Exhibit
4.1


 


Execution
Version


 




 





PIXELWORKS, INC.


 


as Issuer


 


and


 


WELLS
FARGO BANK, NATIONAL ASSOCIATION


 


as Trustee


 


INDENTURE


 


Dated
as of May 18, 2004


 


$125,000,000


 


1.75%
CONVERTIBLE SUBORDINATED DEBENTURES DUE 2024




 





 

















 


CROSS-REFERENCE TABLE 


 


	
  TIA

  Section

  	
   

  	
  Indenture

  Section

  
	
  310(a)(1)

  	
   

  	
  5.11

  
	
        (a)(2)

  	
   

  	
  5.11

  
	
        (a)(3)

  	
   

  	
  n/a

  
	
        (a)(4)

  	
   

  	
  n/a

  
	
        (a)(5)

  	
   

  	
  5.11

  
	
        (b)

  	
   

  	
  5.3;5.11

  
	
        (c)

  	
   

  	
  n/a

  
	
  311(a)

  	
   

  	
  5.12

  
	
        (b)

  	
   

  	
  5.12

  
	
        (c)

  	
   

  	
  n/a

  
	
  312(a)

  	
   

  	
  2.10

  
	
        (b)

  	
   

  	
  14.3

  
	
        (c)

  	
   

  	
  14.3

  
	
  313(a)

  	
   

  	
  5.7

  
	
        (b)(1)

  	
   

  	
  n/a

  
	
        (b)(2)

  	
   

  	
  5.7

  
	
        (c)

  	
   

  	
  5.7; 14.2

  
	
        (d)

  	
   

  	
  5.7

  
	
  314(a)(1),(2),(3)

  	
   

  	
  9.6; 14.6

  
	
        (a)(4)

  	
   

  	
  9.6; 9.7; 14.6

  
	
        (b)

  	
   

  	
  n/a

  
	
        (c)(1)

  	
   

  	
  14.5

  
	
        (c)(2)

  	
   

  	
  14.5

  
	
        (c)(3)

  	
   

  	
  n/a

  
	
        (d)

  	
   

  	
  n/a

  
	
        (e)

  	
   

  	
  14.6

  
	
        (f)

  	
   

  	
  n/a

  
	
  315(a)

  	
   

  	
  5.1(a)

  
	
        (b)

  	
   

  	
  5.6; 14.2

  
	
        (c)

  	
   

  	
  5.1(b)

  
	
        (d)

  	
   

  	
  5.1(c)

  
	
        (e)

  	
   

  	
  4.14

  
	
  316(a)(last sentence)

  	
   

  	
  2.13

  
	
        (a)(l)(A)

  	
   

  	
  4.5

  
	
        (a)(1)(B)

  	
   

  	
  4.4

  
	
        (a)(2)

  	
   

  	
  n/a

  
	
        (b)

  	
   

  	
  4.7

  
	
        (c)

  	
   

  	
  7.4

  
	
  317(a)(1)

  	
   

  	
  4.8

  
	
        (a)(2)

  	
   

  	
  4.9

  
	
        (b)

  	
   

  	
  2.5

  
	
  318(a)

  	
   

  	
  14.1

  
	
        (b)

  	
   

  	
  n/a

  
	
        (c)

  	
   

  	
  14.1

  



 












“n/a” means not applicable.


 


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


 

















 


TABLE OF CONTENTS


 


	
  ARTICLE 1

  DEFINITIONS AND INCORPORATION BY REFERENCE

  	
   

  
	
   

  	
   

  
	
  Section 1.01.

  	
  Definitions

  	
   

  
	
  Section 1.02.

  	
  Incorporation
  by Reference of Trust Indenture Act

  	
   

  
	
  Section 1.03.

  	
  Rules of
  Construction

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 2

  THE SECURITIES

  	
   

  
	
   

  	
   

  
	
  Section 2.01.

  	
  Title and Terms

  	
   

  
	
  Section 2.02.

  	
  Form of
  Securities

  	
   

  
	
  Section 2.03.

  	
  Legends

  	
   

  
	
  Section 2.04.

  	
  Execution,
  Authentication, Delivery and Dating

  	
   

  
	
  Section 2.05.

  	
  Registrar
  and Paying Agent

  	
   

  
	
  Section 2.06.

  	
  Paying Agent to
  Hold Assets in Trust

  	
   

  
	
  Section 2.07.

  	
  General
  Provisions Relating to Transfer and Exchange

  	
   

  
	
  Section 2.08.

  	
  Book-Entry
  Provisions for the Global Securities

  	
   

  
	
  Section 2.09.

  	
  Special
  Transfer Provisions

  	
   

  
	
  Section 2.10.

  	
  Holder Lists

  	
   

  
	
  Section 2.11.

  	
  Persons
  Deemed Owners

  	
   

  
	
  Section 2.12.

  	
  Mutilated,
  Destroyed, Lost or Stolen Securities

  	
   

  
	
  Section 2.13.

  	
  Treasury
  Securities

  	
   

  
	
  Section 2.14.

  	
  Temporary
  Securities

  	
   

  
	
  Section 2.15.

  	
  Cancellation

  	
   

  
	
  Section 2.16.

  	
  CUSIP Numbers

  	
   

  
	
  Section 2.17.

  	
  Defaulted
  Interest

  	
   

  
	
  Section 2.18.

  	
  Rule
  144A and Regulation S

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 3

  SATISFACTION AND DISCHARGE

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 3.01.

  	
  Satisfaction
  and Discharge of Indenture

  	
   

  
	
  Section 3.02.

  	
  Deposited Monies
  to Be Held in Trust

  	
   

  
	
  Section 3.03.

  	
  Return
  of Unclaimed Monies

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 4

  DEFAULTS AND REMEDIES

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 4.01.

  	
  Events of
  Default

  	
   

  
	
  Section 4.02.

  	
  Acceleration
  of Maturity; Rescission and Annulment

  	
   

  
	
  Section 4.03.

  	
  Other Remedies

  	
   

  
	
  Section 4.04.

  	
  Waiver of
  Past Defaults

  	
   

  
	
  Section 4.05.

  	
  Control by
  Majority

  	
   

  
	
  Section 4.06.

  	
  Limitation on
  Suit

  	
   

  
	
  Section 4.07.

  	
  Unconditional
  Rights of Holders to Receive Payment and to Convert

  	
   

  
	
  Section 4.08.

  	
  Collection
  of Indebtedness and Suits for Enforcement by the Trustee

  	
   

  
	
  Section 4.09.

  	
  Trustee
  May File Proofs of Claim

  	
   

  
	
  Section 4.10.

  	
  Restoration
  of Rights and Remedies

  	
   

  
	
  Section 4.11.

  	
  Rights and
  Remedies

  	
   

  
	
  Section 4.12.

  	
  Delay
  or Omission Not Waiver

  	
   

  
	
  Section 4.13.

  	
  Application
  of Money Collected

  	
   

  
	
  Section 4.14.

  	
  Undertaking
  for Costs

  	
   

  
	
  Section 4.15.

  	
  Waiver
  of Stay or Extension Laws

  	
   

  



 


i

















 


	
  ARTICLE 5

  THE TRUSTEE

  	
   

  
	
   

  	
   

  
	
  Section 5.01.

  	
  Certain
  Duties and Responsibilities

  	
   

  
	
  Section 5.02.

  	
  Certain
  Rights of Trustee

  	
   

  
	
  Section 5.03.

  	
  Individual
  Rights of Trustee

  	
   

  
	
  Section 5.04.

  	
  Money Held in
  Trust

  	
   

  
	
  Section 5.05.

  	
  Trustee’s
  Disclaimer

  	
   

  
	
  Section 5.06.

  	
  Notice of
  Defaults

  	
   

  
	
  Section 5.07.

  	
  Reports
  by Trustee to Holders

  	
   

  
	
  Section 5.08.

  	
  Compensation
  and Indemnification

  	
   

  
	
  Section 5.09.

  	
  Replacement
  of Trustee

  	
   

  
	
  Section 5.10.

  	
  Successor
  Trustee by Merger, Etc

  	
   

  
	
  Section 5.11.

  	
  Corporate
  Trustee Required; Eligibility

  	
   

  
	
  Section 5.12.

  	
  Collection of
  Claims Against the Company

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 6

  CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 6.01.

  	
  Company
  May Consolidate, Etc., Only on Certain Terms

  	
   

  
	
  Section 6.02.

  	
  Successor
  Substituted

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 7

  AMENDMENTS, SUPPLEMENTS AND WAIVERS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 7.01.

  	
  Without
  Consent of Holders of Securities

  	
   

  
	
  Section 7.02.

  	
  With Consent of
  Holders of Securities

  	
   

  
	
  Section 7.03.

  	
  Compliance with
  Trust Indenture Act

  	
   

  
	
  Section 7.04.

  	
  Revocation
  of Consents and Effect of Consents or Votes

  	
   

  
	
  Section 7.05.

  	
  Notation on or
  Exchange of Securities

  	
   

  
	
  Section 7.06.

  	
  Trustee
  to Sign Amendment, Etc

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 8

  MEETING OF HOLDERS OF SECURITIES

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 8.01.

  	
  Purposes for
  Which Meetings May Be Called

  	
   

  
	
  Section 8.02.

  	
  Call
  Notice and Place of Meetings

  	
   

  
	
  Section 8.03.

  	
  Persons Entitled
  to Vote at Meetings

  	
   

  
	
  Section 8.04.

  	
  Quorum; Action

  	
   

  
	
  Section 8.05.

  	
  Determination
  of Voting Rights; Conduct and Adjournment of Meetings

  	
   

  
	
  Section 8.06.

  	
  Counting
  Votes and Recording Action of Meetings

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 9

  COVENANTS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 9.01.

  	
  Payment
  of Principal and Interest

  	
   

  
	
  Section 9.02.

  	
  Maintenance
  of Offices or Agencies

  	
   

  
	
  Section 9.03.

  	
  Corporate
  Existence

  	
   

  
	
  Section 9.04.

  	
  Reports

  	
   

  
	
  Section 9.05.

  	
  Compliance
  Certificate

  	
   

  
	
  Section 9.06.

  	
  Liquidated
  Damages

  	
   

  



 


ii

















 


	
  ARTICLE 10

  REDEMPTION OF SECURITIES

  	
   

  
	
  Section 10.01.

  	
  Optional
  Redemption

  	
   

  
	
  Section 10.02.

  	
  Notice to
  Trustee

  	
   

  
	
  Section 10.03.

  	
  Selection of
  Securities to be Redeemed

  	
   

  
	
  Section 10.04.

  	
  Notice of
  Redemption

  	
   

  
	
  Section 10.05.

  	
  Effect
  of Notice of Redemption

  	
   

  
	
  Section 10.06.

  	
  Deposit
  of Redemption Price

  	
   

  
	
  Section 10.07.

  	
  Securities
  Redeemed in Part

  	
   

  
	
  Section 10.08.

  	
  Conversion
  Arrangement On Call For Redemption

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 11

  PURCHASE OF SECURITIES

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 11.01.

  	
  Purchase Right
  Upon Fundamental Change

  	
   

  
	
  Section 11.02.

  	
  Purchase
  of Securities by the Company at Option of the Holder

  	
   

  
	
  Section 11.03.

  	
  Fundamental
  Change Notices; Method of Exercising Purchase Right, Etc

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 12

  CONVERSION OF SECURITIES

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 12.01.

  	
  Conversion Right
  and Conversion Rate

  	
   

  
	
  Section 12.02.

  	
  Exercise
  of Conversion Right

  	
   

  
	
  Section 12.03.

  	
  Fractions of
  Shares

  	
   

  
	
  Section 12.04.

  	
  Adjustment
  of Conversion Rate

  	
   

  
	
  Section 12.05.

  	
  Notice of
  Adjustments of Conversion Rate

  	
   

  
	
  Section 12.06.

  	
  Notice
  Prior to Certain Actions

  	
   

  
	
  Section 12.07.

  	
  Company
  to Reserve Common Stock

  	
   

  
	
  Section 12.08.

  	
  Taxed on
  Conversions

  	
   

  
	
  Section 12.09.

  	
  Covenant
  as to Common Stock

  	
   

  
	
  Section 12.10.

  	
  Cancellation of
  Converted Securities

  	
   

  
	
  Section 12.11.

  	
  Effect
  of Recapitalization, Reclassification, Consolidation, Merger or Sale

  	
   

  
	
  Section 12.12.

  	
  Responsibility
  of Trustee for Conversion Provisions

  	
   

  



 


iii

















 


	
  ARTICLE 13

  SUBORDINATION

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 13.01.

  	
  Securities
  Subordinated to Senior Debt

  	
   

  
	
  Section 13.02.

  	
  Subrogation

  	
   

  
	
  Section 13.03.

  	
  Obligation
  of the Company is Absolute and Unconditional

  	
   

  
	
  Section 13.04.

  	
  Maturity of or
  Default on Senior Debt

  	
   

  
	
  Section 13.05.

  	
  Payments
  on Securities Permitted

  	
   

  
	
  Section 13.06.

  	
  Effectuation
  of Subordination by Trustee

  	
   

  
	
  Section 13.07.

  	
  Knowledge of
  Trustee

  	
   

  
	
  Section 13.08.

  	
  Trustee’s
  Relation to Senior Debt

  	
   

  
	
  Section 13.09.

  	
  Rights of
  Holders of Senior Debt Not Impaired

  	
   

  
	
  Section 13.10.

  	
  Modification of
  Terms of Senior Debt

  	
   

  
	
  Section 13.11.

  	
  Certain
  Conversions Not Deemed Payment

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 14

  OTHER PROVISIONS OF GENERAL APPLICATION

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 14.01.

  	
  Trust
  Indenture Act Controls

  	
   

  
	
  Section 14.02.

  	
  Notices

  	
   

  
	
  Section 14.03.

  	
  Communication
  by Holders with Other Holders

  	
   

  
	
  Section 14.04.

  	
  Acts
  of Holders of Securities

  	
   

  
	
  Section 14.05.

  	
  Certificate
  and Opinion as to Conditions Precedent

  	
   

  
	
  Section 14.06.

  	
  Statements
  Required in Certificate or Opinion

  	
   

  
	
  Section 14.07.

  	
  Effect of
  Headings and Table of Contents

  	
   

  
	
  Section 14.08.

  	
  Successors
  and Assigns

  	
   

  
	
  Section 14.09.

  	
  Separability
  Clause

  	
   

  
	
  Section 14.10.

  	
  Benefits
  of Indenture

  	
   

  
	
  Section 14.11.

  	
  Governing Law

  	
   

  
	
  Section 14.12.

  	
  Counterparts

  	
   

  
	
  Section 14.13.

  	
  Legal Holidays

  	
   

  
	
  Section 14.14.

