiplying the current Conversion Price by a
fraction of which the numerator shall be the Current Market Price per share (as
defined in subsection (f) of this Section 4.6) of the Common Stock on the record
date mentioned below less the fair market value on such record date (as
determined by the Board of Directors, whose determination shall be conclusive
evidence of such fair market value and which shall be evidenced by an Officers’
Certificate delivered to the Trustee) of the portion of the capital stock,
evidences of indebtedness or

 

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other non-cash assets so distributed or of such rights or warrants applicable to
one share of Common Stock (determined on the basis of the number of shares of
Common Stock outstanding on the record date), and of which the denominator shall
be the Current Market Price per share (as defined in subsection (f) of this
Section 4.6) of the Common Stock on such record date. Such adjustment shall be
made successively whenever any such distribution is made and shall become
effective immediately after the record date for the determination of
stockholders entitled to receive such distribution.

In the event the then fair market value (as so determined) of the portion of the
capital stock, evidences of indebtedness or other non-cash assets so distributed
or of such rights or warrants applicable to one share of Common Stock is equal
to or greater than the Current Market Price per share of the Common Stock on
such record date, in lieu of the foregoing adjustment, adequate provision shall
be made so that each holder of a Security shall have the right to receive upon
conversion the amount of capital stock, evidences of indebtedness or other
non-cash assets so distributed or of such rights or warrants such holder would
have received had such holder converted each Security on such 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
Board of Directors determines the fair market value of any distribution for
purposes of this Section 4.6(c) 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.

With respect to any rights (the “Rights”) that may be issued or distributed
pursuant to any rights plan that the Company implements after the date of this
Indenture (any Rights that may be issued pursuant to any such future rights plan
being referred to as, a “Rights Plan”), upon conversion of the Securities into
Common Stock, to the extent that such Rights Plan is in effect upon such
conversion, the holders of Securities will receive, in addition to the Common
Stock, the Rights described therein (whether or not the Rights have separated
from the Common Stock at the time of conversion), subject to the limitations set
forth in any such Rights Plan. Any distribution of rights or warrants pursuant
to a Rights Plan complying with the requirements set forth in the immediately
preceding sentence of this paragraph shall not constitute a distribution of
rights or warrants pursuant to this Section 4.6(c).

Rights or warrants (other than rights issued pursuant to a Rights Plan)
distributed by the Company to all holders of Common Stock entitling the holders
thereof to subscribe for or purchase shares of the Company’s Capital Stock
(either initially or under certain circumstances), which rights or warrants,
until the occurrence of a specified event or events (“Trigger Event”): (i) are
deemed to be transferred with such shares of Common Stock; (ii) are not
exercisable; and (iii) are also issued in respect of future issuances of Common
Stock, shall be deemed not to have been distributed for purposes of this
Section 4.6 (and no adjustment to the Conversion Price under this Section 4.6
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 4.6(c). 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,

 

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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 4.6
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 Common Stock with respect to such
rights or warrants (assuming such holder had retained such rights or warrants),
made to all holders of Common Stock as of the date of such redemption or
repurchase, and (2) in the case of such rights or warrants 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.

(d) In case the Company shall, by dividend or otherwise, at any time distribute
(a “Triggering Distribution”) to all or substantially all holders of its Common
Stock cash, the Conversion Price shall be reduced so that the same shall equal
the price determined by multiplying such Conversion Price in effect immediately
prior to the open of business on the day on which such Triggering Distribution
is declared by the Company (the “Determination Date”) by a fraction of which the
numerator shall be the Current Market Price per share of the Common Stock (as
determined in accordance with subsection (f) of this Section 4.6) on the
Determination Date less the sum of the aggregate amount of cash and the
aggregate fair market value (determined as aforesaid in this Section 4.6(d)) of
any such other consideration so distributed, paid or payable (including, without
limitation, the Triggering Distribution) applicable to one share of Common Stock
(determined on the basis of the number of shares of Common Stock outstanding on
the Determination Date) and the denominator shall be such Current Market Price
per share of the Common Stock (as determined in accordance with subsection
(f) of this Section 4.6) on the Determination Date, such reduction to become
effective immediately prior to the opening of business on the day following the
date on which the Triggering Distribution is paid.

(e) In case any tender offer made by the Company or any of its Subsidiaries for
Common Stock shall expire and such tender offer (as amended upon the expiration
thereof), then, immediately prior to the opening of business on the day after
the last date (the “Expiration Date”) tenders could have been made pursuant to
such tender offer (as it may be amended) (the last time at which such tenders
could have been made on the Expiration Date is hereinafter sometimes called 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 close of business on the Expiration Date by a fraction
of which the numerator shall be the product of the number of shares of Common
Stock outstanding (including tendered shares but excluding any shares held in
the treasury of the Company) at the Expiration Time multiplied by the Current
Market Price per share of

 

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the Common Stock (as determined in accordance with subsection (f) of this
Section 4.6) on the Trading Day next succeeding the Expiration Date and the
denominator shall be the sum of (x) the aggregate consideration (determined as
aforesaid) payable to stockholders based on the acceptance (up to any maximum
specified in the terms of the tender offer) of all shares validly tendered 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 and excluding any shares held in the treasury of the Company) at the
Expiration Time and the Current Market Price per share of Common Stock (as
determined in accordance with subsection (f) of this Section 4.6) on the Trading
Day next succeeding the Expiration Date, such reduction to become effective
immediately prior to the opening of business on the day following the Expiration
Date. In the event that the Company is obligated to purchase shares pursuant to
any such tender offer, but the Company is permanently prevented by applicable
law from effecting any or all such purchases or any or all such purchases are
rescinded, the Conversion Price shall again be adjusted to be the Conversion
Price which would have been in effect based upon the number of shares actually
purchased. If the application of this Section 4.6(e) to any tender offer would
result in an increase in the Conversion Price, no adjustment shall be made for
such tender offer under this Section 4.6(e).

For purposes of this Section 4.6(e), the term “tender offer” shall mean and
include both tender offers and exchange offers, all references to “purchases” of
shares in tender offers (and all similar references) shall mean and include both
the purchase of shares in tender offers and the acquisition of shares pursuant
to exchange offers, and all references to “tendered shares” (and all similar
references) shall mean and include shares tendered in both tender offers and
exchange offers.

(f) For the purpose of any computation under subsections (b), (c), (d) and
(e) of this Section 4.6, the current market price (the “Current Market Price”)
per share of Common Stock on any date shall be deemed to be the average of the
daily closing prices for the 30 consecutive Trading Days commencing 45 Trading
Days before (i) the Determination Date or the Expiration Date, as the case may
be, with respect to distributions or tender offers under subsection (c) of this
Section 4.6 or (ii) the record date with respect to distributions, issuances or
other events requiring such computation under subsection (b), (c), (d) or (e) of
this Section 4.6. If no such prices are available, the Current Market Price per
share shall be the fair value of a share of Common Stock as determined in good
faith by the Board of Directors (which shall be evidenced by an Officers’
Certificate delivered to the Trustee).

(g) In any case in which this Section 4.6 shall require that an adjustment be
made following a record date or a Determination Date or Expiration Date, as the
case may be, established for purposes of this Section 4.6, the Company may elect
to defer (but only until five Business Days following the filing by the Company
with the Trustee of the certificate described in Section 4.9) issuing to the
Holder of any Security converted after such record date or Determination Date or
Expiration Date the shares of Common Stock and other capital stock of the
Company issuable upon such conversion over and above the shares of Common Stock
and other capital stock of the Company issuable upon such conversion only on the
basis of the Conversion Price prior to adjustment; and, in lieu of the shares
the issuance of which is so deferred, the Company shall issue

 

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or cause its transfer agents to issue due bills or other appropriate evidence
prepared by the Company of the right to receive such shares. If any distribution
in respect of which an adjustment to the Conversion Price is required to be made
as of the record date or Determination Date or Expiration Date therefor is not
thereafter made or paid by the Company for any reason, the Conversion Price
shall be readjusted to the Conversion Price which would then be in effect if
such record date had not been fixed or such effective date or Determination Date
or Expiration Date had not occurred.

Section 4.7. NO ADJUSTMENT.

No adjustment in the Conversion Price shall be required if Holders may
participate in the transactions set forth in Section 4.6 above without
converting.

The Company shall not take any voluntary action to decrease the Conversion Price
of the Securities pursuant to Section 4.6(d) or Section 4.6(e) without complying
with the shareholder approval rules of The Nasdaq Global Market (including
Market Rule 5635) and any other stock exchange on which the Company’s Common
Stock is listed at the relevant time.

No adjustment in the Conversion Price shall be required unless the adjustment
would require an increase or decrease of at least 1% in the Conversion Price as
last adjusted; provided, however, that any adjustments which by reason of this
Section 4.7 are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Article 4
shall be made to the nearest cent or to the nearest one-hundredth of a share, as
the case may be.

No adjustment need be made for issuances of Common Stock pursuant to a Company
plan for reinvestment of dividends or interest or for a change in the par value
or a change to no par value of the Common Stock.

Section 4.8. ADJUSTMENT FOR TAX PURPOSES.

The Company shall be entitled to make such reductions in the Conversion Price,
in addition to those required by Section 4.6, as it in its discretion shall
determine to be advisable in order that any stock dividends, subdivisions of
shares, distributions of rights to purchase stock or securities or distributions
of securities convertible into or exchangeable for stock hereafter made by the
Company to its stockholders shall not be taxable.

