Exhibit 4.1


 


EXECUTION VERSION


 




 





POWER-ONE, INC.

as Issuer


 


AND


 


THE BANK OF NEW YORK TRUST COMPANY, N.A.

as Trustee


 






 


Indenture


 


Dated
as of June 17, 2008


 






 


8%
SENIOR SECURED CONVERTIBLE NOTES DUE 2013




 





 

















 


TABLE OF CONTENTS


 


	
   

  	
   

  	
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  I.
  DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION

  	
  1

  
	
   

  	
   

  
	
  1.01

  	
  Definitions

  	
  1

  
	
  1.02

  	
  Rules of Construction

  	
  16

  
	
  1.03

  	
  Compliance Certificates and Opinions

  	
  16

  
	
  1.04

  	
  Form of Documents Delivered to Trustee

  	
  17

  
	
  1.05

  	
  Acts of Holders; Record Dates

  	
  17

  
	
  1.06

  	
  Notices, Etc., to Trustee and Company

  	
  18

  
	
  1.07

  	
  Notice to Holders; Waiver

  	
  18

  
	
  1.08

  	
  Effect of Headings and Table of Contents

  	
  19

  
	
  1.09

  	
  Severability Clause

  	
  19

  
	
  1.10

  	
  Benefits of Indenture

  	
  19

  
	
  1.11

  	
  Governing Law

  	
  19

  
	
  1.12

  	
  No Recourse Against Others

  	
  19

  
	
   

  	
   

  	
   

  
	
  II. THE SECURITIES

  	
  19

  
	
   

  	
   

  	
   

  
	
  2.01

  	
  Designation, Amount and Issuance of Securities

  	
  19

  
	
  2.02

  	
  Form of the Securities

  	
  20

  
	
  2.03

  	
  Date and Denomination of Securities and Interest

  	
  21

  
	
  2.04

  	
  Payments on the Securities

  	
  21

  
	
  2.05

  	
  Execution and Authentication

  	
  22

  
	
  2.06

  	
  Security Registrar, Paying Agent and Conversion Agent

  	
  22

  
	
  2.07

  	
  Paying Agent to Hold Money in Trust

  	
  23

  
	
  2.08

  	
  Exchange and Registration of Transfer of Securities

  	
  24

  
	
  2.09

  	
  Global Securities

  	
  25

  
	
  2.10

  	
  Transfer Restrictions

  	
  26

  
	
  2.11

  	
  Responsibilities and Obligations Relating to the Depositary

  	
  28

  
	
  2.12

  	
  Replacement Securities

  	
  28

  
	
  2.13

  	
  Outstanding Securities

  	
  29

  
	
  2.14

  	
  Temporary Securities

  	
  30

  
	
  2.15

  	
  Cancellation

  	
  30

  
	
  2.16

  	
  CUSIP and ISIN Numbers

  	
  31

  
	
  2.17

  	
  Additional Securities

  	
  31

  
	
  2.18

  	
  Ranking

  	
  31

  
	
   

  	
   

  	
   

  
	
  III. PARTICULAR COVENANTS OF THE COMPANY

  	
  32

  
	
   

  	
   

  
	
  3.01

  	
  Payment of Principal and Interest

  	
  32

  
	
  3.02

  	
  Maintenance of Office or Agency

  	
  32

  
	
  3.03

  	
  Resale of Certain Securities

  	
  32

  
	
  3.04

  	
  Notice of Event of Default

  	
  32

  
	
  3.05

  	
  Late Filing Additional Interest

  	
  33

  



 


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  3.06

  	
  Corporate
  Existence

  	
  33

  
	
  3.07

  	
  Ownership
  of Subsidiaries

  	
  33

  
	
  3.08

  	
  Restricted
  Payments

  	
  34

  
	
  3.09

  	
  Redemption
  and Dividends

  	
  34

  
	
  3.10

  	
  Liens

  	
  34

  
	
  3.11

  	
  Indebtedness

  	
  34

  
	
  3.12

  	
  Financial
  Covenants

  	
  34

  
	
  3.13

  	
  Preservation
  of Repurchase Rights

  	
  35

  
	
  3.14

  	
  Share Cap
  Proposal

  	
  35

  
	
  3.15

  	
  Further
  Assurances

  	
  35

  
	
  3.16

  	
  Annual
  Compliance Certificate

  	
  35

  
	
   

  	
   

  	
   

  
	
  IV.
  REPURCHASE AND REDEMPTION OF SECURITIES

  	
  36

  
	
   

  	
   

  	
   

  
	
  4.01

  	
  Fundamental
  Change Repurchase Right Notice

  	
  36

  
	
  4.02

  	
  Right to
  Require Repurchase Upon Fundamental Change

  	
  37

  
	
  4.03

  	
  Settlement
  of Fundamental Change Repurchases

  	
  38

  
	
  4.04

  	
  Restrictions
  On Repurchases

  	
  39

  
	
  4.05

  	
  Ratio
  Event Repurchase Right Notice

  	
  39

  
	
  4.06

  	
  Right to
  Require Repurchase Upon Ratio Event

  	
  40

  
	
  4.07

  	
  Settlement
  of Ratio Event Repurchases

  	
  42

  
	
  4.08

  	
  Redemption
  Rights

  	
  43

  
	
  4.09

  	
  Redemption
  Price

  	
  45

  
	
  4.10

  	
  Selection
  of Securities to Be Redeemed

  	
  45

  
	
  4.11

  	
  Redemption
  Notice

  	
  45

  
	
  4.12

  	
  Payment
  of Securities Called for Redemption

  	
  46

  
	
  4.13

  	
  Restrictions
  on Redemption

  	
  47

  
	
  4.14

  	
  Officers’
  Certificate to Trustee

  	
  47

  
	
   

  	
   

  	
   

  
	
  V.
  CONVERSION

  	
  47

  
	
   

  	
   

  	
   

  
	
  5.01

  	
  Conversion
  Rights

  	
  47

  
	
  5.02

  	
  Limitation
  on Beneficial Ownership

  	
  48

  
	
  5.03

  	
  Make-Whole
  Fundamental Changes

  	
  48

  
	
  5.04

  	
  Exercise
  of Conversion Privilege

  	
  49

  
	
  5.05

  	
  Settlement
  of Conversion Obligation

  	
  50

  
	
  5.06

  	
  Fractions
  of Shares

  	
  52

  
	
  5.07

  	
  Adjustment
  of Conversion Rate

  	
  52

  
	
  5.08

  	
  Notice of
  Adjustments of Conversion Rate

  	
  62

  
	
  5.09

  	
  Company
  to Reserve Common Stock

  	
  62

  
	
  5.10

  	
  Certain
  Covenants

  	
  63

  
	
  5.11

  	
  Cancellation
  of Converted Securities

  	
  63

  
	
  5.12

  	
  Effect of
  Reclassification, Consolidation, Merger or Sale

  	
  63

  
	
  5.13

  	
  Responsibility
  of Trustee for Conversion Provisions

  	
  64

  
	
  5.14

  	
  Stockholder
  Rights Plan

  	
  65

  
	
  5.15

  	
  Company
  Determination Final

  	
  65

  



 


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  5.16

  	
  Compliance
  with Listing Rules

  	
  65

  
	
   

  	
   

  	
   

  
	
  VI.
  RIGHTS OF PARTICIPATION IN FUTURE EQUITY ISSUANCES

  	
  66

  
	
   

  	
   

  	
   

  
	
  6.01

  	
  Offer
  Notices

  	
  66

  
	
  6.02

  	
  Acceptance
  of Offers

  	
  66

  
	
  6.03

  	
  Settlement
  of Participation in Equity Issuances

  	
  67

  
	
  6.04

  	
  Participation
  Rights Not Applicable

  	
  68

  
	
   

  	
   

  	
   

  
	
  VII.
  EVENTS OF DEFAULT; REMEDIES

  	
  69

  
	
   

  	
   

  	
   

  
	
  7.01

  	
  Events of
  Default

  	
  69

  
	
  7.02

  	
  Acceleration
  of Maturity; Rescission and Annulment

  	
  71

  
	
  7.03

  	
  Default
  Additional Interest

  	
  71

  
	
  7.04

  	
  Collection
  of Indebtedness and Enforcement by Trustee

  	
  72

  
	
  7.05

  	
  Trustee
  May File Proofs of Claim

  	
  73

  
	
  7.06

  	
  Application
  of Money Collected

  	
  73

  
	
  7.07

  	
  Limitation
  on Suits

  	
  73

  
	
  7.08

  	
  Unconditional
  Right of Holders to Receive Payment

  	
  74

  
	
  7.09

  	
  Restoration
  of Rights and Remedies

  	
  74

  
	
  7.10

  	
  Rights
  and Remedies Cumulative

  	
  75

  
	
  7.11

  	
  Delay or
  Omission Not Waiver

  	
  75

  
	
  7.12

  	
  Control
  by Holders

  	
  75

  
	
  7.13

  	
  Waiver of
  Past Defaults

  	
  75

  
	
  7.14

  	
  Undertaking
  for Costs

  	
  76

  
	
  7.15

  	
  Waiver of
  Stay or Extension Laws

  	
  76

  
	
  7.16

  	
  Violations
  of Certain Covenants

  	
  76

  
	
   

  	
   

  	
   

  
	
  VIII.
  CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE

  	
  76

  
	
   

  	
   

  	
   

  
	
  8.01

  	
  Company
  May Consolidate, Etc., Only on Certain Terms

  	
  76

  
	
  8.02

  	
  Effectiveness
  of Consolidation, Merger or Transfer

  	
  77

  
	
   

  	
   

  	
   

  
	
  IX. THE
  TRUSTEE

  	
  77

  
	
   

  	
   

  	
   

  
	
  9.01

  	
  Duties and
  Responsibilities of Trustee

  	
  77

  
	
  9.02

  	
  Notice of
  Defaults

  	
  79

  
	
  9.03

  	
  Reliance on Documents, Opinions, Etc

  	
  79

  
	
  9.04

  	
  No Responsibility
  for Recitals, Etc

  	
  81

  
	
  9.05

  	
  Trustee,
  Security Registrar and Agents May Own Securities

  	
  81

  
	
  9.06

  	
  Monies To
  Be Held in Trust

  	
  81

  
	
  9.07

  	
  Compensation
  and Expenses of Trustee

  	
  81

  
	
  9.08

  	
  Officers’
  Certificate as Evidence

  	
  82

  
	
  9.09

  	
  Conflicting
  Interests of Trustee

  	
  82

  
	
  9.10

  	
  Eligibility
  of Trustee

  	
  82

  
	
  9.11

  	
  Resignation
  or Removal of Trustee

  	
  83

  



 


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  9.12

  	
  Acceptance
  by Successor Trustee

  	
  84

  
	
  9.13

  	
  Succession
  by Merger, Etc

  	
  84

  
	
  9.14

  	
  Preferential
  Collection of Claims

  	
  85

  
	
  9.15

  	
  Trustee’s
  Application for Instructions From the Company

  	
  85

  
	
   

  	
   

  	
   

  
	
  X.
  HOLDERS’ LISTS AND REPORTS

  	
  85

  
	
   

  	
   

  	
   

  
	
  10.01

  	
  Company
  to Furnish Names and Addresses of Holders

  	
  85

  
	
  10.02

  	
  Preservation
  of Information; Communications to Holders

  	
  86

  
	
  10.03

  	
  Reports
  by Company; Rule 144A Information

  	
  86

  
	
   

  	
   

  	
   

  
	
  XI.
  SATISFACTION AND DISCHARGE

  	
  87

  
	
   

  	
   

  	
   

  
	
  11.01

  	
  Discharge
  of Indenture

  	
  87

  
	
  11.02

  	
  Deposited
  Monies to Be Held in Trust by Trustee

  	
  88

  
	
  11.03

  	
  Paying
  Agent to Repay Monies Held

  	
  88

  
	
  11.04

  	
  Return of
  Unclaimed Monies

  	
  88

  
	
  11.05

  	
  Reinstatement

  	
  88

  
	
   

  	
   

  	
   

  
	
  XII. MODIFICATIONS
  AND AMENDMENTS

  	
  88

  
	
   

  	
   

  	
   

  
	
  12.01

  	
  Consent
  Requirements for Modifications and Amendments

  	
  88

  
	
  12.02

  	
  Amendments
  Without Consent of Holders

  	
  89

  
	
  12.03

  	
  Amendments
  Requiring Consent of Holders

  	
  90

  
	
  12.04

  	
  Execution
  of Supplemental Indentures

  	
  90

  
	
  12.05

  	
  Effect of
  Supplemental Indentures

  	
  91

  
	
  12.06

  	
  Reference
  in Securities to Supplemental Indentures

  	
  91

  
	
  12.07

  	
  Notice to
  Holders of Supplemental Indentures

  	
  91

  
	
   

  	
   

  	
   

  
	
  XIII.
  COLLATERAL AND SECURITY DOCUMENTS

  	
  91

  
	
   

  	
   

  	
   

  
	
  13.01

  	
  Security
  Documents

  	
  91

  
	
  13.02

  	
  Suits to
  Protect the Collateral

  	
  94

  
	
  13.03

  	
  Release
  of Collateral

  	
  94

  
	
  13.04

  	
  Sufficiency
  of Release

  	
  95

  
	
  13.05

  	
  Actions
  by the Trustee

  	
  95

  
	
   

  	
   

  	
   

  
	
  XIV.
  MISCELLANEOUS

  	
  96

  
	
   

  	
   

  	
   

  
	
  14.01

  	
  Rules by
  Trustee, Paying Agent and Security Registrar

  	
  96

  
	
  14.02

  	
  Successors

  	
  96

  
	
  14.03

  	
  Multiple
  Originals

  	
  96

  
	
  14.04

  	
  Calculations

  	
  96

  
	
  14.05

  	
  Waiver of
  Jury Trial

  	
  96

  
	
  14.06

  	
  Force
  Majeure

  	
  96

  



 


iv

















 


	
  Schedule A

  	
   

  	
  -

  	
   

  	
  Make-Whole Table

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit A

  	
   

  	
  -

  	
   

  	
  Form of
  Security

  
	
  Exhibit B

  	
   

  	
  -

  	
   

  	
  Form of
  Restrictive Legend for Common Stock Issued Upon Conversion or Redemption

  



 


v

















 


INDENTURE, dated as of June 17, 2008, between POWER-ONE,
INC., a corporation duly organized and existing under the laws of the State of
Delaware, as Issuer (the “Company”),
having its principal office at 740 Calle Plano, Camarillo, California, and THE
BANK OF NEW YORK TRUST COMPANY, N.A., a national banking association, as
Trustee (the “Trustee”).


 


RECITALS OF THE COMPANY


 


WHEREAS, the Company has duly authorized the creation of an
issue of 8% Senior Secured Convertible Notes due 2013 (each a “Security” and collectively, the “Securities”) of the tenor and amount
hereinafter set forth, and to provide therefor the Company has duly authorized
the execution and delivery of this Indenture; and


 


WHEREAS, all things necessary to make the Securities, when
executed by the Company and authenticated and delivered hereunder and duly
issued by the Company, the valid and legally binding obligations of the
Company, and to make this Indenture a valid and legally binding agreement of
the Company, in accordance with the terms of the Securities and the Indenture,
have been done;


 


NOW, THEREFORE, THIS INDENTURE WITNESSETH, for and in
consideration of the premises and the purchases of the Securities by the
Holders thereof, it is mutually agreed, for the benefit of the Company and the
equal and proportionate benefit of all Holders of the Securities, as follows:


 


I.  DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION


 


1.01                           DEFINITIONS.


 


“Act,”
when used with respect to any Holder, has the meaning specified in Section 1.05(a).


 


“Additional
Interest” means Default Additional Interest and Late Filing
Additional Interest.


 


“Additional
Securities” has the meaning specified in Section 2.17.


 


“Additional Shares”
has the meaning specified in Section 5.03(a).


 


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


 


“Agent Members”
has the meaning specified in Section 2.09(f).


 


“Applicable Price”
has the meaning specified in Section 5.07(n).


 

















 


“Averaging Period”
has the meaning specified in Section 5.07(f).


 


“Bankruptcy
Custodian” means any receiver, trustee, assignee, liquidator or
similar official under any Bankruptcy Law.


 


“Bankruptcy Law”
means Title 11 of the United States Code or any similar Federal or State law
for relief of debtors.


 


“Beneficial Owner”
means a “beneficial owner” as determined in accordance with Rule 13d-3
under the Exchange Act.


 


“Board of
Directors” means, with respect to any Person, either the board of
directors of such Person or any duly authorized committee of that board.


 


“Business Day”
means any day, other than a Saturday or a Sunday, that is neither a legal
holiday in the City of New York nor a day on which banking institutions are
authorized or required by law, regulation or executive order to close in the
City of New York.


 


“Capital Stock”
means any and all shares, interests, participations, rights or other
equivalents (however designated) of corporate stock and limited liability
company interests and, with respect to partnerships, partnership interests
(whether general or limited) and any other interest or participation that
confers on a Person the right to receive a share of the profits and losses of,
or distributions of assets of, such partnership.


 


“Cap Price” has
the meaning set forth in Section 5.07(m).


 


“Cash Equivalents”
means:


 


(i)                           United States
dollars;


 


(ii)                        securities
issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof (provided that the full
faith and credit of the United States is pledged in support thereof) having
maturities of not more than twelve months from the date of acquisition;


 


(iii)                     certificates of deposit and
eurodollar time deposits with maturities of twelve months or less from the date
of acquisition, bankers’ acceptances with maturities not exceeding six months
and overnight bank deposits, in each case, with any domestic commercial bank
having combined capital and surplus in excess of $500 million and a Thomson
BankWatch Rating at the time of acquisition of “B” or better;


 


(iv)                    repurchase obligations with
a term of not more than seven days for underlying securities of the types
described in clauses (ii) and (iii) above entered into with any
financial institution meeting the qualifications specified in clause (iii) above;


 


(v)                       commercial
paper having one of the two highest ratings obtainable from Moody’s Investors
Service, Inc. or Standard & Poor’s Rating Services and in each
case maturing within six months after the date of acquisition; and


 


2

















 


(vi)                    money market or mutual funds
at least 90% of the assets of which constitute cash equivalents of the kinds
described in clauses (i) through (v) of this definition.


 


“Collateral”
means the assets of the Company and its domestic, first tier, Wholly Owned
Subsidiaries and any other property or assets that fall within the definition
of “Pledged Collateral” under the Pledge
Agreement that from time to time secure the Securities, and the payment and
performance of all other obligations of the Company to the Holders or the
Trustee hereunder.


 


“Collateral Agent”
means The Bank of New York Trust Company, N.A. or such successors appointed
under the Security Documents.


 


“Commission”
means the United States Securities and Exchange Commission, as from time to
time constituted, created under the Exchange Act.


 


“Common Stock”
means the shares of common stock, par value $0.001 per share, of the Company as
they exist on the date of this Indenture or any other Reference Property into
which the Common Stock shall be reclassified, changed, converted into or
exchanged for in accordance with to Section 5.12.


 


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


 


“Company Notice”
has the meaning specified in Section 13.03.


 


“Contingent Obligation”
means, as to any Person, any direct or indirect liability, contingent or
otherwise, of that person with respect to any Indebtedness, lease or other
obligation of another Person if the primary purpose or intent of the Person
incurring such liability, or the primary effect thereof, is to provide assurance
to the obligee of such liability that such liability will be paid or
discharged, or that any agreements relating thereto will be complied with, or
that the holders of such liability will be protected (in whole or in part)
against loss with respect thereto; provided,
that indemnification provisions not otherwise constituting a guarantee shall
not be deemed to be a “contingent obligation.”


 


“Continuing
Directors” means (i) individuals who on the Issue Date were
members of the Board of Directors of the Company and (ii) any new
directors whose election or appointment to the Board of Directors of the
Company or nomination for election by the Company’s stockholders was approved
by at least a majority of the Company’s directors then still in office (or a
duly constituted committee thereof), either who were directors on the Issue
Date or whose election, appointment or nomination for election was previously
so approved.


 


“Conversion Agent”
has the meaning specified in Section 2.06(a) and
shall include any additional conversion agents appointed pursuant to Section 2.06(a).


 


“Conversion Date”
has the meaning specified in Section 5.04(b).


 


3

















 


“Conversion Notice”
has the meaning specified in Section 5.04(a).


 


“Conversion
Obligation” has the meaning specified in Section 5.05(a).


 


“Conversion Price”
means, at any time, $1,000 divided by
the Conversion Rate as at that time.


 


“Conversion Rate”
means the Initial Conversion Rate, as it may be adjusted pursuant to Section 5.03 or Section 5.07.


 


“Corporate Trust
Office” means the office of the Trustee at which the corporate trust
business of the Trustee shall, at any particular time, be principally
administered, which office is, as of the date of this Indenture, located at The
Bank of New York Trust Company, N.A., 700 South Flower Street, Suite 500,
Los Angeles, California, 90017, Attention: 
Corporate Unit, or such other address as the Trustee may designate from
time to time by notice to the Holders and the Company, or the principal
corporate trust office of any successor Trustee (or such other address as such
successor Trustee may designate from time to time by notice to the Holders and
the Company).


 


“Custodian”
means the Trustee, as custodian with respect to the Global Securities, or any
successor entity.


 


“Default”
means any event that is or, with the passage of time or the giving of notice or
both, would become an Event of Default.


 


“Default
Additional Interest” has the meaning specified in Section 7.03(a).


 


“Delegending Date”
has the meaning specified in Section 2.10(d).


 


“Depositary”
means The Depository Trust Company until a successor Depositary shall have
become such pursuant to the applicable provisions of this Indenture, and
thereafter “Depositary” shall mean
such successor Depositary.


 


“Dilutive Issuance”
has the meaning specified in Section 5.07(n).


 


“Distributed
Property” has the meaning specified in Section 5.07(d).


 


“Effective Date”
has the meaning specified in Section 5.03(c).


 


“Event of Default”
has the meaning specified in Section 7.01.


 


“Ex-Date”
means, with respect to any issuance or distribution to holders of the Common
Stock, the first date on which the shares of the Common Stock trade on the
Relevant Exchange, regular way, without the right to receive such issuance or
distribution.


 


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


 


“Excluded Securities”
means any Common Stock issued or issuable: (i) in connection with any
employee benefit plan or agreement which has been, as of the date of determination,



 


4

















 


approved by the Company’s
Board of Directors, pursuant to which the Company’s securities may be issued in
the ordinary course of business to any consultant, employee, officer or
director for services provided to the Company or any of its subsidiaries; (ii) upon
conversion of the Securities; (iii) pursuant to any bona fide firm
commitment underwritten public offering with a nationally recognized
underwriter, which generates gross proceeds to the Company in excess of
$50,000,000 (other than an “at-the-market offering” as defined in Rule 415(a)(4) under
the 1933 Act and “equity lines”); (iv) upon exercise or conversion of any
options (including the warrants held by PWER Bridge LLC) or convertible
securities which are outstanding on June 11, 2008, provided that the terms
of such options or convertible securities are not materially amended, modified
or changed on or after June 12, 2008 in a manner adverse to the holders; (v) pursuant
to rights under the Rights Agreement, dated as of July 27, 2000, between
the Company and the rights agent named therein or any similar successor
agreement (the “Rights Plan”) and (vi) directly
on an arm’s-length basis to an unrelated third party in connection with bona
fide, strategic transactions, joint ventures, collaborations, licenses of
products or technology, or similar transactions approved by the Company’s Board
of Directors; provided that the primary purpose of such issuance is not to
raise equity capital.


 


“Fundamental
Change” means the occurrence of any one of the following events at
any time after the Issue Date:


 


(a)                                  any Person
other than the Company, its Subsidiaries or its or their employee benefit
plans, files a Schedule TO or any similar schedule, form or report under the
Exchange Act disclosing that such Person has become the direct or indirect
ultimate Beneficial Owner of the Company’s Capital Stock representing more than
50% of the total voting power of all shares of the Capital Stock of the Company
entitled to vote generally in elections of directors;


 


(b)                                 the Company (1) merges
or consolidates with or into any other Person, another Person merges with or
into the Company, or the Company conveys, sells, transfers or leases all or
substantially all of its assets to another Person (excluding a pledge of
securities issued by the Company or any of its Subsidiaries) or (2) engages
in any recapitalization, reclassification or other acquisition transaction or
series of transactions in which all or substantially all the Common Stock is
exchanged for or converted into cash, securities or other property, in each
case, other than any merger or consolidation:


 


(i)                           pursuant to
which the holders of the Common Stock immediately prior to the transaction have
the entitlement to exercise, directly or indirectly, 50% or more of the voting
power of all shares of Capital Stock entitled to vote generally in the election
of directors of either (A) the continuing or surviving corporation
immediately after the transaction or (B) the corporation that directly or
indirectly owns 100% of the Capital Stock of such continuing or surviving
corporation;


 


(ii)                        that does not
result in a reclassification, conversion, exchange or cancellation of the
outstanding Common Stock; or


 


(iii)                     that is effected solely to
change the Company’s jurisdiction of incorporation and results in a
reclassification, conversion or exchange of outstanding shares of the Common
Stock solely into shares of common stock of the surviving entity;


 


5
















 


(c)                                  at any time the
Continuing Directors do not constitute a majority of Board of Directors of the
Company (or, if applicable, of a successor person to the Company); or


 


(d)                                 if shares of
the Common Stock, or shares of any other Capital Stock into which the
Securities are convertible pursuant to the terms of this Indenture, are not
listed for trading on any United States national or regional securities
exchange.


 


Notwithstanding the foregoing, any transaction or
event described above shall not constitute a Fundamental Change if, in
connection with such transaction or event, or as a result therefrom, a
transaction described in clause (b) above
occurs (without regard to any exclusion to such clause described in the paragraphs (i), (ii) or (iii) thereunder) and at least 90% of the consideration
paid for the Common Stock (excluding cash payments for fractional shares, cash
payments made pursuant to dissenters’ appraisal rights and cash dividends)
consists of shares of common stock (or depositary receipts in respect thereof)
traded on any Relevant Exchange (or will be so traded or quoted immediately
following the completion of the merger or consolidation or such other
transaction) and, as a result of such transaction, the Securities become
convertible into such Common Stock (or depositary receipts in respect thereof)
pursuant to Section 5.12.


 


For the purposes of this definition, the term “Person” has the meaning specified in Section 1.01 and also includes any syndicate or group
that would be deemed to be a “person” under Section 13(d)(3) of the
Exchange Act.


 


“Fundamental
Change Expiration Time” has the meaning specified in Section 4.02(b).


 


“Fundamental
Change Repurchase Date” has the meaning specified in Section 4.02(a).


 


“Fundamental
Change Repurchase Notice” has the meaning specified in Section 4.02(b).


 


“Fundamental
Change Repurchase Price” has the meaning specified in Section 4.02(a).


 


“Fundamental
Change Repurchase Right Notice” has the meaning specified in Section 4.01(a).


 


“GAAP”
means generally accepted accounting principles set forth in the opinions and
pronouncements of the Public Company Accounting Oversight Board and statements
and pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as have been approved by a significant segment
of the accounting profession, in each case, as in effect in the United States
from time to time.


 


“Global Security”
means a Security in global form registered in the Security Register in the name
of a Depositary or a nominee thereof.


 


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


 


6

















 


“Indebtedness”
of a Person means, without duplication (i) all indebtedness for borrowed
money, (ii) all obligations issued, undertaken or assumed as the deferred
purchase price of property or services, including (without limitation) capital
leases in accordance with GAAP (other than trade payables entered into in the
ordinary course of business and any liabilities relating to the application of
FASB 133 or any other related accounting literature under GAAP or in connection
with embedded or standalone derivatives related to indebtedness), (iii) all
reimbursement or payment obligations with respect to letters of credit, surety
bonds and other similar instruments, (iv) all obligations evidenced by
notes, bonds, debentures or similar instruments, including obligations so
evidenced incurred in connection with the acquisition of property, assets or
businesses, (v) all indebtedness created or arising under any conditional
sale or other title retention agreement, or incurred as financing, in either
case with respect to any property or assets acquired with the proceeds of such
indebtedness (even though the rights and remedies of the seller or bank under
such agreement in the event of default are limited to repossession or sale of
such property), (vi) all monetary obligations under any leasing or similar
arrangement that would be classified as a capital lease in accordance with
GAAP, (vii) all indebtedness referred to in clauses (i) through
(vi) above secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any mortgage, Lien, pledge, charge, security interest
or other encumbrance upon or in any property or assets (including accounts and
contract rights) owned by any Person, even though the Person which owns such
assets or property has not assumed or become liable for the payment of such
indebtedness, and (viii) all Contingent Obligations in respect of
indebtedness or obligations of others of the kinds referred to in clauses (i) through (vii) above;
and provided, however, that neither the accrual of interest nor the accretion
of original issue discount (in each case, whether as the issuance of
pay-in-kind securities or otherwise) nor imputed interest, cost or premiums
shall be deemed to be Indebtedness for purposes of this definition.


 


“Indenture”
means this instrument as originally executed or as it may from time to time be
supplemented or amended by one or more indentures supplemental hereto entered
into pursuant to the applicable provisions hereof.


 


“Indenture Documents”
means, collectively, this instrument, the Pledge Agreement and the Security
Documents, in each case, as amended from time to time in accordance with the
terms thereof.


 


“Initial
Conversion Rate” means 304.8780 shares of Common Stock per $1,000
principal amount of Securities.


 


“Initial Purchaser”
means the initial purchaser of the securities under the Purchase Agreement.


 


“interest”
means, when used with reference to the Securities, any interest payable under
the terms of the Securities, including any Additional Interest payable under
the terms of the Securities.


 


“Interest Payment
Date” means each March 31, June 30, September 30 and December 31
of each year, commencing September 30, 2008.


 


7

















 


“Issue Date”
means June 17, 2008, being the date the Securities are originally issued.


 


“Last Reported Sale
Price” means, with respect to the Common Stock or any other security
for which a Last Reported Sale Price must be determined, on any date, the
closing sale price per share of Common Stock or unit of such other security
(or, if no closing sale price is reported, the average of the last bid and last
ask prices or, if more than one in either case, the average of the average last
bid and the average last ask prices) on such date as reported in composite
transactions for the Relevant Exchange, if any. 
If the Common Stock or such other security is not listed for trading on
a United States national or regional securities exchange on such date, the “Last Reported Sale Price” shall be the
average of the last quoted bid and ask prices per share of Common Stock or unit
of such other security in the over-the-counter market on such date, as reported
by Pink Sheets LLC or similar organization. 
If the Common Stock or such other security is not so quoted, the “Last Reported Sale Price” shall be the
average of the mid-point of the last bid and ask prices for the Common Stock or
such other security on such date from each of at least three nationally
recognized independent investment banking firms, selected from time to time by
the Company for that purpose.  The Last
Reported Sale Price shall be determined without reference to extended or after
hours trading.  Any such determination
shall be conclusive absent manifest error.


 


“Late Filing
Additional Interest” has the meaning specified in Section 3.05(a).


 


“Lien” means,
with respect to any asset, any mortgage, lien, pledge, charge, security
interest or encumbrance of any kind in respect of such asset, whether or not
filed, recorded or otherwise perfected under applicable law, including any
conditional sale or other title retention agreement, any lease in the nature
thereof, any option or other agreement to sell or give a security interest in
and any filing of or agreement to give any financing statement under the
Uniform Commercial Code (or equivalent statutes) of any jurisdiction.


 


“LTM EBITDA”
shall mean, with respect to the Company and its Subsidiaries on a consolidated
basis for the most recent twelve-month period for which financial statements
are, or are made, publicly available, the consolidated net income of the
Company and its Subsidiaries for such period (treated as a single period), plus
for such period, to the extent such amount was deducted in calculating such
consolidated net income,


 


(a)                                  the sum of (in
each case without duplication):


 


(i)                                     provision for
taxes based on income, profits or capital of the Company and its Subsidiaries
for such period, including, without limitation, state, franchise and similar
taxes, and taxes paid by the Company and its Subsidiaries during such period,


 


(ii)                                  interest
expense of the Company and its Subsidiaries for such period plus the amount of
dividends and accretion on preferred capital stock, and accretion of discounts
on the Company’s debt, for such period,


 


(iii)                               depreciation
and amortization expenses of the Company and its Subsidiaries for such period,


 


8

















 


(iv)                              business
optimization expenses and restructuring charges and reserves, in each case
based on the good faith determination of the audit committee of the Company’s
Board of Directors (which, for the avoidance of doubt, shall include retention,
severance, systems establishment cost, excess pension charges, contract
termination costs (including future lease commitments) and costs to consolidate
facilities and relocate employees),


 


(v)                                 any other
non-cash charges or other non-cash items (including, without limitation,
non-cash charges or other non-cash items relating to the application of FASB
133 or any other related accounting literature under GAAP or in connection with
embedded or standalone derivatives related to indebtedness, or the write-off of
goodwill or other intangibles in accordance with SFAS 142 or SFAS 144, or any
non-cash compensation charges in accordance with SFAS 123(R)); provided that,
for purposes of this subclause (v),
any non-cash charges, other non-cash items or losses shall be treated as cash
charges, other non-cash items or losses in any subsequent period during which
cash disbursements attributable thereto are made, and


 


(vi)                              Transaction
Costs,


 


minus for such period


 


(b)                                 the sum of (in
each case without duplication), non-cash gains from:


 


(i)                                     the disposition
of assets,


 


(ii)                                  the change of
estimates, and


 


(iii)                              change of
actuarial assumptions.