  	
  Recourse
  Against Others

  	
   

  



 


iv

















 


EXECUTION VERSION


 


INDENTURE, dated as of
May 18, 2004, between PIXELWORKS, INC., a corporation duly organized
and existing under the laws of the State of Oregon, having its principal office
at 8100 Nyberg Street, Suite 300, Tualatin, Oregon 97062 (the “Issuer” or the “Company”), and WELLS FARGO BANK, NATIONAL ASSOCIATION, a New
York banking corporation, as Trustee, as Trustee (the “Trustee”).


 


RECITALS OF THE COMPANY


 


The Company has duly
authorized the creation of an issue of its 1.75% Convertible Subordinated
Debentures due 2024 (herein called the “Securities”)
of substantially the tenor and amount hereinafter set forth, and to provide therefor
the Company has duly authorized the execution and delivery of this Indenture.


 


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


 


NOW, THEREFORE, THIS INDENTURE
WITNESSETH:


 


For and in consideration
of the premises and the purchase of the Securities by the Holders thereof, it
is mutually covenanted and agreed, for the equal and proportionate benefit of
all Holders of the Securities, as follows:


 


ARTICLE 1

DEFINITIONS AND INCORPORATION BY REFERENCE


 


Section 1.01.                             Definitions.    For all purposes
of this Indenture and the Securities, the following terms are defined as
follows:


 


“Act”, when used with respect to any Holder
of a Security, has the meaning specified in Section 14.04(a) hereof.


 


“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.


 


“Bankruptcy Law” means Title 11 of the U.S.
Code or any similar federal or state law for the relief of debtors.


 


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


 


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


 


“Business Day”, when used with respect to
any Place of Payment or Place of Conversion, means each Monday, Tuesday,
Wednesday, Thursday and Friday which is not a day on which banking institutions
in that Place of Payment or Place of Conversion, as the case may be, are
authorized or obligated by law to close.


 


“Chief Executive Officer” means the chief
executive officer of the Company.


 

















 


“Closing Price” of any security on any date
of determination means:


 


(1)                                  the closing sale price (or, if no closing
sale price is reported, the last reported sale price) of such security (regular
way) on the New York Stock Exchange on such date;


 


(2)                                  if such security is not listed for
trading on the New York Stock Exchange on any such date, the closing sale price
as reported in the composite transactions for the principal U.S. securities
exchange on which such security is so listed;


 


(3)                                  if such security is not so listed on a
U.S. national or regional securities exchange, the closing sale price as
reported by the Nasdaq National Market;


 


(4)                                  if such security is not so reported, the
last quoted bid price for such security in the over-the-counter market as
reported by the National Quotation Bureau or similar organization; or


 


(5)                                  if such bid price is not available, the
average of the mid-point of the last bid and ask prices of such security on
such date from at least three nationally recognized independent investment
banking firms retained for this purpose by the Company.


 


“Common Stock” means any stock of any class
of the Company which has no preference in respect of dividends or of amounts
payable in the event of any voluntary or involuntary liquidation, dissolution
or winding up of the Company and which is not subject to redemption by the
Company. However, subject to the provisions of Section 12.11 hereof,
shares issuable on conversion of Securities shall include only shares of the
class designated as Common Stock, par value $0.001 per share, of the Company at
the Issue Date or shares of any class or classes resulting from any
reclassification or reclassifications thereof and which have no preference in
respect of dividends or of amounts payable in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Company and which are
not subject to redemption by the Company, provided,
however, that if at any time
there shall be more than one such resulting class, the shares of each such
class then so issuable shall be substantially in the proportion which the total
number of shares of such class resulting from all such reclassifications bears
to the total number of shares of all such classes resulting from all such
reclassifications.


 


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


 


“Company Notice” has the meaning specified
in Section 11.03 hereof.


 


“Company Order” means a written order signed
in the name of the Company by both (1) the Chief Executive Officer, the
President or a Vice President and (2) so long as not the same as the
officer signing pursuant to clause (1), the Chief Financial Officer, the
Treasurer, the Secretary or any Assistant Secretary of the Company, and
delivered to the Trustee.


 


“Continuing Directors” means a director who
either was a member of our board of directors on May 12, 2004 or who
becomes a member of our board of directors subsequent to that date and whose
appointment, election or nomination for election by our stockholders is duly
approved by a majority of the continuing directors on our board of directors at
the time of such approval, either by a specific vote or by approval of the
proxy statement issued by the Company on behalf of the board of directors in
which such individual is named as nominee for director.


 


“Conversion Agent” means any Person
authorized by the Company to convert Securities in accordance with
Article 12 hereof.


 


“Conversion Price” as of any day will equal
$1,000 divided by the Conversion Rate as of such date.


 


2

















 


“Conversion Rate” has the meaning specified
in Section 12.01 hereof.


 


“Corporate Trust Office” means for purposes
of presentation or surrender of Securities for payment, registration, transfer,
exchange or conversion or for service of notices or demands upon the Company,
the office of Wells Fargo Bank, National Association, located in the City of
New York (which at the Issue Date is located at 45 Broadway, 12th
Floor, New York, NY 10006-3007, and for all other purposes, the office of the
Trustee located in the City of Los Angeles, California (which at the Issue Date
is located at 707 Wilshire Boulevard, 17th Floor, Los Angeles,
California 90017).


 


“Current Market Price” has the meaning set
forth in Section l2.4(g).


 


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


 


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


 


“Defaulted Interest” has the meaning
specified in Section 2.17 hereof.


 


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


 


“Designated Senior Debt” means Senior Debt
of the Company which, on the date of a payment event of default or the delivery
of a Payment Blockage Notice, has an aggregate amount outstanding of, or under
which, on such date, the holders thereof are committed to lend up to, at least
$1.0 million and is specifically designated in the instrument, agreement
or other document evidencing or governing that Senior Debt as “Designated Senior Debt” for purposes of
this Indenture.


 


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


 


“DTC Participants” has the meaning specified
in Section 2.08 hereof.


 


“Event of Default” has the meaning specified
in Section 4.01 hereof.


 


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


 


“Expiration Time” has the meaning specified
in Section 12.04(f) hereof.


 


“fair market value” has the meaning set
forth in Section 12.04(g) hereof.


 


“Fundamental Change” means the occurrence of
any of the following after the Issue Date:


 


(1)                                  a “person” or “group” within the meaning
of Section 13(d) of the Exchange Act other than the Company, its
subsidiaries or the Company’s or its subsidiaries’ employee benefit plans,
files a Schedule TO or any schedule, form or report under the Exchange Act
disclosing that such person or group has become the direct or indirect ultimate
“beneficial owner,” as defined in Rule 13d-3 under the Exchange Act, of
the Common Stock representing more than 50% of the voting power of the
Company’s Common Stock entitled to vote generally in the election of directors;


 


(2)                                  consummation of any share exchange,
consolidation or merger of the Company pursuant to which its Common Stock will
be converted into cash, securities or other property or any sale, lease or
other transfer in one transaction or a series of transactions of all or
substantially all of the consolidated assets of the Company and its
subsidiaries, taken as a whole, to any person other than the Company or one or
more of its subsidiaries; provided, however, that a transaction where the
holders of the Company’s Common Stock immediately prior to such transaction
have directly or indirectly, more than 50% of the aggregate voting power of all
classes of Common Stock of the


 


3

















 


continuing or surviving
corporation or transferee entitled to vote generally in the election of
directors immediately after such event shall not be a Fundamental Change; or


 


(3)                                  Continuing Directors cease to constitute
at least a majority of the Board of Directors.


 


However, a Fundamental
Change will not be deemed to have occurred if:


 


 (x)                                the daily market price per share of
Common Stock for any five Trading Days within the period of 10 consecutive
Trading Days beginning immediately after the later of the Fundamental Change or
the public announcement of the Fundamental Change (in the case of a
clause (1) or (3) above) or the period of 10 consecutive Trading Days
ending immediately before the Fundamental Change (in the case of
clause (2) above) shall equal or exceed 110% of the Conversion Price of
the Securities in effect on the date of the Fundamental Change or the public
announcement of the Fundamental Change, as applicable; or


 


 (y)                              in the case of the clause (2) above,
at least 95% of the consideration (excluding cash payments for fractional
shares or dissenters’ appraisal rights) in the transaction or transactions
constituting the Fundamental Change consists of shares of common stock that
are, or upon issuance will be, traded on the New York Stock Exchange or quoted
on the Nasdaq National Market.


 


Beneficial ownership
shall be determined in accordance with Rule 13d-3 promulgated by the SEC
under the Exchange Act. The term “person”
shall include any syndicate or group which would be deemed to be a “person” under Section 13(d)(3) of the
Exchange Act.


 


“Global Security” has the meaning specified
in Section 2.02 hereof.


 


“Guarantee” means any obligation, contingent
or otherwise, of any Person, directly or indirectly guaranteeing any
Indebtedness of any other Person and any obligation, direct or indirect,
contingent or otherwise, of such Person:


 


(1)                                  to purchase or pay (or advance or supply
finds for the purchase or payment of) such Indebtedness of such other Person
(whether arising by virtue of partnership arrangements, or by agreement to
keep-well, to purchase assets, goods, securities or services, to take-or-pay,
or maintain financial statement conditions or otherwise); or


 


(2)                                  entered into for purposes of assuring in
any other manner the obligee of such Indebtedness of the payment thereof or to
protect such obligee against loss in respect thereof (in whole or in part);


 


provided, however, that the term “guarantee” will not include endorsements
for collection or deposit in the ordinary course of business. The term “guarantee” used as a verb has a
corresponding meaning.


 


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


 


“Indebtedness”, when used with respect to
any Person, and without duplication means:


 


(1)                                  all indebtedness, obligations and other
liabilities (contingent or otherwise) of such Person for borrowed money
(including obligations of the Company in respect of overdrafts, foreign
exchange contracts, currency exchange agreements, Interest Rate Protection
Agreements, and any loans or advances from banks, whether or not evidenced by
notes or similar instruments) or evidenced by bonds, debentures, notes or other
instruments for the payment of money, or incurred in connection with the
acquisition of any property, services or assets (whether or not the recourse of
the lender is to the whole of the assets of such Person or to only a portion thereof),
other than any account payable or other accrued current liability or obligation
to trade creditors incurred in the ordinary course of business in connection
with the obtaining of materials or services;


 


4

















 


(2)                                  all reimbursement obligations and other
liabilities (contingent or otherwise) of such Person with respect to letters of
credit, bank guarantees, bankers’ acceptances, surety bonds, performance bonds
or other guaranty of contractual performance;


 


(3)                                  all obligations and liabilities
(contingent or otherwise) in respect of (a) leases of such Person
required, in conformity with generally accepted accounting principles, to be
accounted for as capitalized lease obligations on the balance sheet of such Person
and (b) any lease or related documents (including a purchase agreement) in
connection with the lease of real property which provides that such Person is
contractually obligated to purchase or cause a third party to purchase the
leased property and thereby guarantee a minimum residual value of the leased
property to the landlord and the obligations of such Person under such lease or
related document to purchase or to cause a third party to purchase the leased
property;


 


(4)                                  all obligations of such Person
(contingent or otherwise) with respect to an interest rate or other swap, cap
or collar agreement or other similar instrument or agreement or foreign
currency hedge, exchange, purchase or similar instrument or agreement;


 


(5)                                  all direct or indirect guaranties or
similar agreements by such Person in respect of, and obligations or liabilities
(contingent or otherwise) of such Person to purchase or otherwise acquire or
otherwise assure a creditor against loss in respect of, indebtedness,
obligations or liabilities of another Person of the kind described in clauses
(1) through (4);


 


(6)                                  any indebtedness or other obligations
described in clauses (1) through (4) secured by any mortgage, pledge,
lien or other encumbrance existing on property which is owned or held by such
Person, regardless of whether the indebtedness or other obligation secured
thereby shall have been assumed by such Person; and


 


(7)                                  any and all deferrals, renewals,
extensions, refinancings, replacements, restatements and refundings of, or amendments,
modifications or supplements to, any indebtedness, obligation or liability of
the kind described in clauses (1) through (6).


 


“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.


 


“Initial Purchasers” means Citigroup Global
Markets Inc. and D.A. Davidson & Co.


 


“Interest Payment Date” means each
May 15 and November 15.


 


“Interest Rate” means 1.75% per annum.


 


“Interest Rate Protection Agreement” means,
with respect to any Person, any interest rate swap agreement, interest rate cap
or collar agreement or other financial agreement or arrangement designed to
protect such Person against fluctuations in interest rates, as in effect from
time to time.


 


“Issue Date” means May 18, 2004.


 


“Liquidated Damages” means all liquidated
damages, if any, payable pursuant to Section 7 of the Registration Rights
Agreement.


 


“Maturity” means the date on which the
principal of such Security becomes due and payable as therein or herein
provided, whether at the Stated Maturity or by acceleration, conversion, call
for redemption, exercise of a Purchase Right or a Put Purchase Right or
otherwise.


 


“Nasdaq National Market” means the National
Association of Securities Dealers Automated Quotation National Market or any
successor national securities exchange or automated over-the-counter trading
market in the United States.


 


5

















 


“Non-Electing Share” has the meaning
specified in Section 12.11 hereof.


 


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


 


“Officers’ Certificate” means a certificate
signed by both (1) the Chief Executive Officer, the President or a Vice
President and (2) so long as not the same as the officer signing pursuant
to clause (1), the Chief Financial Officer, the Treasurer or the Secretary
of the Company, and delivered to the Trustee.


 


“Opinion of Counsel” means a written opinion
of counsel, who may be counsel to the Company (and may include directors or
employees of the Company) and which opinion is acceptable to the Trustee, which
acceptance shall not be unreasonably withheld or delayed.


 


“Optional Redemption Price” has the meaning
specified in Section 10.01 hereof.


 


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


 


(1)                                  previously canceled by the Trustee or
delivered to the Trustee for cancellation;


 


(2)                                  for the payment or redemption of which
money in the necessary amount has been previously deposited with the Trustee or
any Paying Agent (other than the Company) in trust or set aside and segregated
in trust by the Company (if the Company shall act as its own Paying Agent) for
the Holders of such Securities, provided,
however, that if such Securities
are to be redeemed, notice of such redemption has been duly given pursuant to
this Indenture; and


 


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


 


“Paying Agent” has the meaning specified in
Section 2.05 hereof.


 


“Payment Blockage Notice” has the meaning
specified in Section 13.01(d) hereof.


 


“Payment Blockage Period” has the meaning
specified in Section 13.01(d) hereof.


 


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


 


“Physical Securities” has the meaning specified
in Section 2.02 hereof.


 


“Place of Conversion” means any city in
which any Conversion Agent is located.


 


“Place of Payment” means any city in which
any Paying Agent is located.


 


“Predecessor Security” of any particular
Security means every previous Security evidencing all or a portion of the same
debt as that evidenced by such particular Security; and, for the purposes of
this definition, any Security authenticated and delivered under
Section 2.12 hereof in exchange for or in lieu of a mutilated, destroyed,
lost or stolen Security shall be deemed to evidence the same debt as the
mutilated, destroyed, lost or stolen Security.


 


“Purchase Agreement” means the Purchase
Agreement, dated May 12, 2004, among the Company and the Initial
Purchasers.