Section 4.9. NOTICE OF ADJUSTMENT.

Whenever the Conversion Price or conversion privilege is adjusted, the Company
shall promptly mail to Holders a notice of the adjustment and file with the
Trustee an Officers’ Certificate briefly stating the facts requiring the
adjustment and the manner of computing it. Unless and until the Trustee shall
receive an Officers’ Certificate setting forth an adjustment of the Conversion
Price, the Trustee may assume without inquiry that the Conversion Price has not
been adjusted and that the last Conversion Price of which it has knowledge
remains in effect.

 

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Section 4.10. NOTICE OF CERTAIN TRANSACTIONS.

In the event that:

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

(2) the Company consolidates or merges with, or transfers all or substantially
all of its property and assets to, another corporation and stockholders of the
Company must approve the transaction; or

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

the Company shall mail to Holders and file with the Trustee a notice stating the
proposed record or effective date, as the case may be. The Company shall mail
the notice at least ten days before such date. Failure to mail such notice or
any defect therein shall not affect the validity of any transaction referred to
in clause (1), (2) or (3) of this Section 4.10.

Section 4.11. EFFECT OF RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE ON
CONVERSION PRIVILEGE.

If any of the following shall occur, namely: (a) any reclassification or change
of shares of Common Stock issuable upon conversion of the Securities (other than
a change in par value, or from par value to no par value, or from no par value
to par value, or as a result of a subdivision or combination, or any other
change for which an adjustment is provided in Section 4.6); (b) any
consolidation or merger or combination to which the Company is a party other
than a merger in which the Company is the continuing corporation and which does
not result in any reclassification of, or change (other than in par value, or
from par value to no par value, or from no par value to par value, or as a
result of a subdivision or combination) in, outstanding shares of Common Stock;
or (c) any sale or conveyance as an entirety or substantially as an entirety of
the property and assets of the Company, directly or indirectly, to any person,
then the Company, or such successor, purchasing or transferee corporation, as
the case may be, shall, as a condition precedent to such reclassification,
change, combination, consolidation, merger, sale or conveyance, execute and
deliver to the Trustee a supplemental indenture providing that the Holder of
each Security then outstanding shall have the right to convert such Security
into the kind and amount of shares of stock and other securities and property
(including cash) receivable upon such reclassification, change, combination,
consolidation, merger, sale or conveyance by a Holder of the number of shares of
Common Stock deliverable upon conversion of such Security immediately prior to
such reclassification, change, combination, consolidation, merger, sale or
conveyance. In the event holders of Common Stock have the opportunity to elect
the form of consideration to be received in such reclassification, change,
combination, consolidation, merger, sale or conveyance, the Company will make
adequate provision whereby the Holders of the Securities shall have the
opportunity, on a timely basis, to determine the form of consideration into
which all of the Securities, treated as a single class, shall be convertible.
The form of consideration into which all of the Securities, treated as a single
class, shall be convertible, shall be determined by the Holders of a majority of
the Securities (based on principal

 

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amount outstanding thereunder) who have made an election as to such form of
consideration and shall be subject to any limitations to which all of the
holders of Common Stock are subject, such as pro rata reductions applicable to
any portion of the consideration payable. In the event that the Holders do not
make such election on or prior to the date 10 days after receipt of notice that
such election is required, then for the purposes of this Section 4.11 the kind
and amount of securities, cash or other property receivable upon such
reclassification, change, combination, consolidation, merger, sale or conveyance
by each Holder shall be deemed to be the kind and amount so receivable by
holders of a plurality of the Common Stock. Such supplemental indenture shall
provide for adjustments of the Conversion Price which shall be as nearly
equivalent as may be practicable to the adjustments of the Conversion Price
provided for in this Article 4. If, in the case of any such consolidation,
merger, combination, sale or conveyance, the stock or other securities and
property (including cash) receivable thereupon by a holder of Common Stock
include shares of stock or other securities and property of a person other than
the successor, purchasing or transferee corporation, as the case may be, in such
consolidation, merger, combination, sale or conveyance, then such supplemental
indenture shall also be executed by such other person and shall contain such
additional provisions to protect the interests of the Holders of the Securities
as the Board of Directors shall reasonably consider necessary by reason of the
foregoing. The Company may not become a party to any such transaction unless its
terms are consistent with this Section 4.11.

In the event the Company shall execute a supplemental indenture pursuant to this
Section 4.11, the Company shall promptly file with the Trustee (x) an Officers’
Certificate briefly stating the reasons therefor, the kind or amount of shares
of stock or other securities or property (including cash) receivable by Holders
of the Securities upon the conversion of their Securities after any such
reclassification, change, combination, consolidation, merger, sale or
conveyance, any adjustment to be made with respect thereto and that all
conditions precedent have been complied with and (y) an Opinion of Counsel that
all conditions precedent have been complied with, and shall promptly mail notice
thereof to all Holders.

Section 4.12. TRUSTEE’S DISCLAIMER.

The Trustee shall have no duty to determine when an adjustment under this
Article 4 should be made, how it should be made or what such adjustment should
be, but may accept as conclusive evidence of that fact or the correctness of any
such adjustment, and shall be protected in relying upon, an Officers’
Certificate including the Officers’ Certificate with respect thereto which the
Company is obligated to file with the Trustee pursuant to Section 4.9. The
Trustee makes no representation as to the validity or value of any securities or
assets issued upon conversion of Securities, and the Trustee shall not be
responsible for the Company’s failure to comply with any provisions of this
Article 4.

The Trustee shall not be under any responsibility to determine the correctness
of any provisions contained in any supplemental indenture executed pursuant to
Section 4.11, but may accept as conclusive evidence of the correctness thereof,
and shall be fully protected in relying upon, the Officers’ Certificate with
respect thereto which the Company is obligated to file with the Trustee pursuant
to Section 4.11.

 

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ARTICLE 5.

COVENANTS

Section 5.1. PAYMENT OF SECURITIES.

The Company shall promptly make all payments in respect of the Securities on the
dates and in the manner provided in the Securities and this Indenture. An
installment of principal or interest (including any Extension Fee), if any,
shall be considered paid on the date it is due if the Paying Agent (other than
the Company) holds by 11:00 a.m., New York City time, on that date money,
deposited by the Company or an Affiliate thereof, sufficient to pay the
installment. Subject to Section 4.2 hereof, accrued and unpaid interest
(including any Extension Fee), if any, on any Security that is payable, and is
punctually paid or duly provided for, on any Interest Payment Date shall be paid
to the Person in whose name that Security is registered at the close of business
on the record date for such interest, if any, at the office or agency of the
Company maintained for such purpose. The Company shall, (in immediately
available funds) to the fullest extent permitted by law, pay interest on overdue
principal (including premium, if any) and overdue installments of interest
(including any Extension Fee), if any, at the rate borne by the Securities.

Payment of the principal of (and premium, if any) and interest (including any
Extension Fee), if any, on the Securities shall be made at the office or agency
of the Company maintained for that purpose in the Borough of Manhattan, The City
of New York (which shall initially be the Trustee) or at the Corporate Trust
Office of the Trustee in such coin or currency of the United States of America
as at the time of payment is legal tender for payment of public and private
debts; provided, however, that at the option of the Company payment of interest
(including any Extension Fee), if any, may be made by check mailed to the
address of the Person entitled thereto as such address appears in the register
of the Securities maintained at the Primary Registrar; provided further that a
Holder with an aggregate principal amount in excess of $2,000,000 will be paid
by wire transfer in immediately available funds at the election of such Holder
if such Holder has provided wire transfer instructions to the Company at least
10 Business Days prior to the payment date.

Section 5.2. SEC REPORTS.

The Company shall timely file all reports and other information and documents
which it is required to file with the SEC pursuant to Section 13 or 15(d) of the
Exchange Act (provided that filings made within any extension pursuant to
Rule 12b-25 under the Exchange Act or any successor rule thereto shall be deemed
timely), and within 15 days after it is required to file them with the SEC, the
Company shall file copies of all such reports, information and other documents
with the Trustee.

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

 

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Section 5.3. COMPLIANCE CERTIFICATES.

The Company shall deliver to the Trustee, within 90 days after the end of each
fiscal year of the Company (beginning with the fiscal year ending May 2, 2010),
an Officers’ Certificate as to the signer’s knowledge of the Company’s
compliance with all conditions and covenants on its part contained in this
Indenture and stating whether or not the signer knows of any default or Event of
Default. If such signer knows of such a default or Event of Default, the
Officers’ Certificate shall describe the default or Event of Default and the
efforts to remedy the same. For the purposes of this Section 5.3, compliance
shall be determined without regard to any grace period or requirement of notice
provided pursuant to the terms of this Indenture.

Section 5.4. FURTHER INSTRUMENTS AND ACTS.

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

Section 5.5. MAINTENANCE OF CORPORATE EXISTENCE.

Subject to Article 6, the Company will do or cause to be done all things
necessary to preserve and keep in full force and effect its corporate existence.

Section 5.6. RESERVED.

Section 5.7. STAY, EXTENSION AND USURY LAWS.

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

Section 5.8. PAYMENT OF EXTENSION FEE.