 


“Make-Whole
Fundamental Change” means any transaction or event that constitutes
a Fundamental Change pursuant to clauses (a) or
(b) of the definition thereof
other than, for the avoidance of doubt, any such transaction or event that is
not a Fundamental Change as a result of the paragraph following clause (d) thereof.


 


“Market Disruption
Event” means the occurrence or existence on any Scheduled Trading
Day for the Common Stock of any suspension or limitation imposed on trading (by
reason of movements in price exceeding limits permitted by the Relevant
Exchange or otherwise) in the Common Stock or in any options contracts or
futures contracts relating to the Common Stock on the Relevant Exchange, and
such suspension or limitation occurs or exists at any time within the 30
minutes prior to the closing time of the Relevant Exchange on such day.


 


“Maturity”
means, in respect of any Security, the date on which the principal, Fundamental
Change Repurchase Price or Redemption Price of such Security becomes due and
payable pursuant to this Indenture, whether at the Stated Maturity Date, Fundamental
Change Repurchase Date or Redemption Date, by declaration of acceleration or
otherwise.


 


“New Issuance Price”
has the meaning specified in Section 5.07(n).


 


9

















 


“Officer”
means each of the Chief Executive Officer, the President, the Chief Financial
Officer, the Treasurer and the Secretary, of the Company.


 


“Officers’
Certificate” means a certificate signed by two Officers, or by one
Officer and any Senior Vice President of the Company, and delivered to the
Trustee.


 


“Opinion of
Counsel” means a written opinion of counsel for the Company, who may
be external or in-house counsel.


 


“Outstanding”
means, in respect of a Security, that such Security is outstanding pursuant to
the terms of Section 2.13.


 


“PAI” means PAI
Capital LLC, a limited liability company established under the laws of the
State of Delaware.


 


“Paying Agent”
has the meaning specified in Section 2.06(a) and
shall include any additional paying agents appointed pursuant to Section 2.06(a).


 


“Permitted Indebtedness”
means (i) the Indebtedness evidenced by the Securities, (ii) unsecured
Indebtedness incurred by the Company that is made expressly subordinate in
right of payment to the Indebtedness evidenced by the Securities, provided that
such Indebtedness does not provide for (A) the payment, prepayment,
repayment, repurchase or defeasance, directly or indirectly, of any principal
or premium, if any, thereon until ninety-one (91) days after the maturity date
of the Securities or later and (B) total interest and fees at a rate in
excess of eight percent (8%) per annum, (iii) Indebtedness of the
Company and its Subsidiaries outstanding as of the date of this Indenture
(which, for the avoidance of doubt, shall include the maximum principal amount
that may be borrowed under any outstanding revolving credit facility), (iv) Indebtedness
secured by Permitted Liens, (v)  unsecured obligations
or Indebtedness to trade creditors of the Company or any of its Subsidiaries
incurred in the ordinary course of business, (vi) extensions, refinancings
and renewals of any items of Permitted Indebtedness, provided that (W) the
principal amount is not increased, (X) the stated maturity date is not
made earlier, (Y) if the Indebtedness being extended, refinanced or renewed
is subordinate in right of payment to the Indebtedness evidenced by the
Securities, such extended, refinanced or renewed Indebtedness is subordinated
in right of payment to the Securities on terms at least as favorable in the
aggregate to the Holders of the Securities as those contained in the
documentation governing the Indebtedness being extended, refinanced or renewed
and (Z) such Indebtedness is incurred either by (1) the Subsidiary
who is the obligor on the Indebtedness being extended, refinanced or renewed or
(2) the Company, (vii) Indebtedness in the form of a bond or other
obligation in favor of a foreign tax authority to secure actual or potential
tax obligations to it and (viii) any Indebtedness not otherwise set forth
in clauses  (i) through
(vii) above, provided that the
aggregate amount of such Indebtedness shall not exceed $10 million.


 


“Permitted Liens” means (i) any
Lien for taxes not yet due or delinquent or being contested in good faith by
appropriate proceedings for which adequate reserves have been established in
accordance with GAAP, (ii) any statutory Lien arising in the ordinary
course of business by operation of law with respect to a liability that is not
yet due or delinquent, (iii) any Lien created by operation of law, arising
in the ordinary course of business with respect to a 


 


10

















 


liability that is not yet
due or delinquent or that are being contested in good faith by appropriate
proceedings, (iv) easements, rights-of-way, municipal and zoning and
building ordinances and similar charges, encumbrances, title defects or other
irregularities, governmental restrictions on the use of property or conduct of
business, and Liens in favor of governmental authorities and public utilities, that
do not materially interfere with the ordinary course of business of the Company and its
Subsidiaries, taken as a whole, (v) Liens securing obligations under
indebtedness included in clauses (i) and (iii) of the definition of
Permitted Indebtedness, (vi) Liens (A) upon or in any equipment
acquired or held by the Company or any of its Subsidiaries
to secure the purchase price of such equipment or Indebtedness incurred solely
for the purpose of financing the acquisition or lease of such equipment, or (B) existing
on such equipment at the time of its acquisition, provided that the Lien is
confined solely to the property so acquired and improvements thereon, and the
proceeds of such equipment, (vii) Liens on property of, or on shares of
stock or Indebtedness of, any corporation existing at the time such corporation
becomes, or becomes a part of, any Subsidiary; provided that such Liens do not
extend to or cover any property or assets of the Company or any
Subsidiary other than the property or assets acquired and the proceeds and
products thereof and were not incurred in anticipation of such Person becoming
a Subsidiary; (viii) Liens incurred in connection with the extension,
renewal or refinancing of any Indebtedness secured by Liens of the type
described in clauses (v) and (vi) above, provided that any extension, renewal or
replacement Lien shall be limited to the property encumbered by the existing
Lien, (ix) Liens arising out of conditional sale, title retention,
consignment or similar arrangements for the sale of goods entered into by the Company or any of its
Subsidiaries, (x) any option or other agreement to purchase any asset of the Company or any
Subsidiary the purchase, sale or other disposition of which is not prohibited
by any provision of the Securities, (xi) leases or subleases and licenses
and sublicenses granted to others in the ordinary course of the Company’s business,
not interfering in any material respect with the business of the Company and its
Subsidiaries taken as a whole, (xii) Liens in favor of customs and revenue
authorities arising as a matter of law to secure payments of custom duties in
connection with the importation of goods and (xiii) Liens arising from
judgments, decrees or attachments other than orders or decrees constituting a
bankruptcy-related event of default.


 


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


 


“Physical
Securities” means permanent certificated Securities in registered
form issued in denominations of $1,000 principal amount and integral multiples
thereof.


 


“Pledge Agreement”
means that certain Pledge and Security Agreement, dated as of even date
herewith, by the Company and certain of its Subsidiaries in favor of the
Trustee, as such agreement may be amended, modified or supplemented from time
to time in accordance with the terms hereof and thereof.


 


“Pledged Equity
Co-Collateral Agents” has the meaning specified in Section 13.01(b).


 


“Pledged Subsidiaries”
means each first tier Subsidiary of the Company, Capital Stock in which
constitutes “Pledged Collateral” under and as defined in the Pledge Agreement.


 


11

















 


“PowerOne UK” means
Power-One Limited, a UK company incorporated in England and Wales with
registration number 3103043.


 


“Protected
Purchaser” has the meaning specified in Section 2.12(a).


 


“Purchase Agreement” means the Purchase
Agreement between the Company and Lehman Brothers Inc., dated June 12,
2008, relating to the Securities,


 


“Ratio Event”
has the meaning specified in Section 4.05(a).


 


“Ratio Event
Expiration Time” has the meaning specified in Section 4.06(b).


 


“Ratio Event
Repurchase Date” has the meaning specified in Section 4.06(a).


 


“Ratio Event
Repurchase Notice” has the meaning specified in Section 4.06(b).


 


“Ratio Event Repurchase
Period” has the meaning specified in Section 4.06(a).


 


“Ratio Event
Repurchase Price” has the meaning specified in Section 4.06(a).


 


“Ratio Event
Repurchase Right Notice” has the meaning specified in Section 4.05(a).


 


“Record Date”
means, with respect to any Interest Payment Date, the March 15, June 15,
September 15 or December 15 immediately preceding such Interest
Payment Date (whether or not a Business Day).


 


“Redemption Date”
means, with respect to any Security to be redeemed, the date fixed for
redemption of such Security by the Company.


 


“Redemption Notice”
has the meaning specified in Section 4.11(a).


 


“Redemption Price”
has the meaning specified in Section 4.09(a).


 


“Reference
Property” has the meaning specified in Section 5.12(a).


 


“Released
Collateral” has the meaning specified in Section 13.03.


 


“Relevant Exchange”
means, at any time, the principal United States national or regional securities
exchange or market on which the Common Stock is listed or admitted for trading
at such time.


 


“Reorganization
Event” has the meaning specified in Section 5.12(a).


 


“Resale
Restriction Termination Date” has the meaning specified in Section 2.10(a).


 


“Responsible
Officer” means any officer of the Trustee within the corporate trust
department of the Trustee including any vice president, assistant vice
president, assistant treasurer, trust officer or any other officer of the
Trustee who customarily performs functions similar to those performed by the
Persons who at the time shall be such officers, respectively, 


 


12

















 


with direct responsibility
for the administration of this Indenture and also, with respect to a particular
matter, any other officer of the Trustee to whom such matter is referred
because of such officer’s knowledge and familiarity with the particular
subject.


 


“Restricted
Security” has the meaning specified in Section 2.10(b).


 


“Restricted
Security Legend” has the meaning specified in Section 2.10(a).


 


“Rule 144”
means Rule 144 under the Securities Act (including any successor rule thereto),
as the same may be amended from time to time.


 


“Rule 144A”
means Rule 144A under the Securities Act (including any successor rule thereto),
as the same may be amended from time to time.


 


“Scheduled Trading
Day” means a day during which trading in the Common Stock is
scheduled to occur on the Relevant Exchange. 
If the Common Stock is not then listed or admitted for trading on a
United States national or regional securities exchange or market, “Scheduled Trading Day” shall mean a
Business Day.


 


“Securities Act”
means the Securities Act of 1933, as amended, and the rules and
regulations of the Commission promulgated thereunder.


 


“Security”
has the meaning specified in the first paragraph of the Recitals of the
Company.


 


“Security Documents”
means, collectively, the Pledge Agreement and all other security agreements,
mortgages, deeds of trust, pledges, collateral assignments and other agreements
or instruments evidencing or creating any security in favor of the Trustee and
any Holders in any or all of the Collateral, (including, without limitation, (a) the
pledge agreement dated on or about the Closing Date and entered into between
the Company, as chargor and The Bank of New York Trust Company (Cayman) Limited, as chargee in
its own name and behalf and in the name of and on behalf of the other secured
creditors referred to therein (the “Cayman Pledge Agreement”),
relating to the shares representing 66% of the corporate capital, as issued
from time to time and paid up, of Power-One Limited, a company incorporated in
the Cayman Islands, (b) the pledge agreement dated on or about the Closing
Date and entered into between PAI, as pledgor and The Bank of New York, as pledgee in
its own name and behalf and in the name of and on behalf of the other secured
creditors referred to therein (the “Chinese Pledge Agreement”),
relating to the shares representing 66% of the corporate capital, as issued
from time to time and paid up, of Shenzhen, a wholly foreign owned limited
liability company established under the laws of the People’s Republic of China,
(c) the pledge agreement dated on or about the Closing Date and entered
into between the Company, as pledgor and The Bank of New York (Luxembourg) S.A., as collateral
agent in its own name and behalf and in the name of and on behalf of the other
secured creditors referred to therein (the “Italian Pledge Agreement”),
relating to the shares representing 66% of the corporate capital, as issued
from time to time and paid up, of Power-One Italy Holdings, S.p.A., an Italian
corporation with, as of the Closing Date, corporate capital of Eur. 120,000.00,
and with its principal place of business at via Birmania 81, Rome, Italy,
fiscal code 09159521005 and (d) the pledge agreement dated on or about the
Closing Date and entered into between the Company, as pledgor and BNY Corporate



 


13

















 


Trust Services Limited, as
collateral agent in its own name and behalf and in the name of and on behalf of
the other secured creditors referred to therein (the “UK Pledge
Agreement”), relating to the shares representing 60.1% of
66% of the corporate capital, as issued from time to time and paid up, of
PowerOne UK) in each case, as amended from time to time in accordance with the
terms thereof.


 


“Security Register”
has the meaning specified in Section 2.06(b).


 


“Security
Registrar” has the meaning specified in Section 2.06(a) and
shall include any co-registrars appointed pursuant to Section 2.06(a).


 


“Shenzhen” means
Power-One Asia Pacific Electronics (Shenzhen) Co., Ltd., a wholly foreign owned
limited liability company established under the laws of the People’s Republic
of China.


 


“Significant
Subsidiary” means any subsidiary, or group of subsidiaries, that
would constitute a “significant subsidiary” under Regulation S-X under the
Securities Act.


 


“Spin-Off”
has the meaning specified in Section 5.07(d).


 


“Stated Maturity
Date” means, for any Security, June 17, 2013.


 


“Stock Price”
means, for a Make-Whole Fundamental Change (a) if holders of the Common
Stock receive only cash consideration for their shares of Common Stock in
connection with such Make-Whole Fundamental Change, the cash amount paid per
share of Common Stock and (b) in all other cases, the average of the Last
Reported Sale Prices of the Common Stock over the ten consecutive Trading Day
period ending on the Trading Day immediately preceding the Effective Date of
such Make-Whole Fundamental Change.


 


“Subordinated Indebtedness”
means any Indebtedness of the Company or its Subsidiaries (whether outstanding
on the Issue Date or thereafter incurred) that is subordinate or junior in
right of payment to the Securities pursuant to a written agreement.


 


“Subsidiary”
means a corporation, association, company, limited partnership, joint-stock
company or business trust more than 50% of the outstanding voting stock or
other voting interests of which is owned, directly or indirectly, by the
Company or by one or more other Subsidiaries, or by the Company and one or more
other Subsidiaries.  For the purposes of
this definition, “voting stock or other voting interests” means stock or other
voting interests which ordinarily have voting power for the election of
directors or comparable governing body, whether at all times or only so long as
no senior class of stock or other interests has such voting power by reason of
any contingency.


 


“Successor Company”
has the meaning specified in Section 8.01(a)(i).


 


“Tangible Net Worth”
means, with respect to any Person at any date of determination, its
consolidated stockholders’ equity, as determined on a consolidated basis,
excluding the impact of non-cash charges or other non-cash items relating to
the application of FASB 133 or any other related accounting literature under
GAAP or in connection with embedded or standalone 


 


14

















 


derivatives related to
Indebtedness, minus the aggregate intangible assets of such Person, as
determined on a consolidated basis.


 


“Total Debt”
means, as of any date of determination, the total amount of Indebtedness that
would appear as such on the balance sheet of a Person as of such date, prepared
in accordance with GAAP.


 


“Total Net Debt”
means, as of any date of determination and in respect of any Person, the total
amount of Indebtedness that would appear as such on the balance sheet of such
Person, minus the total amount of cash and Cash Equivalents that would appear
as such on such balance sheet of such Person, in each case as of the same date
and as prepared in accordance with GAAP.


 


“Trading Day”
means a day during which (a) trading in the Common Stock generally occurs
on the Relevant Exchange and (b) there is no Market Disruption Event.  If the Common Stock is not then listed or
admitted for trading on a United States national or regional securities
exchange or market, then “Trading Day”
means a Business Day.


 


“Transaction Costs”
means all fees, costs and expenses incurred by the Company in connection with
the offering of the Securities and the application of the net proceeds thereof,
including all fees, costs and expenses relating to this Indenture, the Security
Documents, the Purchase Agreement relating to the Securities, and any other
document prepared in connection therewith and the application of the proceeds
thereof relating to the payoff of outstanding Indebtedness and the release of
related Liens and all costs, fees and expenses associated with any amendment or
waiver under any such document, together with all fees, costs and expenses of
financial, legal and accounting advisors related thereto.


 


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


 


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


 


“United States”
means the United States of America.


 


“Valuation Period”
has the meaning specified in Section 5.07(d).


 


“VWAP” means the volume weighted average price and refers
to such price as reported by the Bloomberg Professional Service provided by
Bloomberg L.P. or, if such service is no longer providing such information,
such other comparable service as the Company shall reasonably specify. To the
extent that Common Stock is listed on The Nasdaq Global Market, the VWAP on The
Nasdaq Global Market will be determined based on the Bloomberg function: “TICKER
[PWER] EQUITY AQR” or a successor function on such service.  If for whatever reason the VWAP is
unavailable for a Trading Day, then the Last Reported Sale Price of Common
Stock on that Trading Day shall be used in lieu of the VWAP.


 


15

















 


“Wholly Owned
Subsidiary” of any Person means a Subsidiary of such Person, all the
Capital Stock of which (other than directors’ qualifying shares) is owned by
such Person or another Wholly Owned Subsidiary of such Person.


 


1.02                           RULES OF
CONSTRUCTION.


 


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


 


(a)                                  the terms
defined in Section 1.01 have
the meanings assigned to them in Section 1.01
and include the plural as well as the singular;


 


(b)                                 all accounting
terms not otherwise defined herein have the meanings assigned to them in
accordance with GAAP; and


 


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


 


1.03                           COMPLIANCE
CERTIFICATES AND OPINIONS.


 


(a)                                  Upon any
application or request by the Company to the Trustee to take any action under
any provision of this Indenture, the Company shall furnish to the Trustee such
certificates and opinions as may be required hereunder.  Each such certificate or opinion shall be
given in the form of an Officers’ Certificate, if to be given by an officer of
the Company, or an Opinion of Counsel, if to be given by counsel, and shall
comply with any other requirement set forth in this Indenture.


 


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


 


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


 


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


 


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


 


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


 


16
















 


1.04                         FORM OF
DOCUMENTS DELIVERED TO TRUSTEE.


 


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


 


(b)                                 Any certificate
or opinion of an officer of the Company may be based, insofar as it relates to
legal matters, upon a certificate or opinion of, or representations by,
counsel, unless such officer knows that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous.  Any such
certificate or Opinion of Counsel may be based, insofar as it relates to
factual matters, upon a certificate or opinion of, or representations by, an
officer or officers of the Company stating that the information with respect to
such factual matters is in the possession of the Company, unless such counsel
knows that the certificate or opinion or representations with respect to such
matters are erroneous.


 


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


 


1.05                         ACTS OF
HOLDERS; RECORD DATES.


 


(a)                                  Any request,
demand, authorization, direction, notice, consent, waiver or other action
provided by this Indenture to be given or taken by Holders may be embodied in
and evidenced by one or more instruments of substantially similar tenor signed
by such Holders in person or by agent duly appointed in writing and, except as
herein otherwise expressly provided, such action shall become effective when
such instrument or instruments are delivered to the Trustee and, where it is
hereby expressly required, to the Company. 
Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as an “Act” of the Holders signing such instrument
or instruments.  Proof of execution of
any such instrument or of a writing appointing any such agent shall be
sufficient for any purpose of this Indenture and (subject to Section 9.01) conclusive in favor of
the Trustee and the Company, if made in the manner provided in this Section 1.05.


 


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


 


17

















 


(c)                                  The Company may
fix any day as the record date for the purpose of determining the Holders
entitled to give or take any request, demand, authorization, direction, notice,
consent, waiver or other action, or to vote on any action, authorized or
permitted to be given or taken by Holders. 
If not set by the Company prior to the first solicitation of a Holder
made by any Person in respect of any such action, or, in the case of any such
vote, prior to such vote, the record date for any such action or vote shall be
the 30th day (or, if later, the date of the most recent list of Holders
required to be provided pursuant to Section 10.01)
prior to such first solicitation or vote, as the case may be.  With regard to any record date, only the
Holders on such date (or their duly designated proxies) shall be entitled to
give or take, or vote on, the relevant action.


 


(d)                                 The ownership
of the Securities shall be proved by the Security Register.


 


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


 


1.06                         NOTICES,
ETC., TO TRUSTEE AND COMPANY.


 


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


 


(i)                                     the Trustee by
any Holder or by the Company shall be sufficient for every purpose hereunder if
made, given, furnished or filed in writing to or with the Trustee at its
applicable Corporate Trust Office provided  that such notice shall be effective
only upon actual receipt by the Trustee; or


 


(ii)                                  the Company by
the Trustee or by any Holder shall be sufficient for every purpose hereunder
(unless otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid, to the Company addressed to it at the address of
its principal office specified in the first paragraph of this instrument or at
any other address previously furnished in writing to the Trustee by the
Company, Attention:  General Counsel.


 


1.07                         NOTICE TO
HOLDERS; WAIVER.


 


(a)                                  Where this
Indenture provides for notice to Holders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class postage prepaid, to each Holder affected by such event,
at such Holder’s address as it appears in the Security Register, not later than
the latest date (if any), and not earlier than the earliest date (if any),
prescribed for the giving of such notice. 
In any case where notice to Holders is given by mail, neither the
failure to mail such notice, nor any defect in any notice so mailed, to any
particular Holder shall affect the sufficiency of such notice with respect to
other Holders.  Notices will be deemed to
have been given on the date of mailing. 
Where this Indenture provides for notice in any manner, such notice may
be waived in writing by the Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice.  Waivers of notice by Holders
shall be filed with the Trustee, but such 


 


18

















 


filing shall not be a condition precedent to
the validity of any action taken in reliance upon such waiver.


 


(b)                                 In case by
reason of the suspension of regular mail service or by reason of any other
cause it shall be impracticable to give such notice by mail, then such
notification as shall be made with the approval of the Trustee shall constitute
a sufficient notification for every purpose hereunder.


 


(c)                                  Whenever under
this Indenture the Trustee is required to provide any notice by mail, in all
cases the Trustee may alternatively provide notice by overnight courier or by
telefacsimile, with confirmation of transmission.


 


1.08                         EFFECT OF
HEADINGS AND TABLE OF CONTENTS.


 


The Article and Section headings herein
and the Table of Contents are for convenience only and shall not affect the
construction hereof, and all Article and Section references are to
Articles and Sections, respectively, of this Indenture unless otherwise
expressly stated.


 


1.09                         SEVERABILITY
CLAUSE.


 


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


 


1.10                         BENEFITS
OF INDENTURE.


 


Except as provided in Article 13
hereof, nothing in this Indenture or in the Securities, express or
implied, shall give to any Person, other than the parties hereto and their
respective successors hereunder and the Holders of Securities, any benefit or
any legal or equitable right, remedy or claim under this Indenture.


 


1.11                         GOVERNING
LAW.


 


This Indenture and the Securities shall be governed
by and construed in accordance with the laws of the State of New York.


 


1.12                         NO
RECOURSE AGAINST OTHERS.


 


No director, officer, employee, stockholder or
Affiliate of the Company from time to time shall have any liability for any
obligations of the Company under the Securities or this Indenture.  Each Holder by accepting a Security waives
and releases such liability.


 


II.  THE SECURITIES


 


2.01                         DESIGNATION,
AMOUNT AND ISSUANCE OF SECURITIES.


 


The Securities shall be designated as “8% Senior
Secured Convertible Notes due 2013.”  The
Securities shall be limited to an aggregate principal amount of up to $80,000,000,
subject to 


 


19

















 


Section 2.17.  Upon the execution of this Indenture, or from
time to time thereafter, Securities may be executed by the Company and
delivered to the Trustee for authentication in accordance with Section 2.05.


 


2.02                         FORM OF
THE SECURITIES.


 


(a)                                  The Securities
and the Trustee’s certificate of authentication to be borne by such Securities
shall be substantially in the form set forth in Exhibit A hereto.  The terms and provisions contained in the
form of Securities attached as Exhibit A hereto shall constitute, and are
hereby expressly made, a part of this Indenture and, to the extent applicable,
the Company and the Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound thereby.


 


(b)                                 Any of the
Securities may have such letters, numbers or other marks of identification and
such notations, legends, endorsements or changes as the officers executing the
same may approve (execution thereof to be conclusive evidence of such approval)
and as are not inconsistent with the provisions of this Indenture, or as may be
required by the custodian for the Global Securities, the Depositary or by The
Nasdaq Stock Market, Inc. in order for the Securities to be tradable on
The PORTAL Market or as may be required for the Securities to be tradable on
any other market developed for trading of securities pursuant to Rule 144A
or as may be required to comply with any applicable law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any
securities exchange or automated quotation system on which the Securities may
be listed, or to conform to usage, or to indicate any special limitations or
restrictions to which any particular Securities are subject.


 


(c)                                  So long as the
Securities are eligible for book-entry settlement with the Depositary, or
unless otherwise required by law, subject to Section 2.09,
all of the Securities will be represented by one or more Global Securities.  The transfer and exchange of beneficial
interests in any such Global Securities shall be effected through the
Depositary in accordance with this Indenture and the applicable procedures of
the Depositary.  Except as provided in Section 2.09, beneficial owners of a
Global Security shall not be entitled to have certificates registered in their
names, will not receive or be entitled to receive physical delivery of
certificates in definitive form and will not be considered Holders of such
Global Security.


 


(d)                                 Any Global
Security shall represent such of the outstanding Securities as shall be
specified therein and 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 increased or reduced to reflect issuances, repurchases,
conversions, transfers or exchanges permitted hereby.  Any endorsement 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 or the custodian
for the Global Security, at the direction of the Trustee, in such manner and
upon instructions given by the Holder of such Securities in accordance with
this Indenture.


 


20

















 


2.03                         DATE AND
DENOMINATION OF SECURITIES AND INTEREST.


 


The Securities shall be issuable in fully registered
form without coupons in denominations of $1,000 principal amount and integral
multiples thereof.  Each Security shall
be dated the date of its authentication and shall bear interest from the date
specified on the face of the form of Securities attached as Exhibit A
hereto.  Interest on the Securities shall
be computed on the basis of a 360-day year comprised of twelve 30-day months.


 


2.04                         PAYMENTS
ON THE SECURITIES.


 


(a)                                  On the Stated
Maturity Date, each Holder shall be entitled to receive on such date the
principal amount of the Securities held, plus
accrued and unpaid interest to, but not including, the Stated Maturity Date.


 


(b)                                 On each
Interest Payment Date, the Person in whose name a Security is registered on the
Register at the close of business on the Record Date for such Interest Payment
Date shall be entitled to receive the interest payable on such Interest Payment
Date, except that the interest payable upon Maturity shall be payable to the
Person to whom principal is payable upon Maturity.


 


(c)                                  If any Interest
Payment Date or any date on which principal or any other amount is payable in
respect of the Securities falls on a day that is not a Business Day, such
payment of interest or principal, as the case may be, shall be postponed to the
next succeeding Business Day and no interest or other amount shall be paid as a
result of such postponement.


 


(d)                                 The Company
shall pay any amount of principal when due:


 


(i)                                     with respect to
Global Securities, to the Depositary or its nominee in immediately available
funds; and


 


(ii)                                  with respect to
Physical Securities, at the office of the Paying Agent, which initially shall
be the Corporate Trust Office.


 


(e)                                  The Company
shall pay interest on each Interest Payment Date:


 


(i)                                     with respect to
any Global Securities by wire transfer of immediately available funds to the
account of the Depositary or its nominee;


 


(ii)                                  with respect to
any Physical Securities having a principal amount of $2,000,000 or less, by
check mailed to the address of the Person entitled thereto as it appears in the
Security Register; provided that
at Maturity, interest will be payable at the office of the Company maintained
by the Company for such purposes, which shall initially be the Corporate Trust
Office; and


 


(iii)                               with respect to
any Physical Securities having a principal amount of more than $2,000,000, either
(A) by check mailed to the address of the Person entitled thereto as it
appears in the Security Register or (B) at the election of the Person
entitled thereto, by wire transfer in immediately available funds to an account
within the United States of 


 


21

















 


such Person if such Person has duly delivered
notice of such election and applicable wire instructions to the Registrar not
later than the Record Date for such Interest Payment Date and has not delivered
notice to the Registrar revoking such election prior to such Record Date; provided that at Maturity, interest will
be payable at the office of the Company maintained by the Company for such
purposes, which shall initially be the Corporate Trust Office.


 


(f)                                    If the Company
is required to pay any Additional Interest under this Indenture, the Company
shall pay such Additional Interest to Holders on the same dates and in the same
manner as regular interest is paid to Holders, except as set forth in Section 3.05 and Section 7.03.


 


2.05                         EXECUTION
AND AUTHENTICATION.


 


(a)                                  One or more
Officers shall sign the Securities for the Company by manual or facsimile
signature.  If an Officer whose signature
is on a Security no longer holds that office at the time the Trustee
authenticates the Security, the Security shall be valid nevertheless.


 


(b)                                 The Company
shall deliver the Securities executed by the Company to the Trustee for
authentication together with an authentication order executed by the Chief
Executive Officer of the Company ordering the authentication and delivery of
such Securities, which authentication order shall set forth the number of
separate Securities certificates, the principal amount of each of the
Securities to be authenticated, the date on which the original issue of
Securities is to be authenticated, the Holder of each such Security and
delivery instructions.  Upon receipt of
such executed Securities and such authentication order, the Trustee shall
authenticate and deliver such Securities in accordance with such authentication
order.


 


(c)                                  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.


 


(d)                                 The Trustee may
appoint an authenticating agent reasonably acceptable to the Company to
authenticate the Securities.  Any such
appointment shall be evidenced by an instrument signed by a Responsible
Officer, a copy of which shall be furnished to the Company.  Unless limited by the terms of such
appointment, an authenticating agent may authenticate Securities whenever the
Trustee may do so.  Each reference in
this Indenture to authentication by the Trustee includes authentication by such
agent.  An authenticating agent has the
same rights as any Security Registrar, Paying Agent or agent for service of
notices and demands.


 


2.06                         SECURITY
REGISTRAR, PAYING AGENT AND CONVERSION AGENT.


 


(a)                                  The Company
shall maintain an office or agency where Securities may be presented for
registration of transfer or for exchange (the “Security Registrar”), an office or agency where Securities may
be presented for payment (the “Paying Agent”)
and an office or agency where Securities may be presented for conversion (the “Conversion Agent”), in each case, in the
Borough of Manhattan, The City of New York. 
The Company initially appoints the Trustee as Security Registrar,
Conversion Agent and Paying Agent in connection with the Securities.  The Bank of New York, an Affiliate of the
Trustee, located at 101 Barclay Street, 


 


22

















 


8W, New York, New York 10286, Attn: Corporate
Trust Administration, shall be considered as one such office or agency of the
Company for each of the aforesaid purposes. 
The Company or any of its domestically organized Wholly Owned
Subsidiaries may act as Paying Agent, Conversion Agent or Security
Registrar.  The Company may from time to
time appoint one or more additional Conversion Agents, Paying Agents and
co-registrars and may from time to time rescind such designations.


 


(b)                                 The Security
Registrar shall keep a register of the Securities (the “Security  Register”)
and of their transfer and exchange.


 


(c)                                  The Company
shall enter into an appropriate agency agreement with any Security Registrar,
Paying Agent or Conversion Agent not a party to this Indenture.  Each such agreement shall implement the
provisions of this Indenture that relate to such agent.


 


(d)                                 The Company
shall give prompt written notice to the Trustee of the location, and any change
in the location, of each such office or agency, if not the Trustee, or if not
designated or appointed by the Trustee.


 


(e)                                  If at any time
the Company fails to maintain a Security Registrar, Paying Agent or Conversion
Agent or fails to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office, and the Company hereby appoints the Trustee as its
agent to receive all such presentations, surrenders, notices and demands.