 


“Purchase Date” has the meaning specified in
Section 11.01 hereof.


 


6

















 


“Purchase Notice” has the meaning specified
in Section 11.02 hereof.


 


“Purchase Price” has the meaning specified
in Section 11.01 hereof.


 


“Purchase Right” has the meaning specified
in Section 11.01 hereof.


 


“Put Purchase Date” has the meaning
specified in Section 11.02 hereof.


 


“Put Purchase Price” has the meaning
specified in Section 11.02 hereof.


 


“Put Purchase Right” has the meaning
specified in Section 11.02 hereof.


 


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


 


“Quoted Price” of the Common Stock means the
last reported sale price of the Common Stock on the Nasdaq National Market or,
if the Common Stock is listed on a national securities exchange, then on such
exchange, or if the Common Stock is not quoted on Nasdaq National Market or
listed on an exchange, the average of the last bid and asked price on the
National Association of Securities Dealers Automated Quotation System.


 


“Record Date” means either a Regular Record
Date or a Special Record Date, as the case may be, provided that, for purposes of Section 12.04 hereof,
Record Date has the meaning specified in Section 12.04(g) hereof.


 


“Redemption Date”, when used with respect to
any Security to be redeemed, means the optional redemption date, in the event
of an optional redemption.


 


“Redemption Price”, when used with respect
to any Security to be redeemed, means the Optional Redemption Price, in the
event of an optional redemption.


 


“Reference Period” has the meaning set forth
in Section 12.04(d) hereof.


 


“Register” has the meaning specified in
Section 2.05 hereof.


 


“Registrar” has the meaning specified in
Section 2.05 hereof.


 


“Registration Rights Agreement” means the
Registration Rights Agreement, dated as of May 18, 2004, among the Company
and the Initial Purchasers.


 


“Regular Record Date” for the interest on
the Securities (including Liquidated Damages, if any) payable means the
May 1 (whether or not a Business Day) next preceding a May 15
Interest Payment Date and the November 1 (whether or not a Business Day)
next preceding an November 15 Interest Payment Date.


 


“Regulation S” means Regulation S
promulgated under the Securities Act.


 


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


 


“Restricted Period” means the applicable
distribution compliance period under Regulation S.


 


“Restricted Securities” means the Securities
defined as such in Section 2.03 hereof.


 


“Restricted Securities Legend” has the
meaning set forth in Section 2.03(a) hereof.


 


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


 


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


 


7

















 


“SEC” means the Securities and Exchange
Commission.


 


“Securities” has the meaning ascribed to it
in the first paragraph under the caption “Recitals of the Company”.


 


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


 


“Senior Debt” means the principal of,
premium, if any, interest (including all interest accruing subsequent to the
commencement of any bankruptcy or similar proceeding, whether or not a claim
for post-petition interest is allowable as a claim in any such proceeding) and
rent payable on or termination payment with respect to or in connection with,
and all fees, costs, expenses and other amounts accrued or due on or in
connection with, Indebtedness of the Company, whether outstanding on the Issue
Date or subsequently created, incurred, assumed, guaranteed or in effect
guaranteed by the Company (including all deferrals, renewals, extensions or refundings
of, or amendments, modifications or supplements to, the foregoing), except for
(a) any particular Indebtedness in respect of which the instrument
creating or evidencing the same or the assumption or guarantee thereof
expressly provides that such Indebtedness shall not be senior in right of
payment to the Securities or expressly provides that such Indebtedness is pari
passu or junior to the Securities; (b) any Indebtedness between or among
the Company and/or any of its Subsidiaries; and (c) the Company’s trade
payables and accrued expenses for goods, services or materials purchased or
provided in the ordinary course of business. The term “Senior Debt” shall
include, without limitation, all Designated Senior Debt.


 


“Special Record Date” for the payment of any
Defaulted Interest means a date fixed by the Company pursuant to
Section 2.17 hereof.


 


“Stated Maturity” means the date specified
in any Security as the fixed date for the payment of principal on such Security
or on which an installment of interest (including Liquidated Damages, if any)
on such Security is due and payable.


 


“Subsidiary” means a corporation more than
50% of the outstanding voting stock 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 only, “voting
stock” means stock which ordinarily has voting power for the election of
directors, whether at all times or only so long as no senior class of stock has
such voting power by reason of any contingency.


 


“TIA” means the Trust Indenture Act of 1939
(15 U.S. Code §77aaa-77bbbb), as in effect on the Issue Date; provided, however,
that in the event the TIA is amended after such date, “TIA” means, to the
extent required by such amendment, the Trust Indenture Act of 1939, as so
amended, or any successor statute.


 


“Trading Day” means a day during which
trading in securities generally occurs on The New York Stock Exchange or, if
the Common Stock is not then listed on The New York Stock Exchange, on the
principal other national or regional securities exchange on which the Common
Stock is then listed or, if the Common Stock is not then listed on a national
or regional securities exchange, on the Nasdaq National Market or, if the
Common Stock is not then quoted on the Nasdaq National Market, on the principal
other market on which the Common Stock is traded.


 


“Trading Price” of the Securities on any
date of determination means the average of the secondary market bid quotations
per $1,000 principal amount of Securities obtained by the Trustee for
$5,000,000 principal amount of the Securities at approximately 3:30 p.m.,
New York City time, on such determination date from three independent
nationally recognized securities dealers selected by the Company; provided, however,
that if three such bids cannot reasonably be obtained by the Trustee, but two
such bids are obtained, then the average of the two bids shall be used, and if
only one such bid can reasonably be obtained by the Trustee, this one bid shall
be used. If the Trustee cannot reasonably obtain at least one bid for
$5,000,000 principal amount of Securities from a nationally recognized


 


8

















 


securities dealer, then the trading price per $1,000
principal amount of Securities shall be deemed to be less than 98% of the
product of the sale price (as defined in the Securities) of the Common Stock
and the then applicable Conversion Rate.


 


“Transfer Agent” means any Person, which may
be the Company, authorized by the Company to exchange or register the transfer
of Securities.


 


“Trigger Event” has the meaning specified in
Section 12.04(d) hereof.


 


“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.


 


“U.S. Person” has the meaning specified in
Regulation S.


 


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


 


Section 1.02.                             Incorporation by
Reference of Trust Indenture Act.    Whenever this Indenture refers
to a provision of the TIA, the provision is incorporated by reference in and
made a part of this Indenture.


 


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


 


(i)  “indenture securities” means the Securities;


 


(ii)  “indenture security holder” means a Holder;


 


(iii)  “indenture to be qualified” means this
Indenture;


 


(iv)  “indenture trustee” or “institutional trustee” means the Trustee;
and


 


(v)  “obligor” on the Securities means the
Company and any other obligor on the indenture securities.


 


All other TIA terms used
in this Indenture that are defined by the TIA, defined by TIA reference to
another statute or defined by SEC rule have the meanings assigned to them by
such definitions.


 


Section 1.03.                             Rules of Construction.    For all purposes
of this Indenture, except as otherwise expressly provided or unless the context
otherwise requires:


 


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


 


(ii)  all
accounting terms not otherwise defined herein have the meanings assigned to
them in accordance with accounting principles generally accepted in the United
States prevailing at the time of any relevant computation hereunder; and


 


(iii)  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.


 


9

















 


ARTICLE 2

THE SECURITIES


 


Section 2.01.                             Title and Terms.    The Securities
shall be known and designated as the “1.75% Convertible Subordinated Debentures
due 2024” of the Company. The aggregate principal amount of Securities which
may be authenticated and delivered under this Indenture is limited to
$125,000,000 (or $150,000,000 if the option set forth in Section 2(b) of
the Purchase Agreement is exercised in full), except for securities
authenticated and delivered upon registration of, transfer of, or in exchange
for, or in lieu of other Securities pursuant to Section 2.07, 2.08, 2.09,
2.12, 7.05, 10.07, 11.01 or 12.02 hereof. The Securities shall be issuable in
denominations of $1,000 or multiples thereof.


 


The Securities shall
mature on May 15, 2024.


 


Interest shall accrue
from May 18, 2004 at the Interest Rate until the principal thereof is paid
or made available for payment. Interest shall be payable semiannually in
arrears on May 15 and November 15 of each year, commencing
November 15, 2004.


 


Interest on the
Securities shall be computed on the basis of a 360-day year of twelve 30-day
months, and for any period shorter than a full semiannual period for which
interest is calculated, on the basis of a 30-day month, and for such periods of
less than a month, the actual number of days elapsed over a 30-day month.


 


Subject to
Section 2.17, a Holder of any Security at the close of business on a
Regular Record Date shall be entitled to receive interest (including Liquidated
Damages, if any) on such Security on the corresponding Interest Payment Date.


 


A Holder of any Security
which is converted after the close of business on a Regular Record Date and
prior to the corresponding Interest Payment Date (other than any Security whose
Maturity is prior to such Interest Payment Date) shall be entitled to receive
interest (including Liquidated Damages, if any) on the principal amount of such
Security on such Interest Payment Date, notwithstanding the conversion of such
Security prior to such Interest Payment Date. However, any such Holder which
surrenders any such Security for conversion during the period between the close
of business on such Regular Record Date and ending with the opening of business
on the corresponding Interest Payment Date shall be required to pay the Company
an amount equal to the interest (excluding Liquidated Damages, if any) on the
principal amount of such Security so converted (but excluding any Defaulted
Interest or on the principal amount of such Security so converted that exists
at the time such Holder surrenders such Security for conversion), which is
payable by the Company to such Holder on such Interest Payment Date, at the
time such Holder surrenders such Security for conversion. Notwithstanding the
foregoing, any such Holder which surrenders for conversion any Security (a) which
has been called for redemption by the Company in a notice of redemption given
by the Company pursuant to Section 10.04 hereof on a Redemption Date after
such Regular Record Date and on or prior to the next succeeding Interest
Payment Date or (b) with respect to which the Company has specified a
Purchase Date that is after such Regular Record Date and on or prior to the
next succeeding Interest Payment Date, in either case, shall be entitled to
receive (and retain) such interest and need not pay the Company an amount equal
to the interest on the principal amount of such Security so converted at the
time such Holder surrenders such Security for conversion.


 


Principal of and interest
on, Global Securities shall be payable to the Depositary in immediately available
funds.


 


Principal on Physical
Securities shall be payable at the office or agency of the Company maintained
for such purpose, initially the Corporate Trust Office of the Trustee. Interest
on Physical Securities will be payable by (i) U.S. Dollar check drawn on a
bank located in the city where the Corporate Trust Office of the Trustee is
located mailed to the address of the Person entitled thereto as such address
shall appear in the Register, or (ii) upon application to the Registrar
not later than the


 


10

















 


relevant Record Date by a Holder of an aggregate
principal amount in excess of $5,000,000, wire transfer in immediately
available funds.


 


The Securities shall be
redeemable at the option of the Company as provided in Article 10 hereof.


 


The Securities shall have
the Purchase Rights exercisable at the option of Holders as provided in
Article 11 hereof.


 


The Securities shall be
convertible as provided in Article 12 hereof.


 


The Securities shall be
subordinated in right of payment to Senior Debt of the Company as provided in
Article 13 hereof.


 


Section 2.02.                             Form of Securities.    The Securities
and the Trustee’s certificate of authentication to be borne by such Securities
shall be substantially in the form annexed hereto as Exhibit A, which is
incorporated in and made a part of this Indenture. The terms and provisions
contained in the form of Security 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.


 


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


 


The Securities will be
offered and sold only to QIBs in reliance on Rule 144A and outside the
United States in accordance with Regulation S and shall be issued
initially only in the form of one or more permanent Global Securities (each, a
“Global Security”) in registered
form without interest coupons. The Global Securities shall be:


 


(1)  duly
executed by the Company and authenticated by the Trustee as hereinafter
provided;


 


(2)  registered
in the name of the Depositary (or its nominee) for credit to the respective
accounts of the Holders at the Depositary; and


 


(3)  deposited
with the Trustee, as custodian for the Depositary.


 


The Global Securities
shall be substantially in the form of Security set forth in Exhibit A
annexed hereto (including the text and schedule called for by footnotes 1
and 2 thereto). The aggregate principal amount of the Global Securities may
from time to time be increased or decreased by adjustments made on the records
of the Trustee as required by Section 2.9, as custodian for the Depositary
(or its nominee), in accordance with the instructions given by the Holder
thereof, as hereinafter provided.


 


Securities issued in
exchange for interests in the Global Securities pursuant to
Section 2.08(d) hereof shall be issued in the form of permanent definitive
Securities (the “Physical Securities”)
in registered form without interest coupons. The Physical Securities shall be
substantially in the form set forth in Exhibit A annexed hereto.


 


The Securities shall be
typed, printed, lithographed or engraved or produced by any combination of
these methods or may be produced in any other manner permitted by the rules of
any securities exchange on which the Securities may be listed, all as
determined by the Officers executing such Securities, as evidenced by their
execution of such Securities.


 


Section 2.03.                             Legends.    (a) Restricted Securities Legends.    Each
Security issued hereunder shall, upon issuance, bear the legend set forth in
Section 2.03(a)(i) or Section 2.03(a)(ii) (each, a “Restricted


 


11

















 


Securities Legend”), as the case may be, and such legend
shall not be removed except as provided in Section 2.03(a)(iii). Each
Security that bears or is required to bear the Restricted Securities Legend set
forth in Section 2.03(a)(i) (together with any Common Stock issued
upon conversion of the Securities and required to bear the Restricted
Securities Legend set forth in Section 2.03(a)(ii), collectively, the “Restricted Securities”) shall be subject to
the restrictions on transfer set forth in this Section 2.03(a) (including
the Restricted Securities Legend set forth below), and the Holder of each such
Restricted Security, by such Holder’s acceptance thereof, shall be deemed to
have agreed to be bound by all such restrictions on transfer.


 


As used in
Section 2.03(a), the term “transfer”
encompasses any sale, pledge, transfer or other disposition whatsoever of any
Restricted Security.


 


(i)                                     Restricted
Securities Legend for Securities.    Except as provided
in Section 2.03(a)(iii), until the expiration of the holding period
applicable to sales thereof under Rule 144(k) under the Securities Act (or
any successor provision), any certificate evidencing such Security (and all
securities issued in exchange therefor or substitution thereof, other than
Common Stock, if any, issued upon conversion thereof, which shall bear the
legend set forth in Section 2.03(a)(ii), if applicable) shall bear a
Restricted Securities Legend in substantially the following form:


 


THIS DEBENTURE (OR ITS
PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION
UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE “SECURITIES ACT”), AND THIS
DEBENTURE AND THE COMMON STOCK ISSUABLE UPON CONVERSION THEREOF MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR
AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS DEBENTURE IS HEREBY
NOTIFIED THAT THE SELLER OF THIS DEBENTURE MAY BE RELYING ON THE EXEMPTION FROM
THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A OR
REGULATION S THEREUNDER.