If an Extension Fee is payable by the Company pursuant to Section 7.1 of this
Indenture, the Company shall deliver to the Trustee a certificate to that effect
stating (i) the amount of such Extension Fee that is payable, (ii) the reason
why such Extension Fee is payable and (iii) the date on which such Extension Fee
is payable. Unless and until a Trust Officer of the Trustee receives such a
certificate, the Trustee may assume without inquiry that no such Extension Fee
is payable. If the Company has paid an Extension Fee directly to the Persons
entitled to such Extension Fee, the Company shall deliver to the Trustee a
certificate setting forth the particulars of such payment.

 

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ARTICLE 6.

CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE

Section 6.1. COMPANY MAY CONSOLIDATE, ETC, ONLY ON CERTAIN TERMS.

The Company shall not consolidate with or merge into any other Person (in a
transaction in which the Company is not the surviving Person) or convey,
transfer or lease its properties and assets substantially as an entirety to any
Person, unless:

(1) in case the Company shall consolidate with or merge into another Person (in
a transaction in which the Company is not the surviving Person) or convey,
transfer or lease its properties and assets substantially as an entirety to any
Person, the Person formed by such consolidation or into which the Company is
merged or the Person which acquires by conveyance or transfer, or which leases,
the properties and assets of the Company substantially as an entirety shall be a
corporation organized and validly existing under the laws of the United States
of America, any State thereof or the District of Columbia and shall expressly
assume, by an indenture supplemental hereto, executed and delivered to the
Trustee, in form satisfactory to the Trustee, the due and punctual payment of
the principal of and any premium and interest (including any Extension Fee), if
any, on all the Securities and the performance or observance of every covenant
of this Indenture on the part of the Company to be performed or observed and the
conversion rights shall be provided for in accordance with Article 4, by
supplemental indenture satisfactory in form to the Trustee, executed and
delivered to the Trustee, by the Person (if other than the Company) formed by
such consolidation or into which the Company shall have been merged or by the
Person which shall have acquired the Company’s assets;

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

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

Section 6.2. SUCCESSOR SUBSTITUTED.

Upon any consolidation of the Company with, or merger of the Company into, any
other Person or any conveyance, transfer or lease of the properties and assets
of the Company substantially as an entirety in accordance with Section 6.1, the
successor Person formed by such consolidation or into which the Company is
merged or to which such conveyance, transfer or lease is made shall

 

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succeed to, and be substituted for, and may exercise every right and power of,
the Company under this Indenture with the same effect as if such successor
Person had been named as the Company herein, and thereafter, except in the case
of a lease, the predecessor Person shall be relieved of all obligations and
covenants under this Indenture and the Securities.

ARTICLE 7.

DEFAULT AND REMEDIES

Section 7.1. EVENTS OF DEFAULT.

An “Event of Default” shall occur if:

(1) the Company defaults in the payment of any interest (including any Extension
Fee), if any, on any Security when the same becomes due and payable and the
default continues for a period of 30 days;

(2) the Company defaults in the payment of any principal of (including, without
limitation, any premium, if any, on) any Security when the same becomes due and
payable (whether at maturity, upon a Change in Control Purchase Date or
otherwise);

(3) the Company fails to comply with any of its other agreements contained in
the Securities or this Indenture (other than a failure of the Company to perform
a covenant that is specifically dealt with elsewhere in this Section 7.1) and
such failure continues for the period and after the notice specified below;
provided, however, that this clause 7.1(3) shall not apply to the Company’s
obligations under Section 5.2 of this Indenture;

(4) the Company defaults in the payment of the purchase price of any Security
when the same becomes due and payable;

(5) the Company fails to deliver any shares of Common Stock when such Common
Stock is required to be delivered upon conversion of a Security and such failure
continues for 10 days after such failure;

(6) the Company fails to provide a Change in Control Purchase Notice when
required by Section 3.1;

(7) any indebtedness under any bond, debenture, note or other evidence of
indebtedness for money borrowed by the Company or any Significant Subsidiary
(all or substantially all of the outstanding voting securities of which are
owned, directly or indirectly, by the Company) or under any mortgage, indenture
or instrument under which there may be issued or by which there may be secured
or evidenced any indebtedness for money borrowed by the Company or any
Significant Subsidiary (all or substantially all of the outstanding voting
securities of which are owned, directly or indirectly, by the Company) (an
“Instrument”) with a principal amount then outstanding in excess of U.S.
$15,000,000, whether such indebtedness now exists or shall hereafter be created,
is not paid at final maturity of the Instrument (either at its stated maturity
or upon

 

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acceleration thereof), and such indebtedness is not discharged, or such
acceleration is not rescinded or annulled, within a period of 30 days after
there shall have been given, by registered or certified mail, to the Company by
the Trustee or to the Company and the Trustee by the Holders of at least 25% in
aggregate principal amount of the Securities then outstanding a written notice
specifying such default and requiring the Company to cause such indebtedness to
be discharged or cause such default to be cured or waived or such acceleration
to be rescinded or annulled and stating that such notice is a “Notice of
Default” hereunder;

(8) the Company fails to file its annual or quarterly reports in accordance with
Sections 5.2 or to comply with the requirements of Section 31 4(a)(1) of the
Trust Indenture Act (a “Filing Failure”) and there has been given, by registered
or certified mail, to the Company and the Trustee by the Holders of not less
than 25% in aggregate principal amount of the Securities then outstanding, a
written notice specifying such default and requiring the Company to cause such
default to be cured or waived and stating that such notice is a “Notice of
Default” hereunder and such failure shall continue for either (i) for sixty
(60) days after such notice is given and the Company has not elected to pay the
Extension Fee as provided in this Section 7.1 or (ii) for up to one hundred and
eighty (180) days after such notice is given if the Company has elected to pay
the Extension Fee as provided in this Section 7.1 (and no Event of Default under
this clause 7.1(8) shall be deemed to occur until the passage of such sixty
(60) day or such one hundred and eighty (180) day period, as applicable),
provided that for purposes of this Section 7.1(8), no Filing Failure shall be
deemed to have occurred if the Company files such reports within any extension
period pursuant to Rule 12b-25 of the Exchange Act or any successor rule thereto
and that no Notice of Default shall be given until after the expiration of such
extension period;

(9) the Company or any Significant Subsidiary, pursuant to or within the meaning
of any Bankruptcy Law:

a) commences a voluntary case or proceeding;

b) consents to the entry of an order for relief against it in an involuntary
case or proceeding;

c) consents to the appointment of a Custodian of it or for all or substantially
all of its property; or

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

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

a) is for relief against the Company or any Significant Subsidiary in an
involuntary case or proceeding;

 

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b) appoints a Custodian of the Company or any Significant Subsidiary or for all
or substantially all of the property of the Company or any Significant
Subsidiary; or

c) orders the liquidation of the Company or any Significant Subsidiary; and in
each case the order or decree remains unstayed and in effect for 60 consecutive
days.

The term “Bankruptcy Law” means Title 11 of the United States Code (or any
successor thereto) or any similar federal or state law for the relief of
debtors. The term “Custodian” means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.

A default under clause (3) above is not an Event of Default until the Trustee
notifies the Company, or the Holders of at least 25% in aggregate principal
amount of the Securities then outstanding notify the Company and the Trustee, in
writing of the default, and the Company does not cure the default within 60 days
after receipt of such notice. The notice given pursuant to this Section 7.1 must
specify the default, demand that it be remedied and state that the notice is a
“Notice of Default.” When any default under this Section 7.1 is cured, it
ceases.

Upon the occurrence of a Filing Failure, the Company may elect, within sixty
(60) days of the date notice is given to the Company and the Trustee in
accordance with Section 7.1(8) (unless such Filing Failure is theretofore cured
or waived pursuant to Section 7.4, as applicable), to pay to the Holders a fee
accruing at the rate of 1.00% per annum of the aggregate principal amount of
Securities that are then outstanding (the “Extension Fee”) on the terms and in
the manner described in this paragraph. If the Company elects to pay any
Extension Fee, the Company, at any time on or before the close of business on
the Business Day immediately prior to the sixtieth (60th) day after the date on
which the applicable Filing Failure first occurs, (i) shall notify, in the
manner provided for in Section 11.2, the Holders and the Trustee of such
election and (ii) shall deliver to the Trustee a certificate to that effect
stating the date on which the applicable Extension Fee pursuant to this
paragraph will begin to accrue. The Extension Fee shall be paid on the same
times and in the same manner as interest shall be paid in accordance with this
Indenture. The Extension Fee shall accrue on the Securities from the date that
is sixty (60) days after date notice is given by the Holders in accordance with
Section 7.1(8) to, but excluding, the earlier of (i) the date on which the
Company has made the filings initially giving rise to the Filing Failure and
(ii) the date that is one hundred eighty (180) days after the date notice is
given by the Holders in accordance with Section 7.1(8). Notwithstanding the
foregoing, if an additional Filing Failure occurs during an Extension Period,
the Securities will only be subject to acceleration for such additional Filing
Failure at the earlier of (x) the end of the Extension Period and (y) in the
event that the Company has agreed to pay an Extension Fee in accordance with the
terms of this Section 7.1 as to such additional Filing Failure, the end of the
Extension Period as to such additional Filing Failure. For the avoidance of
doubt, notwithstanding the occurrence of multiple concurrent Filing Failures,
the Extension Fee shall not exceed the rate provided for in this paragraph.

 

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The Trustee shall not be charged with knowledge of any Event of Default unless
written notice thereof shall have been given to a Trust Officer at the Corporate
Trust Office of the Trustee by the Company, a Paying Agent, any Holder or any
agent of any Holder.