 


(f)                                    The Company may
remove any Security Registrar, Paying Agent or Conversion Agent at any time and
without prior notice to Holders by written notice to such Security Registrar,
Paying Agent or Conversion Agent and to the Trustee; provided that no such removal shall become effective until (i) acceptance
of an appointment by a successor as evidenced by an appropriate agreement
entered into by the Company and such successor Security Registrar, Paying Agent
or Conversion Agent, as the case may be, and delivered to the Trustee or (ii) notification
to the Trustee that the Trustee shall serve as Security Registrar, Paying Agent
or Conversion Agent until the appointment of a successor in accordance with clause (i) above.  The Security Registrar, Paying Agent or
Conversion Agent may resign at any time upon written notice; provided that the Trustee may resign as
Paying Agent, Conversion Agent or Security Registrar only if the Trustee also
resigns as Trustee in accordance with Section 9.11.


 


2.07                         PAYING
AGENT TO HOLD MONEY IN TRUST.


 


(a)                                  On or prior to
each due date of the principal and interest on any Security, the Company shall
deposit with the Paying Agent a sum sufficient to pay such principal and interest
when so becoming due.  If the Company or
a Wholly Owned Subsidiary of the Company acts as Paying Agent, it shall
segregate the money held by it as Paying Agent and hold it as a separate trust
fund for the benefit of the Persons entitled thereto.  If such deposit is made, or such segregation
is effected, on a due date for such principal or interest, such deposit shall
be received, or such segregation shall be effected, by 11:00 a.m., New
York City time, on such due date.


 


23

















 


(b)                                 The Company
shall require each Paying Agent (other than the Trustee) to agree in writing
that the 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 on the Securities and shall notify the Trustee of any default by the
Company in making any such payment.


 


(c)                                  The Company at
any time may require a Paying Agent to pay all money held by it to the Trustee
and to account for any funds disbursed by the Paying Agent.  Upon complying with this Section 2.07, the Paying Agent shall
have no further liability for the money delivered to the Trustee.


 


2.08                         EXCHANGE
AND REGISTRATION OF TRANSFER OF SECURITIES.


 


(a)                                  The Company
shall cause to be kept at the Corporate Trust Office the Security Register in
which, subject to such reasonable regulations as it may prescribe, the Company
shall provide for the registration of Securities and of transfers of
Securities.  The Security Register shall
be in written form or in any form capable of being converted into written form
within a reasonably prompt period of time.


 


(b)                                 Upon surrender
for registration of transfer of any Securities to the Security Registrar, and
satisfaction of the requirements for such transfer set forth in this Section 2.08 and in Section 2.10, the Company shall
execute, and the Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Securities of any
authorized denominations and of a like aggregate principal amount and bearing
such restrictive legends as may be required by this Indenture.


 


(c)                                  Securities may
be exchanged for other Securities of any authorized denominations and of a like
aggregate principal amount and bearing such restrictive legends as may be
required by this Indenture, upon surrender of the Securities to be exchanged at
the office of the Security Registrar. 
Whenever any Securities are so surrendered for exchange, the Company shall
execute, and the Trustee shall authenticate and deliver, the Securities that
the Holder making the exchange is entitled to receive bearing registration
numbers not contemporaneously outstanding.


 


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


 


(e)                                  All Securities
presented or surrendered for registration of transfer or for exchange,
repurchase, redemption or conversion shall (if so required by the Company or
the Security Registrar) be duly endorsed, or be accompanied by a written
instrument or instruments of transfer in form satisfactory to the Company, duly
executed by the Holder thereof or his attorney duly authorized in writing.


 


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


 


24

















 


(g)                                 Neither the
Company nor the Trustee nor any Security Registrar shall be required to
exchange, issue or register a transfer of any Securities or portions thereof (i) tendered
for repurchase (and not withdrawn) pursuant to Article 4, (ii) surrendered for conversion pursuant
to Article 5, or (iii) selected
for redemption pursuant to Article 4.


 


2.09                         GLOBAL
SECURITIES.


 


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


 


(b)                                 Notwithstanding
any other provision in this Indenture, no Global Security may be exchanged in
whole or in part for Securities registered, and no transfer of a Global
Security in whole or in part may be registered, in the name of any Person other
than the Depositary or a nominee thereof unless:


 


(i)                                     the Depositary (A) has
notified the Company that it is unwilling or unable to continue as Depositary
for such Global Security or (B) has ceased to be a clearing agency
registered under the Exchange Act, and in each case, a successor depositary has
not been appointed by the Company within 90 calendar days; or


 


(ii)                                  in accordance
with clause (c) below.


 


Any Global Securities exchanged pursuant to
this Section 2.09(b) shall be so
exchanged in whole and not in part.


 


(c)                                  In addition,
Physical Securities shall be issued in exchange for beneficial interests in a
Global Security upon request by or on behalf of the Depositary in accordance
with customary procedures following the request of a beneficial owner seeking
to enforce its rights under the Securities or this Indenture upon the
occurrence and during the continuance of an Event of Default.


 


(d)                                 Securities
issued in exchange for a Global Security or any portion thereof pursuant to Section 2.09(b) or Section 2.09(c) shall be issued
in definitive, fully registered form, without interest coupons, shall have an
aggregate principal amount equal to that of such Global Securities 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 any
legends required hereunder.  Any Global
Securities to be exchanged shall be surrendered by the Depositary to the
Trustee, as Security Registrar, provided
that pending completion of the exchange of a Global Security, the Trustee
acting as custodian for the Global Securities for the Depositary or its nominee
with respect to such Global Securities, shall reduce the principal amount
thereof, 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 make available for delivery the Securities
issuable on such exchange to or upon the written order of the Depositary or an
authorized representative thereof.


 


25

















 


(e)                                  In the event of
the occurrence of any of the events specified in Section 2.09(b) above or upon any request described
in Section 2.09(c), the
Company will promptly make available to the Trustee a sufficient supply of
Physical Securities in definitive, fully registered form, without interest
coupons.


 


(f)                                    Neither any
members of, or participants in, the Depositary (“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 Securities registered in the name of the Depositary or any nominee
thereof, 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 Securities 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 Securities.


 


(g)                                 At such time as
all interests in a Global Security have been redeemed, repurchased, converted,
cancelled or exchanged for Physical Securities, such Global Security shall,
upon receipt thereof, be canceled by the Trustee in accordance with standing
procedures and instructions existing between the Depositary and the custodian
for the Global Security.  At any time
prior to such cancellation, if any interest in a Global Security is redeemed,
repurchased, converted, cancelled or exchanged for Physical Securities, the
principal amount of such Global Security shall, in accordance with the standing
procedures and instructions existing between the Depositary and the custodian
for the Global Security, be appropriately reduced, and an endorsement shall be
made on such Global Security, by the Trustee or the custodian for the Global
Security, at the direction of the Trustee, to reflect such reduction.


 


2.10                         TRANSFER
RESTRICTIONS.


 


(a)                                  Until the date
(the “Resale Restriction Termination Date”)
that is the later of (1) one year after the Issue Date or such shorter
period of time as permitted under Rule 144, and (2) such later date,
if any, as may be required by applicable law:


 


(i)                                     any certificate
evidencing a Security shall bear a legend in substantially the form identified
as “Form of Restricted Security Legend” in the form of Security set forth
in Exhibit A; and


 


(ii)                                  any certificate
representing Common Stock issued upon conversion or redemption of a Security
shall bear a legend substantially in the form identified as “Form of
Restricted Security Legend for Common Stock Issued Upon Conversion or
Redemption” in Exhibit B,


 


(each a “Restricted
Security Legend”), in each case,  unless
(A) such Security or such Common Stock, as the case may be, has been sold
pursuant to a registration statement that has been declared effective under the
Securities Act (and which continues to be effective at the time of 


 


26

















 


such transfer) or sold without transfer
restrictions pursuant to Rule 144, (B) such Restricted Security
Legend has been removed pursuant to Section 2.10(d),
or (C) otherwise agreed by the Company in writing with written notice
thereof to the Trustee.


 


(b)                                 Every Security
(and all securities issued in exchange therefor or in substitution thereof) and
any Common Stock issued upon conversion or redemption of any Security that
bears or is required under Section 2.10(a) to
bear a Restricted Security Legend (each a “Restricted
Security”) shall be subject to the restrictions on transfer set
forth in this Section 2.10
and in the Restricted Security Legend for such Restricted Security, unless such
restrictions on transfer shall be waived by written consent of the Company
following receipt of legal advice supporting the permissibility of the waiver
of such transfer restrictions, and the Holder of any Restricted Securities, by
such Holder’s acceptance thereof, agrees to be bound by all such restrictions
on transfer.


 


(c)                                  In connection
with any transfer of a Physical Security that is a Restricted Security, the
Holder must complete and deliver the form of assignment set forth on the
certificate representing the Securities with the appropriate box checked to the
Trustee.  If the proposed transfer is
pursuant to clause (2)(D) of
the Restricted Security Legend (other than a transfer pursuant to Rule 144),
the Holder must, prior to such transfer, furnish to the Trustee, such
certifications, legal opinions or other information as the Company may
reasonably require to confirm that such transfer is being made pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act.


 


(d)                                 The Company
shall cause the Restricted Securities Legend to be removed from any Restricted
Security on the date (the “Delegending Date”)
that is earlier of (1) the date that is one year after the Issue Date for
any Security Outstanding, (2) the transfer of such Restricted Security
pursuant to an effective registration statement or (3) on any transfer of
such Restricted Security without transfer restrictions under Rule 144, in
each case as follows:


 


(i)                                     with respect to
any Restricted Security that is a Physical Security, upon surrender of such
Restricted Security by the Holder thereof to the Security Registrar for
exchange, such Restricted Security shall be exchanged for a new Security, of
like tenor and aggregate principal amount, which shall not bear the Restricted
Security Legend; and


 


(ii)                                  with respect to
any Restricted Security represented by a Global Security, the Company shall, on
or promptly after the Delegending Date direct the Depositary to remove the
Restricted Securities Legend from the Global Security; provided that if such a direction is not
permitted under the applicable rules, regulations, policies and procedures of
the Depositary as at the Delegending Date, the Company shall, upon surrender of
such Restricted Security by the Holder thereof, reduce the principal amount of
such Global Security by the principal amount of such Restricted Security and
increase the principal amount of a Global Security without the Restricted
Security Legend by an equal principal amount. 
If a Global Security without the Restricted Security Legend is not then
outstanding, the Company shall execute, and the Trustee shall authenticate and
deliver to the Depositary, a Global Security without the Restricted Security
Legend.


 


27
















 


2.11                         RESPONSIBILITIES AND OBLIGATIONS
RELATING TO THE DEPOSITARY.


 


(a)                                  Neither
the Company nor the Trustee shall have any responsibility or obligation to any
Agent Members or any other Person with respect to the accuracy of the books or
records, or the acts or omissions, of the Depositary or its nominee or of any
participant or member thereof, with respect to any ownership interest in the
Securities or with respect to the delivery to any Agent Member or other Person
(other than the Depositary) of any notice or the payment of any amount under or
with respect to such Securities.


 


(b)                                 All
notices and communications to be given to the Holders of Securities and all
payments to be made to Holders of Securities under the Securities shall be
given or made only to or upon the order of the registered Holders of Securities
(which shall be the Depositary or its nominee in the case of a Global
Security).


 


(c)                                  The
rights of beneficial owners in any Global Securities shall be exercised only
through the Depositary subject to the customary procedures of the Depositary.


 


(d)                                 The
Company and the Trustee may rely and shall be fully protected in relying upon
information furnished by the Depositary with respect to its Agent Members.


 


(e)                                  The
Company and 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 Securities (including any transfers between or among Agent
Members) 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.


 


2.12                         REPLACEMENT SECURITIES.


 


(a)                                  If
a mutilated Security is surrendered to the Security Registrar or if the Holder
of a Security claims that the Security has been lost, destroyed or wrongfully
taken, the Company shall issue and the Trustee shall authenticate a replacement
Security if the requirements of Section 8-405 of the Uniform Commercial
Code are met, such that the Holder:


 


(i)                                     notifies
the Company or the Trustee within a reasonable time after he has notice of such
loss, destruction or wrongful taking and the Security Registrar does not
register a transfer prior to receiving such notification;


 


(ii)                                  makes
such request to the Company or the Trustee prior to the Security being acquired
by a protected purchaser as defined in Section 8-303 of the Uniform
Commercial Code (a “Protected Purchaser”);
and


 


(iii)                               satisfies
any other reasonable requirements of the Trustee and the Company.  Such Holder shall furnish an indemnity bond
sufficient in the judgment of the Trustee to protect the Company, the Trustee,
the Paying Agent, the Conversion Agent and the Security Registrar from any loss
or liability that any of them may suffer if a Security is replaced and
subsequently presented or claimed for payment.


 


28

















 


(b)                                 The
Company and the Trustee may charge the Holder for their expenses in replacing a
Security.


 


(c)                                  In
case any Security which (i) has matured or is about to mature, (ii) has
been properly tendered for repurchase on a Fundamental Change Repurchase Date
(and not withdrawn), (iii) is to be converted into shares of Common Stock
or redeemed or repurchased for cash, shall become mutilated or be destroyed,
lost or stolen, the Company may, instead of issuing a substitute Security,
convert or authorize the conversion of, or redeem or repurchase or authorize
redemption or repurchase of, the same (without surrender thereof except in the
case of a mutilated Securities), as the case may be, if the applicant for such
conversion or redemption or repurchase shall furnish to the Company, to the
Trustee and, if applicable, to such authenticating agent such security or
indemnity as may be required by them to save each of them harmless for any
loss, liability, cost or expense caused by or in connection with such
substitution, and, in every case of destruction, loss or theft, the applicant
shall also furnish to the Company, the Trustee and, if applicable, any Paying
Agent or Conversion Agent evidence to their satisfaction of the destruction,
loss or theft of such Securities and of the ownership thereof.


 


(d)                                 The
provisions of this Section 2.12
are exclusive and shall preclude (to the extent lawful) all other rights and
remedies with respect to the replacement or payment of mutilated, lost,
destroyed or wrongfully taken Securities.


 


2.13                         OUTSTANDING SECURITIES.


 


(a)                                  At
any time, the Securities outstanding at that time are all Securities that have
been authenticated by the Trustee and delivered under this Indenture as at that
time, other than:


 


(i)                                     Securities
cancelled by the Trustee or accepted by the Trustee for cancellation as at that
time;


 


(ii)                                  Securities
replaced pursuant to Section 2.12
as at that time, unless the Trustee and the Company receive proof satisfactory
to them that the replaced Security is held by a Protected Purchaser;


 


(iii)                               Securities
repurchased pursuant to Article 4
which are no longer outstanding as at that time pursuant to Section 4.03(d) or Section 4.07(d);


 


(iv)                              Securities
redeemed pursuant to Article 4
which are no longer outstanding as at that time pursuant to Section 4.12(c);


 


(v)                                 Securities
converted pursuant to Article 5
which are no longer outstanding as at that time pursuant to Section 5.05(g); and


 


(vi)                              Securities
that have matured at the Stated Maturity in respect of which the Paying Agent
segregates and holds in trust, in accordance with this Indenture, as of the
Stated Maturity Date, sufficient funds to pay all amounts due on the Stated
Maturity Date with respect to such Securities maturing and the Paying Agent is
not prohibited from paying such money to the Holders on such date pursuant to
the terms of this Indenture.


 


29

















 


(b)                                 Subject
to Section 2.13(c), a
Security does not cease to be outstanding because the Company or an Affiliate
of the Company holds the Security.


 


(c)                                  Notwithstanding
anything else in this Section 2.13,
in determining whether the Holders of the requisite principal amount of
Securities outstanding have given any request, demand, authorization,
direction, notice, consent or waiver hereunder, Securities owned by the Company
or any other obligor upon the Securities or any Affiliate of the Company or of
such other obligor shall be disregarded and deemed not to be outstanding,
except that, in determining whether the Trustee shall be protected in relying
upon any such request, demand, authorization, direction, notice, consent or
waiver, only Securities which a Responsible Officer of the Trustee actually
knows to be so owned shall be so disregarded. 
Securities so owned which have been pledged in good faith may be
regarded as outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgee’s right so to act with respect to such Securities and that
the pledgee is not the Company or any other obligor upon the Securities or any
Affiliate of the Company or of such other obligor.


 


(d)                                 The
Company may from time to time repurchase outstanding Securities on the open
market or in negotiated or other transactions without prior notice to the
Holders.


 


2.14                         TEMPORARY SECURITIES.


 


(a)                                  Pending
the preparation of Securities in certificated form, the Company may execute and
the Trustee or an authenticating agent appointed by the Trustee shall, upon the
written request of the Company, authenticate and deliver temporary Securities
(printed or lithographed).  Temporary
Securities shall be issuable in any authorized denomination, and substantially
in the form of the Securities in certificated form, but with such omissions,
insertions and variations as may be appropriate for temporary Security, all as
may be determined by the Company.  Every
such temporary Security shall be executed by the Company and authenticated by
the Trustee or such authenticating agent upon the same conditions and in
substantially the same manner, and with the same effect, as the Securities in
certificated form.


 


(b)                                 Without
unreasonable delay, the Company will execute and deliver to the Trustee or such
authenticating agent Securities in certificated form and thereupon any or all
temporary Securities may be surrendered in exchange therefor, at the office of
the Security Registrar and the Trustee or such authenticating agent shall
authenticate and make available for delivery in exchange for such temporary
Securities an equal aggregate principal amount of Securities in certificated
form.  Such exchange shall be made by the
Company at its own expense and without any charge therefor.  Until so exchanged, the temporary Securities
shall in all respects be entitled to the same benefits and subject to the same
limitations under this Indenture as Securities in certificated form
authenticated and delivered hereunder.


 


2.15                         CANCELLATION.


 


(a)                                  The
Company may, at any time, deliver Securities to the Trustee for
cancellation.  The Security Registrar and
the Paying Agent shall forward to the Trustee any Securities surrendered to
them for registration of transfer, exchange or payment.  The Trustee and no one else shall cancel all
Securities surrendered for registration of transfer, exchange, payment or 


 


30

















 


cancellation
and deliver canceled Securities to the Company pursuant to written direction by
an Officer.


 


(b)                                 The
Company may not issue new Securities to replace Securities it has redeemed,
repurchased, converted, paid or delivered to the Trustee for cancellation.  The Trustee shall not authenticate Securities
in place of canceled Securities other than pursuant to the terms of this
Indenture.


 


2.16                         CUSIP AND ISIN NUMBERS.


 


The Company in
issuing the Securities may use “CUSIP” and/or “ISIN” numbers (if then generally
in use) and, if so, the Trustee shall use “CUSIP” and/or “ISIN” numbers in
notices of redemption or otherwise 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 and that reliance may
be placed only on the other identification numbers printed on the Securities,
and any such redemption shall not be affected by any defect in or omission of
such numbers.


 


2.17                         ADDITIONAL SECURITIES.


 


The Company
may, from time to time without the consent of the Holders of Outstanding
Securities, increase the aggregate principal amount of the Securities by
issuing additional Securities in the future pursuant to this Indenture (“Additional Securities”) having terms and
conditions identical to those of the other Outstanding Securities, except that
Additional Securities may have a different initial date from which interest
begins to accrue thereon so that the Additional Securities are fungible with
Outstanding Securities; provided
that the Additional Securities may have the same CUSIP number as the Securities
issued on the Issue Date, only if:


 


(a)                                  such
issuance of Additional Securities is permissible as a “qualified reopening” for
United States federal income tax purposes;


 


(b)                                 the
resale of such Additional Securities by non-affiliates of the Company would not
require registration under the Securities Act; and


 


(c)                                  at
the time of, and after giving effect to, such transaction, no Default or Event
of Default shall have occurred and be continuing.


 


2.18                         RANKING.


 


The
indebtedness of the Company arising under or in connection with this Indenture
and every outstanding Security issued under this Indenture from time to time
constitutes and will constitute a senior secured obligation of the Company,
ranking equally in right of payment to all of the Company’s existing and future
unsecured obligations that are not subordinated by their terms and ranking
senior in right of payment to any existing or future indebtedness of the
Company that is expressly subordinated in right of payment to the Securities.


 


31

















 


III.  PARTICULAR COVENANTS OF THE COMPANY


 


3.01                         PAYMENT OF PRINCIPAL AND INTEREST.


 


The Company
covenants and agrees that it shall duly and punctually pay or cause to be paid
the principal of, and interest on, each of the Securities at the places, at the
respective times and in the manner provided herein and in the Securities.


 


3.02                         MAINTENANCE OF OFFICE OR AGENCY.


 


The Company will maintain in the Borough of Manhattan, the City of New
York, an office or agency (which may be an office of the Trustee or an
affiliate of the Trustee, Registrar or co-registrar) where Securities may be
surrendered for registration of transfer or for exchange and where notices and
demands to or upon the Company in respect of the Securities and this Indenture
may be served. The Company will give prompt written notice to the Trustee of
the location, and any change in the location, of such office or agency.  If at any time the Company fails to maintain
any such required office or agency or fails to furnish the Trustee with the
address thereof, such presentations, surrenders, notices and demands may be
made or served at the Corporate Trust Office of the Trustee.


 


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


 


The Company hereby designates The Bank of New York, located at 101
Barclay Street, 8W, New York, New York 10286, Attn: Corporate Trust
Administration, as one such office or agency of the Company in accordance with Section 2.06 hereof.


 


3.03                         RESALE OF CERTAIN SECURITIES.


 


Except as in
accordance with Section 2.17, the Company
shall not, and shall not permit any of its “affiliates” (as defined under Rule 144
or any successor provision thereto) to, resell any Securities that have been
reacquired by any of them.  The Trustee
shall have no responsibility in respect of the Company’s performance of its
agreement in the preceding sentence.


 


3.04                         NOTICE OF EVENT OF DEFAULT.


 


The Company
shall deliver to the Trustee, as soon as possible and in any event within 30
days after the Company becomes aware of the occurrence of any Event of Default
or an event which, with notice or the lapse of time or both, would constitute
an Event of Default, an Officers’ Certificate setting forth the details of such
Event of Default or Default, its status and the action which the Company
proposes to take with respect thereto. 
Any notice required to be 


 


32

















 


given under this Section 3.04
shall be delivered to a Responsible Officer of the Trustee at its Corporate
Trust Office.


 


3.05                         LATE FILING ADDITIONAL INTEREST.


 


(a)                                  If,
at any time during the six-month period beginning on, and including, December 17,
2008, the Company fails to timely file any document or report that it is
required to file with the Commission pursuant to Section 13 or 15(d) of
the Exchange Act (giving effect to any grace period provided by Rule 12b-25
under the Exchange Act), as applicable (other than reports on Form 8-K),
the Company shall pay additional interest (the “Late Filing Additional Interest”) in accordance with this Section 3.05.


 


(b)                                 Late
Filing Additional interest shall accrue on all Restricted Securities then
Outstanding at an annual rate of 0.50% per annum of the principal amount of
such Restricted Securities during such six-month period for which the Company’s
failure to file occurs until June 17, 2009.


 


(c)                                  Late
Filing Additional Interest shall be payable in arrears on each of up to two
Interest Payment Dates following the late filing in the same manner as regular
interest on the Securities.


 


(d)                                 No
Late Filing Additional Interest shall accrue after the end of such six-month
period, regardless of whether any such failure has occurred or is
continuing.  No Late Filing Additional
Interest or other amounts shall be payable in respect of any Common Stock
delivered upon conversion or redemption of the Securities.


 


(e)                                  If
the Company becomes obligated to pay any such Late Filing Additional Interest,
it shall provide an Officers’ Certificate to the Trustee setting forth the
amount thereof, and referencing Section 3.05(e) of
the Indenture.


 


3.06                         CORPORATE EXISTENCE.


 


Except as
otherwise permitted in this Indenture or the Security Documents, the Company
shall, and shall cause each of its Pledged Subsidiaries to, do or cause to be
done all things necessary to preserve and keep in full force and effect its
respective corporate existence in accordance with its organizational documents
(as the same may be amended from time to time).


 


3.07                         OWNERSHIP OF SUBSIDIARIES.


 


The Company
shall maintain direct ownership of all of, and shall not transfer or dispose of
any of, and shall not permit to be issued to any Person other than the Company
any of, the Capital Stock in the Pledged Subsidiaries; provided
that, in the case of Shenzhen, PAI shall
maintain direct ownership of all of, and shall not transfer or dispose of any
of, and shall not permit to be issued to any Person other than PAI any of, the
Capital Stock in Shenzhen; and provided further that,
in the case of PowerOne UK, the Company shall maintain direct ownership of no
less than 60.5% of, and shall not transfer or dispose of any of, and shall not
permit to be issued (if after such issuance the Company shall have less than
60.5% of the Capital 


 


33

















 


Stock in PowerOne UK) to any Person other
than the Company any of, the Capital Stock in PowerOne UK.


 


3.08                         RESTRICTED PAYMENTS.


 


The Company shall not, and
shall not permit any of its Subsidiaries to, directly or indirectly, redeem,
defease, repurchase, repay or make any payments in respect of, by the payment
of cash or cash equivalents (in whole or in part, whether by way of open market
purchases, tender offers, private transactions or otherwise), all or any
portion of any unsecured Subordinated Indebtedness (or any extension, refinancing
or renewal thereof), whether by way of payment in respect of principal of (or
premium, if any) or interest on such Indebtedness if at the time such payment
is due or otherwise made or, after giving effect to such payment, an Event of
Default has occurred and is continuing.


 


3.09                         REDEMPTION AND DIVIDENDS.


 


The Company shall not
directly or indirectly, redeem, repurchase or declare or pay any cash dividend
or distribution on the Company’s Capital Stock without the prior written
consent of the Holders of the majority of the aggregate principal amount of the
Securities outstanding, except for repurchases of securities pursuant to, and
in accordance with, the Company’s equity compensation plans.


 


3.10                         LIENS.


 


The Company shall not, and
shall not permit any of its Subsidiaries to, directly or indirectly, allow or
suffer to exist any Lien upon or in any property or assets (including accounts
and contract rights) owned by the Company or any of its Subsidiaries other than
Permitted Liens.


 


3.11                           INDEBTEDNESS


 


The Company shall
not, and shall not permit any of its Subsidiaries to, directly or indirectly,
create, incur, issue, assume, guarantee or otherwise become directly or
indirectly liable, contingently or otherwise, with respect to any Indebtedness
unless, in each case, (x) no
Default or Event of Default shall have occurred and be continuing at the time
of or as a consequence of such incurrence of Indebtedness, and (y) such
Indebtedness is Permitted Indebtedness.


 


3.12                         FINANCIAL COVENANTS


 


(a)                                  Until
the first anniversary of the Issue Date, the
Company’s Total Debt as of the end of any fiscal quarter shall not
exceed $110 million, plus the principal amount of any additional Securities
issued as a result of the Initial Purchaser’s exercise of its option to acquire
up to $5 million of additional Securities pursuant to the Purchase Agreement,
but in no event greater than $115 million; thereafter, as of the end of any
fiscal quarter the Company’s
Total Debt shall not exceed the greater of (i) $125 million and (ii) the
product of (x) three and (y) LTM EBITDA, in each case determined on a
pro forma basis, including a pro forma sale of assets, incurrence of
indebtedness and/or application of the net proceeds therefrom, in each case as
of 


 


34

















 


such date of determination, as if such
transaction had occurred at the beginning of the relevant twelve-month period;


 


(b)                                 Until
the first anniversary of the Issue Date, cash and Cash Equivalents shall not be
less than $20 million at the end of each fiscal quarter; thereafter cash and
Cash Equivalents shall not be less than $25 million at the end of each fiscal
quarter; and


 


(c)                                  Until
the first anniversary of the Issue Date, the
Company’s Tangible Net Worth at the end of each fiscal quarter shall not
be less than $90 million; thereafter, the
Company’s Tangible Net Worth shall not be less than $100 million at the
end of each fiscal quarter.


 


3.13                         PRESERVATION OF REPURCHASE RIGHTS.


 


The Company
will not enter into any contract or financing arrangement that would restrict
its ability to repurchase the Securities upon exercise of the Holders’
repurchase rights pursuant to Article 4.


 


3.14                         SHARE CAP PROPOSAL


 


No later than
90 days after the Issue Date, the Company will submit for approval by its
stockholders a proposal (the “Share Cap Proposal”)
that, if approved, will permit the Company to issue Common Stock at a
conversion price that is lower than the Cap Price so that the conversion of the
Securities pursuant to this Indenture will not be limited by the rules and
regulations of The Nasdaq Global Market or any other securities exchange on
which the Common Stock may be traded or listed that may otherwise limit such
issuance without such shareholder approval. 
To the extent that the Share Cap Proposal is not approved by the Company’s
stockholders, the Company will resubmit the Share Cap Proposal for approval by
its stockholders at the next regular annual meeting of stockholders (which
shall be held within no more than 230 days after the initial vote) and, if not
then approved, within successive 180 day intervals thereafter over the term of
the Securities until the Share Cap Proposal is either approved or the
Securities are no longer outstanding.


 


3.15                         FURTHER ASSURANCES.


 


Upon request
of the Trustee, the Company shall 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.


 


3.16                         ANNUAL COMPLIANCE CERTIFICATE.


 


The Company
shall deliver to the Trustee, within 120 days after the end of each fiscal
year, an Officers’ Certificate stating that a review of the activities of the
Company and its Subsidiaries during the preceding fiscal year has been made
under the supervision of the signing Officers with a view to determining
whether the Company has kept, observed, performed and fulfilled its obligations
under this Indenture in all material respects, and further stating, as to each
such Officer signing such certificate, that to the best of his or her
knowledge, in his or her capacity as such, the Company has kept, observed,
performed and fulfilled each and every covenant contained in this Indenture in
all material respects and is not in Default in the 


 


35

















 


performance or observance of any of the
terms, provisions and conditions of this Indenture (and, if a Default or an
Event of Default shall have occurred, describing all such Defaults or Events of
Default) of which he or she may have knowledge, in his or her capacity as such,
and that to the best of his or her knowledge no event has occurred and remains
in existence by reason of which, payments on account of the principal of or
interest, if any, on the Securities is prohibited or if such event has
occurred, a description of the event.


 


IV.  REPURCHASE AND REDEMPTION OF SECURITIES


 


4.01                         FUNDAMENTAL CHANGE REPURCHASE RIGHT
NOTICE.


 


(a)                                  On
or before the 10th Business Day
following the occurrence of a Fundamental Change, the Company shall provide to
all Holders and the Trustee and Paying Agent a notice (the “Fundamental Change Repurchase Right Notice”)
of the occurrence of such Fundamental Change and of the repurchase right, if
any, at the option of the Holders arising as a result thereof.


 


(b)                                 A
Fundamental Change Repurchase Right Notice shall specify (if applicable):


 


(i)                                     the
events causing a Fundamental Change;


 


(ii)                                  the
date of the Fundamental Change;


 


(iii)                               the
Fundamental Change Repurchase Date and the last date on which a Holder may
exercise the repurchase right;


 


(iv)                              the
Fundamental Change Repurchase Price;


 


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


 


(vi)                              the
Conversion Rate and any adjustments to the Conversion Rate;


 


(vii)                           that
the Securities with respect to which a Fundamental Change Repurchase Notice has
been delivered by a Holder may be converted only if the Holder withdraws the
Fundamental Change Repurchase Notice in accordance with the terms of this
Indenture;


 


(viii)                        that
the Holder must exercise the repurchase right on or prior to the Fundamental
Change Expiration Time;


 


(ix)                                that
the Holder shall have the right to withdraw any Securities surrendered for
repurchase prior to the Fundamental Change Expiration Time; and


 


(x)                                   the
procedures that Holders must follow to require the Company to repurchase their
Securities.


 


36

















 


(c)                                  No
failure of the Company to give a Fundamental Change Repurchase Right Notice and
no defect therein shall limit the Holders’ repurchase rights or affect the
validity of the proceedings for the repurchase of the Securities pursuant to
this Article 4.


 


4.02                         RIGHT TO REQUIRE REPURCHASE UPON
FUNDAMENTAL CHANGE.


 


(a)                                  If
a Fundamental Change occurs, each Holder shall have the right, at such Holder’s
option, to require the Company to repurchase all of such Holder’s Securities or
any portion thereof that is an integral multiple of $1,000 principal amount,
for cash on the date (the “Fundamental Change
Repurchase Date”) specified by the Company that is not less than 20
days and not more than 35 days after the date of the Fundamental Change
Repurchase Right Notice at a repurchase price equal to 100% of the principal
amount thereof, plus accrued and unpaid interest
thereon to, but excluding, the Fundamental Change Repurchase Date (the “Fundamental Change Repurchase Price”).  However, if such Fundamental Change
Repurchase Date falls after a Record Date for the payment of interest and on or
prior to the corresponding Interest Payment Date, the Company shall pay the
full amount of accrued and unpaid interest payable on such Interest Payment
Date to the holder of record at 5:00 p.m., New York City time, on such
Record Date and the Fundamental Change Repurchase Price shall not include such
accrued and unpaid interest.