 


THE HOLDER OF THIS
DEBENTURE AGREES FOR THE BENEFIT OF PIXELWORKS, INC. THAT (A) THIS
DEBENTURE AND THE COMMON STOCK ISSUABLE UPON CONVERSION THEREOF MAY BE OFFERED,
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (I) IN THE UNITED STATES TO
A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
(AS DEFINED IN RULE l44A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE l44A, (II) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION
IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT, (III) PURSUANT
TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER (IF AVAILABLE), OR (IV) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH
(IV) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES, (B) THE HOLDER WILL NOT, DIRECTLY OR INDIRECTLY, ENGAGE IN
ANY HEDGING TRANSACTION WITH REGARD TO THIS SECURITY OR ANY COMMON STOCK
ISSUABLE UPON CONVERSION OF THIS SECURITY EXCEPT IN COMPLIANCE WITH THE
SECURITIES ACT, AND (C) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS
REQUIRED TO, NOTIFY ANY PURCHASER OF THIS DEBENTURE FROM IT OF THE RESTRICTIONS
REFERRED TO IN (A) AND (B) ABOVE.


 


(ii)                                  Restricted
Securities Legend for Common Stock Issued upon Conversion of the Securities.    Except
as provided in Section 2.03(a)(iii), until the expiration of the holding
period applicable to


 


12

















 


sales thereof under
Rule 144(k) under the Securities Act (or any successor provision), any
stock certificate representing Common Stock issued upon conversion of such
Security shall bear a Restricted Securities Legend in substantially the
following form:


 


THE COMMON STOCK
EVIDENCED HEREBY (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933 (THE “SECURITIES ACT”). THE HOLDER OF THIS
CERTIFICATE AGREES FOR THE BENEFIT OF PIXELWORKS, INC. (THE “COMPANY”)
THAT (A) THE COMMON STOCK EVIDENCED HEREBY MAY OFFERED, RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED, ONLY (I) IN THE UNITED STATES TO A PERSON WHOM THE
SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS
OF RULE 144A, IF AVAILABLE, (II) OUTSIDE THE UNITED STATES IN AN OFFSHORE
TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT,
(III) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), OR (IV) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES
(I) THROUGH (IV) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF
ANY STATE OF THE UNITED STATES, (B) THE HOLDER WILL NOT, DIRECTLY OR
INDIRECTLY, ENGAGE IN ANY HEDGING TRANSACTION WITH REGARD TO THIS COMMON STOCK
EXCEPT IN COMPLIANCE WITH THE SECURITIES ACT, AND (C) THE HOLDER WILL, AND
EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THE COMMON STOCK
EVIDENCED HEREBY FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) AND
(B) ABOVE.


 


(iii)                               Removal
of the Restricted Securities Legends.    Each Security
or share of Common Stock issued upon conversion of such Security shall bear the
Restricted Securities Legend set forth in Section 2.03(a)(i) or
2.03(a)(ii), as the case may be, until the earlier of:


 


(A)                                            the expiration of the holding period
applicable to sales thereof under Rule 144(k) under the Securities Act (or
any successor provision);


 


(B)                                              such Security or Common Stock has been
sold pursuant to a registration statement that has been declared effective
under the Securities Act (and which continues to be effective at the time of
such sale); or


 


(C)                                              such Common Stock has been issued upon
conversion of Securities that have been sold pursuant to a registration
statement that has been declared effective under the Securities Act (and which
continues to be effective at the time of such sale).


 


The Holder must give
notice thereof to the Trustee and any transfer agent for the Common Stock, as
applicable.


 


Notwithstanding the
foregoing, the Restricted Securities Legend may be removed if there is
delivered to the Company such satisfactory evidence, which may include an
opinion of independent counsel, as may be reasonably required by the Company,
that neither such legend nor the restrictions on transfer set forth therein are
required to ensure that transfers of such Security will not violate the
registration requirements of the Securities Act. Upon provision of such
satisfactory evidence, the Trustee, at the written direction of the Company,
shall authenticate and deliver in exchange for such Securities another Security
or Securities having an equal aggregate principal amount that does not bear
such legend. If the Restricted Securities Legend has been removed from a
Security as provided above, no other Security issued in exchange for all or any
part of such Security shall bear such legend, unless


 


13

















 


the Company has reasonable cause to believe that such
other Security is a “restricted security” within the meaning of Rule 144
and instructs the Trustee in writing to cause a Restricted Securities Legend to
appear thereon.


 


Any Security (or security
issued in exchange or substitution thereof) as to which such restrictions on
transfer shall have expired in accordance with their terms or as to which the
conditions for removal of the Restricted Securities Legend set forth in
Section 2.03(a)(i) as set forth therein have been satisfied may, upon
surrender of such Security for exchange to the Registrar in accordance with the
provisions of Section 2.07 hereof, be exchanged for a new Security or
Securities, of like tenor and aggregate principal amount, which shall not bear the
Restricted Securities Legend required by Section 2.03(a)(i).


 


Any such Common Stock as
to which such restrictions on transfer shall have expired in accordance with
their terms or as to which the conditions for removal of the Restricted
Securities Legend set forth in Section 2.03(a)(ii) as set forth
therein have been satisfied may, upon surrender of the certificates
representing such shares of Common Stock for exchange in accordance with the
procedures of the transfer agent for the Common Stock, be exchanged for a new
certificate or certificates for a like aggregate number of shares of Common
Stock, which shall not bear the Restricted Securities Legend required by
Section 2.03(a)(ii).


 


(b)  Global Security Legend.    Each
Global Security shall also bear the following legend on the face thereof:


 


UNLESS THIS CERTIFICATE
IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY
(“DTC”) TO PIXELWORKS, INC. (OR ITS SUCCESSOR) OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE, CONVERSION OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER ENTITY
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON
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 SINCE THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.


 


Section 2.04.                             Execution,
Authentication, Delivery and Dating.    Two Officers shall execute the
Securities on behalf of the Company by manual or facsimile signature. If an
Officer whose signature is on a Security no longer holds that office at the
time the Security is authenticated, the Security shall be valid nevertheless.


 


At any time and from time
to time after the execution and delivery of this Indenture, the Company may
deliver Securities executed by the Company to the Trustee for authentication,
together with a Company Order for the authentication and delivery of such
Securities, and the Trustee in accordance with such Company Order shall
authenticate and deliver such Securities as in this Indenture provided and not
otherwise.


 


Each Security shall be
dated the date of its authentication.


 


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


 


14

















 


The Trustee may appoint
an authenticating agent or agents reasonably acceptable to the Company with
respect to the Securities. 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.


 


Section 2.05.                             Registrar and Paying
Agent.    The
Company shall maintain an office or agency where Securities may be presented
for registration of transfer or for exchange (the “Registrar”) and an office or agency where Securities may be
presented for payment (the “Paying Agent”).
The Registrar shall keep a register of the Securities (the “Register”) and of their transfer and
exchange. The Company may appoint one or more co-Registrars and one or more
additional Paying Agents for the Securities. The term “Paying Agent” includes
any additional paying agent and the term “Registrar” includes any additional
registrar. The Company may change any Paying Agent or Registrar without prior notice
to any Holder.


 


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


 


(i)  hold
all sums held by it for the payment of the principal of or interest (including
Liquidated Damages, if any) on Securities in trust for the benefit of the
Persons entitled thereto until such sums shall be paid to such Persons or otherwise
disposed of as provided in this Indenture;


 


(ii)  give
the Trustee notice of any Default by the Company in the making of any payment
of principal or interest (including Liquidated Damages, if any); and


 


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


 


The Company shall give
prompt written notice to the Trustee of the name and address of any Paying
Agent who is not a party to this Indenture. If the Company fails to appoint or
maintain another entity as Registrar or Paying Agent, the Trustee shall act as
such. The Company or any Affiliate of the Company may act as Paying Agent or
Registrar; provided, however, that none of the Company, its
Subsidiaries or the Affiliates of the foregoing shall act:


 


(i)  as
Paying Agent in connection with redemptions, offers to purchase and discharges,
as otherwise specified in this Indenture, and


 


(ii)  as
Paying Agent or Registrar if a Default or Event of Default has occurred and is
continuing.


 


The Company hereby
initially appoints the Trustee as Registrar and Paying Agent for the
Securities.


 


Section 2.06.                             Paying Agent to Hold
Assets in Trust.    Not
later than 12:00 Noon (New York City time) on each due date of the principal
and interest (including Liquidated Damages, if any) on any Securities, the
Company shall deposit with one or more Paying Agents money in immediately
available funds sufficient to pay such principal and interest (including
Liquidated Damages, if any) so becoming due. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee. Upon payment
over to the Trustee, the Paying Agent (if other than the Company) shall have no
further liability for the money so paid over to the Trustee.


 


If the Company shall act
as a Paying Agent, it shall, prior to or on each due date of the principal of
or interest (including Liquidated Damages, if any) on any of the Securities,
segregate and hold in trust for the benefit of the Holders a sum sufficient
with monies held by all other Paying Agents, to pay the principal or interest
(including Liquidated Damages, if any) so becoming due until such sums shall


 


15

















 


be paid to such Persons or otherwise disposed of as
provided in this Indenture, and shall promptly notify the Trustee of its action
or failure to act.


 


Section 2.07.                             General Provisions
Relating to Transfer and Exchange.    The Securities are issuable
only in registered form. A Holder may transfer a Security only by written
application to the Registrar stating the name of the proposed transferee and
otherwise complying with the terms of this Indenture. No such transfer shall be
effected until, and such transferee shall succeed to the rights of a Holder
only upon, final acceptance and registration of the transfer by the Registrar
in the Register. Furthermore, any Holder of a Global Security shall, by
acceptance of such Global Security, agree that transfers of beneficial
interests in such Global Security may be effected only through a book-entry
system maintained by the Holder of such Global Security (or its agent) and that
ownership of a beneficial interest in the Security shall be required to be
reflected in a book-entry. Notwithstanding the foregoing, in the case of a
Restricted Security, a beneficial interest in a Global Security being
transferred in reliance on an exemption from the registration requirements of
the Securities Act other than in accordance with Rule 144, Rule 144A
and Regulation S may only be transferred for a Physical Security.


 


When Securities are
presented to the Registrar with a request to register the transfer or to
exchange them for an equal aggregate principal amount of Securities of other
authorized denominations, the Registrar shall register the transfer or make the
exchange as requested if its requirements for such transactions are met
(including that such Securities are duly endorsed or accompanied by a written
instrument of transfer duly executed by the Holder thereof or by an attorney
who is authorized in writing to act on behalf of the Holder). Subject to
Section 2.04 hereof, to permit registrations of transfers and exchanges,
the Company shall execute and the Trustee shall authenticate Securities at the
Registrar’s request. No service charge shall be made for any registration of
transfer or exchange or redemption of the Securities, but the Company may
require payment of a sum sufficient to cover any transfer tax or similar
governmental charge payable in connection therewith (other than any such
transfer taxes or other similar governmental charge payable upon exchanges
pursuant to Section 2.14, 7.05 or 10.07 hereof).


 


Neither the Company nor
the Registrar shall be required to exchange or register a transfer of any
Securities:


 


(i)  for
a period of 15 Business Days prior to the day of any selection of Securities
for redemption under Article 10 hereof;


 


(ii)  so
selected for redemption or, if a portion of any Security is selected for
redemption, such portion thereof selected for redemption; or


 


(iii)  surrendered
for conversion or, if a portion of any Security is surrendered for conversion,
such portion thereof surrendered for conversion, or for which a Purchase Notice
or Fundamental Change Purchase Notice has been given and not withdrawn.


 


Section 2.08.                             Book-Entry Provisions
for the Global Securities.    (a) The Global Securities
initially shall


 


(i)  be
registered in the name of the Depositary (or a nominee thereof);


 


(ii)  be
delivered to the Trustee as custodian for such Depositary; and


 


(iii)  bear
the Restricted Securities Legend as set forth in
Section 2.03(a)(i) hereof.


 


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


 


16

















 


shall prevent the Company, the Trustee or any agent of
the Company or Trustee from giving effect to any written certification, proxy
or other authorization furnished by the Depositary or impair, as between the
Depositary and the DTC Participants, the operation of customary practices
governing the exercise of the rights of a Holder of any Security.


 


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


 


(c)           A Global Security may not be transferred, in whole or
in part, to any Person other than the Depositary (or a nominee thereof), and no
such transfer to any such other Person may be registered. Beneficial interests
in a Global Security may be transferred in accordance with the rules and
procedures of the Depositary and the provisions of Section 2.09 hereof.


 


(d)          If at any time:


 


(i)  the
Depositary notifies the Company in writing that it is no longer willing or able
to continue to act as Depositary for the Global Securities, or the Depositary
ceases to be a “clearing agency” registered under the Exchange Act, and a
successor Depositary for the Global Securities is not appointed by the Company
within 90 days of such notice or cessation;


 


(ii)  the
Company, at its option, notifies the Trustee in writing that it elects to cause
the issuance of the Securities in definitive registered form under this
Indenture in exchange for all or any part of the Securities represented by a Global
Security or Global Securities; or


 


(iii)  an
Event of Default has occurred and is continuing and the Registrar has received
a request from the Depositary for the issuance of Physical Securities in
exchange for such Global Security or Global Securities,


 


the Depositary shall surrender such Global Security or
Global Securities to the Trustee for cancellation and the Company shall
execute, and the Trustee, upon receipt of an Officers’ Certificate and Company
Order for the authentication and delivery of Securities, shall authenticate and
deliver in exchange for such Global Security or Global Securities, Physical
Securities of like tenor as that of the Global Securities in an aggregate
principal amount equal to the aggregate principal amount of such Global Security
or Global Securities. Such Physical Securities shall be registered in such
names as the Depositary shall identify in writing as the beneficial owners of
the Securities represented by such Global Security or Global Securities (or any
nominees thereof).


 


Notwithstanding the
foregoing, in connection with any such surrender and subsequent exchange
pursuant to Section 2.08(d) hereof, the Registrar shall reflect on its
books and records the date and a decrease in the principal amount of such
Global Security in an amount equal to the principal amount of the beneficial
interest in such Global Security to be transferred.


 


Section 2.09.                             Special Transfer
Provisions.    Unless
a Security is transferred after the time period referred to in Rule 144(k)
under the Securities Act or otherwise sold pursuant to a registration statement
that has been declared effective under the Securities Act (and which continues
to be effective at the time of such sale), the following provisions shall
apply.