Section 7.2. ACCELERATION.

(a) If an Event of Default (other than an Event of Default specified in clause
(9) or (10) of Section 7.1) occurs and is continuing, the Trustee may, by notice
to the Company, or the Holders of at least 25% in aggregate principal amount of
the Securities then outstanding may, by notice to the Company and the Trustee,
declare all unpaid principal to the date of acceleration on the Securities then
outstanding (if not then due and payable) to be due and payable upon any such
declaration, and the same shall become and be immediately due and payable. If an
Event of Default specified in clause (9) or (10) of Section 7.1 occurs, all
unpaid principal of the Securities then outstanding shall ipso facto become and
be immediately due and payable without any declaration or other act on the part
of the Trustee or any Holder. The Holders of a majority in aggregate principal
amount of the Securities then outstanding by notice to the Trustee may rescind
an acceleration and its consequences if (a) all existing Events of Default,
other than the nonpayment of the principal of the Securities which has become
due solely by such declaration of acceleration, have been cured or waived;
(b) to the extent the payment of such interest is lawful, interest at a rate
borne by the Securities on overdue installments of interest (including any
Extension Fee), if any, and overdue principal, which has become due otherwise
than by such declaration of acceleration, has been paid; (c) the rescission
would not conflict with any judgment or decree of a court of competent
jurisdiction; and (d) all payments due to the Trustee and any predecessor
Trustee under Section 8.7 have been made. No such rescission shall affect any
subsequent default or impair any right consequent thereto.

Section 7.3. OTHER REMEDIES.

If an Event of Default occurs and is continuing, the Trustee may, but shall not
be obligated to, pursue any available remedy by proceeding at law or in equity
to collect the payment of the principal of or interest (including any Extension
Fee), if any, on the Securities or to enforce the performance of any provision
of the Securities or this Indenture.

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

Section 7.4. WAIVER OF DEFAULTS AND EVENTS OF DEFAULT.

Subject to Sections 7.7 and 10.2, the Holders of a majority in aggregate
principal amount of the Securities then outstanding by notice to the Trustee may
waive an existing default or Event of Default and its consequence, except a
default or Event of Default in the payment of the principal of,

 

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premium, if any, or interest (including any Extension Fee), if any, on any
Security, a failure by the Company to convert any Securities into Common Stock
or any default or Event of Default in respect of any provision of this Indenture
or the Securities which, under Section 10.2, cannot be modified or amended
without the consent of the Holder of each Security affected. When a default or
Event of Default is waived, it is cured and ceases.

Section 7.5. CONTROL BY MAJORITY.

The Holders of a majority in aggregate principal amount of the Securities then
outstanding may direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee or exercising any trust or power
conferred on it. However, the Trustee may refuse to follow any direction that
conflicts with law or this Indenture, that the Trustee determines may be unduly
prejudicial to the rights of another Holder or the Trustee, or that may involve
the Trustee in personal liability unless the Trustee is offered indemnity
satisfactory to it; provided, however, that the Trustee may take any other
action deemed proper by the Trustee which is not inconsistent with such
direction.

Section 7.6. LIMITATIONS ON SUITS.

A Holder may not pursue any remedy with respect to this Indenture or the
Securities (except actions for payment of overdue principal, premium, if any, or
interest (including any Extension Fee), if any, for the conversion of the
Securities pursuant to Article 4) unless:

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

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

(3) such Holder or Holders offer to the Trustee reasonable indemnity to the
Trustee against any loss, liability or expense;

(4) the Trustee does not comply with the request within 60 days after receipt of
the request and the offer of indemnity; 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 Securities then outstanding.

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

 

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Section 7.7. RIGHTS OF HOLDERS TO RECEIVE PAYMENT AND TO CONVERT.

Notwithstanding any other provision of this Indenture, the right of any Holder
of a Security to receive payment of principal and interest (including any
Extension Fee), if any, on the Security, on or after the respective due dates
expressed in the Security and this Indenture, to convert such Security in
accordance with Article 4 and to bring suit for the enforcement of any such
payment on or after such respective dates or the right to convert, is absolute
and unconditional and shall not be impaired or affected without the consent of
the Holder.

Section 7.8. COLLECTION SUIT BY TRUSTEE.

If an Event of Default in the payment of principal or interest (including any
Extension Fee), if any, specified in clause (1) or (2) of Section 7.1 occurs and
is continuing, the Trustee may recover judgment in its own name and as trustee
of an express trust against the Company or another obligor on the Securities for
the whole amount of principal and accrued interest (including any Extension
Fee), if any, remaining unpaid, together with, to the extent that payment of
such interest is lawful interest on overdue principal and overdue installments
of interest (including any Extension Fee), if any, in each case at a rate borne
by the Securities and 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.

Section 7.9. TRUSTEE MAY FILE PROOFS OF CLAIM.

The Trustee may file such proofs of claim and other papers or documents as may
be necessary or advisable in order to have the claims of the Trustee (including
any claim for the reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel) and the Holders allowed in any judicial
proceedings relative to the Company (or any other obligor on the Securities),
its creditors or its property and shall be entitled and empowered to collect and
receive any money or other property payable or deliverable on any such claims
and to distribute the same, and any Custodian in any such judicial proceeding is
hereby authorized by each Holder to make such payments to the Trustee and, in
the event that the Trustee shall consent to the making of such payments directly
to the Holders, to pay 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 8.7, and to the
extent that such payment of the reasonable compensation, expenses, disbursements
and advances in any such proceedings shall be denied for any reason, payment of
the same shall be secured by a lien on, and shall be paid out of, any and all
distributions, dividends, money, securities and other property which the Holders
may be entitled to receive in such proceedings, whether in liquidation or under
any plan of reorganization or arrangement or otherwise. Nothing herein contained
shall be deemed to authorize the Trustee to authorize or consent to, or, on
behalf of any Holder, to authorize, accept or adopt any plan of reorganization,
arrangement, adjustment or composition effecting the Securities or the rights of
any Holder thereof, or to authorize the Trustee to vote in respect of the claim
of any Holder in any such proceeding.

 

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Section 7.10. PRIORITIES.

If the Trustee collects any money pursuant to this Article 7, it shall pay out
the money in the following order: First, to the Trustee for amounts due under
Section 8.7;

Second, to Holders for amounts due and unpaid on the Securities for principal
and interest (including any Extension Fee), if any, ratably, without preference
or priority of any kind, according to the amounts due and payable on the
Securities for principal and interest (including any Extension Fee), if any,
respectively; and

Third, the balance, if any, to the Company.

The Trustee may fix a record date and payment date for any payment to Holders
pursuant to this Section 7.10.

Section 7.11. UNDERTAKING FOR COSTS.

In any suit for the enforcement of any right or remedy under this Indenture or
in any suit against the Trustee for any action taken or omitted by it as
Trustee, a court in its discretion may require the filing by any party litigant
in the suit of an undertaking to pay the costs of the suit, and the court in its
discretion may assess reasonable costs, including reasonable attorneys’ fees and
expenses, against any party litigant in the suit, having due regard to the
merits and good faith of the claims or defenses made by the party litigant. This
Section 7.11 does not apply to a suit made by the Trustee, a suit by a Holder
pursuant to Section 7.7, or a suit by Holders of more than 10% in aggregate
principal amount of the Securities then outstanding.

ARTICLE 8.

TRUSTEE

Section 8.1. DUTIES OF TRUSTEE.

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

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

(1) the Trustee need perform only those duties as are specifically set forth in
this Indenture and no others; 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. The Trustee, however, shall examine any
certificates and opinions which by any provision hereof are specifically
required to be delivered to the Trustee to determine whether or not they conform
to the requirements of this Indenture.

 

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

(1) this paragraph does not limit the effect of subsection (b) of this
Section 8.1;

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

(3) the Trustee shall not be liable with respect to any action it takes or omits
to take in good faith in accordance with a direction received by it pursuant to
Section 7.5.

(d) 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
unless the Trustee shall have received adequate indemnity in its opinion against
potential costs and liabilities incurred by it relating thereto.

(e) Every provision of this Indenture that in any way relates to the Trustee is
subject to subsections (a), (b), (c) and (d) of this Section 8.1.

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

Section 8.2. RIGHTS OF TRUSTEE.

Subject to Section 8.1:

(a) The Trustee may rely conclusively on any document believed by it to be
genuine and to have been signed or presented by the proper person. The Trustee
need not investigate any fact or matter stated in the document.

(b) Before the Trustee acts or refrains from acting, it may require an Officers’
Certificate or an Opinion of Counsel, which shall conform to Section 11.4(b).
The Trustee shall not be liable for any action it takes or omits to take in good
faith in reliance on such Officers’ Certificate or Opinion.

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

 

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(d) The Trustee shall not be liable for any action it takes or omits to take in
good faith which it believes to be authorized or within its rights or powers.

(e) The Trustee may consult with counsel of its selection, and the advice or
opinion of such counsel as to matters of law shall be full and complete
authorization and protection in respect of any such action taken, omitted or
suffered by it hereunder in good faith and in accordance with the advice or
opinion of such counsel.

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

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

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

(i) The rights, privileges, protections, immunities and benefits given to the
Trustee, including, without limitation, its right to be indemnified, are
extended to, and shall be enforceable by, the Trustee in each of its capacities
hereunder, and to each agent, custodian and other Person employed to act
hereunder.