 


(b)                                 In
order to exercise the repurchase right, a Holder shall:


 


(i)                                     deliver
to the Trustee (or other Paying Agent appointed by the Company) a duly
completed notice (the “Fundamental Change
Repurchase Notice”) in the form set forth on the reverse of the
Security prior to 5:00 p.m., New York City time, on the Scheduled Trading
Day immediately preceding the Fundamental Change Repurchase Date (the “Fundamental Change Expiration Time”); and


 


(ii)                                  deliver
or effect a book-entry transfer of the Securities to the Trustee (or other
Paying Agent appointed by the Company) at any time after delivery of the
Fundamental Change Repurchase Notice (together with all necessary endorsements)
at the office of the Paying Agent, such delivery being a condition to receipt by
the Holder of the Fundamental Change Repurchase Price therefor; provided that such Fundamental Change Repurchase Price shall
be so paid pursuant to this Section 4.02
only if the Security so delivered to the Paying Agent shall conform in all
respects to the description thereof in the related Fundamental Change
Repurchase Notice.


 


(c)                                  A
Fundamental Change Repurchase Notice shall state:


 


(i)                                     if
certificated, the certificate numbers of Securities to be delivered for
repurchase;


 


(ii)                                  the
portion of the principal amount of Securities to be repurchased, which must be
$1,000 or an integral multiple thereof; and


 


(iii)                               that
the Securities are to be repurchased by the Company pursuant to the applicable
provisions of the Securities and this Indenture.


 


37

















 


(d)                                 A
Fundamental Change Repurchase Notice may be withdrawn by means of a written
notice of withdrawal, delivered to the Paying Agent in accordance with the
Fundamental Change Repurchase Right Notice at any time prior to the Fundamental
Change Expiration Time, specifying:


 


(i)                                     if
certificated Securities have been issued, the certificate numbers of the
withdrawn Securities;


 


(ii)                                  the
principal amount of the Securities with respect to which such notice of
withdrawal is being submitted; and


 


(iii)                               the
principal amount, if any, of such Securities that remain subject to the
original Fundamental Change Repurchase Notice, which portion must be in
principal amounts of $1,000 or an integral multiple of $1,000.


 


(e)                                  If
the Securities to be repurchased are represented by a Global Security, any
Fundamental Change Repurchase Notice or notice of withdrawal thereof in respect
of such Securities must comply, to the extent required by law, with appropriate
procedures of the Depositary.


 


(f)                                    The
Paying Agent shall promptly notify the Company of the receipt by it of any
Fundamental Change Repurchase Notice or notice of withdrawal thereof in
accordance with the provisions of this Section 4.02.


 


4.03                         SETTLEMENT OF FUNDAMENTAL CHANGE
REPURCHASES.


 


(a)                                  Any
repurchase by the Company pursuant to this Article 4
shall be consummated by the delivery of the consideration to be received by the
Holder promptly following the later of the Fundamental Change Repurchase Date
and the time of the book-entry transfer or delivery of the Security.


 


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


 


(c)                                  On
or prior to 11:00 a.m., New York City time, on the Fundamental Change
Repurchase Date, the Company shall deposit with the Paying Agent (or if the
Company is acting as its own Paying Agent, set aside, segregate and hold in
trust) an amount of money sufficient to repurchase on the Fundamental Change
Repurchase Date all of the Securities to be repurchased on such date at the
Fundamental Change Repurchase Price. 
Subject to receipt of funds and/or Securities by the Trustee (or other
Paying Agent appointed by the Company), payment for Securities surrendered for
repurchase (and not withdrawn) prior to the Fundamental Change Expiration Time
shall be made promptly after the later of:


 


38
















 


(i)                                    the
Fundamental Change Repurchase Date with respect to such Security; provided that the Holder has satisfied the conditions to the
payment of the Fundamental Change Repurchase Price in this Section 4.03; and


 


(ii)                                 the
time of book-entry transfer or the delivery of such Security to the Paying
Agent by the Holder thereof in the manner required by this Section 4.03.


 


The Trustee shall, promptly after such payment and upon written demand
by the Company, return to the Company any funds in excess of the Fundamental
Change Repurchase Price.


 


(d)                                If
the Paying Agent holds money sufficient to repurchase on the Fundamental Change
Repurchase Date all the Securities or portions thereof that are to be purchased
as of the Business Day following the Fundamental Change Repurchase Date, then
on and after the Fundamental Change Repurchase Date (i) such Securities
shall cease to be outstanding, (ii) interest shall cease to accrue on such
Securities, and (iii) all other rights of the Holders of such Securities
shall terminate (other than the right to receive the Fundamental Change
Repurchase Price in respect of such Securities), in each case, whether or not
book-entry transfer of the Securities has been made or the Securities have been
delivered to the Paying Agent.


 


(e)                                 In
connection with any repurchase of Securities pursuant to this Article 4, the Company hereby agrees
to:


 


(i)                                    comply
with the provisions of Rule 13e-1, Rule 13e-4, Rule 14e-1 and
any other tender offer rules under the Exchange Act that may then be
applicable; and


 


(ii)                                 otherwise
comply with all applicable federal and state securities laws.


 


4.04                          RESTRICTIONS ON REPURCHASES.


 


No Securities may be repurchased at the option of Holders upon a
Fundamental Change if the principal amount of the Securities has been accelerated,
and such acceleration has not been rescinded, on or prior to such date.


 


4.05                          RATIO EVENT REPURCHASE RIGHT NOTICE.


 


(a)                                 On
or after June 17, 2011, with respect to any fiscal quarter as of the last
day of which the ratio of Total Net Debt to LTM EBITDA was greater than 3.0x
(the end of such fiscal quarter, a “Ratio
Event”), the Company shall, within two (2) Business Days of the
date that it is required to file with the Commission a report on Form 10-Q
or Form 10-K covering such fiscal quarter (without giving effect to any
applicable grace period provided by Rule 12b-25 under the Exchange Act),
give notice (the “Ratio Event Repurchase
Right Notice”) to the Trustee for delivery to all Holders and the
Paying Agent of the occurrence of such Ratio Event and of the repurchase right,
if any, at the option of the Holders arising as a result thereof.


 


(b)                                A
Ratio Event Repurchase Right Notice shall specify (if applicable):


 


(i)                                    the
occurrence of a Ratio Event;


 


39

















 


(ii)                                 the
Ratio Event Repurchase Period and the last date on which a Holder may exercise
the repurchase right;


 


(iii)                              the
method for calculating the Ratio Event Repurchase Price;


 


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


 


(v)                                 the
then current Conversion Rate;


 


(vi)                             that
the Securities with respect to which a Ratio Event Repurchase Notice has been
delivered by a Holder may be converted only if the Holder withdraws the Ratio
Event Repurchase Notice in accordance with the terms of this Indenture;


 


(vii)                          that the
Holder must exercise the repurchase right on or prior to the Ratio Event
Expiration Time;


 


(viii)                       that the
Holder shall have the right to withdraw any Securities surrendered for
repurchase prior to the Ratio Event Expiration Time; and


 


(ix)                               the
procedures that Holders must follow to require the Company to repurchase their
Securities.


 


(c)                                 No
failure of the Company to give a Ratio Event Repurchase Right Notice and no
defect therein shall limit the Holders’ repurchase rights or affect the
validity of the proceedings for the repurchase of the Securities pursuant to
this Article 4.


 


4.06                          RIGHT TO REQUIRE REPURCHASE UPON RATIO
EVENT.


 


(a)                                 If
a Ratio Event occurs, each Holder shall have the right, at such Holder’s
option, to require the Company to repurchase all of such Holder’s Securities or
any portion thereof that is an integral multiple of $1,000 principal amount,
for cash on any date (such date, a “Ratio
Event Repurchase Date”) within the period commencing on the first
day of the calendar month following the date the Ratio Event Repurchase Right
Notice is provided to the Trustee, and ending three calendar months thereafter
(the “Ratio Event Repurchase Period”),
at a repurchase price equal to 100% of the principal amount thereof, plus accrued and unpaid interest thereon to, but excluding,
the Ratio Event Repurchase Date (the “Ratio
Event Repurchase Price”). 
However, if such Ratio Event Repurchase Date falls after a Record Date
for the payment of interest and on or prior to the corresponding Interest
Payment Date, the Company shall pay the full amount of accrued and unpaid
interest payable on such Interest Payment Date to the holder of record at 5:00 p.m.,
New York City time, on such Record Date and the Ratio Event Repurchase Price
shall not include such accrued and unpaid interest.


 


(b)                                In
order to exercise the repurchase right, a Holder shall:


 


(i)                                    deliver
to the Trustee (or other Paying Agent appointed by the Company) a duly
completed notice (the “Ratio Event Repurchase
Notice”) in the form set forth on the reverse of the Security after
9:00 a.m., New York City time, on the date that is 20 Business Days prior
to the applicable Ratio Event Repurchase Date and prior to 5:00 p.m.,


 


40

















 


New York City time, on the applicable Ratio
Event Repurchase Date elected by such Holder (the “Ratio Event Expiration Time”); and


 


(ii)                                 deliver
or effect a book-entry transfer of the Securities to the Trustee (or other
Paying Agent appointed by the Company) at any time after delivery of the Ratio
Event Repurchase Notice (together with all necessary endorsements) at the
office of the Paying Agent, such delivery being a condition to receipt by the
Holder of the Ratio Event Repurchase Price therefor; provided
that such Ratio Event Change Repurchase Price shall be so paid pursuant to this
Section 4.06 only if the
Security so delivered to the Paying Agent shall conform in all respects to the
description thereof in the related Ratio Event Repurchase Notice.


 


(c)                                 A
Ratio Event Repurchase Notice shall state:


 


(i)                                    the
applicable Ratio Event Repurchase Date elected by the Holder;


 


(ii)                                 if
certificated, the certificate numbers of Securities to be delivered for
repurchase;


 


(iii)                              the
portion of the principal amount of Securities to be repurchased, which must be
$1,000 or an integral multiple thereof; and


 


(iv)                             that
the Securities are to be repurchased by the Company pursuant to the applicable
provisions of the Securities and this Indenture.


 


(d)                                A
Ratio Event Repurchase Notice may be withdrawn by means of a written notice of
withdrawal, delivered to the Paying Agent in accordance with the Ratio Event
Repurchase Right Notice at any time prior to the Ratio Event Expiration Time,
specifying:


 


(i)                                    if
certificated Securities have been issued, the certificate numbers of the
withdrawn Securities;


 


(ii)                                 the
principal amount of the Securities with respect to which such notice of
withdrawal is being submitted; and


 


(iii)                              the
principal amount, if any, of such Securities that remain subject to the
original Ratio Event Repurchase Notice, which portion must be in principal
amounts of $1,000 or an integral multiple of $1,000.


 


(e)                                 If
the Securities to be repurchased are represented by a Global Security, any
Ratio Event Repurchase Notice or notice of withdrawal thereof in respect of
such Securities must comply with appropriate procedures of the Depositary.


 


(f)                                   The
Paying Agent shall promptly notify the Company of the receipt by it of any
Ratio Event Repurchase Notice or notice of withdrawal thereof in accordance
with the provisions of this Section 4.06.


 


41

















 


4.07                          SETTLEMENT OF RATIO EVENT REPURCHASES.


 


(a)                                 Any
repurchase by the Company pursuant to this Article 4
shall be consummated by the delivery of the consideration to be received by the
Holder promptly following the later of the Ratio Event Repurchase Date and the
time of the book-entry transfer or delivery of the Security.


 


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


 


(c)                                 On
or prior to 11:00 a.m., New York City time, on the Ratio Event Repurchase
Date, the Company shall deposit with the Paying Agent (or if the Company is
acting as its own Paying Agent, set aside, segregate and hold in trust) an
amount of money sufficient to repurchase on the Ratio Event Repurchase Date all
of the Securities tendered by Holders as of 5:00 p.m. on the Business Day
immediately preceding the Ratio Event Repurchase Date to be repurchased on the
Ratio Event Repurchase Date at the Ratio Event Repurchase Price.  On or prior to 11:00 a.m., New York City
time, on the Business Day immediately following the Ratio Event Repurchase
Date, the Company shall deposit with the Paying Agent (or if the Company is
acting as its own Paying Agent, set aside, segregate and hold in trust) an
amount of additional money sufficient to repurchase on such date all of the
Securities tendered by Holders subsequent to 5:00 p.m. on the Business Day
immediately preceding the Ratio Event Repurchase Date and at or before 5:00 p.m.
on the Ratio Event Repurchase Date to be repurchased at the Ratio Event
Repurchase Price.  Subject to receipt of
funds and/or Securities by the Trustee (or other Paying Agent appointed by the
Company), payment for Securities surrendered for repurchase (and not withdrawn)
prior to the Ratio Event Expiration Time shall be made promptly after the later
of:


 


(i)                                    the
Ratio Event Repurchase Date with respect to such Security; provided
that the Holder has satisfied the conditions to the payment of the Ratio Event
Repurchase Price in this Section 4.07;
and


 


(ii)                                 the
time of book-entry transfer or the delivery of such Security to the Paying
Agent by the Holder thereof in the manner required by this Section 4.07.


 


The Trustee shall, promptly after such payment and upon written demand
by the Company, return to the Company any funds in excess of the Ratio Event
Repurchase Price.


 


(d)                                If
the Paying Agent holds money sufficient to repurchase on the Ratio Event
Repurchase Date all the Securities or portions thereof that are to be purchased
as of the Business Day following the Ratio Event Repurchase Date, then on and
after the Ratio Event Repurchase Date (i) such Securities shall cease to
be outstanding, (ii) interest (including Additional Interest, if any)
shall cease to accrue on such Securities, and (iii) all other rights of
the Holders of such 


 


42

















 


Securities shall terminate (other than the
right to receive the Ratio Event Repurchase Price in respect of such
Securities), in each case, whether or not book-entry transfer of the Securities
has been made or the Securities have been delivered to the Paying Agent.


 


(e)                                 In
connection with any repurchase of Securities pursuant to this Article 4, the Company hereby agrees
to:


 


(i)                                    comply
with the applicable provisions of Rule 13e-1, Rule 13e-4, Rule 14e-1
and any other tender offer rules under the Exchange Act that may then be
applicable; and


 


(ii)                                 otherwise
comply with all applicable federal and state securities laws,


 


and the provisions of this
Indenture are subject to the Company’s compliance, to the extent required by
law, with such rules and laws.


 


4.08                          REDEMPTION RIGHTS.


 


(a)                                 The
Securities shall be redeemable at the Company’s option in accordance with this Article 4:


 


(i)                                    in
whole or in part, at any time on or after June 17, 2010, if the Last
Reported Sale Price of the Common Stock for 20 or more Trading Days in a period
of 30 consecutive Trading Days ending on the Trading Day prior to the date the
Company provides a Redemption Notice in accordance with this Article 4 exceeds 175% of the
Conversion Price in effect on each such Trading Day; and


 


(ii)                                 in
whole but not in part, at any time if less than 10% of the aggregate principal
amount of Securities initially issued (including any additional Securities
issued in connection with exercise by the Initial Purchaser of its over-allotment
option) are then Outstanding.


 


(b)                                Notwithstanding
the foregoing, the Company may only exercise its redemption rights pursuant to clause (a) of this Section 4.08 if, as evidenced by an
Officers’ Certificate, all of the conditions listed below (the “Equity Conditions”) are satisfied on each day during the period (x) commencing
ten days prior to the date a Redemption Notice is delivered to the Trustee and (y) ending
on the Redemption Date (the “Equity
Conditions Measuring Period”). The Equity Conditions are as
follows:


 


(i)                                    all shares of
Common Stock issuable upon conversion of the Securities and held by a
non-affiliate of the Company shall be eligible for sale without the need for
registration under any applicable federal or state securities laws;


 


(ii)                                 the Company shall have
no knowledge of any fact that would cause any shares of Common Stock issuable
upon conversion of the Securities not to be eligible for sale without
restriction pursuant to Rule 144 and any applicable state securities laws
(other than restrictions due to the Holder of such Common Stock being an
Affiliate of the Company);


 


43

















 


(iii)                             during the equity
conditions measuring period, the common stock is listed or traded on The Nasdaq
Global Market, The Nasdaq Global Select Market, The Nasdaq Capital Market, the
New York Stock Exchange or the American Stock Exchange, or any of their
respective successors (each an “Eligible Market”)
and shall not have been suspended from trading on such exchange or market
(other than suspensions of not more than two trading days and occurring prior
to the applicable date of determination due to business announcements by the
Company) nor shall delisting or suspension by such exchange or market been
threatened or pending either (A) in writing by such exchange or market or (B) by
falling below the then effective minimum listing maintenance requirements of
such exchange or market;


 


(iv)                             during the Equity
Conditions Measuring Period, to the extent any Securities have been delivered
to the Company for conversion in accordance with the terms of the Securities,
the Company shall have delivered shares of Common Stock upon conversion of the
Securities to the Holders on a timely basis;


 


(v)                                 any applicable shares
of Common Stock to be issued upon conversion may be issued in full without
violating the rules or regulations of The Nasdaq Global Market or any
applicable Eligible Market on which the Common Stock delivered upon conversion
are then listed or trading;


 


(vi)                             during the Equity
Conditions Measuring Period, the Company shall not have failed to make any
payments within five (5) Business Days of when such payment is due
pursuant to the Securities, this Indenture, the Pledge Agreement or the other
security documents;


 


(vii)                          during the Equity Conditions
Measuring Period, there shall not have occurred the public announcement of a
pending, proposed or intended transaction or event that will constitute a
Fundamental Change, pursuant to clause  (a) or (b) of the
definition thereof (other than, for the avoidance of doubt, any such
transaction or event that is not a Fundamental Change as a result of the second
to last paragraph of the definition thereof), which has not been abandoned,
terminated or consummated;


 


(viii)                      the average daily trading volume
of the Common Stock on The Nasdaq Global Market or any other Eligible Market on
which the shares of Common Stock delivered upon conversion are then-listed or
trading for the Equity Conditions Measuring Period was at least $2.5 million;
and


 


(ix)                              no Default or Event of
Default under the indenture shall have occurred and be continuing.


 


(c)                                 The
Company may elect to redeem any Securities pursuant to this Section 4.08 by providing notice to
each Holder of such Securities in accordance with Section 4.11 not less than 25 Scheduled Trading Days nor
more than 60 days prior to the Redemption Date for such Securities.


 


44

















 


4.09                          REDEMPTION PRICE.


 


(a)                                 The
“Redemption Price” (as determined
by the Company) for any Securities redeemed pursuant to Section 4.08 shall be an amount in
cash equal to 100% of the principal amount of the Securities being redeemed, plus any accrued and unpaid interest to (but excluding) the
Redemption Date, plus the present value of all
remaining interest payments on such Holder’s Securities (including deferred
interest, if any) through and including the Stated Maturity Date.  The present value of the remaining interest
payments will be computed using a discount rate of 350 basis points.


 


(b)                                If
the Redemption Date for any Security falls after a Record Date for the payment
of interest and on or prior to the corresponding Interest Payment Date, the
Company shall pay the full amount of accrued and unpaid interest payable on
such Interest Payment Date to the holder of record at 5:00 p.m., New York
City time, on such Record Date and the cash portion of the Redemption Price
shall not include such accrued and unpaid interest.


 


4.10                          SELECTION OF SECURITIES TO BE REDEEMED.


 


(a)                                 If
less than all the Securities are to be redeemed, the particular Securities to
be redeemed shall be selected not more than 60 days prior to the Redemption
Date by the Trustee, from the Outstanding Securities not previously called for
redemption, by lot, on a pro rata basis or in accordance with such other method
as the Trustee shall deem fair and appropriate; provided
that the unredeemed portion of the principal amount of any Security shall be in
a denomination not less than the minimum authorized denomination for such
Security.


 


(b)                                The
Trustee shall promptly notify the Company in writing of the Securities selected
for partial redemption and the principal amount thereof to be redeemed.  For all purposes of this Indenture, unless
the context otherwise requires, all provisions relating to the redemption of
Securities shall relate, in the case of any Security redeemed or to be redeemed
only in part, to the portion of the principal amount of such Security that has
been or is to be redeemed.


 


(c)                                 If
the Trustee selects a portion of a Holder’s Security for partial redemption and
such Holder converts a portion of the same Security, the converted portion
shall be deemed to be from the portion selected for redemption.


 


4.11                          REDEMPTION NOTICE.


 


(a)                                 Notice
of redemption (a “Redemption Notice”)
shall be given by first-class mail, postage prepaid, to each Holder of
Securities to be redeemed, at the address of such Holder as it appears in the
Securities Register.


 


(b)                                The
Redemption Notice for any Securities to be redeemed shall state:


 


(i)                                    the
Redemption Date;


 


45

















 


(ii)                                the
Redemption Price or, if the Redemption Price cannot be calculated prior to the
time the Redemption Notice is required to be sent, a statement of how the
Redemption Price will be calculated;


 


(iii)                             if
less than all Outstanding Securities are to be redeemed, the identification
(and, in the case of partial redemption, the respective principal amounts) of
the particular Securities to be redeemed;


 


(iv)                             that
on the Redemption Date, the Redemption Price will become due and payable upon
each such Security or portion thereof, and that interest thereon, if any, shall
cease to accrue on and after said date;


 


(v)                                the
place or places where such Securities are to be surrendered for payment of the
Redemption Price; and


 


(vi)                             the
CUSIP number for the Securities redeemed.


 


(c)                                 A
Redemption Notice shall be given by the Company or, at the Company’s request,
by the Trustee in the name and at the expense of the Company; provided that the Company shall have delivered to the
Trustee, at least five Business Days before the Redemption Notice is required
to be mailed (or such shorter period agreed to by the Trustee), an Officers’
Certificate requesting that the Trustee give such notice and setting forth the
complete form of such notice and the information to be stated in such notice.


 


(d)                                A
Redemption Notice shall be irrevocable.


 


(e)                                 A
Redemption Notice, if mailed in the manner herein provided, shall be
conclusively presumed to have been duly given, whether or not the Holder
receives such notice.  In any case, a
failure to give such Redemption Notice by mail or any defect in the Redemption
Notice to the Holder of any Security designated for redemption as a whole or in
part shall not affect the validity of the proceedings for the redemption of any
other Security.


 


4.12                          PAYMENT OF SECURITIES CALLED FOR
REDEMPTION.


 


(a)                                 If
any Redemption Notice has been given in respect of any Securities in accordance
with Section 4.11, such
Securities or portion of such Securities shall become due and payable on the
Redemption Date at the place or places stated in the Redemption Notice and at
the applicable Redemption Price.  On
presentation and surrender of such Securities at the place or places stated in
the Redemption Notice, such Securities or the portions thereof specified in the
Redemption Notice shall be paid and redeemed by the Company at the applicable
Redemption Price.


 


(b)                                On
or prior to 11:00 a.m., New York City time, on the Redemption Date, the
Company shall deposit with the Paying Agent (or, if the Company is acting as
its own Paying Agent, set aside, segregate and hold in trust) an amount of
money and shares of Common Stock, if any, sufficient to pay the Redemption
Price of all of the Securities to be redeemed on such Redemption Date.  Subject to receipt of funds and Common Stock,
if any, by the Paying Agent, payment for the Securities to be redeemed shall be
made promptly after the later of:


 


46

















 


(i)                                    the
Redemption Date for such Securities; and


 


(ii)                                 the
time of presentation of such Security to the Trustee (or other Paying Agent
appointed by the Company) by the Holder thereof in the manner required by this Section 4.12.


 


The Paying Agent shall, promptly after such
payment and upon written demand by the Company, return to the Company any funds
in excess of the Redemption Price.


 


(c)                                 Subject
to a Holder’s right to receive interest on the related Interest Payment Date
where the Redemption Date falls between a Record Date and the Interest Payment
Date to which it relates as described in Section 4.09(b) above,
if the Paying Agent holds money and, if applicable, shares of Common Stock
sufficient to pay the Redemption Price for all the Securities or portions
thereof that are to be redeemed as of the Business Day immediately following
the Redemption Date, then on and after the Redemption Date (i) such
Securities shall cease to be outstanding and interest, if any, will cease to
accrue, whether or not book-entry transfer of the Securities is made or whether
or not the Security is delivered to the Paying Agent, (ii) all other
rights of the Holder will terminate as of the Redemption Date, other than the
right to receive the Redemption Price and previously accrued and unpaid
interest, if any, upon delivery or transfer of the Securities, and (iii) the
Holder will be deemed to be a holder of record of any shares of Common Stock
issuable in connection with such redemption as of the date of delivery or
transfer of the Securities by such Holder.


 


(d)                                Cash
amounts due upon redemption in respect of Securities presented for redemption
shall be paid by the Company to such Holder, or such Holder’s nominee or
nominees.


 


(e)                                 Upon
presentation of any Security redeemed in part only, the Company shall not be
required to issue, register the transfer of or exchange any Physical Security.


 


4.13                         RESTRICTIONS ON REDEMPTION.


 


The Company may not redeem any Security on any date if the principal
amount of the Securities has been accelerated in accordance with the terms of
this Indenture, and such acceleration has not been rescinded on or prior to
such date.


 


4.14                         OFFICERS’ CERTIFICATE TO TRUSTEE.


 


In connection with any redemption of Securities effected pursuant to
this Article IV, the Company shall deliver
to the Trustee an Officers’ Certificate dated as of the Redemption Date to the
effect that all conditions precedent to the redemption of such Securities have
been satisfied.


 


V.  CONVERSION


 


5.01                         CONVERSION RIGHTS.


 


At any time prior to the close of business on the Business Day
immediately preceding the Maturity of the Securities, a Holder shall have the
right, at such Holder’s option, to convert all its 


 


47

















 


Securities or any portion thereof that is an
integral multiple of $1,000 principal amount at the Conversion Rate.


 


5.02                         LIMITATION ON BENEFICIAL OWNERSHIP.


 


In no event will any Holder will be entitled to receive Common Stock
upon conversion to the extent (but only to the extent) that such receipt would
cause such converting Holder to become, directly or indirectly, a Beneficial
Owner of more than 9.9% of the shares of Common Stock outstanding at such time.
Any purported delivery of shares of Common Stock upon conversion of Securities
shall be void and have no effect to the extent (but only to the extent) that
such delivery would result in the converting Holder becoming the beneficial
owner of more than 9.9% of the shares of Common Stock outstanding at such time.
If any delivery of shares of Common Stock owed to a Holder upon conversion of
Securities is not made, in whole or in part, as a result of this limitation,
the Company’s obligation to make such delivery shall not be extinguished and
the Company shall deliver such shares as promptly as practicable after any such
converting Holder gives notice to the Company that such delivery would not
result in such Holder being the Beneficial Owner of more than 9.9% of the
shares of Common Stock outstanding at such time.


 


5.03                         MAKE-WHOLE FUNDAMENTAL CHANGES.


 


(a)                                 If
a Holder elects to convert Securities in connection with a Make-Whole
Fundamental Change that occurs prior to the Stated Maturity Date, the
Conversion Rate applicable to each $1,000 principal amount of Securities so
converted shall, to the extent applicable, be increased by an additional number
of shares of Common Stock (the “Additional
Shares”) as described below. 
For purposes of this Section 5.03,
a conversion shall be deemed to be “in
connection with” a Make-Whole Fundamental Change if the Conversion
Date for such conversion occurs at any time from, and including, the Effective
Date of such Make-Whole Fundamental Change to, and including, the Business Day
prior to the related Fundamental Change Repurchase Date.


 


(b)                                The
Company shall notify Holders and the Trustee of the occurrence of any
Make-Whole Fundamental Change on the Effective Date of the Make-Whole
Fundamental Change.


 


(c)                                 The
number of Additional Shares shall be determined by the Company by reference to
the table set forth in Schedule A, based on the date on which the Make-Whole
Fundamental Change becomes effective (the “Effective
Date”) and the Stock Price. 
If the exact Stock Price and Effective Date are not set forth in such
table, then:


 


(i)                                    if
the actual Stock Price is between two Stock Prices in the table or the
Effective Date is between two Effective Dates in the table, the number of
Additional Shares shall be determined by a straight-line interpolation between
the number of Additional Shares set forth for the next higher and next lower
Stock Prices and the two nearest Effective Dates, as applicable, based on a
365-day year;


 


(ii)                                 if
the Stock Price is greater than $9.00 per share of Common Stock (subject to
adjustment in the same manner and at the same time as the Stock Prices as set 


 


48

















 


forth in clause (d) of
this Section 5.03), no
Additional Shares shall be added to the Conversion Rate; and


 


(iii)                              if
the Stock Price is less than $2.85 per share (subject to adjustment in the same
manner and at the same time as the Stock Prices as set forth in clause (d) of this Section 5.03), no Additional Shares
shall be added to the Conversion Rate.


 


(d)                                The
Stock Prices set forth in the first column of the table in Schedule A shall be
adjusted by the Company as of any date on which the Conversion Rate of the
Securities is adjusted (other than pursuant to this Section 5.03).  The
adjusted Stock Prices shall equal the Stock Prices applicable immediately prior
to such adjustment, multiplied by a
fraction, the numerator of which is the Conversion Rate in effect 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 number of Additional Shares within the
table shall be adjusted in the same manner as the Conversion Rate is adjusted
(other than pursuant to this Section 5.03).


 


(e)                                 Notwithstanding
the foregoing, in no event shall the Conversion Rate exceed 350.6670 per $1,000
principal amount of Securities (subject to adjustment in the same manner as the
Conversion Rate is adjusted pursuant to Section 5.07(b),
(c), (d), (e) and
(f)) as a result of any increase
under this Section 5.03, nor
will any Additional Shares of Common Stock be issued or issuable to the extent that
such issuance would not be in compliance with the rules of The Nasdaq
Global Market or other Eligible Market on which the Common Stock is then
traded.


 


5.04                          EXERCISE OF CONVERSION PRIVILEGE.


 


(a)                                 Before
any Holder shall be entitled to convert its Securities as forth above, such
Holder shall:


 


(i)                                    in
the case of a Global Security, comply with the procedures of the Depositary in
effect at that time and, if required under Section 5.05(f),
pay funds equal to interest payable on the next Interest Payment Date to which
such Holder is not entitled as set forth in Section 5.05(f) and,
if required under Section 5.04(g),
pay any taxes or duties such Holder is required to pay as set forth in Section 5.04(g); and


 


(ii)                                 in
the case of a Physical Security, (A) complete and manually sign and
deliver an irrevocable written notice to the Conversion Agent in the form
attached to such Physical Security as set forth in Exhibit A (or a
facsimile thereof) (a “Conversion Notice”)
at the office of the Conversion Agent and shall state in writing therein the
principal amount of Securities to be converted and the name or names (with
addresses) in which such Holder wishes the certificate or certificates for any
shares of Common Stock, if any, to be delivered upon settlement of the Conversion
Obligation to be registered, (B) surrender such Securities, duly endorsed
to the Company or in blank (and accompanied by appropriate endorsement and
transfer documents), at the office of the Conversion Agent, (C) if
required under Section 5.05(f),
pay funds equal to interest payable on the next Interest Payment Date to which
such Holder is not entitled as set forth in Section 5.05(f) and,
(D) if required under Section 5.04(g),
pay any taxes or duties such Holder is required to pay as set forth in Section 5.04(g).


 


49
















 


(b)                                 The
date on which the Holder has complied with the requirements set forth in Section 5.04(a) in respect of a
Security shall be deemed to be the “Conversion
Date” for such Security.


 


(c)                                  No
Conversion Notice with respect to any Securities may be tendered by a Holder
thereof if such Holder has also tendered a Fundamental Change Repurchase Notice
or a Ratio Event Repurchase Notice and not validly withdrawn such Fundamental
Change Repurchase Notice or Ratio Event Repurchase Notice, as the case may be,
in accordance with the applicable provisions of Article 4.


 


(d)                                 If
the Company calls Securities for redemption pursuant to Section 4.08, a Holder may convert its
Securities only until the close of business on the Business Day prior to the
applicable Redemption Date.


 


(e)                                  If
more than one Security shall be surrendered for conversion at one time by the
same Holder, the Conversion Obligation with respect to such Securities, if any,
that shall be payable upon conversion shall be computed on the basis of the
aggregate principal amount of the Securities (or specified portions thereof to
the extent permitted thereby) so surrendered.