 


With respect to the
registration of any proposed transfer of Securities to a QIB in accordance with
Rule 144A:


 


(i)  if
the Securities to be transferred consist of an interest in the Global
Securities, the transfer of such interest may be effected only through the
book-entry system maintained by the Depositary; and


 


(ii)  if
the Securities to be transferred consist of Physical Securities, the Registrar
shall register the transfer if such transfer is being made by a proposed
transferor who has checked the box


 


17

















 


provided on the form of
Security stating, or has otherwise advised the Company and the Registrar in
writing, that the sale has been made in compliance with the provisions of
Rule 144A to a transferee who has signed the certification provided on the
form of Security stating or has otherwise advised the Company and the Registrar
in writing that:


 


(A)                it is purchasing
the Securities for its own account or an account with respect to which it
exercises sole investment discretion, in each case for investment and not with
a view to distribution;


 


(B)                  it and any such
account is a QIB within the meaning of Rule l44A;


 


(C)                  it is aware that
the sale to it is being made in reliance on Rule 144A;


 


(D)                 it acknowledges
that it has received such information regarding the Company as it has requested
pursuant to Rule 144A or has determined not to request such information;
and


 


(E)                   it is aware
that the transferor is relying upon its foregoing representations in order to
claim the exemption from registration provided by Rule 144A.


 


With respect to the
registration of any proposed transfer of Securities to a person who is not a
U.S. Person in an offshore transaction in accordance with Regulation S:


 


(i)  if
the Securities to be transferred consist of an interest in the Global
Securities, the transfer of such interest may be effected only through the
book-entry system maintained by the Depositary; and


 


(ii)  if
the Securities to be transferred consist of Physical Securities, the Registrar
shall register the transfer if such transfer is being made by a proposed
transferor who has checked the box provided for on the form of Security
stating, or has otherwise advised the Company and the Registrar in writing,
that the sale has been made in compliance with the provisions of
Regulation S to a transferee who has signed the certification provided for
on the form of Security stating or has otherwise advised the Company and the
Registrar in writing that:


 


(A)                the transfer is
not being made to a person in the United States and (1) at the time the
buy order was originated, the transferee was outside the United States or such
transferor and any Person acting on its behalf reasonably believed and believes
that the transferee was outside the United States or (2) the transaction
was executed in, on or through the facilities of a designated offshore
securities market and neither such transferor nor any Person acting on its
behalf knows that the transaction was prearranged with a buyer in the United
States;


 


(B)                  no directed selling
efforts have been made in contravention of the requirements of Rule 903(b)
or Rule 904(b) of Regulation S under the Securities Act;


 


(C)                  the transaction
is not part of a plan or scheme to evade the registration requirements of the
Securities Act; and


 


(D)                 if the proposed
transfer is being made prior to the expiration of the Restricted Period, the
transfer is not being made to a U.S. Person.


 


By its acceptance of any
Security bearing the Restricted Securities Legend, each Holder of such a
Security acknowledges the restrictions on transfer of such Security set forth
in this Indenture and agrees that it will transfer such Security only as
provided in this Indenture. The Registrar shall not register a transfer of any
Security unless such transfer complies with the restrictions on transfer of
such Security set forth in this Indenture. The Registrar shall be entitled to
receive and rely on written instructions from the Company verifying that such
transfer complies with such restrictions on transfer. In connection with any
transfer of Securities, each Holder agrees by its acceptance of the Securities
to furnish the Registrar or the Company such certifications, legal opinions or
other information as either of them may reasonably require to confirm that such
transfer is being made pursuant to an exemption from, or a transaction not
subject to, the registration requirements of the Securities Act; provided, however,
that the Registrar shall not be required to determine (but may rely on a
determination made by the Company with respect to) the sufficiency of any such
certifications, legal opinions or other information.


 


18

















 


The Registrar shall
retain copies of all letters, notices and other written communications received
pursuant to Section 2.08 hereof or this Section 2.09. The Company
shall have the right to inspect and make copies of all such letters, notices or
other written communications at any reasonable time upon the giving of
reasonable written notice to the Registrar.


 


Section 2.10.                             Holder Lists.    The Trustee shall
preserve in as current a form as is reasonably practicable the most recent list
available to it of the names and addresses of Holders and shall otherwise
comply with Section 312(a) of the TIA. If the Trustee is not the
Registrar, the Company shall furnish to the Trustee prior to or on each
Interest Payment Date and at such other times as the Trustee may request in
writing a list in such form and as of such date as the Trustee may reasonably
require of the names and addresses of Holders relating to such Interest Payment
Date or request, as the case may be.


 


Section 2.11.                             Persons Deemed Owners.    The Company, the
Trustee and any agent of the Company or the Trustee may treat the registered
Holder of a Global Security as the absolute owner of such Global Security for
the purpose of receiving payment thereof or on account thereof and for all
other purposes whatsoever, whether or not such Security be overdue, and
notwithstanding any notice of ownership or writing thereon, or any notice of
previous loss or theft or other interest therein. The Company, the Trustee and
any agent of the Company or the Trustee may treat the Person in whose name any
Security is registered as the owner of such Security for the purpose of
receiving payment of principal of and interest (including Liquidated Damages,
if any) on such Security and for all other purposes whatsoever, whether or not
such Security be overdue, and notwithstanding any notice of ownership or
writing thereon, or any notice of previous loss or theft or other interest
therein.


 


Section 2.12.                             Mutilated, Destroyed,
Lost or Stolen Securities.    If any mutilated Security is
surrendered to the Trustee, the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor a new Security of like tenor and
principal amount and bearing a number not contemporaneously outstanding.


 


If there is delivered to
the Company and the Trustee


 


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


 


(ii)  such
security or indemnity as may be required by them to save each of them and any
agent of either of them harmless,


 


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


 


In case any such
mutilated, destroyed, lost or stolen Security has become or is about to become
due and payable, the Company in its discretion, but subject to any conversion
rights, may, instead of issuing a new Security, pay such Security, upon
satisfaction of the condition set forth in the preceding paragraph.


 


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


 


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


 


19

















 


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


 


Section 2.13.                             Treasury Securities.    In determining
whether the Holders of the requisite principal amount of Outstanding Securities
are present at a meeting of Holders for quorum purposes or have given any
request, demand, authorization, direction, notice, consent or waiver hereunder,
Securities owned by the Company or any Affiliate of the Company shall be
disregarded and deemed not to be Outstanding, except that, in determining
whether the Trustee shall be protected in relying upon any such determination
as to the presence of a quorum or upon any such request, demand, authorization,
direction, notice, consent or waiver, only such Securities of which the Trustee
has received written notice and are so owned shall be so disregarded.


 


Section 2.14.                             Temporary Securities.    Pending the
preparation of Securities in definitive form, the Company may execute and the
Trustee shall, upon 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 definitive form but with such omissions, insertions and
variations as may be appropriate for temporary Securities, all as may be
determined by the Company. Every such temporary Security shall be executed by
the Company and authenticated by the Trustee upon the same conditions and in
substantially the same manner, and with the same effect, as the Securities in
definitive form. Without unreasonable delay, the Company will execute and
deliver to the Trustee Securities in definitive form (other than in the case of
Securities in global form) and thereupon any or all temporary Securities (other
than any such Securities in global form) may be surrendered in exchange
therefor, at each office or agency maintained by the Company pursuant to
Section 9.02 and the Trustee shall authenticate and deliver in exchange
for such temporary Securities an equal aggregate principal amount of Securities
in definitive 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 definitive form
authenticated and delivered hereunder.


 


Section 2.15.                             Cancellation.    All securities
surrendered for payment, redemption, purchase, conversion, registration of
transfer or exchange shall, if surrendered to any Person other than the
Trustee, be delivered to the Trustee. All Securities so delivered shall be
canceled promptly by the Trustee, and no Securities shall be issued in lieu
thereof except as expressly permitted by any of the provisions of this
Indenture. Upon written instructions of the Company, the Trustee shall destroy
canceled Securities and, after such destruction, shall deliver a certificate of
such destruction to the Company. If the Company shall acquire any of the
Securities, such acquisition shall not operate as a redemption or satisfaction
of the indebtedness represented by such Securities unless the same are
delivered to the Trustee for cancellation.


 


Section 2.16.                             CUSIP Numbers.    The Company in
issuing the Securities may use “CUSIP” numbers (if then generally in use), and
the Trustee shall use CUSIP numbers in notices of redemption or exchange as a
convenience to Holders; provided,
however, that any such notice
shall state that no representation is made as to the correctness of such
numbers either as printed on the Securities or as contained in any such 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. The Company shall promptly notify the
Trustee of any change in the CUSIP numbers.


 


Section 2.17.                             Defaulted Interest.    If the Company
fails to make a payment of interest (including Liquidated Damages, if any) on
any Security when due and payable (“Defaulted
Interest”), it shall pay such Defaulted Interest plus (to the extent
lawful) any interest payable on the Defaulted Interest, in any lawful manner.
It may elect to pay such Defaulted Interest, plus any such interest payable on
it, to the Persons who are Holders of such Securities on which the interest is
due on a subsequent Special


 


20

















 


Record Date. The Company shall notify the Trustee in
writing of the amount of Defaulted Interest proposed to be paid on each such
Security. The Company shall fix any such Special Record Date and payment date
for such payment. At least 15 days before any such Special Record Date,
the Company shall mail to Holders affected thereby a notice that states the Special
Record Date, the Interest Payment Date, and amount of such interest (and such
Liquidated Damages, if any) to be paid.


 


Section 2.18.                             Rule 144A and
Regulation S.    The
Company agrees that it will refuse to register any transfer of Securities or
Common Stock that is not made in accordance with the provisions of
Rule 144A or Regulation S under the Securities Act, pursuant to a
registration statement which has been declared effective under the Securities
Act or pursuant to an available exemption from the registration requirements of
the Securities Act; provided that
this Section 2.18 shall not be applicable to any Securities or shares of
Common Stock which do not bear the legend set forth in
Section 2.03(a)(i) or (ii) hereof.


 


ARTICLE 3

SATISFACTION AND DISCHARGE


 


Section 3.01.                             Satisfaction and
Discharge of Indenture.    When:


 


(a)                                  The Company shall deliver to the trustee
for cancellation all Securities previously authenticated (other than any
Securities which 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 previously canceled, or


 


(b)                                 (i) All the Securities not
previously canceled or delivered to the Trustee for cancellation shall have
become due and payable, or are by their terms to become due and payable within
one year or are to be called for redemption within one year under arrangements
satisfactory to the Trustee for the giving of notice of redemption, and


 


(ii) The
Company shall deposit with the Trustee, in trust, cash in U.S. dollars which
through the payment of interest and principal in respect thereof, in accordance
with their terms, will provide (and without reinvestment and assuming no tax
liability will be imposed on the Trustee), not later than one day before the
due date of any payment of money, an amount in cash, sufficient to pay
principal of or interest (including Liquidated Damages, if any) on all of the
Securities (other than any Securities which 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 previously canceled
or delivered to the Trustee for cancellation, on the dates such payments of
principal or interest (including Liquidated Damages, if any) are due to such
date of maturity or redemption, as the case may be,


 


and if, in the case of either clause (a) or (b),
the Company shall also pay or cause to be paid all other sums payable hereunder
by the Company, then this Indenture shall cease to be of further effect (except
as to: (A) remaining rights of registration of transfer, substitution and
exchange and conversion of Securities, (B) rights hereunder of Holders to
receive payments of principal of and interest (including Liquidated Damages, if
any) on the Securities 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 (C) the rights, obligations and immunities of the Trustee
hereunder), and the Trustee, on demand of the Company accompanied by an
Officers’ Certificate and an Opinion of Counsel as provided in
Section 14.05 hereof and at the cost and expense of the Company, shall
execute proper instruments acknowledging satisfaction of and discharging this
Indenture; provided, however, that the Company shall reimburse
the Trustee for all amounts due the Trustee under Section 5.08 hereof and
for any costs or expenses thereafter reasonably and properly incurred by the
Trustee and to compensate the Trustee for any services thereafter reasonably
and properly rendered by the Trustee in connection with this Indenture or the
Securities.


 


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Section 3.02.                             Deposited Monies to Be
Held in Trust.    Subject
to Section 3.03 hereof, all monies deposited with the Trustee pursuant to
Section 3.01 hereof shall be held in trust and applied by it to the
payment, notwithstanding the provisions of Article 13 hereof, 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
or redemption of which such monies have been deposited with the Trustee, of all
sums due and to become due thereon for principal and interest (including
Liquidated Damages, if any). All monies deposited with the Trustee pursuant to
Section 3.01 hereof (and held by it or any Paying Agent) for the payment
of Securities subsequently converted shall be returned to the Company upon
request of the Company.


 


Section 3.03.                             Return of Unclaimed
Monies.    The
Trustee and the Paying Agent shall pay to the Company any money held by them
for the payment of principal or interest (including Liquidated Damages, if any)
that remains unclaimed for two years after the date upon which such payment
shall have become due. After payment to the Company, Holders entitled to the
money must look to the Company for payment as general creditors unless an
applicable abandoned property law designates another Person, and all liability
of the Trustee and the Paying Agent with respect to such money shall cease.


 


ARTICLE 4

DEFAULTS AND REMEDIES


 


Section 4.01.                             Events of Default.    An “Event of Default” with respect to the
Securities occurs when any of the following occurs (whatever the reason for
such Event of Default and whether it shall be occasioned by the provisions of
Article 13 hereof or be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):


 


(a)                                  the Company defaults in the payment of
the principal on any of the Securities when it becomes due and payable, at
Maturity, upon redemption or exercise of a Purchase Right or Put Purchase Right
or otherwise, whether or not such payment is prohibited by Article 13
hereof; or


 


(b)                                 the Company defaults in the payment of
interest (including Liquidated Damages, if any) on any of the Securities when
it becomes due and payable and such default continues for a period of
30 days, whether or not such payment is prohibited by Article 13
hereof; or


 


(c)                                  the Company fails to deliver shares of
Common Stock, together with cash instead of fractional shares, when those
shares of Common Stock or cash instead of fractional shares are required to be
delivered following conversion of a Security in accordance with
Article 12, and that failure continues for 10 days; or


 


(d)                                 the Company fails to perform or observe
any other term, covenant or agreement contained in the Securities or this
Indenture and the failure continues for a period of 60 days after written
notice of such failure, requiring the Company to remedy the same, shall have
been given to the Company by the Trustee or to the Company and the Trustee by the
Holders of at least 25% in aggregate principal amount of the Outstanding
Securities; or


 


(e)                                  (i) the Company fails to make any
payment by the end of the applicable grace period, if any, after the maturity
of any Indebtedness for borrowed money in an amount in excess of $10,000,000 or
(ii) there is an acceleration of any Indebtedness for borrowed money in an
amount in excess of $10,000,000 because of a default with respect to such
Indebtedness without such Indebtedness having been discharged or such acceleration
having been cured, waived, rescinded or annulled, in the case of either
(i) or (ii) above, for a period of 30 days after written notice
to the Company by the Trustee or to the Company and the Trustee by Holders of
at least 25% in aggregate principal amount of the Outstanding Securities; or


 


22

















 


(f)                                    the Company fails, within 30 days
after the occurrence of a Fundamental Change, to give to each Holder of
Securities notice pursuant to Section 11.03 hereof; or


 


(g)                                 the entry by a court having jurisdiction
in the premises of (i) a decree or order for relief in respect of the
Company in an involuntary case or proceeding under any applicable U.S. federal
or state bankruptcy, insolvency, reorganization or other similar law or
(ii) a decree or order adjudging the Company a bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization, arrangement,
adjustment or composition of or in respect of the Company under any applicable
U.S. federal or state law, or appointing a custodian, receiver, liquidator,
assignee, trustee, sequestrator or other similar official of the Company or of
any substantial part of its property, or ordering the winding up or liquidation
of its affairs, and the continuance of any such decree or order for relief or
any such other decree or order unstayed and in effect for a period of 60
consecutive days; or


 


(h)                                 the commencement by the Company of a
voluntary case or proceeding under any applicable U.S. federal or state
bankruptcy, insolvency, reorganization or other similar law or of any other
case or proceeding to be adjudicated a bankrupt or insolvent, or the consent by
the Company to the entry of a decree or order for relief in respect of the
Company in an involuntary case or proceeding under any applicable U.S. federal
or state bankruptcy, insolvency, reorganization or other similar law or to the
commencement of any bankruptcy or insolvency case or proceeding against the
Company, or the filing by the Company of a petition or answer or consent
seeking reorganization or relief under any applicable U.S. federal or state
law, or the consent by the Company to the filing of such petition or to the
appointment of or the taking possession by a custodian, receiver, liquidator,
assignee, trustee, sequestrator or other similar official of the Company or of
any substantial part of its property, or the making by the Company of an
assignment for the benefit of creditors, or the admission by the Company in
writing of its inability to pay its debts generally as they become due, or the
taking of corporate action by the Company expressly in furtherance of any such
action.