Section 8.3. INDIVIDUAL RIGHTS OF TRUSTEE.

The Trustee in its individual or any other capacity may become the owner or
pledgee of Securities and may otherwise deal with the Company or an Affiliate of
the Company with the same rights it would have if it were not Trustee. Any Agent
may do the same with like rights. However, the Trustee is subject to
Sections 8.10 and 8.11.

Section 8.4. TRUSTEE’S DISCLAIMER.

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

 

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Section 8.5. NOTICE OF DEFAULT OR EVENTS OF DEFAULT.

If a default or an Event of Default occurs and is continuing and if it is known
to the Trustee, the Trustee shall mail to each Securityholder notice of the
default or Event of Default within 90 days after it occurs. However, the Trustee
may withhold the notice if and so long as a committee of its Trust Officers in
good faith determines that withholding notice is in the interests of Holders,
except in the case of a default or an Event of Default in payment of the
principal of or interest (including any Extension Fee), if any, on any Security.

Section 8.6. REPORTS BY TRUSTEE TO HOLDERS.

If such report is required by TIA Section 313, within 60 days after each May 15,
beginning with the May 15 following the date of this Indenture, the Trustee
shall mail to each Holder a brief report dated as of such May 15 that complies
with TIA Section 313(a). The Trustee also shall comply with TIA Section 3
13(b)(2) and (c).

A copy of each report at the time of its mailing to Holder shall be mailed to
the Company and filed with the SEC and each stock exchange, if any, on which the
Securities are listed. The Company shall notify the Trustee whenever the
Securities become listed on any stock exchange or listed or admitted to trading
on any quotation system and any changes in the stock exchanges or quotation
systems on which the Securities are listed or admitted to trading and of any
delisting thereof.

Section 8.7. COMPENSATION AND INDEMNITY.

The Company shall pay to the Trustee from time to time such compensation (as
agreed to from time to time by the Company and the Trustee in writing) for its
services (which compensation shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust). The Company shall
reimburse the Trustee upon request for all reasonable disbursements, expenses
and advances incurred or made by it. Such expenses may include the reasonable
compensation, disbursements and expenses of the Trustee’s agents and counsel.

The Company shall indemnify the Trustee or any predecessor Trustee (which for
purposes of this Section 8.7 shall include its officers, directors, employees
and agents) for, and hold it harmless against, any and all loss, liability or
expense including taxes (other than taxes based upon, measured by or determined
by the income of the Trustee), (including reasonable legal fees and expenses)
incurred by it in connection with the acceptance or administration of its duties
under this Indenture or any action or failure to act as authorized or within the
discretion or rights or powers conferred upon the Trustee hereunder including
the reasonable costs and expenses of the Trustee and its counsel in defending
itself against any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder. The Trustee shall notify
the Company promptly of any claim asserted against the Trustee for which it may
seek indemnity. The Company need not pay for any settlement effected without its
prior written consent, which shall not be unreasonably withheld.

 

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The Company need not reimburse the Trustee for any expense or indemnify it
against any loss or liability incurred by it resulting from its gross negligence
or bad faith.

To secure the Company’s payment obligations in this Section 8.7, the Trustee
shall have a senior claim to which the Securities are hereby made subordinate on
all money or property held or collected by the Trustee, except such money or
property held in trust to pay the principal of and interest (including any
Extension Fee), if any, on the Securities. The obligations of the Company under
this Section 8.7 shall survive the satisfaction and discharge of this Indenture
or the resignation or removal of the Trustee.

When the Trustee incurs expenses or renders services after an Event of Default
specified in clause (9) or (10) of Section 7.1 occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law. The provisions of this Section shall
survive the termination of this Indenture.

Section 8.8. REPLACEMENT OF TRUSTEE.

The Trustee may resign by so notifying the Company in writing. The Holders of a
majority in aggregate principal amount of the Securities then outstanding may
remove the Trustee by so notifying the Trustee in writing and may, with the
Company’s written consent, appoint a successor Trustee. The Company may remove
the Trustee if:

(1) the Trustee fails to comply with Section 8.10;

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

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

(4) the Trustee becomes incapable of acting.

If the Trustee resigns or is removed or if a vacancy exists in the office of
Trustee for any reason, the Company shall promptly appoint a successor Trustee.
The resignation or removal of a Trustee shall not be effective until a successor
Trustee shall have delivered the written acceptance of its appointment as
described below.

If a successor Trustee does not take office within 45 days after the retiring
Trustee resigns or is removed, the retiring Trustee, the Company or the Holders
of 10% in principal amount of the Securities then outstanding may petition any
court of competent jurisdiction for the appointment of a successor Trustee at
the expense of the Company.

 

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If the Trustee fails to comply with Section 8.10, any Holder may petition any
court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor Trustee.

A successor Trustee shall deliver a written acceptance of its appointment to the
retiring Trustee and to the Company. Immediately after that, the retiring
Trustee shall transfer all property held by it as Trustee to the successor
Trustee and be released from its obligations (exclusive of any liabilities that
the retiring Trustee may have incurred while acting as Trustee) hereunder, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. A successor Trustee shall mail notice of its succession to
each Holder.

A retiring Trustee shall not be liable for the acts or omissions of any
successor Trustee after its succession.

Notwithstanding replacement of the Trustee pursuant to this Section 8.8, the
Company’s obligations under Section 8.7 shall continue for the benefit of the
retiring Trustee.

Section 8.9. SUCCESSOR TRUSTEE BY MERGER, ETC.

If the Trustee consolidates with, merges or converts into, or transfers all or
substantially all of its corporate trust assets (including the administration of
this Indenture) to, another corporation, the resulting, surviving or transferee
corporation, without any further act, shall be the successor Trustee, provided
such transferee corporation shall qualify and be eligible under Section 8.10.
Such successor Trustee shall promptly mail notice of its succession to the
Company and each Holder.

Section 8.10. ELIGIBILITY; DISQUALIFICATION.

The Trustee shall always satisfy the requirements of paragraphs (1), (2) and
(5) of TIA Section 310(a). The Trustee (or its parent holding company) shall
have a combined capital and surplus of at least $50,000,000. If at any time the
Trustee shall cease to satisfy any such requirements, it shall resign
immediately in the manner and with the effect specified in this Article 8. The
Trustee shall be subject to the provisions of TIA Section 310(b). Nothing herein
shall prevent the Trustee from filing with the SEC the application referred to
in the penultimate paragraph of TIA Section 310(b).

Section 8.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.

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

 

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ARTICLE 9.

SATISFACTION AND DISCHARGE OF INDENTURE

Section 9.1. SATISFACTION AND DISCHARGE OF INDENTURE.

This Indenture shall cease to be of further effect (except as to any surviving
rights of conversion, registration of transfer or exchange of Securities herein
expressly provided for and except as further provided below), and the Trustee,
on demand of and at the expense of the Company, shall execute proper instruments
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 2.7 and (ii) Securities for whose
payment money has theretofore been deposited in trust and thereafter repaid to
the Company as provided in Section 9.3) have been delivered to the Trustee for
cancellation; or

b) all such Securities not theretofore delivered to the Trustee for
cancellation,

i) have become due and payable, or

ii) will become due and payable at the Final Maturity Date within one year, and
the Company has irrevocably deposited or caused to be irrevocably deposited cash
with the Trustee or a Paying Agent (other than the Company or any of its
Affiliates) as trust funds in trust for the purpose of and in an amount
sufficient to pay and discharge the entire indebtedness on such Securities not
theretofore delivered to the Trustee for cancellation, for principal and
interest (including any Extension Fee), if any, to the date of such deposit (in
the case of Securities which have become due and payable) or the Final Maturity
Date;

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

(3) the Company has delivered to the Trustee an Officers’ Certificate and an
Opinion of Counsel, each stating that all conditions precedent herein 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 Company to the Trustee under Section 8.7 shall survive and,
if money shall have been deposited with the Trustee pursuant to subclause (B) of
clause (1) of this Section, the provisions of Sections 2.3, 2.4, 2.5, 2.6, 2.7,
2.12, 3.1, 3.2, 3.3, 3.4, 3.5, 3.6 and 11.5, Article 4, the last paragraph of
Section 5.2 and this Article 9, shall survive until the Securities have been
paid in full.

Section 9.2. APPLICATION OF TRUST MONEY.

Subject to the provisions of Section 9.3, the Trustee or a Paying Agent shall
hold in trust, for the benefit of the Holders, all money deposited with it
pursuant to Section 9.1 and shall apply the deposited money in accordance with
this Indenture and the Securities to the conversion or payment of the principal
of and interest (including any Extension Fee), if any, on the Securities.

 

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Section 9.3. REPAYMENT TO COMPANY.

The Trustee and each Paying Agent shall promptly pay to the Company upon request
any excess money (i) deposited with them pursuant to Section 9.1 and (ii) held
by them at any time.

The Trustee and each Paying Agent shall pay to the Company upon request any
money held by them for the payment of principal or interest (including any
Extension Fee), if any, that remains unclaimed for two years after a right to
such money has matured; provided, however, that the Trustee or such Paying
Agent, before being required to make any such payment, may at the expense of the
Company cause to be mailed to each Holder entitled to such money notice that
such money remains unclaimed and that after a date specified therein, which
shall be at least 30 days from the date of such mailing, any unclaimed balance
of such money then remaining will be repaid to the Company. After payment to the
Company, Holders entitled to money must look to the Company for payment as
general creditors unless an applicable abandoned property law designates another
person.