 


(f)                                    In
case any Security shall be surrendered for partial conversion, the Company
shall execute and the Trustee shall, as provided in an Officers’ Certificate,
authenticate and deliver to or upon the written order of the Holder of the
Security so surrendered, without charge to such Holder, a new Security or
Securities in authorized denominations in an aggregate principal amount equal
to the unconverted portion of the surrendered Securities.


 


(g)                                 If
a Holder submits a Security for conversion, the Company shall pay all stamp and
other duties, if any, which may be imposed by the United States or any
political subdivision thereof or taxing authority thereof or therein with
respect to the issuance of shares of Common Stock, if any, upon the
conversion.  However, the Holder shall
pay any such tax which is due because the Holder requests any shares of Common
Stock to be issued in a name other than the Holder’s name.  The Company may refuse to deliver the
certificates representing the shares of Common Stock being issued in a name
other than the Holder’s name until the Company 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 regulations.


 


(h)                                 Upon
the conversion of an interest in a Global Security, the Trustee, or the
Custodian at the direction of the Trustee, shall make a notation on such Global
Security as to the reduction in the principal amount represented thereby.  The Company shall notify the Trustee in
writing of any conversion of Securities effected through any Conversion Agent
other than the Trustee.


 


5.05                           SETTLEMENT OF CONVERSION OBLIGATION.


 


(a)                                  Subject
to clause (d) of this Section 5.05, upon conversion of any
Securities in accordance with this Article 5,
the Company shall deliver, with respect to each $1,000 principal amount of
Securities converted, no later than the third Business Day immediately
following the Conversion Date, a number of shares of Common Stock equal to the
Conversion Rate in effect 


 


50

















 


on the Conversion Date, and, if applicable,
cash in lieu of fractional shares (the “Conversion
Obligation”).


 


(b)                                 If
applicable, upon conversion the Company will also pay to a converting Holder,
subject to Section 5.16, that
amount of cash, if any, contemplated to be paid pursuant to Section 5.07(m), in addition to the
shares of Common Stock received upon conversion and any cash in lieu of
fractional shares.


 


(c)                                  If
the Conversion Price as adjusted pursuant to Section 5.03
above is lower than the Cap Price and, absent the Cap Price, the Conversion
Price would have been reduced pursuant to the Make-Whole Fundamental Change to
a price that is lower than the Cap Price, then, subject to Section 5.16, upon conversion of a
Security, the converting Holder will, in addition to the shares of Common Stock
received upon conversion and any cash in lieu of fractional shares, receive an
additional cash payment equal to the Last Reported Sale Price on the applicable
Conversion Date multiplied by that number of additional shares of Common Stock
that would have been issuable upon conversion of the Securities had the Cap
Price not been applicable.


 


If, pursuant to the vote required by Section 3.14,
the Company’s stockholders approve the Share Cap Proposal and a Make-Whole
Fundamental Change adjustment is triggered, then the Cap Price will no longer
apply and the conversion price thereafter applicable shall be reduced to equal
the greater of the Floor Price or the Conversion Price as adjusted pursuant to Section 5.03 above.


 


(d)                                 Notwithstanding
clause (a) above, if,
following a Make-Whole Fundamental Change, Securities are surrendered for
conversion following the related Effective Date and the Reference Property into
which the Securities are convertible consists solely of cash as set forth in Section 5.12, then the Company shall
satisfy the related Conversion Obligations by delivering, no later than the
third Business Day following the Conversion Date, cash in an amount equal to
the Stock Price multiplied by the Conversion Rate
then in effect.


 


(e)                                  The
Company shall issue, or shall cause to be issued, for any shares of Common
Stock due upon conversion to such Holder, or such Holder’s nominee or nominees,
certificates or, to the extent permissible, a book-entry transfer through the
Depositary (together with any cash in lieu of fractional shares and any cash
payable pursuant to Sections 5.05(f) or 5.07(m)).


 


(f)                                    Upon
conversion, a Holder shall not receive any separate cash payment for accrued
and unpaid interest except as set forth in this clause (f).  The
Company’s settlement of the Conversion Obligation as described above shall be
deemed to satisfy its obligation to pay the principal amount of the Security
and accrued and unpaid interest to, but not including, the Conversion
Date.  As a result, accrued and unpaid
interest to, but not including, the Conversion Date shall be deemed to be paid
in full rather than cancelled, extinguished or forfeited.  Notwithstanding the preceding sentence, if
Securities are converted after 5:00 p.m., New York City time, on a Record
Date for the payment of interest, Holders of such Securities as of 5:00 p.m.,
New York City time, on the Record Date shall receive the interest payable on
such Securities on the corresponding Interest Payment Date notwithstanding the
conversion.  Securities surrendered for
conversion during the period from 5:00 p.m., New York City time, on any
Record Date to 9:00 a.m., New York City time, on the corresponding
Interest Payment Date 


 


51

















 


must be accompanied by payment of an amount
equal to the interest payable on the Securities so converted; provided that no such payment need be made with respect to
any Security:


 


(i)                                     if
the Company has specified a Fundamental Change Repurchase Date that is after a
Record Date and on or prior to the corresponding Interest Payment Date;


 


(ii)                                  if
the Company has called such Security for redemption and specified a Redemption
Date for such Security that is after a Record Date and on or prior to the
corresponding Interest Payment Date;


 


(iii)                               to
the extent of any overdue interest on such Security which remains unpaid at the
time of conversion with respect to such Security; or


 


(iv)                              if
the Conversion Date for such Security occurs after the close of business on the
Record Date immediately preceding the Stated Maturity Date.


 


Except as described above, no payment or
adjustment shall be made for accrued interest on converted Securities.


 


(g)                                 Upon
conversion of any Securities pursuant to this Article 5,
(i) any such Securities shall be deemed to have been converted and shall
cease to be outstanding immediately prior to the close of business on the
Conversion Date and, (ii) as of the close of business on the last Trading
Day prior to the Conversion Date the Holder of such Securities shall be deemed
to be a holder of record of any shares of the Common Stock issuable as a result
of the conversion of such Securities.


 


5.06                           FRACTIONS OF SHARES.


 


(a)                                  No
fractional shares of Common Stock shall be issued upon conversion of any
Security.


 


(b)                                 If
more than one Security shall be surrendered for conversion at one time by the
same Holder, the number of full shares of Common Stock which shall be issuable
upon conversion thereof shall be computed on the basis of the aggregate
principal amount of the Securities (or specified portions thereof) so
surrendered.


 


(c)                                  Instead
of any fractional share of Common Stock that would otherwise be issuable upon
conversion of any Securities (or specified portions thereof), the Company shall
calculate and pay a cash adjustment in respect of such fraction (calculated to
the nearest 1/100th of a share) in an amount equal to the Last Reported Sale
Price of the Common Stock on the last Trading Day prior to the Conversion Date.


 


5.07                           ADJUSTMENT OF CONVERSION RATE.


 


(a)                                  The
Conversion Rate shall be adjusted from time to time by the Company as set forth
in this Section 5.07; provided that the Company shall not make any adjustments to
the Conversion Rate pursuant to clauses (b) through
(f) hereunder if Holders of
the Securities participate (as a result of holding the Securities, and at the
same time as holders of the Common 


 


52

















 


Stock participate) in any of the transactions
described below as if such Holders held a number of shares of Common Stock
equal to the Conversion Rate, multiplied by
the principal amount (expressed in thousands) of Securities held by such
Holders, without having to convert their Securities.


 


(b)                                 In
case the Company shall issue shares of Common Stock as a dividend or distribution
on shares of Common Stock, or shall effect a share split or share combination,
the Conversion Rate shall be adjusted based on the following formula:


 


	
  CR1 = CR0
  x

  	
   

  	
  OS1

  
	
   

  	
  OS0

  



 


where,


 


CR1=                   the
Conversion Rate in effect immediately after the open of business on the Ex-Date
for such dividend or distribution or the effective date of such share split or
combination, as the case may be;


 


CR0=                   the
Conversion Rate in effect immediately prior to the open of business on the
Ex-Date for such dividend or distribution or the effective date of such share
split or combination, as the case may be;


 


OS1=                    the
number of shares of Common Stock outstanding immediately prior to the open of
business on the Ex-Date for such dividend or distribution or the effective date
of such share split or combination, in each case, after giving effect to such
dividend, distribution or share split or combination, as the case may be; and


 


OS0=                    the
number of shares of Common Stock outstanding immediately prior to the open of
business on the Ex-Date for such dividend or distribution or the effective date
of such share split or combination, as the case may be.


 


Such adjustment shall become effective immediately after the open of
business on the Ex-Date for such dividend or distribution, or the effective
date for such share split or share combination. 
If any dividend or distribution of the type described in this Section 5.07(b) is declared but not so paid or
made, or the outstanding shares of Common Stock are not split or combined, as
the case may be, the Conversion Rate shall be immediately readjusted, effective
as of the date the Company determines not to pay such dividend or distribution,
or split or combine the outstanding shares of Common Stock, as the case may be,
to the Conversion Rate that would then be in effect if such dividend,
distribution, share split or share combination had not been declared.


 


(c)                                  In
case the Company shall distribute to all or substantially all holders of its
outstanding shares of Common Stock any rights or warrants entitling them for a
period of not more than 60 days from the issuance date for such distribution to
subscribe for or purchase shares of Common Stock at a price per share less than
the Last Reported Sale Price of the Common Stock on the Trading Day immediately
preceding the declaration date of such distribution, the Conversion Rate shall
be increased based on the following formula:


 


53

















 


	
  CR1 = CR0
  x

  	
   

  	
  OS0  + X

  
	
   

  	
  OS0  + Y

  



 


where,


 


CR1 =                      the
Conversion Rate in effect immediately after the open of business on the Ex-Date
for such distribution;


 


CR0 =                      the
Conversion Rate in effect immediately prior to the open of business on the
Ex-Date for such distribution;


 


OS0 =                       the
number of shares of Common Stock outstanding immediately prior to the open of
business on the Ex-Date for such distribution;


 


X =                                    the total number of
shares of Common Stock issuable pursuant to such rights or warrants; and


 


Y =                                     the number of
shares of Common Stock equal to the aggregate price payable to exercise such
rights or warrants, divided by
the average of the Last Reported Sale Prices of the Common Stock over the 10
consecutive Trading Day period ending on the Trading Day immediately preceding
the Ex-Date for such distribution.


 


Such adjustment shall be successively made whenever any such rights or
warrants are distributed and shall become effective immediately after the open
of business on the Ex-Date for such distribution.  To the extent such rights or warrants are not
exercised prior to their expiration or shares of the Common Stock are not
delivered after the expiration of such rights or warrants, the Conversion Rate
shall be readjusted to the Conversion Rate that would then be in effect had the
adjustments made upon the issuance of such rights or warrants been made on the
basis of delivery of only the number of shares of Common Stock actually
delivered.  If such rights or warrants
are not so issued, the Conversion Rate shall again be adjusted to be the
Conversion Rate that would then be in effect if such Ex-Date for such
distribution had not been fixed.


 


In determining whether any rights or warrants entitle the holders to
subscribe for or purchase shares of Common Stock at less than such Last
Reported Sale Price, and in determining the aggregate offering price of such
shares of Common Stock, there shall be taken into account any consideration
received by the Company for such rights or warrants and any amount payable on
exercise or conversion thereof, the value of such consideration, if other than
cash, to be determined by the Board of Directors.


 


If, based on the same event, a Conversion Rate adjustment is triggered
pursuant to both this clause (c) and
subclause (ii) of clause (n) of this Section 5.07,
the Conversion Rate shall be adjusted in accordance with the provisions of the
clause that provides the adjustment most favorable to the Holders.


 


(d)                                 In
case the Company shall, by dividend or otherwise, distribute to all or
substantially all holders of its Common Stock shares of any class of Capital
Stock of the Company, evidences of its indebtedness or other assets or property
of the Company, excluding:


 


54

















 


(i)                                     dividends
or distributions as to which an adjustment was effected pursuant to Section 5.07(b) or Section 5.07(c);


 


(ii)                                  dividends
or distributions paid exclusively in cash; and


 


(iii)                               distributions
described below in this clause (d) with
respect to Spin-Offs),


 


(any of such shares of Capital Stock,
indebtedness, or other asset or property hereinafter in this clause (d) called the “Distributed Property”), then, in each such case the Conversion
Rate shall be increased based on the following formula:


 


	
  CR1 = CR0
  x

  	
   

  	
  SP0

  
	
   

  	
  SP0  - FMV

  



 


where,


 


CR1 =                      the
Conversion Rate in effect immediately after the open of business on the Ex-Date
for such distribution;


 


CR0 =                      the
Conversion Rate in effect immediately prior to the open of business on the
Ex-Date for such distribution;


 


SP0 =                        the
average of the Last Reported Sale Prices of the Common Stock over the 10
consecutive Trading Day period ending on the Trading Day immediately preceding
the Ex-Date for such distribution; and


 


FMV =                 the fair market value as determined by
the Board of Directors of the Distributed Property distributed with respect to
each outstanding share of Common Stock as of the open of business on the
Ex-Date for such distribution.


 


Such adjustment shall become effective immediately after the open of
business on the Ex-Date for such distribution. 
If the Board of Directors determines “FMV” for purposes of this Section 5.07(d) by reference to the actual or when
issued trading market for any securities, it must in doing so consider the
prices in such market over the same period used in computing the Last Reported
Sale Prices of the Common Stock over the ten consecutive Trading Day period
ending on the Trading Day immediately preceding the Ex-Date for such
distribution.


 


With respect to an adjustment pursuant to this clause (d) where
there has been a payment of a dividend or other distribution on the Common
Stock or shares of Capital Stock of any class or series, or similar equity
interest, of or relating to a Subsidiary or other business unit of the Company
that are listed on a national or regional securities exchange (a “Spin-Off”), the Conversion Rate shall be
increased based on the following formula:


 


	
  CR1 = CR0
  x

  	
   

  	
  FMV + MP0

  
	
   

  	
  MP0

  



 


where,


 


55

















 


CR1 =                      the
Conversion Rate in effect immediately after the open of business on the Ex-Date
for the Spin-Off;


 


CR0 =                      the
Conversion Rate in effect immediately prior to the open of business on the
Ex-Date for the Spin-Off;


 


FMV =                 the average of the Last Reported Sale
Prices of the Capital Stock or similar equity interest distributed to holders
of the Common Stock applicable to one share of Common Stock over the first 10
consecutive Trading Day period immediately following, and including, the third
Trading Day after the Ex-Date for the Spin-Off (such period, the “Valuation Period”); and


 


MP0 =                    the
average of the Last Reported Sale Prices of the Common Stock over the Valuation
Period.


 


Such adjustment to the Conversion Rate under the foregoing provisions
of this clause (d) shall be made
immediately after the open of business on the day after the last Trading Day of
the Valuation Period, but shall be given effect as of the open of business on
the Ex-Date for the Spin-Off.


 


(e)                                  In
case the Company shall pay cash dividends or make cash distributions to all or
substantially all holders of the Common Stock, the Conversion Rate shall be
increased based on the following formula:


 




	
  CR1 = CR0 x

  	
   

  	
  SP0

  
	
   

  	
  SP0 – C

  






 


where,


 


CR1=                          the
Conversion Rate in effect immediately after the open of business on the Ex-Date
for such distribution;


 


CR0=                          the
Conversion Rate in effect immediately prior to the open of business on the
Ex-Date for such distribution;


 


SP0=                            the
average of the Last Reported Sale Prices of the Common Stock over the 10
consecutive Trading Day period ending on the Trading Day immediately preceding
the Ex-Date for such distribution; and


 


C=                                       the
amount in cash per share the Company distributes to holders of Common Stock in
such distribution.


 


Such adjustment shall become effective immediately after the open of
business on the Ex-Date for such dividend or distribution.  If the portion of the cash so distributed
applicable to one share of the Common Stock is equal to or greater than “SP0” as set forth above, in lieu of
the foregoing adjustment, adequate provision shall be made so that each Holder
of Securities shall receive on the date on which such cash dividend is
distributed to holders of Common Stock, for 


 


56

















 


each $1,000 principal amount of Securities,
the amount of cash such holder would have received had such Holder owned a number
of shares equal to the Conversion Rate on the Ex-Date for such distribution,
without being required to convert the Securities.  If such dividend or distribution is not so
paid or made, the Conversion Rate shall again be adjusted to be the Conversion
Rate that would then be in effect if such dividend or distribution had not been
declared.


 


(f)                                    In
case the Company or any of its Subsidiaries makes a payment in respect of a
tender offer or exchange offer for all or any portion of the Common Stock, to
the extent that the cash and value of any other consideration included in the
payment per share of Common Stock exceeds the Last Reported Sale Price of the
Common Stock on the Trading Day next succeeding the last date on which tenders
or exchanges may be made pursuant to such tender or exchange offer (as it may
be amended), the Conversion Rate shall be increased based on the following
formula:


 




	
  CR1 = CR0 x

  	
   

  	
  AC + (SP1 x OS1)

  
	
   

  	
  OS0 x SP1

  






 


where,


 


CR1 =                        the Conversion Rate in effect
immediately after the open of business on the Trading Day next succeeding the
date such tender or exchange offer expires;


 


CR0
=                       the
Conversion Rate in effect immediately prior to the open of business on the
Trading Day next succeeding the date such tender or exchange offer expires;


 


AC =                          the
aggregate value of all cash and any other consideration (as determined by the
Board of Directors) paid or payable for shares purchased in such tender or
exchange offer;


 


SP1 =                         the
average of the Last Reported Sale Prices of the Common Stock over the 10
consecutive Trading Day period commencing on, and including, the Trading Day
next succeeding the date such tender or exchange offer expires (the “Averaging Period”);


 


OS1 =                       the
number of shares of Common Stock outstanding immediately after the close of
business on the date such tender or exchange offer expires (after giving effect
to such tender offer or exchange offer); and


 


OS0 =                       the
number of shares of Common Stock outstanding immediately prior to the date such
tender or exchange offer expires (prior to giving effect to such tender offer
or exchange offer).


 


Such adjustment shall be made immediately prior to the open of business
on the day following the last day of the Averaging Period, but shall be given
effect as of the open of business on the Trading Day next succeeding the date
such tender or exchange offer expires.


 


57

















 


If the Company or any of its Subsidiaries is obligated to purchase
shares of Common Stock pursuant to any such tender or exchange offer, but the
Company or such Subsidiary is permanently prevented by applicable law from
effecting all or any such purchases or all or any portion of such purchases are
rescinded, the Conversion Rate shall again be adjusted to be the Conversion
Rate that would then be in effect if such tender or exchange offer had not been
made or had only been made in respect of the purchases that had been effected.


 


(g)                                 For
purposes of this Section 5.07
the term “record date” shall mean,
with respect to any dividend, distribution or other transaction or event in
which the holders of Common Stock have the right to receive any cash,
securities or other property or in which the Common Stock (or other applicable
security) is exchanged for or converted into any combination of cash,
securities or other property, the date fixed for determination of shareholders
entitled to receive such cash, securities or other property (whether such date
is fixed by the Board of Directors or by statute, contract or otherwise).


 


(h)                                 For
the avoidance of doubt, for purposes of clauses (b),
(c), (d), (e) and
(f) of this Section 5.07 in the event of any
reclassification of the Common Stock, as a result of which the Securities
become convertible into more than one class of Common Stock, if an adjustment
to the Conversion Rate is required pursuant to any of clauses (b), (c), (d),
(e) and (f), references in those clauses to one
share of Common Stock or Last Reported Sale Price of one share of Common Stock
shall be deemed to refer to a unit or to the price of a unit consisting of the
number of shares of each class of Common Stock into which the Securities are
then convertible equal to the numbers of shares of such class issued in respect
of one share of Common Stock in such reclassification.  The above provisions of this paragraph shall
similarly apply to successive reclassifications.


 


(i)                                     In
addition to those required by clauses (b),
(c), (d), (e) and
(f) of this Section 5.07, and to the extent
permitted by applicable law and the rules of The Nasdaq Global Market or
any other securities exchange or market on which the Common Stock is then
listed, the Company from time to time may, in its sole discretion, increase the
Conversion Rate by any amount for a period of at least 20 Business Days if the
Company’s Board of Directors determines that such increase would be in the
Company’s best interest.  Whenever the
Conversion Rate is increased pursuant to the preceding sentence, the Company
shall mail to the Holder of each Security at his last address appearing on the
Register provided for in Section 1.07
an irrevocable notice of the increase at least 20 Business Days prior to the
date the increased Conversion Rate takes effect, and such notice shall state
the increased Conversion Rate and the period during which it will be in
effect.  In addition, the Company may
also (but is not required to) increase the Conversion Rate to avoid or diminish
any income tax to holders of Common Stock or rights to purchase Common Stock in
connection with any dividend or distribution of shares (or rights to acquire
shares) or similar event.


 


(j)                                     Without
limiting the foregoing, no adjustment to the Conversion Rate need be made


 


(i)                                     except
as provided under clause (c) above
or clauses (n) through (q) below, upon the issuance of any
shares of Common Stock or any options, warrants, rights or any exchangeable or
convertible security;


 


58

















 


(ii)                                  for
a change in the par value of the Common Stock; or


 


(iii)                               for
accrued and unpaid interest (including any Additional Interest).


 


(k)                                  The
Company shall not make any adjustment to the Conversion Rate under clauses (b), (c), (d),
(e), (f) or (n) of
this Section 5.07 unless the
adjustments would result in a change of at least 1% in the Conversion
Rate.  However, the Company will carry
forward any adjustment that it would otherwise have to make and take that
adjustment into account in any subsequent adjustment.  In addition, regardless of whether the
aggregate adjustment is less than 1%, the Company will make such
carried-forward adjustments not otherwise effected with respect to any Security
on the earlier of (i) the date of the conversion of such Security, and (ii) the
one-year anniversary of the first date upon which an adjustment would otherwise
have been made, except to the extent such adjustment has already been made.


 


(l)                                     All
calculations and other determinations under this Article 5 shall be made by the Company and shall be made
to the nearest cent or to the nearest 1/10,000th of a share, as the case may be.


 


(m)                               If
the arithmetic average of the daily VWAP per share of Common Stock for the five
consecutive Trading Days immediately preceding, but not including, June 18,
2009 (the “366 Day Price”) is less
than the $3.28, then the Conversion Price shall be reduced (the “Reset”) to equal the greater of (i) the
366 Day Price or (ii) $2.76 (the “Cap
Price”) (and the Conversion Rate shall be accordingly and
proportionally increased).  If the 366
Day Price is lower than the Cap Price and, absent the Cap Price, the Conversion
Price would have been reduced pursuant to the Reset to the 366 Day Price, then,
subject to Section 5.16, upon
conversion of a Security, the converting Holder will, in addition to the shares
of Common Stock received upon conversion and any cash in lieu of fractional
shares, receive an additional cash payment equal to the Last Reported Sale
Price on the applicable Conversion Date multiplied by that number of additional
shares of Common Stock that would have been issuable upon conversion of the Securities
had the Cap Price not been applicable and the conversion price had been reset
to the greater of $2.00 (the “Floor Price”)
or the 366 Day Price.


 


If, pursuant to the vote required by Section 3.14,
the Company’s stockholders approve the Share Cap Proposal and the Reset is
triggered, then the Cap Price will no longer apply and the conversion price
thereafter applicable shall be reduced to equal the greater of the Floor Price
or the 366 Day Price.


 


If the 366 Day Price equals or exceeds the $3.28, no adjustment shall
be made pursuant to the Reset provisions described above.  The foregoing $3.28 price, the Floor Price
and the Cap Price are prior to any adjustment and shall be adjusted in
accordance with adjustments to the Conversion Rate described clauses (b), (c), (d), (e) and (f) of this Section 5.07
but they shall not be adjusted as a result of adjustments to the Conversion
Rate described under Section 5.12.  The Conversion Rate pursuant to this clause (m) shall be determined without giving effect to
any increase in the Conversion Rate pursuant to clause (i) of
this Section 5.07.


 


(n)                                 (i)                                     If
and whenever the Company issues or sells, or is deemed to have issued or sold,
any shares of common stock, options, rights, warrants, convertible or other
securities 


 


59

















 


(including the issuance or sale of shares of
common stock, options, rights, warrants, convertible or other securities owned
or held by or for the account of the Company, but excluding Excluded Securities
or securities that are deemed to have been issued or sold by the Company in
connection with any Excluded Security) for a consideration per share (the “New Issuance Price”) less than a price (the
“Applicable Price”) equal to the
conversion price in effect immediately prior to such issue or sale (the
foregoing a “Dilutive Issuance”),
then immediately after such Dilutive Issuance, the Conversion Rate then in
effect shall be increased to an amount equal to the product of (A) the
Conversion Rate in effect immediately prior to such Dilutive Issuance and (B) the
quotient determined by dividing (1) the product derived by multiplying (I) the
Applicable Price in effect immediately prior to such Dilutive Issuance by (II) the
number of shares of Common Stock deemed outstanding immediately after such
Dilutive Issuance, by (2) the sum of (I) the product derived by
multiplying the Applicable Price by the number of shares of Common Stock deemed
outstanding immediately prior to such Dilutive Issuance plus (II) the
consideration, if any, received by the Company upon such Dilutive Issuance.


 


(ii)                                  If
the Company in any manner grants or sells any options, rights, warrants or
convertible securities (collectively, “Options,”
as used in this clause (o)) and
the lowest price per share for which one share of Common Stock is issuable upon
the exercise of any such Option or upon conversion or exchange or exercise of
any convertible securities issuable upon exercise of such Option is less than
the Applicable Price, then such share of Common Stock shall be deemed to be
outstanding and to have been issued and sold by the Company at the time of the
granting or sale of such Option for such price per share. For purposes of this
paragraph, the “lowest price per share for which one share of Common Stock is
issuable upon the exercise of any such Option or upon conversion or exchange or
exercise of any convertible securities issuable upon exercise of such option”
shall be equal to the sum of the lowest amounts of consideration (if any)
received or receivable by the Company with respect to any one share of Common
Stock upon granting or sale of the option, upon exercise of the Option and upon
conversion or exchange or exercise of any convertible security issuable upon
exercise of such Option. No further adjustment of the Conversion Rate shall be
made upon the actual issuance of such share of Common Stock or of such
convertible securities upon the exercise of such Options or upon the actual
issuance of such Common Stock upon conversion or exchange or exercise of such
convertible securities.  If, based on the
same event, a Conversion Rate adjustment is triggered pursuant to both this subclause (ii) and clause (c) of this Section 5.07, the Conversion Rate
shall be adjusted in accordance with the provisions of the clause that provides
the adjustment most favorable to the Holders.


 


(iii)                               If
the Company in any manner issues or sells any convertible securities and the
lowest price per share for which one share of Common Stock is issuable upon
such conversion or exchange or exercise thereof is less than the Applicable
Price, then such share of Common Stock shall be deemed to be outstanding and to
have been issued and sold by the Company at the time of the issuance or sale of
such convertible securities for such price per share. For the purposes of this
paragraph, the “lowest price per share for which one share of Common Stock is
issuable upon such conversion or exchange or exercise” shall be equal to the
sum of the lowest amounts of consideration (if any) received or receivable by
the Company with respect to any one share of Common Stock upon the issuance or
sale of the convertible security and upon the conversion or exchange 


 


60

















 


or exercise of such convertible security. No
further adjustment of the Conversion Rate shall be made upon the actual
issuance of such share of Common Stock upon conversion or exchange or exercise
of such convertible securities, and if any such issue or sale of such
convertible securities is made upon exercise of any options for which
adjustment of the Conversion Rate had been or are to be made pursuant to this clause (n), no further adjustment of the
Conversion Rate shall be made by reason of such issue or sale.


 


(iv)                              If
the purchase price provided for in any options, the additional consideration,
if any, payable upon the issue, conversion, exchange or exercise of any
convertible securities, or the rate at which any convertible securities are
convertible into or exchangeable or exercisable for Common Stock changes at any
time, the Conversion Rate in effect at the time of such change shall be
adjusted to the Conversion Rate which would have been in effect at such time
had such options or convertible securities provided for such changed purchase price,
additional consideration or changed conversion rate, as the case may be, at the
time initially granted, issued or sold. For purposes of this paragraph, if the
terms of any option or convertible security that was outstanding as of the date
of this offering memorandum are changed in the manner described in the
immediately preceding sentence, then such option or convertible security and
the Common Stock deemed issuable upon exercise, conversion or exchange thereof
shall be deemed to have been issued as of the date of such change. No
adjustment shall be made if such adjustment would result in a reduction of the
Conversion Rate then in effect.


 


(v)                                 In
case any option is issued in connection with the issue or sale of other
securities of the Company, together comprising one integrated transaction in
which no specific consideration is allocated to such options by the parties
thereto, such options will be deemed to have been issued for the difference of (x) the
aggregate fair market value of such options and other securities issued or sold
in such integrated transaction, less, (y) the fair market value of the
securities other than such option, issued or sold in such transaction, and the
other securities issued or sold in such integrated transaction will be deemed
to have been issued or sold for the balance of the consideration received by
the Company. If any Common Stock, options or convertible securities are issued
or sold or deemed to have been issued or sold for cash, the consideration
received therefor will be deemed to be the net amount received by the Company
therefor. If any Common Stock, options or convertible securities are issued or
sold for a consideration other than cash, the amount of the consideration other
than cash received by the Company will be the fair value of such consideration,
except where such consideration consists of securities, in which case the
amount of consideration received by the Company will be the Last Reported Sale
Price of such securities on the date of receipt. The fair value of any
consideration other than cash or securities will be determined, at the Company’s
expense, within five Business Days after the tenth day following the valuation
event by an independent, nationally-recognized appraiser appointed by the
Company. The determination of such appraiser shall be binding absent manifest
error.


 


(vi)                              Unless
approval of the stockholders permitting such issuance has been obtained in
advance, the Company will not take any action that would cause the provisions
of this clause (n) to be
triggered to the extent the resulting adjustment would 


 


61

















 


not be in compliance with the applicable
regulations of The Nasdaq Global Market or any other exchange or market on
which the Company’s Common Stock is then traded.


 


(o)                                 If
the Company takes a record of the holders of Common Stock for the purpose of
entitling them (i) to receive a dividend or other distribution payable in
Common Stock, options or in convertible securities or (ii) to subscribe
for or purchase Common Stock, options or convertible securities, then such
record date will be deemed to be the date of the issue or sale of the Common
Stock deemed to have been issued or sold upon the declaration of such dividend
or the making of such other distribution or the date of the granting of such
right of subscription or purchase, as the case may be.


 


(p)                                 For
purposes of this Section 5.07,
the number of shares of Common Stock at any time outstanding shall not include
shares held in the treasury of the Company but shall include shares issuable in
respect of scrip certificates issued in lieu of fractions of shares of Common
Stock.


 


5.08                          NOTICE OF ADJUSTMENTS OF CONVERSION
RATE.


 


(a)                                  Whenever
the Conversion Rate is adjusted as herein provided:


 


(i)                                     the
Company shall compute the adjusted Conversion Rate in accordance with Section 5.07 and shall prepare a
certificate signed by an Officer setting forth the adjusted Conversion Rate and
showing in reasonable detail the facts upon which such adjustment is based, and
such certificate shall promptly be filed with the Trustee and with each
Conversion Agent (if other than the Trustee); and


 


(ii)                                  as
soon as reasonably practicable after each such adjustment, the Company shall
provide a notice to all Holders stating that the Conversion Rate has been
adjusted and setting forth the adjusted Conversion Rate.


 


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


 


5.09                          COMPANY TO RESERVE COMMON STOCK.


 


The Company shall initially reserve out of its authorized and unissued
Common Stock a number of shares of Common Stock per $1,000 principal amount of
Securities equal to 130% of the Initial Conversion Rate.  So long as any Securities are outstanding,
the Company shall take all action necessary to reserve and keep available out
of its authorized and unissued Common Stock, solely for the purpose of
effecting the conversion of the Securities, 130% of the number of shares of
Common Stock as shall from time to time be necessary to effect the conversion
of all of the Securities then outstanding; provided that at no time shall the
number of shares of Common Stock so reserved be less than the number of shares
required to be reserved by the previous sentence (without regard to any
limitations on conversions) (the “Required Reserve Amount”).