 


Section 4.02.                             Acceleration of
Maturity; Rescission and Annulment.    If an Event of Default with
respect to Outstanding Securities (other than an Event of Default specified in
Section 4.01(g) or 4.01(h) hereof) occurs and is continuing, the Trustee
or the Holders of at least 25% in aggregate principal amount of the Outstanding
Securities, by written notice to the Company, may declare due and payable 100%
of the principal amount of all Outstanding Securities plus any accrued and
unpaid interest (including Liquidated Damages, if any) to the date of payment.
Upon a declaration of acceleration, such principal and accrued and unpaid interest
(including Liquidated Damages, if any) to the date of payment shall be
immediately due and payable.


 


If an Event of Default
specified in Section 4.01(g) or 4.01(h) hereof occurs, all unpaid
principal of and accrued and unpaid interest (including Liquidated Damages, if
any) on the Outstanding Securities shall become and be immediately due and
payable, without any declaration or other act on the part of the Trustee or any
Holder.


 


The Holders of a majority
in aggregate principal amount of the Outstanding Securities by written notice
to the Trustee may rescind and annul an acceleration and its consequences if:


 


(i)  all
existing Events of Default, other than the nonpayment of principal of or
interest on the Securities which has become due solely because of the
acceleration, have been remedied, cured or waived, and


 


(ii)  the
rescission would not conflict with any judgment or decree of a court of
competent jurisdiction;


 


provided, however, that in the event such declaration of
acceleration has been made based on the existence of an Event of Default under
Section 4.01(e) hereof and such Event of Default has been remedied, cured
or waived in accordance with Section 4.01(e) hereof, then, without any
further action by the Holders, such declaration of acceleration shall be
rescinded automatically and the consequences


 


23

















 


of such declaration shall be annulled. No such
rescission or annulment shall affect any subsequent Default or impair any right
consequent thereon.


 


Section 4.03.                             Other Remedies.    If an Event of
Default with respect to Outstanding Securities occurs and is continuing, the
Trustee may pursue any available remedy by proceeding at law or in equity to
collect the payment of principal of or interest on the Securities or to enforce
the performance of any provision of the Securities.


 


The Trustee may maintain
a proceeding in which it may prosecute and enforce all rights of action and
claims under this Indenture or the Securities, even if it does not possess any
of the Securities or does not produce any of them in the proceeding.


 


Section 4.04.                             Waiver of Past
Defaults.    The
Holders, either (a) through the written consent of not less than a
majority in aggregate principal amount of the Outstanding Securities or
(b) by the adoption of a resolution, at a meeting of Holders of the
Outstanding Securities at which a quorum is present, by the Holders of at least
a majority in aggregate principal amount of the Outstanding Securities
represented at such meeting, may, on behalf of the Holders of all of the
Securities, waive an existing Default or Event of Default, except a Default or
Event of Default:


 


(i)  in
the payment of the principal of or interest (including Liquidated Damages, if
any) on any Security (provided, however, that subject to Section 4.07
hereof, the Holders of a majority in aggregate principal amount of the
Outstanding Securities may rescind an acceleration and its consequences,
including any related payment default that resulted from such acceleration);


 


(ii)  in
respect of the failure to convert any Security in accordance with
Article 12; or


 


(iii)  in
respect of a covenant or provision hereof which, under Section 7.02
hereof, cannot be modified or amended without the consent of the Holder of each
Outstanding Security affected.


 


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


 


Section 4.05.                             Control by Majority.    The Holders,
either (a) through the written consent of not less than a majority in
aggregate principal amount of the Outstanding Securities, or (b) by the
adoption of a resolution, at a meeting of Holders of the Outstanding Securities
at which a quorum is present, by the Holders of at least a majority in
aggregate principal amount of the Outstanding Securities represented at such
meeting, 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. However, the Trustee may refuse to
follow any direction that:


 


(i)  conflicts
with any law or with this Indenture,


 


(ii)  the
Trustee determines may be unduly prejudicial to the rights of the Holders not
joining therein, or


 


(iii)  may
expose the Trustee to personal liability.


 


The Trustee may take any
other action deemed proper by the Trustee which is not inconsistent with such
direction.


 


Section 4.06.                             Limitation on Suit.    No Holder of any
Security shall have any right to pursue any remedy with respect to this
Indenture or the Securities (including instituting any proceeding, judicial or
otherwise, with respect to this Indenture or for the appointment of a receiver
or trustee) unless:


 


(i)  such
Holder has previously given written notice to the Trustee of an Event of
Default that is continuing;


 


24






















(ii)  the Holders of at least 25%
in aggregate principal amount of the Outstanding Securities shall have made
written request to the Trustee to pursue the remedy;


 


(iii)  such Holder or Holders have
offered to the Trustee indemnity satisfactory to it against any costs, expenses
and liabilities incurred in complying with such request;


 


(iv)  the Trustee has failed to
comply with the request for 60 days after its receipt of such notice,
request and offer of indemnity; and


 


(v)  during such 60-day period, no
direction inconsistent with such written request has been given to the Trustee
by the Holders of a majority in aggregate principal amount of the Outstanding
Securities (or such amount as shall have acted at a meeting pursuant to the
provisions of this Indenture);


 


provided, however, that no one or more of such Holders may
use this Indenture to prejudice the rights of another Holder or to obtain
preference or priority over another Holder.


 


Section 4.07.                             Unconditional Rights of
Holders to Receive Payment and to Convert.    Notwithstanding any other
provision in this Indenture, the Holder of any Security shall have the right,
which is absolute and unconditional, to receive payment of the principal of and
interest (including Liquidated Damages, if any) on such Security on the Stated
Maturity expressed in such Security (or, in the case of redemption, on the
Redemption Date, or in the case of the exercise of a Purchase Right or Put
Purchase Right, on the Purchase Date or Put Purchase Date, as applicable) and
to convert such Security in accordance with Article 12, and to bring suit
for the enforcement of any such payment on or after such respective dates and
right to convert, and such rights shall not be impaired or affected without the
consent of such Holder.


 


Section 4.08.                             Collection of
Indebtedness and Suits for Enforcement by the Trustee.    The Company
covenants that if:


 


(i)  a Default or Event of Default
occurs in the payment of any interest (including Liquidated Damages, if any) on
any Security when such interest (including Liquidated Damages, if any) becomes
due and payable and such Default or Event of Default continues for a period of
30 days, or


 


(ii)  a Default or Event of Default
occurs in the payment of the principal of any Security at the Maturity thereof,
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 (as
expressed therein or as a result of any acceleration effected pursuant to
Section 4.02 hereof) on such Securities for principal and interest
(including Liquidated Damages, if any) and, to the extent that payment of such
interest shall be legally enforceable, interest on any overdue principal and on
any overdue interest (including Liquidated Damages, if any), in each case at
the Interest Rate, and, in addition thereto, such further amount as shall be
sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel.


 


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


 


If an Event of Default
occurs and is continuing, the Trustee may in its discretion proceed to protect
and enforce its rights and the rights of the Holders of Securities by such
appropriate judicial proceedings as the Trustee shall deem most effectual to
protect and enforce any such rights, whether


 


25

















 


for the specific enforcement of any covenant or
agreement in this Indenture or in aid of the exercise of any power granted
herein, or to enforce any other proper remedy.


 


Section 4.09.                             Trustee May File Proofs
of Claim.    In
case of the pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to the Company or the property of the Company or its
creditors, the Trustee (irrespective of whether the principal of the Securities
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand on
the Company for the payment of overdue principal or interest (including
Liquidated Damages, if any)) shall be entitled and empowered, by intervention
in such proceeding or otherwise, (1) to file and prove a claim for the
whole amount of principal and interest (including Liquidated Damages, if any)
owing and unpaid in respect of the Securities and to file such other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel) and of the Holders of
Securities allowed in such judicial proceeding, and (2) to collect and
receive any moneys or other property payable or deliverable on any such claim
and to distribute the same; and any custodian, receiver, assignee, trustee,
liquidator, sequestrator or other similar official in any such judicial
proceedings is hereby authorized by each Holder of Securities to make such
payments to the Trustee and, in the event that the Trustee shall consent to the
making of such payments directly to the Holders of Securities, to pay to the
Trustee any amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel and any other
amounts due the Trustee under Section 5.08.


 


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


 


Section 4.10.                             Restoration of Rights
and Remedies.    If
the Trustee or any Holder of a Security has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders of
Securities 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.


 


Section 4.11.                             Rights and Remedies.    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 conferred in this Indenture upon or
reserved to the Trustee or to the Holders of Securities is intended to be
exclusive of any other right or remedy, and every right and remedy shall, to
the extent permitted by law, be cumulative and in addition to every other right
and remedy given hereunder or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any
other appropriate right or remedy.


 


Section 4.12.                             Delay or Omission Not
Waiver.    No
delay or omission of the Trustee or of any Holder of any Security to exercise
any right or remedy accruing upon any Event of Default shall impair any such
right or remedy or constitute a waiver of any such Event of Default or any
acquiescence therein. Every right and remedy given by this Article or by
law to the Trustee or to the Holders of Securities may be exercised from time
to time, and as often as may be deemed expedient, by the Trustee or by the
Holders of Securities, as the case may be.


 


Section 4.13.                             Application of Money
Collected.    Subject
to Article 13, any money and property 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 and
property on account of principal or interest (including Liquidated Damages, if
any), 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;


 


26

















 


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


 


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


 


Section 4.14.                             Undertaking for Costs.    All parties to
this Indenture agree, and each Holder of any Security by such Holder’s
acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy
under this Indenture, or in any suit against the Trustee for any action taken,
suffered or omitted by it as Trustee, the filing by any party litigant in such
suit of an undertaking to pay the costs of such suit, and that such court may
in its discretion assess reasonable costs, including reasonable attorneys’
fees, against any party litigant in such suit, having due regard to the merits
and good faith of the claims or defenses made by such party litigant; but the
provisions of this Section 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
aggregate principal amount of the Outstanding Securities, or to any suit
instituted by any Holder of any Security for the enforcement of the payment of
the principal of or interest (including Liquidated Damages, if any) on any
Security on or after the Stated Maturity expressed in such Security (or, in the
case of redemption or exercise of a Purchase Right, on or after the Redemption
Date) or for the enforcement of the right to convert any Security in accordance
with Article 12.


 


Section 4.15.                             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 to take
the benefit or advantage of, any stay or extension law wherever enacted, now or
at any time hereafter in force, which may affect the covenants or the
performance of this Indenture; and the Company (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.


 


ARTICLE 5

THE TRUSTEE


 


Section 5.01.                             Certain Duties and
Responsibilities.    (a) Except
during the continuance of an Event of Default,


 


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


 


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


 


(b)                                 In case an Event of Default actually
known to a Responsible Officer of the Trustee has occurred and is continuing,
the Trustee shall exercise such of the rights and powers vested in it by this


 


27

















 


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


 


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


 


(i)  This paragraph (c) shall
not be construed to limit the effect of paragraph (a) of this
Section 5.01;


 


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


 


(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 a direction received by it of the Holders of a
majority in principal amount of the Outstanding Securities (or such lesser
amount as shall have acted at a meeting pursuant to the provisions of this
Indenture) relating to the time, method and place of conducting any proceeding
for any remedy available to the Trustee, or exercising any trust or power
conferred upon the Trustee, under this Indenture.


 


(d)                                 Whether or not herein expressly so
provided, every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section 5.01.


 


(e)                                  No provision of this Indenture shall
require the Trustee to expend or risk its own funds or otherwise incur any
liability in the performance of any of its duties hereunder, or in the exercise
of any of its rights or powers. The Trustee may refuse to perform any duty or
exercise any right or power unless it receives indemnity satisfactory to it
against any loss, liability, cost or expense (including, without limitation,
reasonable fees of counsel).


 


(f)                                    The Trustee shall not be obligated to pay
interest on any money or other assets received by it unless otherwise agreed in
writing with the Company. Assets held in trust by the Trustee need not be
segregated from other funds except to the extent required by law.


 


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


 


(h)                                 The Trustee shall not be deemed to have
notice or actual knowledge of any Event of Default or a Registration Default
(as such term is defined in the Registration Rights Agreement) or the
obligation of the Company to pay Liquidated Damages unless a Responsible
Officer of the Trustee has actual knowledge thereof or unless written notice of
any event which is in fact a Default is received by the Trustee pursuant to
Section 14.02 hereof, and such notice references the Securities and this
Indenture.


 


(i)                                     The rights, privileges, protections,
immunities and benefits given to the Trustee hereunder, 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
Paying Agent, authenticating agent, Conversion Agent or Registrar acting
hereunder.


 


28

















 


Section 5.02.                             Certain Rights of
Trustee.    Subject
to the provisions of Section 5.01 hereof and subject to Sections 315(a)
through (d) of the TIA:


 


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


 


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


 


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


 


(iv)  The Trustee shall not be
liable for any action taken or omitted to be taken by it in good faith which it
reasonably believed to be authorized or within the discretion or rights or
powers conferred upon it by this Indenture, unless the Trustee’s conduct
constitutes negligence.


 


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


 


(vi)  Unless otherwise specifically
provided in this Indenture, any demand, request, direction or notice from the
Company shall be sufficient if signed by an Officer of the Company.


 


(vii)  The permissive rights of the
Trustee to do things enumerated in this Indenture shall not be construed as a
duty unless so specified herein.