Section 9.4. REINSTATEMENT.

If the Trustee or any Paying Agent is unable to apply any money in accordance
with Section 9.2 by reason of any legal proceeding or by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, then the Company’s obligations under
this Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to Section 9.1 until such time as the Trustee or
such Paying Agent is permitted to apply all such money in accordance with
Section 9.2; provided, however, that if the Company has made any payment of the
principal of or interest (including any Extension Fee), if any, on any
Securities because of the reinstatement of its obligations, the Company shall be
subrogated to the rights of the Holders of such Securities to receive any such
payment from the money held by the Trustee or such Paying Agent.

ARTICLE 10.

AMENDMENTS, SUPPLEMENTS AND WAIVERS

Section 10.1. WITHOUT CONSENT OF HOLDERS.

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

(a) to comply with Sections 4.11 and 6.1;

(b) to cure any ambiguity, defect or inconsistency;

 

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(c) to make any other change that does not adversely affect the rights of any
Securityholder;

(d) to comply with the provisions of the TIA;

(e) to add to the covenants of the Company for the equal and ratable benefit of
the Holders or to surrender any right, power or option conferred upon the
Company; or

(f) to appoint a successor Trustee.

Section 10.2. WITH CONSENT OF HOLDERS.

The Company and the Trustee may amend or supplement this Indenture or the
Securities with the written consent of the Holders of at least a majority in
aggregate principal amount of the Securities then outstanding. The Holders of at
least a majority in aggregate principal amount of the Securities then
outstanding may waive compliance in a particular instance by the Company with
any provision of this Indenture or the Securities without notice to any
Securityholder. However, notwithstanding the foregoing but subject to
Section 10.4, without the written consent of each Securityholder affected, an
amendment, supplement or waiver, including a waiver pursuant to Section 7.4, may
not:

(a) change the stated maturity of the principal of any Security;

(b) reduce the principal amount of, or any premium or interest (including any
Extension Fee), if any, on, any Security;

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

(d) change the make-whole premium payable pursuant to Section 4.1(e) hereof;

(e) change the place or currency of payment of principal of, or any premium or
interest (including any Extension Fee), if any, on, any Security;

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

(g) modify the provisions with respect to the purchase right of Holders pursuant
to Article 3 upon a Change in Control in a manner adverse to Holders;

(h) adversely affect the right of Holders to convert Securities other than as
provided in or under Article 4 of this Indenture;

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

 

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

(k) modify any of the provisions of this Section or Section 7.4, except to
increase any such percentage or to provide that certain provisions of this
Indenture cannot be modified or waived without the consent of the Holder of each
outstanding Security affected thereby.

It shall not be necessary for the consent of the Holders under this Section 10.2
to approve the particular form of any proposed amendment, supplement or waiver,
but it shall be sufficient if such consent approves the substance thereof.

After an amendment, supplement or waiver under this Section 10.2 becomes
effective, the Company shall mail to the Holders affected thereby a notice
briefly describing the amendment, supplement or waiver. Any failure of the
Company to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such amendment, supplement or waiver.

Section 10.3. COMPLIANCE WITH TRUST INDENTURE ACT.

Every amendment to or supplement of this Indenture or the Securities shall
comply with the TIA as in effect at the date of such amendment or supplement.

Section 10.4. REVOCATION AND EFFECT OF CONSENTS.

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

After an amendment, supplement or waiver becomes effective, it shall bind every
Securityholder, unless it makes a change described in any of clauses (a) through
(k) of Section 10.2. In that case the amendment, supplement or waiver shall bind
each Holder of a Security who has consented to it and every subsequent Holder of
a Security or portion of a Security that evidences the same debt as the
consenting Holder’s Security.

Section 10.5. NOTATION ON OR EXCHANGE OF SECURITIES.

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

 

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Section 10.6. TRUSTEE TO SIGN AMENDMENTS, ETC.

The Trustee shall sign any amendment or supplemental indenture authorized
pursuant to this Article 10 if the amendment or supplemental indenture does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
If it does, the Trustee may, in its sole discretion, but need not sign it. In
signing or refusing to sign such amendment or supplemental indenture, the
Trustee shall be entitled to receive and, subject to Section 8.1, shall be fully
protected in relying upon, an Opinion of Counsel stating that such amendment or
supplemental indenture is authorized or permitted by this Indenture. The Company
may not sign an amendment or supplement indenture until the Board of Directors
approves it.

Section 10.7. EFFECT OF SUPPLEMENTAL INDENTURES.

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

ARTICLE 11.

MISCELLANEOUS

Section 11.1. TRUST INDENTURE ACT CONTROLS.

If any provision of this Indenture limits, qualifies or conflicts with the
duties imposed by any of Sections 310 to 317, inclusive, of the TIA through
operation of Section 318(c) thereof, such imposed duties shall control.

Section 11.2. NOTICES.

Any demand, authorization notice, request, consent or communication shall be
given in writing and delivered in person or mailed by first-class mail, postage
prepaid, addressed as follows or transmitted by facsimile transmission
(confirmed by delivery in person or mail by first-class mail, postage prepaid,
or by guaranteed overnight courier) to the following facsimile numbers:

If to the Company, to:

Magma Design Automation, Inc.

1650 Technology Drive

San Jose, CA 95110

Attention: Chief Financial Officer

Facsimile No.: (408) 715-2557

 

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With a copy to:

Wilson Sonsini Goodrich & Rosati, Professional Corporation

650 Page Mill Road

Palo Alto, CA 94304-1050

Attention: Karen Dreyfus, Esq.

Facsimile No.: (650) 493-6811

If to the Trustee, to:

U.S. Bank National Association

633 West Fifth St., 24th Floor

Los Angeles, California 90071

Attn: Corporate Trust Services (Magma Design Automation, Inc. — 6.00%
Convertible Senior Notes due 2014)

Facsimile No.: (213) 615-6197

Such notices or communications shall be effective when received.

The Company or the Trustee by notice to the other may designate additional or
different addresses for subsequent notices or communications.

Any notice or communication mailed to any Holder shall be mailed by first-class
mail or delivered by an overnight delivery service to it at its address shown on
the register kept by the Primary Registrar; provided, however that any notice or
communication with respect to Securities held by the Depositary on behalf of the
Holders may be made by delivering such notice or communication to the Depositary
and having such notice or communication posted to such Holders on the systems of
the Depositary.

Failure to mail a notice or communication to any Holder or the Depositary, as
applicable, or any defect in such notice or communication shall not affect its
sufficiency with respect to other Holders. If a notice or communication to a
Holder is mailed in the manner provided above, it is duly given, whether or not
the addressee receives it.

Section 11.3. COMMUNICATIONS BY HOLDERS WITH OTHER HOLDERS.

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

Section 11.4. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.

(a) Upon any request or application by the Company to the Trustee to take any
action under this Indenture, the Company shall furnish to the Trustee at the
request of the Trustee:

(1) an Officers’ Certificate stating that, in the opinion of the signers, all
conditions precedent (including any covenants, compliance with which constitutes
a condition precedent), if any, provided for in this Indenture relating to the
proposed action have been complied with; and

 

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(2) an Opinion of Counsel stating that, in the opinion of such counsel, all such
conditions precedent (including any covenants, compliance with which constitutes
a condition precedent) have been complied with.

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

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

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

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

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

provided, however, that with respect to matters of fact an Opinion of Counsel
may rely on an Officers’ Certificate or certificates of public officials.

Section 11.5. RECORD DATE FOR VOTE OR CONSENT OF HOLDERS.

The Company (or, in the event deposits have been made pursuant to Section 9.1,
the Trustee) may set a record date for purposes of determining the identity of
Holders entitled to vote or consent to any action by vote or consent authorized
or permitted under this Indenture, which record date shall not be more than
thirty (30) days prior to the date of the commencement of solicitation of such
action. Notwithstanding the provisions of Section 10.4, if a record date is
fixed, those persons who were Holders of Securities at the close of business on
such record date (or their duly designated proxies), and only those persons,
shall be entitled to take such action by vote or consent or to revoke any vote
or consent previously given, whether or not such persons continue to be Holders
after such record date.

 

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Section 11.6. RULES BY TRUSTEE, PAYING AGENT, REGISTRAR AND CONVERSION AGENT.

The Trustee may make reasonable rules (not inconsistent with the terms of this
Indenture) for action by or at a meeting of Holders. Any Registrar, Paying Agent
or Conversion Agent may make reasonable rules for its functions.

Section 11.7. LEGAL HOLIDAYS.

A “Legal Holiday” is a Saturday, Sunday or a day on which state or federally
chartered banking institutions in New York, New York and the state in which the
Corporate Trust Office is located are not required to be open. If a payment date
is a Legal Holiday, payment shall be made on the next succeeding day that is not
a Legal Holiday, and no interest (including any Extension Fee), if any, shall
accrue for the intervening period.

Section 11.8. GOVERNING LAW.

This Indenture and the Securities shall be governed by, and construed in
accordance with, the laws of the State of New York, without regard to principles
of conflicts of laws.

Section 11.9. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.

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

Section 11.10. NO RECOURSE AGAINST OTHERS.

All liability described in paragraph 14 of the Securities of any director,
officer, employee or stockholder, as such, of the Company is waived and
released.

Section 11.11. SUCCESSORS.