 


62
















 


If at any time while any of the Securities
remain outstanding the Company does not have a sufficient number of authorized
and unreserved shares of Common Stock to satisfy its obligation to reserve for
issuance upon conversion of the Securities at least a number of shares of
Common Stock equal to the Required Reserve Amount (an “Authorized
Share Failure”), then the Company shall immediately take all action
necessary to increase the Company’s authorized shares of Common Stock to an
amount sufficient to allow the Company to reserve the Required Reserve Amount
for the Securities then outstanding. Without limiting the generality of the
foregoing sentence, as soon as practicable after the date of the occurrence of
an Authorized Share Failure, but in no event later than 60 days after the
occurrence of such Authorized Share Failure, the Company shall hold a meeting
of its stockholders for the approval of an increase in the number of authorized
shares of Common Stock and the Company shall be required to increase the number
of authorized shares no later than 90 days after the occurrence of the
Authorized Share Failure (the “Authorized Share Failure
Deadline”). In connection with such meeting, the Company shall
provide each stockholder with a proxy statement and shall use its best efforts
to solicit its stockholders’ approval of such increase in authorized shares of
Common Stock and to cause its Board of Directors to recommend to the
stockholders that they approve such proposal.


 


5.10         CERTAIN COVENANTS.


 


Before taking any action which would cause an
adjustment reducing the Conversion Rate below the then par value, if any, of
the shares of Common Stock issuable upon conversion of the Securities, the
Company shall take all corporate action which it reasonably determines may be
necessary in order that the Company may validly and legally issue shares of
such Common Stock at such adjusted Conversion Rate.


 


5.11         CANCELLATION OF CONVERTED SECURITIES.


 


All Securities delivered for conversion shall
be delivered to the Trustee or its agent and canceled by the Trustee as
provided in Section 2.15.


 


5.12         EFFECT OF RECLASSIFICATION,
CONSOLIDATION, MERGER OR SALE.


 


(a)           If there shall be:


 


(i)            any reclassification
or change of the outstanding shares of Common Stock (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 split, subdivision or combination);


 


(ii)           a consolidation,
binding share exchange, recapitalization, reclassification, merger, combination
or other similar event; or


 


(iii)          any sale or conveyance
to another Person of all or substantially all of the property and assets of the
Company (excluding a pledge of securities issued by any of the Company’s
subsidiaries),


 


in any case as a result of
which holders of Common Stock shall be entitled to receive cash, securities or
other property or assets with respect to or in exchange for such Common Stock
(any such event described in clauses (i) through
(iii), a “Reorganization Event”), then at the 


 


63

















 


effective time of such
Reorganization Event, the right to convert each $1,000 principal amount of
Securities shall be changed to a right to convert such Securities by reference
to the kind and amount of cash, securities or other property or assets that a
holder of a number of shares of Common Stock equal to the Conversion Rate
immediately prior to such transaction would have owned or been entitled to
receive (the “Reference Property”).


 


(b)           From and after the
effective time of a Reorganization Event, upon conversion of a Security, the
Last Reported Sale Price shall be calculated with respect to a unit of
Reference Property corresponding to the amount of Reference Property that a
holder of one share of the Common Stock would have received in the
Reorganization Event.


 


(c)           For purposes of
determining the constitution of Reference Property, the type and amount of
consideration that a holder of Common Stock would have been entitled to in the
case of reclassifications, consolidations, mergers, sales or conveyance of
assets or other transactions that cause the Common Stock to be converted into
the right to receive more than a single type of consideration (determined based
in part upon any form of stockholder election) shall be deemed to be the (i) weighted
average of the types and amounts of consideration received by the holders of
Common Stock that affirmatively make such an election or (ii) if no
holders of Common Stock affirmatively make such election, the types and amounts
of consideration actually received by such holders.


 


(d)           The Company or the
successor or purchasing Person, as the case may be, shall execute with the
Trustee a supplemental indenture permitted under Section 12.01 providing for the conversion and settlement
of the Securities as set forth in this Indenture.  Such supplemental indenture shall provide for
adjustments which shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Article 5
and the Trustee may conclusively rely on the determination by the Company of
the equivalency of such adjustments.


 


(e)           In the event a
supplemental indenture is executed pursuant to this Section 5.12, the Company shall promptly file with the
Trustee an Officers’ Certificate briefly stating the reasons therefor, the kind
or amount of cash, securities or property or assets that will constitute the
Reference Property after any such Reorganization Event, any adjustment to be
made with respect thereto and that all conditions precedent have been complied with,
and shall promptly mail notice thereof to all Holders.  Failure to deliver such notice shall not
affect the legality or validity of such supplemental indenture.


 


(f)            The Company shall not
become a party to any such transaction unless its terms are consistent with
this Section 5.12.  None of the foregoing provisions shall affect
the right of a holder of Securities to convert its Securities in accordance
with the provisions of this Article 5
prior to the effective date of a Reorganization Event.


 


(g)           The provisions of this Section 5.12 shall similarly apply to
successive Reorganization Events.


 


5.13         RESPONSIBILITY OF TRUSTEE FOR CONVERSION
PROVISIONS.


 


(a)           The Trustee, subject to
the provisions of Article 9,
and any Conversion Agent, shall not at any time be under any duty or
responsibility to any Holder of Securities or to the 


 


64

















 


Company to determine whether
any facts exist which may require any adjustment of the Conversion Rate, or
with respect to the nature or extent of any such adjustment when made, or with
respect to the method employed, herein or in any supplemental indenture
provided to be employed, in making the same, or whether a supplemental
indenture need be entered into.


 


(b)           Neither the Trustee,
subject to the provisions of Article 9,
nor any Conversion Agent shall be accountable with respect to the validity or
value (or the kind or amount) of any Common Stock, or of any other securities
or property or cash, which may at any time be issued or delivered upon the
conversion of any Securities, and it or they do not make any representation
with respect thereto nor shall the Trustee or any Conversion Agent be
responsible for monitoring the price of any Common Stock.  Neither the Trustee, subject to the
provisions of Article 9, nor
any Conversion Agent shall be responsible for making calculations under this Article 5, nor any failure of the
Company to make or calculate any cash payment or to issue, transfer or deliver
any shares of Common Stock or share certificates or other securities or
property or cash upon the surrender of any Security for the purpose of
conversion; and the Trustee, subject to the provisions of Article 9, and any Conversion Agent
shall not be responsible for any failure of the Company to comply with any of
the covenants of the Company contained in this Article 5.


 


5.14         STOCKHOLDER RIGHTS PLAN.


 


To the extent shares of Common Stock traded
on the Relevant Exchange trade with rights, if any, as may be provided by the
terms of any stockholder rights plan adopted by the Company, as the same may be
amended from time to time, each share of Common Stock issued upon conversion of
Securities pursuant to this Article 5
shall be entitled to receive the appropriate number of such rights and the certificates
representing the Common Stock issued upon such conversion shall bear such
legends, if any, in each case as may be provided by the terms of any such
stockholder rights plan adopted by the Company, as the same may be amended from
time to time.  If prior to any
conversion, however, such rights have separated from the shares of Common Stock
in accordance with the provisions of the applicable stockholder rights
agreement, the Conversion Rate shall be adjusted at the time of separation as
if the Company distributed to all holders of the Common Stock, shares of the
Company’s Capital Stock, evidences of indebtedness, assets, property, rights or
warrants as described in Section 5.07(d),
subject to readjustment in the event of the expiration, termination or
redemption of such rights.


 


5.15         COMPANY DETERMINATION FINAL.


 


Any determination that the Company or the
Board of Directors must make pursuant to this Article 5
shall be conclusive if made in good faith, absent manifest error.


 


5.16         COMPLIANCE WITH LISTING RULES.


 


Notwithstanding any of the conversion
provisions described in this Article 5,
including without limitation the right to receive an additional cash payment if
the Cap Price conditions described above under Sections
5.05(b), (c) and 5.07(m) are
met, there shall be an overriding limit on the conversion provisions with
respect to the Securities such that to the extent that the operation of any
conversion provision would cause the Company to breach the applicable rules and
regulations of The Nasdaq Global Market or any applicable eligible securities
exchange or 


 


65

















 


market on
which the Common Stock to be delivered upon conversion is then listed or
trading, such conversion provision shall be null and void and of no force or
effect to such extent.


 


VI.  RIGHTS OF
PARTICIPATION IN FUTURE EQUITY ISSUANCES


 


6.01         OFFER NOTICES.


 


Prior to June 17, 2010, the Company will
not, directly or indirectly, offer, sell, grant any option to purchase, or
otherwise dispose of, or announce any offer, sale, grant of any option to
purchase or other disposition of, any of its or its Subsidiaries’ Capital Stock
or equivalent securities, including without limitation any debt, preferred
stock or other instrument or security that is, at any time during its life and
under any circumstances, convertible into or exchangeable or exercisable for
shares of Common Stock, unless it first shall have delivered to the Trustee for
delivery to each Holder an irrevocable written notice (the “Offer Notice”) of any proposed or intended issuance, sale or
exchange of the securities being offered which (a) identifies and
describes the securities being offered, (b) describes the price and other
terms upon which the securities are to be issued, sold or exchanged, (c) sets
forth the number or amount of securities being issued, sold or exchanged, (d) identifies
the persons or entities (if known) to which the securities are to be offered,
issued, sold or exchanged and (e) offers to issue, sell or exchange to the
Holders up to 35% of the securities, allocating among the Holders (x) based
on each Holder’s pro rata portion of the aggregate principal amount of
Securities purchased on the Issue Date (such pro rata portion of such Holder
being such Holder’s “Basic Amount”),
and (y) with respect to each Holder that elects to purchase its Basic
Amount, any additional portion of the securities being issued, sold or
exchanged attributable to the Basic Amounts of other Holders as such Holder
indicates it will purchase or acquire in the event the other Holders subscribe
for less than their Basic Amounts (the “Undersubscription Amount”),
which process shall be repeated until the Holders have an opportunity to
subscribe for any remaining Undersubscription Amount.


 


6.02         ACCEPTANCE OF OFFERS.


 


To accept an offer to purchase or acquire the
securities being issued, sold or exchanged, in whole or in part, a Holder must
deliver a written notice to the Company prior to the end of the fifth Business
Day after such Holder’s receipt of the Offer Notice (the “Offer Period”),
setting forth the portion of the Holder’s Basic Amount that the Holder elects
to purchase and, if the Holder elects to purchase all of its Basic Amount, the
Undersubscription Amount, if any, that the Holder elects to purchase (the “Notice of Acceptance”). 
If the Basic Amounts subscribed for by all Holders are less than the
total of all of the Basic Amounts, then each Holder who has set forth an
Undersubscription Amount in its Notice of Acceptance shall be entitled to purchase,
in addition to the Basic Amounts subscribed for, the Undersubscription Amount
it has subscribed for; provided, however, that if (a) the
Undersubscription Amounts subscribed for exceed the difference between the
total of all the Basic Amounts and the Basic Amounts subscribed for (the “Available Undersubscription Amount”), then (b) the
Available Undersubscription Amount shall be allocated among the Holders who
have subscribed for Undersubscription Amounts based on each Holder’s pro rata
portion of all of the Basic Amounts of the Holders who have subscribed for
Undersubscription Amounts (subject to rounding by the Company to the extent it
deems necessary).


 


66

















 


Notwithstanding this Section 6.02
and Section 6.01 above, if, prior to
five Business Days after delivery of the Offer Notice, the Company chooses to
modify or amend the terms and conditions upon which the securities are being
offered, issued, sold or exchanged, then the Company may deliver to the Holders
a new Offer Notice and the Holders shall have three Business Days after receipt
of such new Offer Notice to deliver a Notice of Acceptance.


 


6.03         SETTLEMENT OF PARTICIPATION IN EQUITY
ISSUANCES.


 


(a)           The Company shall have
20 Business Days from the expiration of the Offer Period above:


 


(i)            to offer, issue, sell
or exchange, pursuant to a definitive agreement(s), all or any part of the
securities as to which a Notice of Acceptance was not given by the Holders, but
only to the persons or entities described in the Offer Notice (if any persons
or entities were described in the Offer Notice) or their affiliates and only
upon terms and conditions (including, without limitation, unit prices and
interest rates) that are not more favorable to the acquiring person or persons
or less favorable to the Company than those set forth in the Offer Notice, and


 


(ii)           to publicly announce (i) the
execution of such definitive agreement(s), and either (ii) the
consummation of the transactions contemplated by such agreement(s) or (iii) the
termination of such agreement(s); all of (i), (ii) and (iii) which
shall be filed with the SEC on a Current Report on Form 8-K, (and if the
filing is disclosing the consummation of such transactions, the definitive
agreement(s) and any applicable transaction documents shall be filed as
exhibits thereto).


 


(b)           In the event the
Company proposes to offer, issue, sell or exchange less than all of the
securities not subscribed by the Holders pursuant to a Notice of Acceptance,
then each Holder may, at its sole option and in its sole discretion, reduce the
number or amount of the securities specified in its Notice of Acceptance to an
amount that is greater than or equal to the number or amount the Holder
initially subscribed to in its Notice of Acceptance multiplied by the ratio of
the number of securities that the Company proposes to sell to the number of
securities the Company originally proposed to offer, issue, sell or
exchange.  In the event that, pursuant to
this paragraph, any Holder elects to reduce the number or amount of securities
specified in its Notice of Acceptance, the Company may not issue, sell or
exchange more than the reduced number or amount of the securities unless and
until the Company re-offers such securities to the Holders pursuant to an Offer
Notice (except that, in that case, the Offer Period for such re-offer shall be
reduced to five Business Days).


 


(c)           Upon the closing of the
issuance, sale or exchange of all or less than all of the securities not
subscribed by the Holders pursuant to a Notice of Acceptance, the Holders shall
acquire from the Company, and the Company shall issue to the Holders, the
number or amount of securities specified in the Notices of Acceptance (as
reduced pursuant to clause (b) above,
if applicable), upon the terms and conditions specified in the Offer Notice.
The purchase by the Holders of any of the securities is subject in all cases to
the preparation, execution and delivery by the Company and the Holders of a
definitive agreement, reasonably satisfactory in form and substance to the
Holders and their respective counsel.


 


67

















 


(d)           Any securities not
acquired by the Holders or other persons in accordance with clause (a) above may not be issued,
sold or exchanged until they are again offered to the Holders under the
procedures specified in Sections 6.01
and 6.02 and clauses (a) through (c) above.


 


(e)           the Company and the
Holders agree that if any Holder elects to purchase or acquire securities
pursuant to the procedures in Sections 6.01
and 6.02 and clauses (a) through (d) above, neither the subsequent
definitive agreement nor any other related transaction documents shall include
any term or provisions requiring the Holder to agree to any trading restrictions
with respect to any securities of the Company held by the Holder prior to such
purchase or acquisition.


 


(f)            Notwithstanding
anything to the contrary in Sections 6.01
and 6.02 and clauses (a) through (e) above and unless otherwise agreed
to by the Holders,


 


(i)            The Company shall
either (x) confirm in writing to the Holders that the transaction with
respect to the issuance, sale or exchange of the securities has been abandoned
or (y) shall publicly disclose its intention to issue, sell or exchange
the securities, in either case in such a manner such that the Holders will not
be in possession of material non-public information, by the 20th Business Day
following delivery of the Offer Notice;


 


(ii)           if by the 20th Business
Day following delivery of the Offer Notice no public disclosure regarding the
transaction with respect to the issuance, sale or exchange of the securities
has been made, and no notice regarding the abandonment of such transaction has
been received by the Holders, the transaction shall be deemed to have been
abandoned and the Holders shall not be deemed to be in possession of any
material, non-public information with respect to the Company; and


 


(iii)          should the Company
decide to pursue the transaction with respect to the issuance, sale or exchange
of the securities, the Company shall provide each Holder with another Offer
Notice and each Holder will again have the right of participation set forth in
these Sections 6.01 through 6.03. 
The Company shall not be permitted to deliver more than one such Offer
Notice to the Holders in any 60 day period.


 


6.04         PARTICIPATION RIGHTS NOT APPLICABLE


 


The rights of the Holders contained in Sections 6.01 through 6.03 above
shall not apply in connection with the issuance of any Common Stock or
securities convertible into or exchangeable or exercisable for shares of Common
Stock or Common Stock equivalents issued or issuable pursuant to any issued
convertible securities: (a) directly on an arm’s-length basis to an
unrelated third party that is a counterparty, such counterparty’s affiliates or
their respective stockholders, in connection with bona fide, strategic
transactions approved by the Company’s Board of Directors (provided that the
primary purpose of such issuance is not to raise equity capital); (b) pursuant
to any bona fide firm commitment underwritten public offering with a nationally
recognized underwriter, which generates gross proceeds to the Company in excess
of $50,000,000; (c) that are Excluded Securities; or (d) in
connection with any issuances of any securities related to the exercise,
exchange, adjustment or conversion of the Securities.


 


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VII.  EVENTS OF
DEFAULT; REMEDIES


 


7.01         EVENTS OF DEFAULT.


 


An “Event
of Default” means any one of the following events with respect to
the Securities (whatever the reason for such event or whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of
any administrative or governmental body):


 


(a)           The Company’s (A) failure
to comply with its obligation to convert the Securities into shares of Common
Stock and, if applicable, cash  upon
exercise of a Holder’s conversion right and that failure continues for five
days; or (B) written notice to any Holder of the Securities, including by
way of public announcement or through any of its agents, at any time, of its
intention not to comply with a request for conversion of any Securities that
are tendered in accordance with the provisions of the Securities;


 


(b)           The Company’s failure
to pay to any amount of principal or interest or other amounts when and as due
under the Securities (including, without limitation, failure to pay any
redemption or repurchase payments or amounts hereunder), except, in the case of
a failure to pay interest when and as due, in which case only if such failure
continues for a period of at least five Business Days;


 


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


 


(i)            commences a voluntary
case; or


 


(ii)           consents to the entry
of an order for relief against the Company or such Significant Subsidiary in an
involuntary case, as the case may be; or


 


(iii)          consents to the appointment
of a Bankruptcy Custodian of the Company or such Significant Subsidiary, or of
all or substantially all of the property of the Company or such Significant
Subsidiary, as the case may be; or


 


(iv)          makes a general
assignment for the benefit of creditors of the Company or such Significant
Subsidiary, as the case may be; or admits in writing that it is generally
unable to pay its debts as they become due; or


 


(v)           commences a voluntary
liquidation, dissolution or winding up;


 


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


 


(i)            is for relief against
the Company or a Significant Subsidiary of the Company in an involuntary case;
or


 


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(ii)           appoints a Bankruptcy
Custodian of the Company or a Significant Subsidiary of the Company, or of all
or substantially all of the property of the Company or a Significant Subsidiary
of the Company; or


 


(iii)          orders the liquidation
of the Company or a Significant Subsidiary of the Company;


 


(e)           any default in the
payment when due, after the expiration of any applicable grace period, of
principal of, or premium, if any, or interest on, indebtedness, in the
aggregate principal amount then outstanding of $10,000,000 or more, or any
other defaults or other events on any Indebtedness of the Company or any of its
Subsidiaries in an aggregate principal amount of $10,000,000 or more and which
has resulted in the acceleration of the maturity date thereof and the principal
amount of which having been declared due and payable or otherwise been caused
to come due prior to its stated maturity;


 


(f)            except as otherwise
set forth in this section, the Company or any of its Subsidiaries party thereto
fails to comply with any covenant or agreement contained in this Indenture, the
Securities, the Pledge Agreement or the other Security Documents, and such
failure continues for a period of at least ten consecutive Business Days after
the Company receives written notice of such failure from the Holders of
Securities representing at least 25% of the aggregate principal amount of the
Securities then Outstanding;


 


(g)           a final judgment or
judgments for the payment of money aggregating in excess of $10,000,000 are
rendered against the Company or any of its Significant Subsidiaries and which
judgments are not, within 90 days after the entry thereof, bonded, discharged
or stayed pending appeal, or are not discharged within 90 days after the
expiration of such stay; provided, however, that any judgment which is covered
by insurance or an indemnity from a credit worthy party shall not be included
in calculating the $10,000,000 amount set forth above so long as the Company
provides the Holder a written statement from such insurer or indemnity provider
(which written statement shall be reasonably satisfactory to the Holder) to the
effect that such judgment is covered by insurance or an indemnity and the
Company will receive the proceeds of such insurance or indemnity within 30 days
of the issuance of such judgment;


 


(h)           at any time following
an Authorized Share Failure Deadline if there has been an Authorized Share
Failure;


 


(i)            the suspension from
trading or failure of the Common Stock to be listed on The Nasdaq Global Market
or on an Eligible Market for a period of five consecutive days or for more than
an aggregate of 15 days in any 365-day period; or


 


(j)            any breach or failure
in any respect to comply with any covenant of this Indenture relating to these
Securities and such breach or failure continues for a period of at least ten
consecutive Business Days after the Company receives written notice of such
breach or failure from the Holders of Securities representing at least 25% of
the aggregate principal amount of the Securities then outstanding.


 


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7.02         ACCELERATION OF MATURITY; RESCISSION AND
ANNULMENT.


 


(a)           If an Event of Default
(other than an Event of Default specified in Section 7.01(c) or
Section 7.01(d)) occurs and
is continuing, then in every such case (except as provided in Section 7.03) the Holders of not less
than 25% in principal amount of the Outstanding Securities may, and the Trustee
at the written request of such Holders shall, declare the principal of all such
Securities to be due and payable immediately, by a notice in writing to the
Company (and to the Trustee if given by the Holders), and upon any such
declaration such principal shall become immediately due and payable.


 


(b)           If an Event of Default
specified in Section 7.01(c) or
Section 7.01(d) occurs,
the principal of, and accrued and unpaid interest on, all of the Securities
shall become immediately due and payable without any declaration or other Act
of the Holders or any act on the part of the Trustee.


 


(c)           At any time following
an Event of Default and after such a declaration of acceleration has been made,
the Holders of a majority in aggregate principal amount of the Outstanding
Securities, by written notice to the Company and the Trustee and without notice
to any other Holder, may rescind and annul such declaration and its
consequences if:


 


(i)            such rescission and
annulment will not conflict with any judgment or decree of a court of competent
jurisdiction;


 


(ii)           all Events of Default,
other than the non-payment of the principal amount plus
accrued and unpaid interest on Securities that have become due solely by such
declaration of acceleration, have been cured or waived as provided in Section 7.13;


 


(iii)          the Company has paid the
Trustee its reasonable compensation and reimbursed the Trustee for its
expenses, disbursements and advances; and


 


(iv)          in the event of the cure
or waiver of an Event of Default of the type described in clause (c) or (d) of
Section 7.01, the Trustee shall have received an Officers’ Certificate and
an Opinion of Counsel stating that such Event of Default has been cured or
waived.


 


No such rescission shall affect any
subsequent default or impair any right consequent thereon.


 


7.03         DEFAULT ADDITIONAL INTEREST.


 


(a)           Notwithstanding Section 7.02, if the Company so
elects, the sole remedy of Holders for an Event of Default specified in Section 7.01(f) relating to the
failure by the Company to comply with its obligations under Section 10.03 shall, for the first 90
days after the occurrence of such an Event of Default (which shall be the 10th Business Day after written notice is
provided to the Company in accordance with Section 7.01(f))
consist exclusively of the right to receive additional interest (“Default Additional Interest”) at an annual
rate equal to 0.25% per annum of the principal amount of the Outstanding
Securities for each day of such 90-day period during which time such Event of
Default continues.  The Company may elect
to pay 


 


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Default Additional Interest as
the sole remedy under this Section 7.03(a) by
giving notice to the Holders, the Trustee and Paying Agent of such election on
or before the close of business on the date on which such Event of Default
occurs.  If the Company fails to timely
give such notice or pay Default Additional Interest, the Securities will be
immediately subject to acceleration as provided in Section 7.02.  If
such Event of Default has not been cured or waived prior to the 91st day after its occurrence, then the
Securities shall be subject to acceleration in accordance with Section 7.02.


 


(b)           Default Additional
Interest shall be payable in arrears on each Interest Payment Date following
the occurrence of such Event of Default in the same manner as regular interest
on the Securities.


 


(c)           If Default Additional
Interest is payable under this Section 7.03,
the Company shall deliver to the Trustee an Officers’ Certificate to that
effect stating that Default Additional Interest is payable and the date upon
which such Default Additional Interest shall begin to accrue.  Unless and until a Responsible Officer of the
Trustee receives at the Corporate Trust Office such a certificate, the Trustee
may assume without inquiry that Default Additional Interest is not payable.  If Default Additional Interest has been paid
by the Company directly to the Persons entitled to it, the Company shall
deliver to the Trustee an Officers’ Certificate setting forth the particulars
of such payment.


 


(d)           The provisions of this Section 7.03 with respect to an Event
of Default of the type described in clause (a) above
shall not affect the rights of the Holders in the event of the occurrence of
any other Event of Default.


 


7.04         COLLECTION OF INDEBTEDNESS AND
ENFORCEMENT BY TRUSTEE.


 


(a)           The Company covenants
that if a Default is made in the payment of the principal amount and accrued
and unpaid interest at the Maturity thereof or in the payment of the
Fundamental Change Repurchase Price in respect of any Security, the Company
shall, upon demand of the Trustee, pay to it, for the benefit of the Holders of
such Securities, the whole amount then due and payable on such Securities, and,
in addition thereto, such further amounts required pursuant to Section 7.08, together with amounts
owed to the Trustee, its agents and counsel hereunder.


 


(b)           Subject to the
provisions of this Indenture relating to the duties of the Trustee, the Trustee
may exercise any of the rights or powers under this Indenture, but will be
under no obligation to do so at the request or direction of any of the Holders
unless such Holders have offered to the Trustee indemnity or security
satisfactory to it against any loss, liability or expense.


 


(c)           The Trustee may
maintain a proceeding even if the Trustee does not possess any of the
Securities or does not produce any of the Securities in the proceeding, and any
recovery or judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, be for the ratable benefit of the Holders of the Securities.  A delay or omission by the Trustee or any
Holder in exercising any right or remedy accruing upon an Event of Default
shall not impair the right or remedy or 


 


72

















 


constitute a waiver of, or acquiescence
in, the Event of Default.  No remedy is
exclusive of any other remedy.  All
available remedies are cumulative.


 


7.05         TRUSTEE MAY FILE PROOFS OF CLAIM.


 


(a)           In case of any judicial
proceeding relative to the Company (or any other obligor upon the Securities),
its property or its creditors, the Trustee shall be entitled and empowered, by
intervention in such proceeding or otherwise, to take any and all actions
authorized under the Trust Indenture Act in order to have claims of the Holders
and the Trustee allowed in any such proceeding. 
In particular, the Trustee shall be authorized to collect and receive
any moneys or other property payable or deliverable on any such claims and to
distribute the same; and any custodian, receiver, assignee, trustee,
liquidator, sequestrator or other similar official 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 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 9.07.


 


(b)           No provision of this
Indenture shall be deemed to authorize the Trustee to authorize or consent to
or accept or adopt on behalf of any Holder any plan of reorganization,
arrangement, adjustment or composition affecting the Securities or the rights
of any Holder thereof or to authorize the Trustee to vote in respect of the
claim of any Holder in any such proceeding.


 


7.06         APPLICATION OF MONEY COLLECTED.


 


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


 


FIRST: 
To the payment of all amounts due the Trustee and the Collateral Agent
hereunder and under the Security Documents;


 


SECOND: 
To the payment of the amounts then due and unpaid on the Securities for
the principal amount, Fundamental Change Repurchase Price, Redemption Price or
interest, as the case may be, in respect of which or for the benefit of which
such money has been collected, ratably, without preference or priority of any
kind, according to the amounts due and payable on such Securities; and


 


THIRD: 
To the payment of the remainder, if any, to the Company or any other
Person lawfully entitled thereto.


 


7.07         LIMITATION ON SUITS.


 


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


 


73

















 


any other
remedy hereunder (other than in the case of an Event of Default specified in Section 7.01(a) or Section 7.01(b)),
unless:


 


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


 


(b)           the Holders of at least
25% in aggregate principal amount of the Outstanding Securities shall have made
written request to the Trustee to pursue such remedy in its own name as Trustee
hereunder;


 


(c)           such Holder or Holders
have provided to the Trustee security or indemnity reasonably satisfactory to
the Trustee against the expenses, losses and liabilities to be incurred in
compliance with such request;


 


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


 


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


 


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


 


7.08         UNCONDITIONAL RIGHT OF HOLDERS TO
RECEIVE PAYMENT.


 


Notwithstanding any other provision of this
Indenture, the right of any Holder to receive payment of the principal amount,
Fundamental Change Repurchase Price, Ratio Event Repurchase Price, Redemption
Price or accrued and unpaid interest in respect of the Securities held by such
Holder, on or after the respective due dates expressed in the Securities or any
Fundamental Change Repurchase Date or Ratio Event Repurchase Date, as
applicable, and to convert the Securities in accordance with Article 5, or to bring suit for the enforcement of any
such payment on or after such respective dates or the right to convert, shall
not be impaired or affected adversely without the consent of such Holder.


 


7.09         RESTORATION OF RIGHTS AND REMEDIES.


 


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


 


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7.10         RIGHTS AND REMEDIES CUMULATIVE.


 


Except as otherwise provided with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Securities
in the last paragraph of Section 2.12,
no right or remedy herein conferred upon or reserved to the Trustee or to the
Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter existing
at law or in equity or otherwise.  The
assertion or employment of any right or remedy hereunder shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.


 


7.11         DELAY OR OMISSION NOT WAIVER.


 


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


 


7.12         CONTROL BY HOLDERS.


 


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


 


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


 


(ii)           the Trustee may refuse
to follow any such direction that the Trustee determines is unduly prejudicial
to the rights of any other Holder or that would involve the Trustee in personal
liability;


 


(iii)          it being understood that
the Trustee shall be entitled to the protections provided to it under Sections 9.01(b)(iii) and 9.01(c) in connection with such
direction.


 


7.13         WAIVER OF PAST DEFAULTS.


 


(a)           The Holders of a majority
or more in aggregate principal amount of the Securities may waive any existing
Default under this Indenture, and its consequences, except a default in the
payment of the principal of or interest or Additional Interest, if any, on any
Securities.  Upon any such waiver, such
Default shall cease to exist, and any Event of Default arising therefrom shall
be deemed to have been cured for every purpose of this Indenture; but no such
waiver shall extend to any subsequent or other Default or impair any right consequent
thereon.


 


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7.14         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, in either case in respect of the
Securities, a court may require any party litigant in such suit to file an
undertaking to pay the costs of the suit, and the court may assess reasonable
costs, including reasonable attorney’s 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; but the provisions of this Section 7.14 shall not apply to any suit instituted by
the Company, to any suit instituted by the Trustee, to any suit instituted by
any Holder, or group of Holders, holding in the aggregate more than 10% in
principal amount of the Outstanding Securities, or to any suit instituted by
any Holder for the enforcement of the payment of the principal amount on any
Security on or after Maturity of such Security or the Fundamental Change
Repurchase Price.


 


7.15         WAIVER OF STAY OR EXTENSION LAWS.


 


The Company covenants (to the extent that it
may lawfully do so) that it will not at any time insist upon, or plead, or in
any manner whatsoever claim or take the benefit or advantage of, any stay,
extension or usury law or other law which would prohibit or forgive the Company
from paying all or any portion of the principal of or interest 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 that it may lawfully do so)
hereby expressly waives all benefit or advantage of any such law and covenants
that it will not hinder, delay or impede 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.


 


7.16         VIOLATIONS OF CERTAIN COVENANTS.


 


A violation of any covenant or agreement in
this Indenture that expressly provides that a violation of such covenant or
agreement shall not constitute an Event of Default may only be enforced by the
Trustee by instituting a legal proceeding against the Company for enforcement
of such covenant or agreement.


 


VIII.  CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE


 


8.01         COMPANY MAY CONSOLIDATE, ETC., ONLY
ON CERTAIN TERMS.


 


(a)           The Company shall not
consolidate with or merge with or into any other Person or, transfer all or
substantially all its assets to another Person (excluding a pledge of
securities issued by the Company or any of the Company’s Subsidiaries), unless:


 


(i)            the resulting,
surviving or transferee person (the “Successor
Company”) assumes by supplemental indenture all of the Company’s
obligations under the Securities and this Indenture;


 


(ii)           the Successor Company
shall be a corporation organized and existing under the laws of the United
States of America, and a state thereof or the District of Columbia;


 


76

















 


(iii)          immediately after giving
effect to such transaction, no Default or Event of Default shall have occurred
and be continuing;


 


(iv)          if the Securities become
convertible into Common Stock or other securities issued by a Person other than
the Successor Company as a result of such transaction, such Person shall fully
and unconditionally guarantee all obligations of the Successor Company under
the Securities and this Indenture;


 


(v)           the Trustee shall have
received an Opinion of Counsel to the effect that the merger, consolidation or
transfer complies with the Indenture; and


 


(vi)          the Company shall have
delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each
stating that such consolidation, merger or transfer and, if a supplemental
indenture is required in connection with such transaction, such supplemental
indenture, comply with this Article 8.