 


Section 5.03.                             Individual Rights of
Trustee.    The
Trustee in its individual or any other capacity may become the owner or pledgee
of Securities and may otherwise deal with the Company or any Affiliate of the
Company with the same rights it would have if it were not Trustee. However, in
the event that the Trustee acquires any conflicting interest (as such term is
defined in Section 310(b) of the TIA), it must eliminate such conflict
within 90 days, apply to the SEC for permission to continue as trustee (to
the extent permitted under Section 310(b) of the TIA) or resign. Any agent
may do the same with like rights and duties. The Trustee is also subject to
Section 5.11 and 5.12 hereof.


 


Section 5.04.                             Money Held in Trust.    Money held by the
Trustee in trust hereunder need not be segregated from other funds except to
the extent required by law. The Trustee shall be under no liability for
interest on any money received by it hereunder except as otherwise expressly
agreed with the Company.


 


Section 5.05.                             Trustee’s Disclaimer.    The recitals
contained herein and in the Securities (except for those in the certificate of
authentication) shall be taken as the statements of the Company, and the
Trustee assumes no responsibility for their correctness. The Trustee makes no
representations as to the validity, sufficiency or priority of this Indenture
or of the Securities. The Trustee shall not be accountable for the use or
application by the Company of Securities or the proceeds thereof.


 


Section 5.06.                             Notice of Defaults.    Within
90 days after the occurrence of any Default or Event of Default hereunder
of which the Trustee has received written notice, the Trustee shall give notice
to Holders pursuant to Section 14.02 hereof, unless such Default or Event
of Default shall have been cured or waived; provided,
however, that, except in the case
of a Default or Event of Default in the payment of the principal of or interest
(including Liquidated Damages, if any), or in the payment of any redemption or
purchase obligation, on any Security, the Trustee shall be protected in
withholding such notice if and so long as Responsible Officers of the Trustee
in good faith determine that the withholding of such notice is in the interest
of the Holders.


 


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Section 5.07.                             Reports by Trustee to
Holders.    The
Trustee shall transmit to Holders such reports concerning the Trustee and its
actions under this Indenture as may be required by Section 313 of the TIA
at the times and in the manner provided by the TIA.


 


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


 


Section 5.08.                             Compensation and
Indemnification.    The
Company covenants and agrees to pay to the Trustee from time to time, and the
Trustee shall be entitled to, reasonable compensation (which shall not be
limited by any provision of law in regard to the compensation of a trustee of
an express trust) as the Company and the Trustee shall from time to time agree
in writing and the Company covenants and agrees to pay or reimburse the Trustee
upon its request for all reasonable expenses, disbursements and advances
incurred or made by it or on its behalf 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 agents and other persons
not regularly in its employ), except to the extent that any such expense,
disbursement or advance is due to its negligence or bad faith. When the Trustee
incurs expenses or renders services in connection with an Event of Default
specified in Section 4.01 hereof, the expenses (including the reasonable
charges and expenses of its counsel) and the compensation for the services are
intended to constitute expenses of administration under any Bankruptcy Law. The
Company also covenants to indemnify the Trustee and its officers, directors,
employees and agents for, and to hold such Persons harmless against, any loss,
liability or expense incurred by them, arising out of or in connection with the
acceptance or administration of this Indenture or the trusts hereunder or the performance
of their duties hereunder, including the reasonable costs and expenses of
defending themselves against or investigating any claim of liability in the
premises, except to the extent that any such loss, liability or expense was due
to the negligence or willful misconduct of such Persons. The obligations of the
Company under this Section 5.08 to compensate and indemnify the Trustee
and its officers, directors, employees and agents and to pay or reimburse such
Persons for expenses, disbursements and advances shall constitute additional
indebtedness hereunder and shall survive the satisfaction and discharge of this
Indenture or the earlier resignation or removal of the Trustee. Such additional
indebtedness shall be a senior claim 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, and the
Securities are hereby subordinated to such senior claim. “Trustee” for purposes
of this Section 5.08 shall include any predecessor Trustee, but the
negligence or willful misconduct of any Trustee shall not affect the
indemnification of any other Trustee.


 


Section 5.09.                             Replacement of Trustee.    A resignation or
removal of the Trustee and appointment of a successor Trustee shall become
effective only upon the successor Trustee’s acceptance of appointment as
provided in this Section 5.09.


 


The Trustee may resign
and be discharged from the trust hereby created by so notifying the Company in
writing. The Holders of at least a majority in aggregate principal amount of
Outstanding Securities may remove the Trustee by so notifying the Trustee and
the Company in writing. The Company must remove the Trustee if:


 


(i)  the Trustee fails to comply
with Section 5.11 hereof or Section 310 of the TIA;


 


(ii)  the Trustee becomes incapable
of acting;


 


(iii)  the Trustee is adjudged a
bankrupt or an insolvent or an order for relief is entered with respect to the
Trustee under any Bankruptcy Law; or


 


(iv)  a Custodian or public officer
takes charge of the Trustee or its property.


 


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If the Trustee resigns or
is removed or if a vacancy exists in the office of the Trustee for any reason,
the Company shall promptly appoint a successor Trustee. The Trustee shall be
entitled to payment of its fees and reimbursement of its expenses while acting
as Trustee.


 


Any Holder may petition
any court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor Trustee if the Trustee fails to comply with
Section 5.11 hereof.


 


If an instrument of
acceptance by a successor Trustee shall not have been delivered to the Trustee
within 30 days after the giving of such notice of resignation or removal,
the resigning or removed Trustee, as the case may be, may petition, at the
expense of the Company, any court of competent jurisdiction for the appointment
of a successor Trustee.


 


A successor Trustee shall
deliver a written acceptance of its appointment to the retiring Trustee and to
the Company. Thereupon the resignation or removal of the retiring Trustee shall
become effective, and the successor Trustee shall have all the rights, powers
and duties of the Trustee under this Indenture. The Company shall mail a notice
of the successor Trustee’s succession to the Holders. The retiring Trustee
shall promptly transfer all property held by it as Trustee to the successor
Trustee. Notwithstanding replacement of the Trustee pursuant to this
Section 5.09, the Company’s obligations under Section 5.08 hereof
shall continue for the benefit of the retiring Trustee with respect to
expenses, losses and liabilities incurred by it prior to such replacement.


 


Section 5.10.                             Successor Trustee by
Merger, Etc..    Subject
to Section 5.11 hereof, if the Trustee consolidates with, merges or
converts into, or transfers or sells all or substantially all of its corporate
trust business (including the administration of the trust created by this
Indenture) to, another corporation or national banking association, the
successor entity without any further act shall be the successor Trustee as to
the Securities.


 


Section 5.11.                             Corporate Trustee
Required; Eligibility.    The Trustee shall at all times satisfy the
requirements of Sections 310(a)(1), (2) and (5) of the TIA. The
Trustee shall at all times have (or, in the case of a corporation included in a
bank holding company system, the related bank holding company shall at all
times have) a combined capital and surplus of at least $100 million as set
forth in its (or its related bank holding company’s) most recent published
annual report of condition. The Trustee is subject to Section 310(b) of
the TIA.


 


Section 5.12.                             Collection of Claims
Against the Company.    The
Trustee is subject to Section 311(a) of the TIA, excluding any creditor
relationship listed in Section 311(b) of the TIA. A Trustee who has
resigned or been removed shall be subject to Section 311(a) of the TIA to
the extent indicated therein.


 


ARTICLE 6

CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE


 


Section 6.01.                             Company May
Consolidate, Etc., Only on Certain Terms.    The Company shall not
consolidate with or merge into any other Person or convey, transfer or lease
its properties and assets substantially as an entirety to any Person, and the
Company shall not permit any Person to consolidate with or merge into the
Company or convey, transfer or lease its properties and assets substantially as
an entirety to the Company, unless:


 


(i)  in the event that the Company
shall consolidate with or merge into another Person or convey, transfer or
lease its properties and assets substantially as an entirety to any Person, the
Person formed by such consolidation or into which the Company is merged or the
Person which acquires by conveyance or transfer, or which leases, the
properties and assets of the Company substantially as an entirety shall be a
corporation, limited liability company, partnership or trust organized and
validly existing under the laws of the United States of America, any State thereof
or the District of Columbia and, if the entity surviving such transaction or
transferee entity is not the Company, then such surviving or transferee entity
shall expressly assume, by an indenture


 


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supplemental hereto,
executed and delivered to the Trustee, in form reasonably satisfactory to the
Trustee, the due and punctual payment of the principal of and interest
(including Liquidated Damages, if any) on all the Securities and the
performance of every covenant of this Indenture on the part of the Company to
be performed or observed and shall have provided for conversion rights in
accordance with Section 12.11 hereof;


 


(ii)  at the time of consummation
of such transaction, no Event of Default, and no event which, after notice or
lapse of time or both, would become an Event of Default, shall have happened
and be continuing; and


 


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


 


Section 6.02.                             Successor Substituted.    Upon any
consolidation or merger by the Company with or into any other Person or any
conveyance, transfer or lease of the properties and assets of the Company
substantially as an entirety to any Person, in accordance with
Section 6.01 hereof, the successor Person formed by such consolidation or
into which the Company is merged or to which such conveyance, transfer or lease
is made shall succeed to, and be substituted for, and may exercise every right
and power of, the Company under this Indenture with the same effect as if such
successor Person had been named as the Company herein, and thereafter, except
in the case of a lease to another Person, the predecessor Person shall be
relieved of all obligations and covenants under this Indenture and the
Securities.


 


ARTICLE 7

AMENDMENTS, SUPPLEMENTS AND WAIVERS


 


Section 7.01.                             Without Consent of
Holders of Securities.    Without the consent of any Holders of Securities,
the Company, when authorized by a Board Resolution, and the Trustee, at any
time and from time to time, may amend this Indenture and the Securities to:


 


(a)                                  add to the covenants of the Company for
the benefit of the Holders of Securities;


 


(b)                                 surrender any right or power herein
conferred upon the Company;


 


(c)                                  make provision with respect to the
conversion rights of Holders of Securities pursuant to Section 12.11
hereof;


 


(d)                                 provide for the assumption of the
Company’s obligations to the Holders of Securities in the case of a merger,
consolidation, conveyance, transfer or lease pursuant to Article 6 hereof;


 


(e)                                  reduce the Conversion Price; provided, however,
that such reduction in the Conversion Price shall not adversely affect the
interest of the Holders of Securities (after taking into account tax and other
consequences of such reduction) in any material respect;


 


(f)                                    comply with the requirements of the SEC
in order to effect or maintain the qualification of this Indenture under the
TIA;


 


(g)                                 make any changes or modifications to this
Indenture necessary in connection with the registration of any Securities under
the Securities Act as contemplated in the Registration Rights Agreement; provided, however,
that such action pursuant to this clause (g) does not adversely affect the
interests of the Holders of Securities in any material respect;


 


(h)                                 cure any ambiguity, correct or supplement
any provision herein which may be inconsistent with any other provision herein
or which is otherwise defective, or make any other provisions with respect to
matters or questions arising under this Indenture which the Company and the
Trustee may deem necessary or desirable and which shall not be inconsistent
with the provisions of this Indenture;


 


(i)                                     add or modify any other provisions with
respect to matters or questions arising under this Indenture which the Company
and the Trustee may deem necessary or desirable and which shall not be
inconsistent with the provisions of this Indenture, provided, however,
that such action pursuant to this clause (i) does not adversely affect the
interests of the Holders of Securities in any material respect; or


 


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(j)                                     make provision for the establishment of a
book-entry system in which Holders would have the option to participate for the
clearance and settlement of transactions in Securities originally issued in
definitive form.


 


Section 7.02.                             With Consent of Holders
of Securities.    Except
as provided above in Section 7.01 or below in this Section 7.02, this
Indenture or the Securities may be amended or supplemented, and noncompliance
by the Company in any particular instance with any provision of this indenture
or the Securities may be waived, in each case (i) with the written consent
of the Holders of at least a majority in aggregate principal amount of the
Outstanding Securities or (ii) by the adoption of a resolution, at a
meeting of Holders of the Outstanding Securities at which a quorum is present,
by the Holders of a majority in aggregate principal amount of the Outstanding
Securities represented at such meeting.


 


Without the written
consent or the affirmative vote of each Holder of Securities affected, an
amendment or waiver under this Section 7.02 may not:


 


(a)                                  change the Stated Maturity of the
principal of, or any installment of interest (including Liquidated Damages, if
any) on, any Security;


 


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


 


(c)                                  reduce the Interest Rate or interest
(including Liquidated Damages, if any) on any Security;


 


(d)                                 change the currency of payment of
principal of, premium, if any, or interest (including Liquidated Damages, if
any) on any Security;


 


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


 


(f)                                    except as permitted by Section 12.11
hereof, adversely affect the right to convert any Security as provided in
Article 12 hereof;


 


(g)                                 adversely affect the Purchase Right or
Put Purchase Right;


 


(h)                                 modify the subordination provisions of
the Securities in a manner adverse to the Holders of Securities;


 


(i)                                     modify any of the provisions of this
Section, Section 4.04 or Section 4.11, except to increase any
percentage contained herein or therein or to provide that certain other
provisions of this Indenture cannot be modified or waived without the consent
of the Holder of each Outstanding Security affected thereby; or


 


(j)                                     reduce the requirements of
Section 8.04 hereof for quorum or voting, or reduce the percentage in
aggregate principal amount of the Outstanding Securities the consent of whose
Holders is required for any such supplemental indenture or the consent of whose
Holders is required for any waiver provided for in this Indenture.


 


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


 


Section 7.03.                             Compliance with Trust
Indenture Act.    Every
amendment to this Indenture or the Securities shall be set forth in a
supplemental indenture that complies with the TIA as then in effect.


 


Section 7.04.                             Revocation of Consents
and Effect of Consents or Votes.    Until an amendment, supplement
or waiver becomes effective, a written consent to it by a Holder is a
continuing consent by the Holder and every subsequent Holder of a Security or
portion of a Security that evidences the same debt as the consenting Holder’s
Security, even if notation of the consent is not made on any Security; provided, however,
that unless a record date shall have been established, any such Holder or
subsequent


 


33

















 


Holder may revoke the consent as to its Security or
portion of a Security if the Trustee receives written notice of revocation
before the date the amendment, supplement or waiver becomes effective.


 


An amendment, supplement
or waiver becomes effective on receipt by the Trustee of written consents from
or affirmative votes by, as the case may be, the Holders of the requisite
percentage of aggregate principal amount of the Outstanding Securities, and
thereafter shall bind every Holder of Securities; provided, however,
if the amendment, supplement or waiver makes a change described in any of
clauses (a) through (j) of Section 7.02 hereof, the amendment,
supplement or waiver shall bind only each Holder of a Security which has
consented to it or voted for it, as the case may be, and every subsequent Holder
of a Security or portion of a Security that evidences the same indebtedness as
the Security of the consenting or affirmatively voting, as the case may be,
Holder.