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

Section 11.12. MULTIPLE COUNTERPARTS.

The parties may sign multiple counterparts of this Indenture. Each signed
counterpart shall be deemed an original, but all of them together represent the
same agreement.

Section 11.13. SEPARABILITY.

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

 

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Section 11.14. TABLE OF CONTENTS, HEADINGS, ETC.

The table of contents, cross-reference sheet and headings of the Articles and
Sections of this Indenture have been inserted for convenience of reference only,
are not to be considered a part hereof, and shall in no way modify or restrict
any of the terms or provisions hereof.

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the parties hereto have hereunto set their hands as of the
date and year first above written.

 

MAGMA DESIGN AUTOMATION, INC.

By:

 

 

Name:

 

Title:

 

U.S. BANK NATIONAL ASSOCIATION,

as Trustee

By:

 

 

Name:

 

Title:

 

[Signature Page to Indenture]

 

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EXHIBIT A

[FORM OF FACE OF SECURITY]

[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY TO MAGMA DESIGN AUTOMATION, INC. (THE “COMPANY”) OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND
ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE THEREOF. THIS SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE
NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE AND, UNLESS AND UNTIL IT IS EXCHANGED
IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE FORM, THIS 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.]1

 

 

1

This paragraph should be included only if the Security is a Global Security.

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MAGMA DESIGN AUTOMATION, INC.

 

CUSIP: 559181 AE2

   R-            

6.00% CONVERTIBLE SENIOR NOTES DUE 2014

Magma Design Automation, Inc., a Delaware corporation (the “Company”, which term
shall include any successor corporation under the Indenture referred to on the
reverse hereof), promises to pay to                     , or registered assigns,
the principal sum of                     Dollars ($         ) on May 15, 2014
[or such greater or lesser amount as is indicated on the Schedule of Exchanges
of Securities on the other side of this Security].1

Interest Payment Dates: May 15 and November 15

Record Dates: May 1 and November 1

This Security is convertible as specified on the other side of this Security.
Additional provisions of this Security are set forth on the other side of this
Security.

SIGNATURE PAGE FOLLOWS

 

 

1

This phrase should be included only if the Security is a global Security.

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

 

MAGMA DESIGN AUTOMATION, INC.

By:

 

 

Name:

 

Title:

 

 

Attest:

 

Name: Title:

Dated:

Trustee’s Certificate of Authentication: This is one of the Securities referred
to in the within-mentioned Indenture.

 

U.S. BANK NATIONAL ASSOCIATION, as Trustee

 

Authorized Signatory By:

 

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[FORM OF REVERSE SIDE OF SECURITY]

MAGMA DESIGN AUTOMATION, INC.

6.00% CONVERTIBLE SENIOR NOTES DUE 2014

1. INTEREST

Magma Design Automation, Inc., a Delaware corporation (the “Company”), promises
to pay interest on the principal amount of this Security at the rate per annum
shown above. The Company will pay interest semi-annually in arrears on May 15
and

November 15 of each year (each, an “Interest Payment Date”), beginning May 15,
2010. Interest on the Securities will accrue from the most recent Interest
Payment Date or, if no interest has been paid, from September 11, 2009. Interest
(including any Extension Fee), if any, will be computed on the basis of a
360-day year composed of twelve 30-day months. Capitalized terms used in the
Security which are not otherwise defined herein shall have the meaning ascribed
to such terms in the Indenture, dated September 11, 2009 (together with any
supplemental indentures thereto, the “Indenture”), between the Company and U.S.
Bank National Association (the “Trustee,” which term shall include any successor
trustee under the Indenture hereinafter referred to).

2. METHOD OF PAYMENT

The Company will pay interest (including any Extension Fee), if any, on this
Security (except defaulted interest) to the person in whose name each Security
is registered at the close of business on the May 1 or November 1 (whether or
not a Business Day) immediately preceding the relevant Interest Payment Date
(each, a “Record Date”) (other than with respect to a Security repurchased in
connection with a Change in Control on a repurchase date, during the period from
the close of business on a Record Date to (but excluding) the next succeeding
Interest Payment Date, in which case accrued interest (including any Extension
Fee), if any, shall be payable (unless such Security or portion thereof is
converted) to the holder of the Security or portion thereof repurchased in
accordance with the applicable repurchase provisions of the Indenture). The
Holder must surrender this Security to a Paying Agent to collect principal
payments. The Company will pay the principal of, and interest (including any
Extension Fee), if any, on the Securities at the office or agency of the Company
maintained for such purpose, in money of the United States that at the time of
payment is legal tender for payment of public and private debts. Until otherwise
designated by the Company, the Company’s office or agency maintained for such
purpose will be the principal Corporate Trust Office (as defined in the
Indenture) of the Trustee. The Company may, however, pay principal and interest
(including any Extension Fee), if any, in respect of any Certificated Security
by check or wire payable in such money; provided, however, that a Holder with an
aggregate principal amount in excess of $2,000,000 will be paid by wire transfer
in immediately available funds at the election of such Holder if such Holder has
provided wire transfer instructions to the Company at least ten (10) Business
Days prior to the Interest Payment Date. The Company may mail an interest check,
if any, to the Holder’s registered address. Notwithstanding the foregoing, so
long as this Security is registered in the name of a Depositary or its nominee,
all payments hereon shall be made by wire transfer of immediately available
funds to the account of the Depositary or its nominee.

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3. PAYING AGENT, REGISTRAR AND CONVERSION AGENT

Initially, the Trustee will act as Paying Agent, Registrar, Securities Custodian
and Conversion Agent. The Company may change any Paying Agent, Registrar and
Conversion Agent without notice to the Holder.

The Company or any of its Subsidiaries may, subject to certain limitations set
forth in the Indenture, act as Paying Agent or Registrar.

4. INDENTURE, LIMITATIONS

This Security is one of a duly authorized issue of Securities of the Company
designated as its 6.00% Convertible Senior Notes due 2014 (the “Securities”),
issued under the Indenture. The terms of this Security include those stated in
the Indenture and those required by or made part of the Indenture by reference
to the Trust Indenture Act of 1939, as amended, as in effect on the date of the
Indenture. This Security is subject to all such terms, and the Holder of this
Security is referred to the Indenture and said Act for a statement of them.

The Securities are unsecured obligations of the Company. The aggregate principal
amount of Securities outstanding at any time may not exceed $26,689,000 in
aggregate principal amount, except as provided in Section 2.7 of the Indenture.
The Indenture does not limit other debt of the Company, whether secured or
unsecured.

5. PURCHASE OF SECURITIES AT OPTION OF HOLDER UPON A CHANGE IN CONTROL

At the option of the Holder and subject to the terms and conditions of the
Indenture, the Company shall become obligated to purchase all or any part
specified by the Holder (so long as the principal amount of such part is $1,000
or an integral multiple of $1,000 in excess thereof) of the Securities held by
such Holder on the date that is thirty (30) Business Days after the occurrence
of a Change in Control, at a purchase price equal to 100% of the principal
amount of the Securities to be repurchased thereof together with accrued
interest (including any Extension Fee), if any, up to, but excluding, the Change
in Control Purchase Date. The Holder shall have the right to withdraw any Change
in Control Purchase Notice (in whole or in a portion thereof that is $1,000 or
an integral multiple of $1,000 in excess thereof) at any time prior to the close
of business on the Business Day next preceding the Change in Control Purchase
Date by delivering a written notice of withdrawal to the Paying Agent in
accordance with the terms of the Indenture.

6. CONVERSION

Upon compliance with the provisions of the Indenture, including, without
limitation, the provisions of Section 4.1(a) of the Indenture, the registered
holder of this Security has the right at

 

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any time after the date of this Indenture and on or before the close of business
on the last Trading Day prior to the Final Maturity Date (or in case this
Security or any portion hereof is subject to a duly completed election for
repurchase, on or before the close of business on the Business Day immediately
preceding the Change in Control Purchase Date (unless the Company defaults in
payment due upon repurchase or such holder elects to withdraw the submission of
such election to repurchase)) to convert the principal amount hereof, or any
portion of such principal amount which is $1,000 or an integral multiple
thereof.

The initial Conversion Price is $1.80 per share, subject to adjustment under
certain circumstances as provided in the Indenture. The number of shares of
Common Stock issuable upon conversion of a Security is determined by dividing
the principal amount of the Security or portion thereof converted by the
Conversion Price in effect on the Conversion Date. No fractional shares will be
issued upon conversion; in lieu thereof, an amount will be paid in cash based
upon the Closing Price (as defined in the Indenture) of the Common Stock on the
Trading Day immediately prior to the Conversion Date.

The Conversion Rate on any Securities surrendered in connection with a Change in
Control may be increased by an amount, if any, determined in accordance with
Section 4.1(e) of the Indenture.