 


(b)           Upon satisfaction of
the conditions described above, all of the Company’s obligations in respect of
the Securities shall be terminated, and the Successor Company shall succeed to,
and may exercise, all of the Company’s rights and powers under this Indenture.


 


8.02         EFFECTIVENESS OF CONSOLIDATION, MERGER
OR TRANSFER.


 


(a)           Upon satisfaction of
all applicable conditions in Section 8.01,
all such obligations of the Company or such other predecessor corporation shall
be terminated.


 


(b)           The Successor Company
formed by such consolidation or into which the Company is merged or the
Successor Company to which such conveyance, transfer, lease or other
disposition is made shall succeed to, and be substituted for, and may exercise
every right and power of, the Company under this Indenture with the same effect
as if such successor had been named as the Company herein; and thereafter,
except in the case of a conveyance, transfer or lease of all or substantially
all the Company’s assets (in which case the Company will not be discharged from
the obligation to pay the principal amount of the Securities and interest,
including any Additional Interest) and except for obligations, if any, that the
Company may have under a supplemental indenture, the Company shall be
discharged from all obligations and covenants under this Indenture and the
Securities.  Subject to Section 12.04, the Company, the
Trustee and the Successor Company shall enter into a supplemental indenture to
evidence the succession and substitution of such Successor Company and such
discharge and release of the Company.


 


IX.  THE TRUSTEE


 


9.01         DUTIES AND RESPONSIBILITIES OF TRUSTEE.


 


(a)           The Trustee, prior to
the occurrence of an Event of Default and after the curing of all Events of
Default which may have occurred, undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture against the
Trustee.  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, 


 


77

















 


and use the same degree of care
and skill in their exercise, as a prudent person would exercise or use under
the circumstances in the conduct of his or her own affairs.


 


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


 


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


 


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


 


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


 


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


 


(iii)          the Trustee shall not be
liable with respect to any action taken or omitted to be taken by it in good
faith in accordance with the written direction of the Holders of not less than
a majority in principal amount of the Securities at the time Outstanding in
accordance with Section 1.05
relating to the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred
upon the Trustee, under this Indenture;


 


(iv)          whether or not therein
provided, every provision of this Indenture relating to the conduct or
affecting the liability of, or affording protection to, the Trustee shall be
subject to the provisions of this Section 9.01;


 


(v)           the Trustee shall not
be liable in respect of any payment (as to the correctness of amount,
entitlement to receive or any other matters relating to payment) or notice
effected by the Company or any other Paying Agent or any records maintained by
the Security Registrar with respect to the Securities; and


 


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


 


(c)           None of the provisions
contained in this Indenture shall require the Trustee to expend or risk its own
funds or otherwise incur personal financial liability in the performance of any
of its duties or in the exercise of any of its rights or powers, if there is
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.


 


9.02         NOTICE OF DEFAULTS.


 


(a)           If a Default occurs and
is continuing and is actually known to a Responsible Officer of the Trustee,
the Trustee shall give the Holders notice of thereof within 90 days after it
obtains such knowledge, unless such Default has been cured or waived.


 


(b)           Notwithstanding Section 9.02(a), the Trustee shall be
protected in withholding notice of a Default, except in the case of any Default
in the payment of principal amount or interest on any of the Securities or
Fundamental Change Repurchase Price, or in the performance of Conversion
Obligations, if and so long as the Board of Directors or a committee of
Responsible Officers of the Trustee in good faith determines that the
withholding of such notice is in the interest of the Holders of Securities.


 


9.03         RELIANCE ON
DOCUMENTS, OPINIONS, ETC.


 


Except as otherwise provided in Section 9.01:


 


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


 


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


 


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


 


(d)           the Trustee shall be under
no obligation to exercise any of the rights or powers vested in it by this
Indenture at the request, order or direction of any of the Holders pursuant to
the provisions of this Indenture, unless such Holders shall have provided to
the Trustee security 


 


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or indemnity reasonably
satisfactory to the Trustee against the costs, expenses and liabilities which
may be incurred therein or thereby;


 


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


 


(f)            the Trustee shall be
under no obligation to review, ascertain or confirm the Company’s compliance
with, or breach of, any representation, warranty or covenant made in this
Indenture;


 


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


 


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


 


(i)            in no event shall the
Trustee be responsible or liable for special, indirect, or consequential loss
or damage of any kind whatsoever (including, but not limited to, loss of
profit) irrespective of whether the Trustee has been advised of the likelihood
of such loss or damage and regardless of the form of action;


 


(j)            the Trustee shall not
be deemed to have notice of any Default or Event of Default unless a
Responsible 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 of the Trustee, and such notice
references the Securities and the Indenture;


 


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


 


(l)            the Trustee may
request that the Company deliver a certificate setting forth the names of
individuals and/or titles of officers authorized at such time to take specified
actions pursuant to this Indenture;


 


(m)          the Trustee shall not be
required to give any bond or surety in respect of performance of its powers and
duties under this Indenture;


 


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(n)           the permissive rights
of the Trustee to do things enumerated in this Indenture shall not be construed
as duties; and


 


(o)           the Trustee agrees to
accept and act upon facsimile and electronic transmission of written
instructions and/or directions pursuant to this Indenture given by the Company,
provided, however that: (i) the Company, subsequent to such facsimile or
electronic transmission of written instructions and/or directions, shall
provide the originally executed instructions and/or directions to the Trustee
in a timely manner and (ii) such originally executed instructions and/or
directions shall be signed by an authorized officer of the Company.


 


9.04         NO RESPONSIBILITY FOR RECITALS, ETC.


 


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


 


9.05         TRUSTEE, SECURITY REGISTRAR AND AGENTS MAY OWN
SECURITIES.


 


The Trustee, any Paying Agent, any Conversion
Agent or Security Registrar, in its individual or any other capacity, may
become the owner or pledgee of Securities with the same rights it would have if
it were not Trustee, Paying Agent, Conversion Agent or Security Registrar.


 


9.06         MONIES TO BE HELD IN TRUST.


 


Subject to the provisions of Section 11.04, all monies and properties received by
the Trustee shall, until used or applied as herein provided, be held in trust
for the purposes for which they were received. 
Money held by the Trustee in trust hereunder need not be segregated from
other funds except to the extent required by law.  The Trustee shall have no liability for
interest on any money received by it hereunder except as may be agreed in
writing from time to time by the Company and the Trustee.


 


9.07         COMPENSATION AND EXPENSES OF TRUSTEE.


 


(a)           The Company shall pay
to the Trustee from time to time, and the Trustee shall be entitled to,
reasonable compensation for all services rendered by it hereunder in any
capacity (which shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust) as mutually agreed to from time
to time in writing between the Company and the Trustee, and the Company will
pay or reimburse the Trustee upon its request for all reasonable out-of-pocket
expenses, disbursements and advances reasonably incurred or made by the Trustee
in accordance with any of the provisions of this Indenture (including the
reasonable compensation and the expenses and disbursements of its counsel and
of all Persons not regularly in its employ) except any such expense,
disbursement or advance as may arise from its gross negligence, willful
misconduct or bad faith.


 


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(b)           The Company shall
indemnify the Trustee or any predecessor Trustee (and all officers, directors
and employees of the Trustee or any predecessor Trustee), in any capacity under
this Indenture and its agents and any authenticating agent for, and to hold
each of them harmless against, any and all loss, damage, liability, claim or
expense, including taxes (other than taxes based upon, measured by or
determined by the income of the Trustee) incurred without negligence, willful
misconduct or bad faith on the part of the Trustee or such officer(s),
director(s), employee(s) and agent(s) or authenticating agent, as the
case may be, and arising out of or in connection with the acceptance or
administration of this trust or in any other capacity hereunder, including the
costs and expenses of defending themselves against any claim of liability in
the premises.


 


(c)           The obligations of the
Company under this Section 9.07
to compensate or indemnify the Trustee and to pay or reimburse the Trustee for
expenses, disbursements and advances shall be secured by a Lien prior to that
of the Securities upon all property and funds held or collected by the Trustee
as such, except funds held in trust for the benefit of the Holders of
particular Securities.  The obligation of
the Company under this Section 9.07
shall survive the satisfaction and discharge of this Indenture and the
resignation or removal of the Trustee.


 


(d)           When the Trustee and
its agents and any authenticating agent incur expenses or render services after
an Event of Default specified in Section 7.01(c) or
Section 7.01(d) with
respect to the Company occurs, the expenses and the compensation for the
services are intended to constitute expenses of administration under any
Bankruptcy Law.


 


9.08         OFFICERS’ CERTIFICATE AS EVIDENCE.


 


Except as otherwise provided in Section 9.01, whenever in the administration of the
provisions of this Indenture the Trustee shall deem it necessary or desirable
that a matter be proved or established prior to taking or omitting any action
hereunder, such matter (unless other evidence in respect thereof be herein
specifically prescribed) may, in the absence of negligence or willful
misconduct on the part of the Trustee, be deemed to be conclusively proved and
established by an Officers’ Certificate delivered to the Trustee.


 


9.09         CONFLICTING INTERESTS OF TRUSTEE.


 


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


 


9.10         ELIGIBILITY OF TRUSTEE.


 


There shall at all times be a Trustee
hereunder which shall be a Person that is eligible pursuant to the Trust
Indenture Act to act as such and has a combined capital and surplus of at least
$50,000,000 (or if such Person is a member of a bank holding company system,
its bank holding company shall have a combined capital and surplus of at least
$50,000,000).  If such Person publishes
reports of condition at least annually, pursuant to law or to the requirements
of any supervising or examining authority, then for the purposes of this Section 9.10 the combined capital and surplus of such
Person shall be deemed to be its combined capital and surplus as set forth in
its most recent report of condition so published.  If at any time the Trustee shall cease to 


 


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be eligible in
accordance with the provisions of this Section 9.10,
it shall resign immediately in the manner and with the effect hereinafter
specified in this Article.


 


9.11         RESIGNATION OR REMOVAL OF TRUSTEE.


 


(a)           The Trustee may at any
time resign by giving written notice of such resignation to the Company and to
the Holders of Securities.  Upon
receiving such notice of resignation, the Company shall promptly appoint a
successor trustee by written instrument, in duplicate, executed by order of the
Board of Directors, one copy of which instrument shall be delivered to the
resigning Trustee and one copy to the successor trustee.  If no successor trustee shall have been so
appointed and have accepted appointment 60 days after the mailing of such
notice of resignation to the Holders:


 


(i)            the resigning Trustee
may, upon ten business days’ notice to the Company and the Holders, appoint a
successor identified in such notice or may petition, at the expense of the Company,
any court of competent jurisdiction for the appointment of a successor trustee;
or


 


(ii)           any Holder who has been
a bona fide Holder of a Security or Securities for at least 6 months may,
subject to the provisions of Section 7.14,
on behalf of himself and all others similarly situated, petition any such court
for the appointment of a successor trustee.


 


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


 


(i)            the Trustee shall fail
to comply with Section 9.09
within 90 days after written request therefor by the Company or by any Holder
who has been a bona fide Holder of a Security or Securities for at least 6
months; or


 


(ii)           the Trustee shall cease
to be eligible in accordance with the provisions of Section 9.10 and shall fail to resign after written
request therefor by the Company or by any such Holder; or


 


(iii)          the Trustee shall become
incapable of acting, or shall be adjudged a bankrupt or insolvent, or a
receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation;


 


then, in any such case, the
Company may remove the Trustee and appoint a successor trustee by written
instrument, in duplicate, executed by order of the Board of Directors, one copy
of which instrument shall be delivered to the Trustee so removed and one copy
to the successor trustee, or, subject to the provisions of Section 7.14,
any Holder who has been a bona fide Holder of a Security or Securities for at
least 6 months may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor trustee; provided, however, that if no successor Trustee shall have been
appointed and have accepted appointment 60 days after either the Company or the
Holders has removed the Trustee, the Trustee so removed may petition at the
Company’s expense any court of competent jurisdiction for an appointment of a
successor trustee.  Such court may 


 


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thereupon, after such notice,
if any, as it may deem proper and prescribe, remove the Trustee and appoint a
successor trustee.


 


(c)           The Holders of a
majority in aggregate principal amount of the Securities at the time
Outstanding may at any time remove the Trustee and nominate a successor trustee
which shall be deemed appointed as successor trustee unless, within ten days
after notice to the Company of such nomination, the Company objects thereto, in
which case the Trustee so removed or any Holder, or if such Trustee so removed
or any Holder fails to act, the Company, upon the terms and conditions and
otherwise as in Section 9.11(a) provided,
may petition any court of competent jurisdiction for an appointment of a
successor trustee.


 


(d)           Any resignation or
removal of the Trustee and appointment of a successor trustee pursuant to any
of the provisions of this Section 9.11
shall become effective upon acceptance of appointment by the successor trustee
as provided in Section 9.12.


 


9.12         ACCEPTANCE BY SUCCESSOR TRUSTEE.


 


(a)           Any successor trustee
appointed as provided in Section 9.11
shall execute, acknowledge and deliver to the Company and to its predecessor
trustee an instrument accepting such appointment hereunder, and thereupon the
resignation or removal of the predecessor trustee shall become effective and
such successor trustee, without any further act, deed or conveyance, shall
become vested with all the rights, powers, duties and obligations of its
predecessor hereunder, with like effect as if originally named as trustee
herein; but, nevertheless, on the written request of the Company or of the
successor trustee, the trustee ceasing to act shall, upon payment of any amount
then due it pursuant to the provisions of Section 9.07,
execute and deliver an instrument transferring to such successor trustee all
the rights and powers of the trustee so ceasing to act.  Upon request of any such successor trustee, the
Company shall execute any and all instruments in writing for more fully and
certainly vesting in and confirming to such successor trustee all such rights
and powers.  Any trustee ceasing to act
shall, nevertheless, retain a Lien upon all property and funds held or
collected by such trustee as such, except for funds held in trust for the
benefit of Holders of particular Securities, to secure any amounts then due it
pursuant to the provisions of Section 9.07.


 


(b)           No successor trustee
shall accept appointment as provided in this Section 9.12
unless, at the time of such acceptance, such successor trustee shall be
qualified under the provisions of Section 9.09
and be eligible under the provisions of Section 9.10.


 


(c)           Upon acceptance of
appointment by a successor trustee as provided in this Section 9.12, the Company (or the
former trustee, at the written direction of the Company) shall mail or cause to
be mailed notice of the succession of such trustee hereunder to the Holders of
Securities at their addresses as they shall appear on the Security
Register.  If the Company fails to mail
such notice within ten days after acceptance of appointment by the successor
trustee, the successor trustee shall cause such notice to be mailed at the
expense of the Company.


 


9.13         SUCCESSION BY MERGER, ETC.


 


(a)           Any corporation into
which the Trustee may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or 


 


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consolidation to which the
Trustee shall be a party, or any corporation succeeding to all or substantially
all of the corporate trust business of the Trustee (including any trust created
by this Indenture), shall be the successor to the Trustee hereunder without the
execution or filing of any paper or any further act on the part of any of the
parties hereto; provided that in the case of any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, such corporation shall be qualified under the
provisions of Section 9.09
and eligible under the provisions of Section 9.10.


 


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


 


9.14         PREFERENTIAL COLLECTION OF CLAIMS.


 


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


 


9.15         TRUSTEE’S APPLICATION FOR INSTRUCTIONS
FROM THE COMPANY.


 


Any application by the Trustee for written
instructions from the Company (other than with regard to any action proposed to
be taken or omitted to be taken by the Trustee that affects the rights of the
Holders of the Securities under this Indenture) may, at the option of the
Trustee, set forth in writing any action proposed to be taken or omitted by the
Trustee under this Indenture and the date on and/or after which such action
shall be taken or such omission shall be effective.  The Trustee shall not be liable for any
action taken by, or omission of, the Trustee in accordance with a proposal
included in such application on or after the date specified in such application
(which date shall not be less than three Business Days after the date any
officer of the Company actually receives such application, unless any such
officer shall have consented in writing to any earlier date) unless prior to
taking any such action (or the effective date in the case of an omission), the
Trustee shall have received written instructions in response to such application
specifying the action to be taken or omitted.


 


X.  HOLDERS’ LISTS AND REPORTS


 


10.01       COMPANY TO FURNISH NAMES AND ADDRESSES
OF HOLDERS.


 


Upon request from the Trustee in writing, the
Company shall furnish or cause to be furnished to the Trustee, within 30 days
after the receipt by the Company of any such request, a list of the names and
addresses of the Holders as of a date not more than 15 days prior to the time 


 


85

















 


such list is
furnished, in such form as the Trustee may reasonably require; provided that no such list need be
furnished so long as the Trustee is acting as Security Registrar.


 


10.02       PRESERVATION OF INFORMATION;
COMMUNICATIONS TO HOLDERS.


 


(a)           The Trustee shall
preserve, in as current a form as is reasonably practicable, the names and
addresses of Holders contained in the most recent list furnished to the Trustee
as provided in Section 10.01
and the names and addresses of Holders received by the Trustee in its capacity
as Security Registrar.  The Trustee may
destroy any list furnished to it as provided in Section 10.01 upon receipt of a new list so furnished.


 


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


 


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


 


10.03       REPORTS BY COMPANY; RULE 144A INFORMATION.


 


(a)           The Company shall file
with the Trustee any information, documents or reports that the Company is
required to file with the Commission pursuant to Section 13 or 15(d) of
the Exchange Act within 15 days after the same are required to be filed with
the Commission (giving effect to any grace period provided by Rule 12b-25
under the Exchange Act).  To the extent
any such information, documents and reports are filed by the Company with the
Commission electronically via the Commission’s Electronic Data Gathering and
Retrieval System (or any successor system), such information, documents and
reports shall be deemed filed with the Trustee as at such time they are filed
by the Company electronically.


 


(b)           The Company covenants
and agrees that it shall, during any period in which it is not required to file
with the Commission reports pursuant to Section 13 or 15(d) under the
Exchange Act, furnish to any Holder or beneficial owner of any Restricted
Securities which continue to be Restricted Securities in connection with any
sale thereof, and any prospective purchaser of Restricted Securities designated
by such Holder or beneficial owner, the information, if any, required pursuant
to Rule 144A(d)(4) under the Securities Act upon the request of such
Holder or beneficial owner, including all information required from time to
time to enable such Holder or beneficial owner to sell its Restricted
Securities without registration under the Securities Act pursuant to the
exemption provided by Rule 144A.


 


(c)           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 conclusively rely exclusively
on an Officers’ Certificate).  It is
expressly understood that materials transmitted electronically by the Company
to the Trustee shall be deemed filed with the Trustee for purposes of this Section 10.03.


 


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XI.  SATISFACTION AND DISCHARGE


 


11.01                     DISCHARGE OF INDENTURE.


 


(a)                                  Subject
to Section 11.01(b), this
Indenture shall cease to be of further effect if at any time:


 


(i)                                     either:


 


(A)                              the
Company shall have delivered to the Trustee for cancellation all Securities
theretofore authenticated (other than any Securities that have been destroyed,
lost or stolen and in lieu of or in substitution for which other Securities
shall have been authenticated and delivered) and not theretofore canceled; or


 


(B)                                all
the Securities not theretofore canceled or delivered to the Trustee for
cancellation shall have become due and payable (whether at the Stated Maturity
Date, or on any Fundamental Change Repurchase Date or upon conversion or
otherwise) and the Company shall deposit with the Trustee, in trust, cash funds
sufficient to pay all amounts due on all of such Securities (other than any
Securities that shall have been mutilated, destroyed, lost or stolen and in
lieu of or in substitution for which other Securities shall have been
authenticated and delivered) not theretofore canceled or delivered to the
Trustee for cancellation, including principal and interest due, accompanied,
except in the event the Securities are due and payable solely in cash upon a
Fundamental Change Repurchase Date, by a verification report as to the
sufficiency of the deposited amount from an independent certified accountant or
other financial professional reasonably satisfactory to the Trustee;


 


(ii)                                  the
Company has paid all other sums payable by the Company under this Indenture;
and


 


(iii)                               the
Company has delivered to the Trustee an Officers’ Certificate and an Opinion of
Counsel stating that all conditions precedent under this Indenture relating to
the satisfaction and discharge of this Indenture have been complied with.


 


(b)                                 Notwithstanding
Section 11.01(a), the
following rights, obligations and immunities shall survive any satisfaction or
discharge of this indenture under this Section 11.01:


 


(i)                                     remaining
rights of substitution and exchange of Securities;


 


(ii)                                  rights
hereunder of Holders to receive payments of principal of and interest on, the
Securities, the Fundamental Change Repurchase Price, the Ratio Event Repurchase
Price, the Redemption Price or the Conversion Obligation, as the case may be,
and the other rights, duties and obligations of Holders, as beneficiaries
hereof with respect to the amounts, if any, so deposited with the Trustee; and


 


(iii)                               the
rights and immunities of the Trustee hereunder.


 


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(c)                                  If
the Indenture is discharged in accordance with the foregoing, the Trustee shall
execute proper instruments acknowledging the satisfaction and discharge of the
Indenture.


 


11.02                     DEPOSITED MONIES TO BE HELD IN TRUST BY
TRUSTEE.


 


Subject to Section 11.04,
all monies deposited with the Trustee pursuant to Section 11.01
shall be held in trust for the sole benefit of the Holders, and such monies
shall be applied by the Trustee to the payment, either directly or through any
paying agent (including the Company if acting as its own paying agent), to the
Holders of the particular Securities for the payment of which such monies have
been deposited with the Trustee, of all sums due and to become due thereon for
principal and interest.


 


11.03                     PAYING AGENT TO REPAY MONIES HELD.


 


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


 


11.04                     RETURN OF UNCLAIMED MONIES.


 


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


 


11.05                     REINSTATEMENT.


 


If the Trustee or the Paying Agent is unable
to apply any money in accordance with Section 11.02
by reason of any order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application, the Company’s
obligations under this Indenture and the Securities shall be revived and
reinstated as though no deposit had occurred pursuant to Section 11.01
until such time as the Trustee or the paying agent is permitted to apply all
such money in accordance with Section 11.02;
provided, however,
that if the Company makes any payment of interest on or principal of any
Security following the reinstatement of its obligations, the Company shall be
subrogated to the rights of the Holders of such Securities to receive such
payment from the money held by the Trustee or Paying Agent.


 


XII.  MODIFICATIONS AND AMENDMENTS


 


12.01                     CONSENT REQUIREMENTS FOR MODIFICATIONS
AND AMENDMENTS.


 


Except as provided in Section 12.02
and Section 12.03, this Indenture or
the Securities may be amended with the consent of the Holders of at least a
majority principal amount of the 


 


88

















 


Outstanding
Securities, including, without limitation, consents obtained in connection with
a purchase of, or tender offer or exchange offer for, Securities, and, subject
to certain exceptions as set forth in this Indenture, any past Default or
compliance with any provisions (except a default in the payment of the
principal of or interest or Additional Interest, if any, on any Securities) may
be waived with the consent of the Holders of a majority principal amount of the
Outstanding Securities, including, without limitation, consents obtained in
connection with a purchase of, or tender offer or exchange offer for,
Securities.


 


12.02                     AMENDMENTS WITHOUT CONSENT OF HOLDERS.


 


The Company and the Trustee may modify or
amend this Indenture or the Securities without the consent of any Holder to:


 


(i)                                     cure
any ambiguity, error, defect, omission or inconsistency; provided
that the rights of the Holders are not adversely affected in any material
respect;


 


(ii)                                  provide
for the assumption by one or more Successor Companies of the Company’s
obligations under this Indenture;


 


(iii)                               add
guarantees with respect to the Securities;


 


(iv)                              enter
into additional or supplemental security documents consistent with the terms of
the Security Documents and in a manner that does not adversely affect the
rights of any Holder, or add to the Collateral securing the obligations of the
Company in respect of the Securities;


 


(v)                                 add
to the Company’s covenants for the benefit of the Holders or surrender any
right or power conferred upon the Company;


 


(vi)                              provide
for the conversion of the Securities into cash and Reference Property in
accordance with the terms of this Indenture;


 


(vii)                           provide
for the conversion rights of Holders of Securities and the Company’s repurchase
obligation in connection with a Fundamental Change in accordance with the terms
of this Indenture in the event of any reclassification of the Common Stock,
merger or consolidation, or sale, conveyance, transfer or lease of the Company’s
property and assets substantially as an entirety; or


 


(viii)                        make
any change that does not adversely affect the rights of any Holder in any
material respect; provided that any amendment to
conform the terms of this Indenture or the Securities to the section entitled “Description
of Notes” as set forth in the final offering memorandum related to the
Securities dated June 12, 2008 shall be deemed not to be adverse to any
Holder.


 


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12.03                     AMENDMENTS REQUIRING CONSENT OF HOLDERS.


 


(a)                                  Without
the written consent or the affirmative vote of each Holder of Outstanding
Securities affected thereby, an amendment, supplement or waiver under this Section 12.03 may not:


 


(i)                                     reduce
the amount of Securities whose Holders must consent to an amendment;


 


(ii)                                  reduce
the rate, or extend the stated time for payment, of interest on any Security;


 


(iii)                               reduce
the principal, or extend the Stated Maturity Date, of any Security;


 


(iv)                              make
any change that adversely affects the conversion rights of any Securities;


 


(v)                                 reduce
the Fundamental Change Repurchase Price of any Security or amend or modify in
any manner adverse to the Holders the Company’s obligation to make such
payments, whether through an amendment or waiver of provisions in the
covenants, definitions or otherwise;


 


(vi)                              change
the place or currency of payment of principal or interest in respect of any
Security;


 


(vii)                           impair
the right of any Holder to receive payment of principal of and interest on such
Holder’s Securities on or after the due dates therefore, or to institute suit
for the enforcement of any payment on or with respect to such Holder’s
Securities;


 


(viii)                        modify
the redemption provisions of the Securities in any manner adverse to the
Holders;


 


(ix)                                adversely
affect the ranking of the Securities as the Company’s senior secured
Indebtedness; or


 


(x)                                   make
any change in the amendment provisions which require each Holder’s consent or
in the waiver provisions.


 


(b)                                 It
shall not be necessary for any Act of Holders under this Section 12.03 to approve the
particular form of any proposed supplemental indenture, but it shall be
sufficient if such Act shall approve the substance thereof.


 


12.04                     EXECUTION OF SUPPLEMENTAL INDENTURES.


 


In executing, or accepting the additional
trusts created by, any supplemental indenture permitted by this Article 12 or the modifications thereby of the trusts
created by this Indenture, the Trustee shall be provided with, and (subject to Section 9.01) shall be fully protected and indemnified
by the Company in relying upon, in addition to the documents required by 


 


90

















 


Section 1.03,
an Opinion of Counsel stating that the execution of such supplemental indenture
is authorized or permitted by this Indenture. 
Subject to the preceding sentence, the Trustee shall sign such
supplemental indenture if the same does not adversely affect the Trustee’s own
rights, duties or immunities under this Indenture or otherwise or adversely
affect the rights, duties or immunities of the Holders under this Indenture or
otherwise.  The Trustee may, but shall
not be obligated to, enter into any such supplemental indenture that adversely
affects the Trustee’s own rights, duties or immunities under this Indenture or
otherwise.


 


12.05                     EFFECT OF SUPPLEMENTAL INDENTURES.


 


Upon the execution of any supplemental
indenture under this Article 12,
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 theretofore or thereafter authenticated and delivered hereunder shall be
bound thereby.


 


12.06                     REFERENCE IN SECURITIES TO SUPPLEMENTAL
INDENTURES.


 


Securities authenticated and delivered after
the execution of any supplemental indenture pursuant to this Article 12 shall bear a notation in form approved by
the Trustee as to any matter provided for in such supplemental indenture.  If the Company shall so determine, new
Securities so modified as to conform, in the opinion of the Trustee and the
Company, to any such supplemental indenture may be prepared and executed by the
Company and authenticated and delivered by the Trustee in exchange for
Outstanding Securities.


 


12.07                     NOTICE TO HOLDERS OF SUPPLEMENTAL
INDENTURES.


 


The Company shall cause notice of the
execution of any supplemental indenture to be mailed promptly to each Holder,
at such Holder’s address appearing on the Security Register, briefly describing
such supplemental indenture.  Failure to
deliver such notice, or any defect in such notes, shall not affect the legality
or validity of such supplemental indenture.


 


XIII.  COLLATERAL AND SECURITY DOCUMENTS


 


13.01                     SECURITY DOCUMENTS.


 


(a)                                  The
due and punctual payment of the principal of and interest and Additional
Interest, if any, on the Securities when and as the same shall be due and
payable, whether on an interest payment date, at maturity, by acceleration,
repurchase, redemption or otherwise, and interest on the overdue principal of
and interest and Additional Interest (to the extent permitted by law), if any,
on the Securities and performance of all other obligations of the Company to
the Holders of Securities or the Trustee under this Indenture and the
Securities, according to the terms hereunder or thereunder, are secured as
provided in the Security Documents;


 


(b)                                 Under
the Security Documents, the Company has appointed The Bank of New York Trust
Company, N.A. to act as Collateral Agent, and has further authorized the
Collateral Agent to appoint co-collateral agents (the “Pledged Equity
Co-Collateral Agents”) and direct such Pledged Equity Co-Collateral Agents
in accordance with the terms of the Security Documents.  Each Holder of Securities, by its acceptance
of such Securities consents and agrees 


 


91

















 


to the terms of the Security Documents
(including, without limitation, the provisions providing for foreclosure and
release of Collateral) as the same may be in effect or may be amended, modified
or waived from time to time in accordance with their terms and the terms of
this Indenture, and authorizes and directs the Trustee, the Collateral Agent
and all Pledged Equity Co-Collateral Agents to enter into the Security
Documents to which they are a party, bind the Holders to the terms set forth in
such Security Documents and to perform and observe their respective obligations
and exercise their respective rights thereunder in accordance therewith.


 


(c)                                  All
of the rights, protections and privileges granted to the Trustee under Article 9, Section 14.05, and this Article shall
inure to the benefit of the Collateral Agent acting under this Indenture and
under all of the Security Documents, and shall inure also to the benefit of the
Pledged Equity Co-Collateral Agents acting under the Security Documents.  The Collateral Agent and the Co-Collateral
Agents are third-party beneficiaries hereof, and may enforce their rights
herein as if they were parties hereto.


 


(d)                                 In
addition to the foregoing, the Trustee, Collateral Agent and Pledged Equity
Co-Collateral Agents (as used solely for purposes of this clause (d), collectively, the “Collateral
Agents”) shall have the following protections:


 


(i)            the Trustee and the Collateral Agents may each accept
without investigation such right and title as the Company may have to any of
the Collateral pursuant to the Security Documents and shall not be bound or
concerned to examine or inquire into or be liable for any defect or failure in
the right or title of the Company;


 


(ii)           neither
the Trustee nor the Collateral Agents shall be liable for any failure, omission
or defect in perfecting, protecting or further assuring any security interest
including:


 


(A)          any failure,
omission or defect in registering or filing or procuring registration or filing
of, or otherwise protecting or perfecting any security interest or the priority
thereof or the right or title of any person in or to the assets and other
interests secured pursuant to the Security Documents; and


 


(B)           any failure or
omission to require any further assurances in relation to any security
interest;


 


(iii)          neither
the Trustee nor the Collateral Agents shall be responsible for any
unsuitability, inadequacy or unfitness of any security interest created
pursuant to any Security Document and neither shall they be obliged to make any
investigation into, and shall be entitled to assume, the suitability, adequacy
and fitness of such security interests;


 


(iv)          neither
the Trustee nor the Collateral Agent shall be responsible for investigating,
monitoring or supervising the observance or performance by any person in
respect of the Security Documents or otherwise;


 


(v)           until
the occurrence of an Event of Default which is continuing, the moneys standing
to the credit of any account secured pursuant to the Security Documents 


 


92

















 


shall be dealt
with in accordance with the provisions of the Security Documents and neither
the Trustee nor the Collateral Agents shall be responsible for any liability
suffered by any person, whether by reason of depreciation in value or by
fluctuation in exchange rates or otherwise;


 


(vi)          neither
the Trustee nor the Collateral Agent will be liable for any decline in the
value nor any loss realised upon any sale or other disposition pursuant to the
Security Documents of any of the assets and other interests secured pursuant to
the Security Documents;


 


(vii)         beyond
the exercise of reasonable care in the custody thereof, the Trustee and the
Collateral Agents shall have no duty as to any Collateral in their possession
or control or in the possession or control of any agent or bailee or any income
thereon or as to preservation of rights against prior parties or any other
rights pertaining thereto, and none of them shall be responsible for preparing
or filing any financing or continuation statements or recording any documents
or instruments in any public office at any time or times or otherwise
perfecting or maintaining the perfection of any security interest in the
Collateral;


 


(viii)        neither
the Trustee nor the Collateral Agents shall be responsible for the execution,
legality, effectiveness, adequacy, genuineness, validity, enforceability or
suitability of any of the Security Documents, nor for other documents entered
into in connection therewith, nor shall either of them be responsible or liable
to any person because of any invalidity of any provisions of such documents or
the unenforceability thereof, whether arising from statute, law or decision of
any court. Neither the Trustee nor the Collateral Agent shall have any
responsibility for, or have any duty to make any investigation in respect of or
in any way be liable whatsoever for:


 


(A)          the nature,
status, creditworthiness or solvency of the Company or any other person or
entity who has at any time provided any security or support whether by way of
guarantee, charge or otherwise in respect of any obligation of the Company;


 


(B)           the execution,
legality, validity, adequacy, admissibility in evidence or enforceability of
any Security Document or any other document entered into in connection
therewith;


 


(C)           the scope or
accuracy of any representations, warranties or statements made by or on behalf
of the Company in any application for any advance or any document entered into
in connection therewith;


 


(D)          the performance
or observance by any person of any provisions of any Security Documents (except
as set forth therein) or in any document entered into in connection therewith
or the fulfilment or satisfaction of any conditions contained therein or
relating thereto;


 


(E)           the existence,
accuracy or sufficiency of any legal or other opinions, searches, reports,
certificates, valuations or investigations delivered or 


 


93

















 


obtained or
required to be delivered or obtained at any time in connection herewith; or


 


(F)           the failure by
the Company to comply with the Security Documents.