To convert a Security, a Holder must (a) complete and manually sign the
conversion notice set forth below and deliver such notice to a Conversion Agent,
(b) surrender the Security to a Conversion Agent, (c) furnish appropriate
endorsements and transfer documents if required by a Registrar or a Conversion
Agent, and (d) pay any transfer or similar tax, if required. Securities so
surrendered for conversion (in whole or in part) during the period from the
close of business on any Record Date to the opening of business on the next
succeeding Interest Payment Date, if any, (excluding Securities or portions
thereof subject to purchase upon a Change in Control on a Change in Control
Purchase Date, during the period beginning at the close of business on a Record
Date and ending at the opening of business on the first Business Day after the
next succeeding Interest Payment Date, if any, or if such Interest Payment Date,
if any, is not a Business Day, the second such Business Day) shall also be
accompanied by payment in funds acceptable to the Company of an amount equal to
the interest (including any Extension Fee), if any, payable on such Interest
Payment Date, if any, on the principal amount of such Security then being
converted, and such interest, if any, shall be payable to such registered Holder
notwithstanding the conversion of such Security, subject to the provisions of
this Indenture relating to the payment of defaulted interest, if any, by the
Company. If the Company defaults in the payment of interest payable on such
Interest Payment Date, if any, the Company shall promptly repay such funds to
such Holder. A Holder may convert a portion of a Security equal to $1,000 or any
integral multiple thereof.

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

 

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7. DENOMINATIONS, TRANSFER, EXCHANGE

The Securities are in registered form, without coupons, in denominations of
$1,000 and integral multiples of $1,000. A Holder may register the transfer of
or exchange Securities only in accordance with the Indenture. The Registrar may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and to pay any taxes or other governmental charges that may
be imposed in relation thereto by law or permitted by the Indenture.

8. PERSONS DEEMED OWNERS

The Holder of a Security may be treated as the owner of it for all purposes.

9. UNCLAIMED MONEY

If money for the payment of principal or interest (including any Extension Fee),
if any, remains unclaimed for two years, the Trustee or Paying Agent will pay
the money back to the Company at its written request, subject to applicable
unclaimed property law. After that, Holders entitled to money must look to the
Company for payment as general creditors unless an applicable abandoned property
law designates another person.

10. AMENDMENT, SUPPLEMENT AND WAIVER

Subject to certain exceptions, the Indenture or the Securities may be amended or
supplemented with the consent of the Holders of at least a majority in aggregate
principal amount of the Securities then outstanding, and an existing default or
Event of Default and its consequence or compliance with any provision of the
Indenture or the Securities may be waived in a particular instance with the
consent of the Holders of a majority in aggregate principal amount of the
Securities then outstanding. Without the consent of or notice to any Holder, the
Company and the Trustee may amend or supplement the Indenture or the Securities
to, among other things, cure any ambiguity, defect or inconsistency or make any
other change that does not adversely affect the rights of any Holder.

11. SUCCESSOR ENTITY

When a successor corporation assumes all the obligations of its predecessor
under the Securities and the Indenture in accordance with the terms and
conditions of the Indenture, the predecessor corporation (except in certain
circumstances specified in the Indenture) shall be released from those
obligations.

12. DEFAULTS AND REMEDIES

Under the Indenture, an Event of Default includes: (i) default for 30 days in
payment of interest (including any Extension Fee), if any, on any Security after
the date that such interest becomes due and payable; (ii) default in payment of
any principal (including, without limitation, any premium) on any Security after
the date that such payment becomes due and payable; (iii) failure by

 

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the Company to comply with any of its other agreements contained in the
Indenture or the Securities, which continues after for the period and after the
notice specified in Section 7.1 of the Indenture; (iv) failure by the Company to
pay the purchase price, when the same becomes due and payable; (v) failure by
the Company to deliver all cash and any shares of Common Stock when such cash
and Common Stock, if any, are required to be delivered upon conversion of a
Security; (vi) failure by the Company to provide a Change in Control Purchase
Notice when required by Section 3.1 of the Indenture; (vii) default in the
payment of certain indebtedness of the Company or a Significant Subsidiary,
(viii) failure by the Company to file annual or quarterly reports in accordance
with Sections 5.2 or 5.6 of the Indenture or to comply with the requirements of
Section 31 4(a)(1) of the Trust Indenture Act (subject to the requirements in
the Indenture to provide notice and the extension rights provided to the Company
in the Indenture) and (ix) certain events of bankruptcy, insolvency or
reorganization of the Company or any Significant Subsidiary. If an Event of
Default (other than as a result of certain events of bankruptcy, insolvency or
reorganization of the Company) occurs and is continuing, the Trustee or the
Holders of at least 25% in aggregate principal amount of the Securities then
outstanding may declare all unpaid principal to the date of acceleration on the
Securities then outstanding to be due and payable immediately, all as and to the
extent provided in the Indenture. If an Event of Default occurs as a result of
certain events of bankruptcy, insolvency or reorganization of the Company,
unpaid principal of the Securities then outstanding shall become due and payable
immediately without any declaration or other act on the part of the Trustee or
any Holder, all as and to the extent provided in the Indenture. Holders may not
enforce the Indenture or the Securities except as provided in the Indenture. The
Trustee may require indemnity satisfactory to it before it enforces the
Indenture or the Securities. Subject to certain limitations, Holders of a
majority in aggregate principal amount of the Securities then outstanding may
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Holders notice of any continuing default (except a default in
payment of principal or interest (including any Extension Fee), if any) if it
determines that withholding notice is in their interests. The Company is
required to file periodic reports with the Trustee as to the presence or absence
of default.

13. TRUSTEE DEALINGS WITH THE COMPANY

U.S. Bank National Association, the Trustee under the Indenture, in its
individual or any other capacity, may make loans to, accept deposits from and
perform services for the Company or an Affiliate of the Company, and may
otherwise deal with the Company or an Affiliate of the Company, as if it were
not the Trustee.

14. NO RECOURSE AGAINST OTHERS

A director, officer, employee or stockholder, as such, of the Company shall not
have any liability for any obligations of the Company under the Securities or
the Indenture nor for any claim based on, in respect of or by reason of such
obligations or their creation. The Holder of this Security by accepting this
Security waives and releases all such liability. The waiver and release are part
of the consideration for the issuance of this Security.

 

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15. AUTHENTICATION

This Security shall not be valid until the Trustee or an authenticating agent
manually signs the certificate of authentication on the other side of this
Security.

16. ABBREVIATIONS AND DEFINITIONS

Customary abbreviations may be used in the name of the Holder or an assignee,
such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties),
JT TEN (= joint tenants with right of survivorship and not as tenants in
common), CUST (= Custodian) and UGMA (= Uniform Gifts to Minors Act).

All terms defined in the Indenture and used in this Security but not
specifically defined herein are defined in the Indenture and are used herein as
so defined.

17. INDENTURE TO CONTROL; GOVERNING LAW

In the case of any conflict between the provisions of this Security and the
Indenture, the provisions of the Indenture shall control. This Security shall be
governed by, and construed in accordance with, the laws of the State of New
York, without regard to principals of conflicts of law.

The Company will furnish to any Holder, upon written request and without charge,
a copy of the Indenture. Requests may be made to: Magma Design Automation, Inc.,
1850 Technology Drive, San Jose, CA 95110, (408) 565-7500, Attention: Investor
Relations.

 

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ASSIGNMENT FORM

To assign this Security, fill in the form below:

I or we assign and transfer this Security to

 

 

 

(Insert assignee’s soc. sec. 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 Company. The agent may
substitute another to act for him or her.

 

        Your Signature: Date:                             

 

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

*Signature guaranteed by: By:  

 

 

 

* The signature must be guaranteed by an institution which is a member of one of
the following recognized signature guaranty programs: (i) the Securities
Transfer Agent Medallion Program (STAMP); (ii) the New York Stock Exchange
Medallion Program (MSP); (iii) the Stock Exchange Medallion Program (SEMP); or
(iv) such other guaranty program acceptable to the Trustee.

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CONVERSION NOTICE

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

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

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

 

 

 

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

 

 

 

 

 

 

 

 

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

 

        Your Signature: Date:                             

 

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

 

*Signature guaranteed by: By:  

 

 

 

* The signature must be guaranteed by an institution which is a member of one of
the following recognized signature guaranty programs: (i) the Securities
Transfer Agent Medallion Program (STAMP); (ii) the New York Stock Exchange
Medallion Program (MSP); (iii) the Stock Exchange Medallion Program (SEMP); or
(iv) such other guaranty program acceptable to the Trustee.

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OPTION TO ELECT REPURCHASE

UPON A CHANGE IN CONTROL

To: Magma Design Automation, Inc.

The undersigned registered owner of this Security hereby irrevocably
acknowledges receipt of a notice from Magma Design Automation, Inc. (the
“Company”) as to the occurrence of a Change in Control with respect to the
Company and requests and instructs the Company to redeem the entire principal
amount of this Security, or the portion thereof (which is $1,000 or an integral
multiple thereof) below designated, in accordance with the terms of the
Indenture referred to in this Security at the Change in Control Purchase Price,
together with accrued interest (including any Extension Fee), if any, to, but
excluding, such date, to the registered Holder hereof.

Dated:                     

 

 

 

Signature(s)

Signature(s) must be guaranteed by a qualified guarantor institution with
membership in an approved signature guarantee program pursuant to Rule 17Ad- 15
under the Securities Exchange Act of 1934.

 

Signature Guaranty

Principal amount to be redeemed

(in an integral multiple of $1,000, if less than all):

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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SCHEDULE OF EXCHANGES OF SECURITIES1

The following exchanges, repurchases or conversions of a part of this global
Security have been made:

 

Principal Amount of this

Global Note Following

Such Decrease Date of

Exchange (or Increase)

 

Authorized Signatory of

Securities Custodian

 

Amount of Decrease in

Principal Amount of this

Global Note

  

Amount of Increase in

Principal Amount of this

Global Note

                           

 

1

This schedule should be included only if the Security is a global Security.