 


(e)                                  The
Company will execute and comply with, and cause each of its Subsidiaries to
execute and comply with, the terms of each Security Document to which the
Company is, or is required to be, a party. 
The Company shall take, and shall cause each of its Subsidiaries to
take, at their sole expense, upon request of the Trustee, any and all actions
reasonably required to cause the Security Documents to create and maintain, as
security for the obligations of the Company hereunder, a valid and enforceable
perfected Lien in and on all the Collateral, in favor of the Trustee on behalf
of itself and the Holders and subject to no other Liens.


 


13.02                     SUITS TO PROTECT THE COLLATERAL.


 


The Trustee shall have power to institute in
its name and to maintain such suits and proceedings as it may deem expedient to
prevent any impairment of the Collateral by any acts which may be unlawful or
in violation of this Indenture or any of the Security Documents, and such suits
and proceedings as necessary to preserve or protect its interests and the
interests of the Holders in the Collateral, including power to institute and
maintain suits or proceedings to restrain the enforcement of or compliance with
any legislative or other governmental enactment, rule or order that may be
unconstitutional or other-wise invalid, if the enforcement of, or compliance
with, such enactment, rule or order would impair the security hereunder or
under any of the Security Documents, or be prejudicial to the interests of the
Holders or the Trustee.


 


13.03                     RELEASE OF COLLATERAL.


 


(a)                                  The
Trustee and the Collateral Agent shall not at any time release Collateral from
the Liens created by this Indenture and the Security Documents unless such
release is in accordance with the provisions of this Indenture and the Security
Documents.


 


(b)                                 In
the event that any Collateral is released in accordance with the provisions of Article 12, the Liens on such
Collateral securing the Securities will be automatically released and
terminated.  In addition, in the event of
this Indenture ceasing to be in effect pursuant to the terms of Section 11.01 (subject to the terms of
Section 11.05), the Liens on
all Collateral securing the Securities will be automatically released and terminated.


 


(c)                                  To
evidence any such release and termination, the Company shall be entitled to
such releases, terminations and other documents and instruments as the Company
or any third party entitled to rely thereon may request, and the Trustee and
the Collateral Agent shall, at the Company’s expense, execute and deliver such
requested releases, terminations and other documents and instruments, with
respect to items of Collateral subject to release pursuant to clauses (a) and
(b) above (the “Released Collateral”)
upon compliance with the conditions precedent that the Company shall have
delivered to the Trustee and the Collateral Agent the following:


 


94

















 


(i)                                     a
notice from the Company requesting release of Released Collateral (a “Company Notice”) and specifically
describing the proposed Released Collateral;


 


(ii)                                  an
Officers’ Certificate certifying that (x) the release of such Released
Collateral complies with the terms and conditions of this Indenture, (y) all
conditions precedent in this Indenture and the Security Documents to such
release have been complied with, and (z) no Default or Event of Default
pursuant to clause (a) or (b) of Section 7.01 hereof is in effect or continuing on the
date thereof or would result therefrom, and


 


(iii)                               an
Opinion of Counsel substantially to the effect that all conditions precedent
herein and under any of the Security Documents relating to the release of such
Collateral have been complied with.


 


(d)                                 The
release of any Collateral from the Liens of the Security Documents or the
release, in whole or in part, of the Liens created by the Security Documents
shall not be deemed to impair the security under this Indenture in
contravention of the provisions hereof if and to the extent the Collateral is
released pursuant to this Indenture or the applicable Security Documents.


 


13.04                     SUFFICIENCY OF RELEASE.


 


All purchasers and grantees of any property
or rights purporting to be released shall be entitled to rely upon any release
executed by the Trustee hereunder as sufficient for the purpose of this
Indenture and as constituting a good and valid release of the property therein
described from the Lien of this Indenture and of the Security Documents.


 


13.05                     ACTIONS BY THE TRUSTEE.


 


Subject to the provisions of the Security
Documents and this Indenture, the Trustee may in its sole discretion and
without the consent of the Holders take all actions that are deemed necessary
or appropriate in order to (i) enforce any of the terms of the Security Documents
and (ii) collect and receive all amounts payable in respect of the
obligations of the Company under the Security Documents and this
Indenture.  The Trustee shall have the
power to institute and maintain such suits and proceedings as it may deem expedient
in order to prevent any impairment of the Collateral by any act that may be
unlawful or in violation of this Indenture or the Security Documents, and such
suits and proceedings as the Trustee may deem expedient to preserve or protect
its interests and those of the Holders in the Collateral.  No duty beyond that set forth in Section 9.01 is imposed on the Trustee pursuant to this
Section 13.05.  Nothing herein shall imply or be deemed to
imply that any action by the Company or the Trustee need comply with, or comply
with the statutes under, the Trust Indenture Act.  For the avoidance of doubt, in connection
with a release of Collateral, each of the Trustee and Collateral Agent shall be
fully protected in conclusively relying upon the Officers’ Certificate and
Opinion of Counsel to be provided to them pursuant to Section 13.02(c).


 


95

















 


XIV.  MISCELLANEOUS


 


14.01                     RULES BY TRUSTEE, PAYING AGENT AND
SECURITY REGISTRAR.


 


The Trustee may make reasonable rules for
action by, or a meeting of, Holders.  The
Security Registrar and the Paying Agent may make reasonable rules for
their functions.


 


14.02                     SUCCESSORS.


 


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


 


14.03                     MULTIPLE ORIGINALS.


 


The parties may sign any number of copies of
this Indenture.  Each signed copy shall
be an original, but all of them together represent the same agreement.  One signed copy is enough to prove this
Indenture.


 


14.04                     CALCULATIONS.


 


Except as otherwise provided herein, the
Company will be responsible for making all calculations called for under the
Indenture and the Securities.  These
calculations include, but are not limited to, determinations of the Last
Reported Sale Prices of Common Stock, accrued interest payable on the
Securities, any make-whole calculations and the Conversion Rate of the
Securities.  The Company will make all
such calculations in good faith and, absent manifest error, its calculations
will be final and binding on the Holders. 
The Company will provide a schedule of its calculations to each of the
Trustee and the Conversion Agent, and each of the Trustee and the Conversion
Agent is entitled to rely conclusively upon the accuracy of the Company’s
calculations without independent verification. 
The Trustee will deliver a copy of such schedule to any Holder upon the
request of such Holder.


 


14.05                     WAIVER OF JURY TRIAL.


 


EACH OF THE COMPANY AND THE TRUSTEE HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND
ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING
TO THIS AGREEMENT, THE SECURITIES OR THE TRANSACTION CONTEMPLATED THEREBY.


 


14.06                     FORCE MAJEURE.


 


In no event shall the Trustee be responsible
or liable for any failure or delay in the performance of its obligations
hereunder arising out of or caused by, directly or indirectly, forces beyond
its control, including, without limitation, strikes, work stoppages, accidents,
acts of war or terrorism, civil or military disturbances, nuclear or natural
catastrophes or acts of God, and interruptions, loss or malfunctions of
utilities, communications or computer (software or hardware) services; it being
understood that the Trustee shall use reasonable efforts which are 


 


96

















 


consistent
with accepted practices in the banking industry to resume performance as soon
as practicable under the circumstances.


 


[Remainder of the page intentionally
left blank]


 


97

















 


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


 


 


	
   

  	
  POWER-ONE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  / s /
  Richard J. Thompson

  
	
   

  	
  Name:

  	
  Richard J.
  Thompson

  
	
   

  	
  Title:

  	
  Chief
  Executive Officer of Power-One, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  THE BANK OF
  NEW YORK TRUST

  
	
   

  	
  COMPANY,
  N.A.,

  
	
   

  	
  as Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  / s / Teresa
  Petta

  
	
   

  	
  Name:

  	
  Teresa Petta

  
	
   

  	
  Title:

  	
  Vice President

  
					



 

















 


SCHEDULE A


 


Make-Whole Table


 


The following table sets forth the number of
Additional Shares to be added to the Conversion Rate, per $1,000 principal
amount of Securities, pursuant to Section 5.03
of this Indenture:


 


Additional Make-Whole Shares Per $1,000 Bond


 


	
   

  	
   

  	
  $2.85

  	
   

  	
  $3.00

  	
   

  	
  $3.50

  	
   

  	
  $4.00

  	
   

  	
  $4.50

  	
   

  	
  $5.00

  	
   

  	
  $5.50

  	
   

  	
  $6.00

  	
   

  	
  $6.50

  	
   

  	
  $7.00

  	
   

  	
  $7.50

  	
   

  	
  $8.00

  	
   

  	
  $8.50

  	
   

  	
  $9.00

  	
   

  
	
  06/17/08

  	
   

  	
  45.7890

  	
   

  	
  45.7890

  	
   

  	
  45.7890

  	
   

  	
  45.7890

  	
   

  	
  42.9355

  	
   

  	
  38.6706

  	
   

  	
  34.8122

  	
   

  	
  31.4588

  	
   

  	
  28.6223

  	
   

  	
  26.1919

  	
   

  	
  24.0853

  	
   

  	
  22.2430

  	
   

  	
  20.6171

  	
   

  	
  19.1719

  	
   

  
	
  06/17/09

  	
   

  	
  45.7890

  	
   

  	
  45.7890

  	
   

  	
  45.7890

  	
   

  	
  41.4171

  	
   

  	
  36.6654

  	
   

  	
  32.9101

  	
   

  	
  29.5303

  	
   

  	
  26.7163

  	
   

  	
  24.3365

  	
   

  	
  22.2970

  	
   

  	
  20.5300

  	
   

  	
  18.9841

  	
   

  	
  17.6204

  	
   

  	
  16.4090

  	
   

  
	
  06/17/10

  	
   

  	
  45.7890

  	
   

  	
  45.7890

  	
   

  	
  38.2078

  	
   

  	
  32.9358

  	
   

  	
  29.0957

  	
   

  	
  25.9373

  	
   

  	
  23.2974

  	
   

  	
  21.1021

  	
   

  	
  19.2464

  	
   

  	
  17.6560

  	
   

  	
  16.2782

  	
   

  	
  15.0729

  	
   

  	
  14.0100

  	
   

  	
  13.0646

  	
   

  
	
  06/17/11

  	
   

  	
  45.7890

  	
   

  	
  33.8167

  	
   

  	
  26.4344

  	
   

  	
  22.3345

  	
   

  	
  19.5645

  	
   

  	
  17.3857

  	
   

  	
  15.6300

  	
   

  	
  14.1737

  	
   

  	
  12.9430

  	
   

  	
  11.8890

  	
   

  	
  10.9757

  	
   

  	
  10.1766

  	
   

  	
  9.4716

  	
   

  	
  8.8453

  	
   

  
	
  06/17/12

  	
   

  	
  45.7890

  	
   

  	
  21.6497

  	
   

  	
  11.7127

  	
   

  	
  8.6576

  	
   

  	
  7.3677

  	
   

  	
  6.5346

  	
   

  	
  5.8812

  	
   

  	
  5.3400

  	
   

  	
  4.8825

  	
   

  	
  4.4905

  	
   

  	
  4.1507

  	
   

  	
  3.8534

  	
   

  	
  3.5911

  	
   

  	
  3.3582

  	
   

  
	
  06/17/13

  	
   

  	
  45.7890

  	
   

  	
  27.9190

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  



 
















 


EXHIBIT A


 


[FACE
OF SECURITY]


 


[GLOBAL
SECURITY LEGEND]


 


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


 


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 MAY NOT BE EXCHANGED IN
WHOLE OR IN PART FOR A SECURITY REGISTERED, AND NO TRANSFER OF THIS
SECURITY IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY
PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE.


 


[RESTRICTED
SECURITY LEGEND]


 


THIS SECURITY (OR ITS
PREDECESSOR) AND ANY COMMON STOCK ISSUABLE UPON THE CONVERSION OF THIS SECURITY
HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND ACCORDINGLY MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED, EXCEPT AS SET FORTH BELOW.  BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL
INTEREST HEREIN, THE HOLDER:


 


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


 


(2)                                  AGREES THAT IT
WILL NOT RESELL OR OTHERWISE TRANSFER THIS SECURITY PRIOR TO THE DATE (THE “RESALE
RESTRICTION TERMINATION DATE”) THAT IS THE LATER OF (X) ONE YEAR AFTER THE
ORIGINAL ISSUE DATE HEREOF OR SUCH SHORTER PERIOD OF TIME AS PERMITTED BY RULE
144 UNDER THE SECURITIES ACT OR ANY SUCCESSOR PROVISION THEREUNDER, AND (Y) SUCH
LATER DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE LAW, EXCEPT (A) TO
POWER-ONE, INC. (THE “COMPANY”) OR ANY OF ITS SUBSIDIARIES OR AFFILIATES, (B) PURSUANT
TO AN 


 

















 


EFFECTIVE REGISTRATION
STATEMENT, (C) TO A PERSON WHO THE TRANSFEROR REASONABLY BELIEVES IS A QIB
PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, OR (D) PURSUANT TO AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER, IF
AVAILABLE, OR ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT (IN WHICH CASE THE COMPANY MAY REQUIRE SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS MAY REASONABLY BE
REQUIRED TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION
FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT) AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION;
AND


 


(3)                                  AGREES THAT IT
WILL DELIVER TO EACH PERSON TO WHOM THIS SECURITY OR AN INTEREST HEREIN IS
TRANSFERRED A NOTICE AS TO THE ABOVE RESTRICTIONS.


 


THE COMMON STOCK ISSUABLE
UPON CONVERSION OF THE SECURITIES IS SUBJECT TO CERTAIN RESTRICTIONS ON
OWNERSHIP AND TRANSFER.  THE COMPANY WILL
FURNISH A FULL STATEMENT ABOUT THE RESTRICTIONS ON TRANSFERABILITY AND OWNERSHIP
OF THE COMMON STOCK TO ANY HOLDER ON REQUEST AND WITHOUT CHARGE.  SUCH REQUEST MAY BE MADE TO THE COMPANY’S
CORPORATE SECRETARY AT ITS PRINCIPAL OFFICE.


 

















 


POWER-ONE, INC.


 


8.0% Senior Secured Convertible Note due 2013


 


	
  No. 1

  	
   

  	
   

  	
   

  	
  $75,000,000

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  CUSIP No.:    

  	
  739308 AA2  

  
	
   

  	
   

  	
   

  	
  ISIN Number:

  	
  US739308AA26

  



 


Power-One, Inc., a Delaware corporation,
promises to pay to Cede & Co., or its registered assigns, the
principal sum of $75,000,000, as revised by the Schedule of Increases or
Decreases in Global Security attached hereto, on June 17, 2013.


 


Interest Payment Dates:   March 31, June 30, September 30
and December 31, commencing September 30, 2008.


 


Interest Record Dates:      March 15, June 15, September 15
and December 15.


 


Reference is made to the further provisions of this
Security set forth on the reverse hereof, including, without limitation,
provisions giving the Holder of this Security the right to convert this
Security into Common Stock, on the terms and subject to the limitations
referred to on the reverse hereof and as more fully specified in the
Indenture.  Such further provisions shall
for all purposes have the same effect as though fully set forth at this place.


 


This Security shall not be valid or become
obligatory for any purpose until the certificate of authentication hereon shall
have been manually signed by the Trustee or a duly authorized authenticating
agent under the Indenture.


 

















 


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


 


 


	
   

  	
  POWER-ONE, INC.

  	 

	
   

  	
   

  	 

	
   

  	
   

  	 

	
   

  	
  By:

  	
   

  	 

	
   

  	
   

  	
  Name:

  	 

	
   

  	
   

  	
  Title:

  
					



 


 


TRUSTEE’S CERTIFICATE OF
AUTHENTICATION


 


THE BANK OF NEW YORK TRUST
COMPANY, N.A., as Trustee,

certifies that this Security is one of the Securities described

in the within-named Indenture.


 


	
  Dated:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Authorized Signatory

  	
   

  



 


 


Signature Page to


Rule 144A Global Note


 

















 


[REVERSE
OF SECURITY]


 


POWER-ONE, INC.


 


8.0% Senior Secured Convertible Note due 2013


 


1.                                      Interest


 


POWER-ONE, INC., a Delaware corporation (such
corporation, and its successors and assigns under the Indenture hereinafter referred
to, being herein called the “Company”),
promises to pay interest on the principal amount of this Security at the rate
of 8.0% per annum.


 


The Company will pay interest quarterly on March 31,
June 30, September 30 and December 31 of each year commencing on
September 30, 2008.  Interest on the
Security will accrue from the most recent date to which interest has been paid
or, if no interest has been paid, from June 17, 2008.  Interest will be computed on the basis of a
360-day year of twelve 30-day months.


 


If a payment date is not a Business Day, payment
will be made on the next succeeding Business Day, and no additional interest
will accrue in respect of such payment by virtue of the payment being made on
such later date.


 


The Company shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
principal and premium, if any, from time to time as provided in the Indenture;
and it shall pay interest (including post-petition interest in any proceeding
under any Bankruptcy Law) on overdue installments of interest (without regard
to any applicable grace periods) from time to time as provided in the
Indenture.


 


2.                                      Paying
Agent, Registrar and Conversion Agent


 


Initially, The Bank of New York Trust Company, N.A.,
a national banking association (the “Trustee”),
will act as Paying Agent, Security Registrar and Conversion Agent.  The Company may appoint and change any Paying
Agent, Security Registrar or co-registrar or Conversion Agent without notice.  The Company or any of its domestically
organized Wholly Owned Subsidiaries may act as Paying Agent, Security Registrar
or co-registrar, or Conversion Agent.


 


3.                                       Indenture


 


The Company issued the Securities under an Indenture
dated as of June 17, 2008 (the “Indenture”),
between the Company and the Trustee. 
Terms defined in the Indenture and not defined herein have the meanings
ascribed thereto in the Indenture.  The
Securities are subject to all such terms, and Holders are referred to the
Indenture for a statement of those terms.


 


This Security is one of the Securities referred to
in the Indenture issued in an initial aggregate principal amount of
$75,000,000.  Additional Securities may
be issued in accordance with the Indenture. 
The Indenture also imposes limitations on the ability of the Company to 


 


A-1

















 


consolidate or merge with or
into any other Person or convey, transfer or lease all or substantially all of
the property of the Company.


 


4.                                     Conversion


 


In compliance with the provisions of the Indenture,
at any time prior to 5:00 p.m., New York City time, on the Business Day
immediately preceding the Stated Maturity Date of this Security, the Holder
hereof has the right, at its option, to convert each $1,000 principal amount of
this Security into shares of Common Stock, determined as set forth in the
Indenture, based on an initial Conversion Rate of 304.8780 shares of
Common Stock per $1,000 principal amount of Securities, as the same may be
adjusted pursuant to the terms of the Indenture.


 


5.                                      Denominations,
Transfer, Exchange


 


The Securities are in registered form without
coupons in denominations of $1,000 and whole multiples of $1,000.  A Holder may transfer or exchange Securities
in accordance with the Indenture.  Upon
any transfer or exchange, the Security Registrar and the Trustee may require a
Holder, among other things, to furnish appropriate endorsements or transfer
documents and to pay any taxes required by law or permitted by the Indenture.


 


6.                                      Persons
Deemed Owners


 


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


 


7.                                      Defaults
and Remedies


 


If an Event of Default (other than an Event of
Default relating to certain events of bankruptcy, insolvency or reorganization
of the Company) occurs and is continuing, the Trustee or the Holders of at
least 25% in principal amount of the Outstanding Securities may declare the
principal of and accrued but unpaid interest on all the Securities to be due
and payable.  If an Event of Default
relating to certain events of bankruptcy, insolvency or reorganization of the
Company occurs, the principal of and interest on all the Securities will become
immediately due and payable without any declaration or other act on the part of
the Trustee or any Holder.


 


Notwithstanding the foregoing, at the election of
the Company, the sole remedy for an Event of Default relating to a failure to
file certain reports with the Commission and the Trustee shall, for the first
90 calendar days after the occurrence of such Event of Default (which will be
the 10th Business Day after written notice is provided to the
Company in accordance with the Indenture), consist exclusively of the right to
receive Default Additional Interest at an annual rate of 0.25% per annum on the
principal amount of Restricted Securities then Outstanding for each day of such
90-day period during which such Event of Default continues.


 


8.                                      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 or for any claim based on, in
respect of or by reason of such obligations or their creation.  By accepting a 


 


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Security, each Holder waives
and releases all such liability.  The
waiver and release are part of the consideration for the issue of the
Securities.


 


9.                                      Authentication


 


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


 


10.                                 Abbreviations


 


Customary abbreviations may be used in the name of a
Holder or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants
by the entireties), JT TEN (=joint tenants with rights of survivorship and not
as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).


 


11.                                GOVERNING
LAW


 


THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.


 


12.                                CUSIP
and ISIN Numbers


 


Pursuant to a recommendation promulgated by the
Committee on Uniform Securities Identification Procedures, the Company has
caused CUSIP and ISIN numbers to be printed on the Securities and has directed
the Trustee to use CUSIP and ISIN numbers in notices of redemption as a
convenience to Holders.  No
representation is made as to the accuracy of such numbers either as printed on
the Securities or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.


 


The Company will furnish to any Holder of Securities upon written
request and without charge to the Holder a copy of the Indenture which has in
it the text of this Security.


 


A-3

















 


SCHEDULE OF INCREASES AND DECREASES IN GLOBAL SECURITY


 


The following increases or
decreases in this Global Security have been made:


 


	
  Date of

  Exchange

  	
   

  	
  Amount of

  decrease in

  principal amount

  of this Global

  Security

  	
   

  	
  Amount of

  increase in

  principal amount

  of this Global

  Security

  	
   

  	
  Principal amount

  of this Global

  Security

  following such

  decrease or

  increase

  	
   

  	
  Signature of

  authorized

  signatory of

  Trustee or

  Custodian

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


A-4

















 


[FORM OF
CONVERSION NOTICE]


 


To:                              POWER-ONE, INC.


 


The undersigned registered owner of this Security
hereby irrevocably exercises the option to convert this Security, or the
portion thereof (which is $1,000 or a multiple thereof) below designated, into,
shares of Common Stock of Power-One, Inc., in accordance with the terms of
the Indenture referred to in this Security, and directs that the shares
issuable and deliverable upon such conversion, any cash in lieu of fractional
shares or otherwise payable upon conversion hereof and any Securities
representing any unconverted principal amount hereof, be issued and delivered
to the registered Holder hereof unless a different name has been indicated
below.  Capitalized terms used herein but
not defined shall have the meanings ascribed to such terms in the
Indenture.  If shares or any portion of
this Security not converted are to be issued in the name of a person other than
the undersigned, the undersigned will provide the appropriate information below
and pay all transfer taxes payable with respect thereto.  Any amount required to be paid by the
undersigned on account of interest accompanies this Security.


 


	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature(s)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature(s) must be
  guaranteed by an “eligible guarantor institution” meeting the requirements of
  the Security Registrar, which requirements include membership or
  participation in the Security Transfer Agent Medallion Program (“STAMP”) or such
  other “signature guarantee program” as may be determined by the Security
  Registrar in addition to, or in substitution for, STAMP, all in accordance with
  the Securities Exchange Act of 1934, as amended.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature Guarantee

  



 


A-5

















 


Fill in the registration of shares of Common Stock
to be issued, and Securities, if any, to be delivered, and the person to whom
payment for fractional shares or any other cash payment, if any, is to be made,
if, other than to and in the name of the registered Holder:


 


Please print name and
address


 


	
   

  	
   

  
	
  (Name)

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  (Street Address)

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  (City, State and Zip Code)

  	
   

  
	
   

  	
   

  
	
  Principal amount to be
  converted

  	
   

  
	
  (if less than all, must be
  $1,000 or

  	
   

  
	
  whole multiples thereof):

  	
   

  
	
   

  	
   

  
	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Social Security or Other

  	
   

  
	
  Taxpayer Identification
  Number:

  	
   

  



 


NOTICE:  The signature on this Conversion Notice must
correspond with the name as written upon the face of the Securities in every
particular without alteration or enlargement or any change whatever.


 


A-6

















 


[FORM OF
FUNDAMENTAL CHANGE REPURCHASE NOTICE]


 


To:                              POWER-ONE, INC.


 


The undersigned registered owner of this Security
hereby acknowledges receipt of a notice from Power-One, Inc. (the “Company”) as to the occurrence of a
Fundamental Change with respect to the Company and specifying the Fundamental
Change Repurchase Date and requests and instructs the Company to repay to the
registered holder hereof in accordance with the applicable provisions of the
Indenture referred to in this Security (1) the entire principal amount of
this Security, or the portion thereof (that is $1,000 principal amount or an
integral multiple thereof) below designated, and (2) if such Fundamental
Change Repurchase Date does not fall during the period after a Record Date and
on or prior to the corresponding Interest Payment Date, accrued and unpaid
interest thereon to, but excluding, such Fundamental Change Repurchase Date.


 


In the case of Physical Securities, the certificate
numbers of the Securities to be repurchased are as set forth below:


 


	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Signature(s)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Social Security or Other

  
	
   

  	
  Taxpayer Identification
  Number

  
	
   

  	
   

  
	
   

  	
  Principal amount to be
  repaid (if less than all):

  
	
   

  	
  $          ,000

  
	
   

  	
   

  
	
   

  	
  NOTICE: The signature on
  the Fundamental Change Repurchase Notice must correspond with the name as
  written upon the face of the Security in every particular without alteration
  or enlargement or any change whatever.

  



 


A-7

















 


[FORM OF
RATIO EVENT REPURCHASE NOTICE]


 


To:                              POWER-ONE, INC.


 


The undersigned registered owner of this Security
hereby acknowledges receipt of a notice from Power-One, Inc. (the “Company”) as to the occurrence of a Ratio
Event with respect to the Company and requests and instructs the Company to
repay to the registered holder hereof in accordance with the applicable
provisions of the Indenture referred to in this Security on
[              ],
20[    ] (the applicable “Ratio Event Repurchase Date”) (1) the
entire principal amount of this Security, or the portion thereof (that is
$1,000 principal amount or an integral multiple thereof) below designated, and (2) if
such Ratio Event Repurchase Date does not fall during the period after a Record
Date and on or prior to the corresponding Interest Payment Date, accrued and
unpaid interest thereon to, but excluding, such Ratio Event Repurchase Date.


 


In the case of Physical Securities, the certificate
numbers of the Securities to be repurchased are as set forth below:


 


	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Signature(s)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Social Security or Other

  
	
   

  	
  Taxpayer Identification
  Number

  
	
   

  	
   

  
	
   

  	
  Principal amount to be
  repaid (if less than all):

  
	
   

  	
  $          ,000

  
	
   

  	
   

  
	
   

  	
  NOTICE: The signature on
  the Ratio Event Repurchase Notice must correspond with the name as written
  upon the face of the Security in every particular without alteration or
  enlargement or any change whatever.

  



 


A-8

















 


[FORM OF
ASSIGNMENT AND TRANSFER]


 


For value received
                                                        
hereby sell(s), assign(s) and transfer(s) unto
                                  
(Please insert social security or Taxpayer Identification Number of assignee)
the within Security, and hereby irrevocably constitutes and appoints
                                          
attorney to transfer the said Security on the books of the Company, with full
power of substitution in the premises.


 


In connection with any transfer of Securities
bearing a legend setting out restrictions on the offer, sale, pledge or other
transfer of such Securities, the undersigned confirms that such Securities are
being transferred:


 


·                                          To Power-One, Inc.
or any subsidiary or affiliate thereof; or


 


·                                          Pursuant to a
registration statement which has been declared effective under the Securities
Act of 1933, as amended (the “Securities Act”),
and which continues to be effective at the time of transfer; or


 


·                                          If the
Securities are eligible for resale pursuant to Rule 144A under the
Securities Act, to a “qualified institutional buyer” in compliance with Rule 144A
under the Securities Act, that purchases for its own account or for the account
of a “qualified institutional buyer” to whom notice is given that the transfer
is being made in reliance on Rule 144A under the Securities Act; or


 


·                                          Pursuant to an
exemption from registration under Rule 144 under the Securities Act; or


 


·                                          Pursuant to
another available exemption from the registration requirements of the
Securities Act, subject to the Company’s and the Trustee’s right prior to any
such offer, sale or transfer to require the delivery of an opinion of counsel,
certification and/or other information satisfactory to each of them.


 


Unless one of the boxes is checked, the Securities Registrar will
refuse to register any of the Securities evidenced by this certificate in the
name of any person other than the registered Holder thereof.


 


	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Signature(s)

  



 


A-9

















 


	
   

  	
  Signature(s) must be guaranteed by an institution
  which is a member of one of the following recognized signature Guarantee
  Programs:

  
	
   

  	
   

  	
   

  
	
   

  	
  (i)

  	
  The Securities Transfer Agent Medallion Program
  (STAMP);

  
	
   

  	
   

  	
   

  
	
   

  	
  (ii)

  	
  The New York Stock Exchange Medallion Program
  (MNSP);

  
	
   

  	
   

  	
   

  
	
   

  	
  (iii)

  	
  The Stock Exchange Medallion Program (SEMP) or

  
	
   

  	
   

  	
   

  
	
   

  	
  (iv)

  	
  another guarantee program acceptable to the Trustee.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Signature Guarantee(s)

  



 


A-10

















 


EXHIBIT B


 


[FORM OF
RESTRICTIVE LEGEND FOR COMMON STOCK ISSUED UPON CONVERSION]


 


THIS COMMON STOCK
CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), AND ACCORDINGLY MAY NOT BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED, EXCEPT AS SET FORTH BELOW.  BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL
INTEREST HEREIN, THE HOLDER:


 


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


 


(2)                                  AGREES THAT IT
WILL NOT RESELL OR OTHERWISE TRANSFER THIS COMMON STOCK CERTIFICATE PRIOR TO
THE DATE THAT IS THE LATER OF (X) ONE YEAR AFTER THE ORIGINAL ISSUE DATE
OF THE PREDECESSOR SECURITY HERETO OR SUCH SHORTER PERIOD OF TIME AS PERMITTED
BY RULE 144 UNDER THE SECURITIES ACT OR ANY SUCCESSOR PROVISION THEREUNDER, AND
(Y) SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE LAW,
EXCEPT (A) TO POWER-ONE, INC. (THE “COMPANY”) OR ANY OF ITS SUBSIDIARIES
OR AFFILIATES, (B) TO A PERSON WHO THE TRANSFEROR REASONABLY BELIEVES IS A
QIB PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (C) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT, OR (D) PURSUANT TO AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER, IF AVAILABLE, OR ANY
OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT (IN WHICH CASE THE COMPANY MAY REQUIRE SUCH CERTIFICATIONS, LEGAL
OPINIONS OR OTHER INFORMATION AS MAY REASONABLY BE REQUIRED TO CONFIRM
THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT) AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF
ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION; AND


 


(3)                                  AGREES THAT IT
WILL DELIVER TO EACH PERSON TO WHOM THIS COMMON STOCK CERTIFICATE OR AN
INTEREST HEREIN IS TRANSFERRED A NOTICE AS TO THE ABOVE RESTRICTIONS.


 


B-1