 


Section 7.05.                             Notation on or Exchange
of Securities.    If
an amendment, supplement or waiver changes the terms of a Security:


 


(a)                                  the Trustee may require the Holder of a
Security to deliver such Security to the Trustee, the Trustee may place an
appropriate notation on the Security about the changed terms and return it to
the Holder and the Trustee may place an appropriate notation on any Security
thereafter authenticated; or


 


(b)                                 if the Company or the Trustee so
determines, the Company in exchange for the Security shall issue and the
Trustee shall authenticate a new Security that reflects the changed terms.


 


Failure to make the
appropriate notation or issue a new Security shall not affect the validity and
effect of such amendment, supplement or waiver.


 


Section 7.06.                             Trustee to Sign
Amendment, Etc.    The
Trustee shall sign any supplement or amendment authorized pursuant to this
Article 7 if the amendment does not adversely affect the rights, duties,
liabilities or immunities of the Trustee. If the supplement or amendment does
adversely affect the rights, duties, liabilities or immunities of the Trustee,
the Trustee may but need not sign it. In signing or refusing to sign such
supplement or amendment, the Trustee shall be entitled to receive and shall be
fully protected in relying upon an Officers’ Certificate and an Opinion of
Counsel as conclusive evidence that such amendment is authorized or permitted
by this Indenture.


 


ARTICLE 8

MEETING OF HOLDERS OF SECURITIES


 


Section 8.01.                             Purposes for Which
Meetings May Be Called.    A meeting of Holders of Securities may be
called at any time and from time to time pursuant to this Article to make,
give or take any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be made, given or taken by
Holders of Securities.


 


Notwithstanding anything
contained in this Article 8, the Trustee may, during the pendency of a
Default or an Event of Default, call a meeting of Holders of Securities in
accordance with its standard practices.


 


Section 8.02.                             Call Notice and Place
of Meetings.    (a) The
Trustee may at any time call a meeting of Holders of Securities for any purpose
specified in Section 8.01 hereof, to be held at such time and at such
place in The City of New York. Notice of every meeting of Holders of
Securities, setting forth the time and the place of such meeting, in general
terms the action proposed to be taken at such meeting and the percentage of the
principal amount of the Outstanding Securities which shall constitute a quorum
at such meeting, shall be given, in the manner provided in Section 14.02
hereof, not less than 21 nor more than 180 days prior to the date fixed
for the meeting.


 


(b)                                 In case at any time the Company, pursuant
to a Board Resolution, or the Holders of at least 10% in principal amount of
the Outstanding Securities shall have requested the Trustee to call a meeting
of the Holders of Securities for any purpose specified in Section 8.01
hereof, by written


 


34

















 


request setting forth in reasonable detail the action
proposed to be taken at the meeting, and the Trustee shall not have made the
first publication of the notice of such meeting within 21 days after
receipt of such request or shall not thereafter proceed to cause the meeting to
be held as provided herein, then the Company or the Holders of Securities in
the amount specified, as the case may be, may determine the time and the place
in The City of New York for such meeting and may call such meeting for such
purposes by giving notice thereof as provided in paragraph (a) of this Section.


 


Section 8.03.                             Persons Entitled to
Vote at Meetings.    To
be entitled to vote at any meeting of Holders of Securities, a Person shall be
(a) a Holder of one or more Outstanding Securities on the Record Date
pertaining to such meeting or (b) a Person appointed by an instrument in
writing as proxy for a Holder or Holders of one or more Outstanding Securities
by such Holder or Holders on the Record Date pertaining to such meeting. The
only Persons who shall be entitled to be present or to speak at any meeting of
Holders shall be the Persons entitled to vote at such meeting and their
counsel, any representatives of the Trustee and its counsel and any
representatives of the Company and its counsel.


 


Section 8.04.                             Quorum; Action.    The Persons
entitled to vote a majority in principal amount of the Outstanding Securities
shall constitute a quorum. In the absence of a quorum within 30 minutes of the
time appointed for any such meeting, the meeting shall, if convened at the
request of Holders of Securities, be dissolved. In any other case, the meeting
may be adjourned for a period of not less than 10 days as determined by
the chairman of the meeting prior to the adjournment of such meeting. In the
absence of a quorum at any such adjourned meeting, such adjourned meeting may
be further adjourned for a period of not less than 10 days as determined
by the chairman of the meeting prior to the adjournment of such adjourned
meeting. Notice of the reconvening of any adjourned meeting shall be given as
provided in Section 8.02(a) hereof, except that such notice need be given
only once and not less than five days prior to the date on which the meeting is
scheduled to be reconvened.


 


At a meeting or an
adjourned meeting duly reconvened and at which a quorum is present as
aforesaid, any resolution and all matters (except as limited by the second
paragraph of Section 7.02 hereof) shall be effectively passed and decided
if passed or decided by the Persons entitled to vote not less than a majority
in principal amount of Outstanding Securities represented and voting at such
meeting.


 


Any resolution passed or
decisions taken at any meeting of Holders of Securities duly held in accordance
with this Section shall be binding on all the Holders of Securities,
whether or not present or represented at the meeting.


 


Section 8.05.                             Determination of Voting
Rights; Conduct and Adjournment of Meetings.    (a) Notwithstanding any
other provisions of this Indenture, the Trustee may make such reasonable
regulations as it may deem advisable for any meeting of Holders of Securities
in regard to proof of the holding of Securities and of the appointment of
proxies and in regard to the appointment and duties of inspectors of votes, the
submission and examination of proxies, certificates and other evidence of the
right to vote, and such other matters concerning the conduct of the meeting as
it shall deem appropriate.


 


(b)                                 The Trustee shall, by an instrument in
writing, appoint a temporary chairman (which may be the Trustee) of the
meeting, unless the meeting shall have been called by the Company or by Holders
of Securities as provided in Section 8.02(b) hereof, in which case the
Company or the Holders of Securities calling the meeting, as the case may be,
shall in like manner appoint a temporary chairman. A permanent chairman and a
permanent secretary of the meeting shall be elected by vote of the Persons
entitled to vote a majority in principal amount of the Outstanding Securities
represented at the meeting.


 


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


 


(d)                                 Any meeting of Holders of Securities duly
called pursuant to Section 8.02 hereof at which a quorum is present may be
adjourned from time to time by Persons entitled to vote a majority in principal
amount of the Outstanding Securities represented at the meeting, and the
meeting may be held as so adjourned without further notice.


 


Section 8.06.                             Counting Votes and
Recording Action of Meetings.    The vote upon any resolution
submitted to any meeting of Holders of Securities shall be by written ballots
on which shall be subscribed the signatures of the Holders of Securities or of
their representatives by proxy and the principal amounts and serial numbers of
the Outstanding Securities held or represented by them. The permanent chairman
of the meeting shall appoint two inspectors of votes who shall count all votes
cast at the meeting for or against any resolution and who shall make and file
with the secretary of the meeting their verified written reports in duplicate
of all votes cast at the meeting. A record, at least in duplicate, of the
proceedings of each meeting of Holders of Securities shall be prepared by the
secretary of the meeting and there shall be attached to said record the
original reports of the inspectors of votes on any vote by ballot taken thereat
and affidavits by one or more Persons having knowledge of the facts setting
forth a copy of the notice of the meeting and showing that said notice was
given as provided in Section 8.02 hereof and, if applicable,
Section 8.04 hereof. Each copy shall be signed and verified by the
affidavits of the permanent chairman and secretary of the meeting and one such
copy shall be delivered to the Company and another to the Trustee to be
preserved by the Trustee, the latter to have attached thereto the ballots voted
at the meeting. Any record so signed and verified shall be conclusive evidence
of the matters therein stated.


 


ARTICLE 9

COVENANTS


 


Section 9.01.                             Payment of Principal
and Interest.    The
Company will duly and punctually pay the principal of and interest (including
Liquidated Damages, if any) on the Securities in accordance with the terms of
the Securities and this Indenture. The Company will deposit or cause to be
deposited with the Trustee as directed by the Trustee, no later than the day of
the Stated Maturity of any Security or installment of interest (including
Liquidated Damages, if any), all payments so due.


 


Section 9.02.                             Maintenance of Offices
or Agencies.    The
Company hereby appoints the Trustee’s Corporate Trust Office as its office in
The City of New York where Securities may be:


 


(i)  presented or surrendered for
payment;


 


(ii)  surrendered for registration
of transfer or exchange;


 


(iii)  surrendered for conversion;


 


and where notices and demands to or upon the Company
in respect of the Securities and this Indenture may be served.


 


The Company may at any
time and from time to time vary or terminate the appointment of any such office
or appoint any additional offices for any or all of such purposes; provided, however,
that until all of the Securities have been delivered to the Trustee for cancellation,
or moneys sufficient to pay the principal of and interest (including Liquidated
Damages, if any) on the Securities have been made available for payment and
either paid or returned to the Company pursuant to the provisions of
Section 9.03 hereof, the Company will maintain in The City of New York, an
office or agency where


 


36

















 


Securities may be presented or surrendered for
payment, where Securities may be surrendered for registration of transfer or exchange,
where Securities may be surrendered for conversion and where notices and
demands to or upon the Company in respect of the Securities and this Indenture
may be served. The Company will give prompt written notice to the Trustee, and
notice to the Holders in accordance with Section 14.02 hereof, of the
appointment or termination of any such agents and of the location and any
change in the location of any such office or agency.


 


If at any time the
Company shall fail to maintain any such required office or agency in The City
of New York, or shall fail to furnish the Trustee with the address thereof,
presentations and surrenders may be made at, and notices and demands may be
served on, the Corporate Trust Office of the Trustee.


 


Section 9.03.                             Corporate Existence.    Subject to
Article 6 hereof, the Company will do or cause to be done all things
necessary to preserve and keep in full force and effect its corporate
existence, rights (charter and statutory) and franchises; provided, however,
that the Company shall not be required to preserve any such right or franchise
if the Company determines that the preservation thereof is no longer desirable
in the conduct of the business of the Company and that the loss thereof is not
disadvantageous in any material respect to the Holders.


 


Section 9.04.                             Reports.    (a) The
Company shall make available to the Trustee within 15 days after it files
them with the SEC copies of the annual and quarterly reports and other
information, documents and other reports deemed “filed” for the purposes of
Section 18 of the Exchange Act or incorporated by reference in any filing
under the Securities Act or the Exchange Act (or copies of such portions of any
of the foregoing as the SEC may by rules and regulations prescribe) which the
Company is required to file with the SEC pursuant to Section 13 or 15(d)
of the Exchange Act; provided, however, that the Company shall not be
required to deliver to the Trustee any materials for which the Company has
sought and received confidential treatment by the SEC. The Company also shall
comply with the other provisions of Section 314(a) of the TIA.


 


(b)                                 If at any time the Company is not subject
to Section 13 or 15(d) of the Exchange Act, upon the request of a Holder
of a Security, the Company will promptly furnish or cause to be furnished to
such Holder or to a prospective purchaser of such Security designated by such
Holder, as the case may be, the information, if any, required to be delivered
by it pursuant to Rule 144A(d)(4) under the Securities Act to permit
compliance with Rule 144A in connection with the resale of such Security; provided, however,
that the Company shall not be required to furnish such information in
connection with any request made on or after the date which is two years from
the later of the date such Security was last acquired from the Company or an
Affiliate of the Company.


 


Section 9.05.                             Compliance Certificate.    The Company shall
deliver to the Trustee, within 120 days after the end of each fiscal year
of the Company, an Officers’ Certificate stating whether or not the signer
thereof has knowledge of any failure by the Company to comply with all
conditions and covenants then required to be performed under this Indenture
and, if so, specifying each such failure and the nature thereof. Within five
Business Days of an Officer of the Company coming to have actual knowledge of a
Default, regardless of the date, the Company shall deliver an Officers’
Certificate to the Trustee specifying such Default and the nature and status
thereof.


 


Section 9.06.                             Liquidated Damages.    If Liquidated
Damages are payable by the Company pursuant to the Registration Rights
Agreement, the Company shall deliver to the Trustee an Officers’ Certificate to
that effect stating (i) the amount of such Liquidated Damages that are
payable, (ii) the reason why such Liquidated Damages are payable and
(iii) the date on which such damages are payable. Unless and until a
Responsible Officer of the Trustee receives such an Officers’ Certificate, the
Trustee may assume without inquiry that no Liquidated Damages are payable. If
the Company has paid Liquidated Damages directly to the persons entitled to
such amounts, the Company shall deliver to the Trustee a certificate setting
forth the particulars of such payment.


 


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ARTICLE 10

REDEMPTION OF SECURITIES


 


Section 10.01.                       Optional Redemption.    The Securities
are not redeemable prior to May 15, 2011. On and after May 15, 2011,
the Company may, at its option, redeem the Securities in whole at any time or
in part from time to time, on any date prior to maturity, upon notice as set
forth in Section 10.04, at a redemption price equal to 100% of the
principal amount of the Securities (the “Optional
Redemption Price”), plus any interest accrued (including Liquidated
Damages, if any) but not paid prior to, but excluding, the Optional Redemption
Date.


 


Section 10.02.                       Notice to Trustee.    If the Company
elects to redeem Securities pursuant to the redemption provisions of
Section 10.01 hereof, it shall notify the Trustee at least 30 days
prior to the Redemption Date of such intended Redemption Date, the principal
amount of Securities to be redeemed and the CUSIP numbers of the Securities to
be redeemed.


 


Section 10.03.                       Selection of Securities
to be Redeemed.    If
fewer than all the Securities are to be redeemed, the Trustee shall select the
particular Securities to be redeemed from the Outstanding Securities by a
method that complies with the requirements of any exchange on which the Securities
are listed, or, if the Securities are not listed on an exchange, on a pro rata
basis or by lot or in accordance with any other method the Trustee considers
fair and appropriate. Securities and portions thereof that the Trustee selects
shall be in amounts equal to the minimum authorized denominations for
Securities to be redeemed or any multiple thereof.


 


If any Security selected
for partial redemption is converted in part before termination of the
conversion right with respect to the portion of the Security so selected, the
converted portion of such Security shall be deemed to be the portion selected
for redemption (provided, however, that the Holder of such Security
so converted and deemed redeemed shall not be entitled to any additional
interest payment as a result of such deemed redemption than such Holder would
have otherwise been entitled to receive upon conversion of such Security).
Securities which have been converted during a selection of Securities to be
redeemed may be treated by the Trustee as Outstanding for the purpose of such
selection.


 


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


 


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


 


Section 10.04.                       Notice of Redemption.    Notice of
redemption shall be given in the manner provided in Section 14.02 hereof
to the Holders of Securities to be redeemed. Such notice shall be given not
less than 30 or more than 60 days prior to the Redemption Date.


 


All notices of redemption
shall state:


 


(1)                                  the Redemption Date;


 


(2)                                  the Redemption Price
and interest accrued and unpaid to, but excluding, the Redemption Date, if any;


 


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


 


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


 


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


 


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


 


(7)                                  the CUSIP number of
the Securities.


 


The notice given shall
specify the last date on which exchanges or transfers of Securities may be made
pursuant to Section 2.07 hereof, and shall specify the serial numbers of
Securities and the portions thereof called for redemption.


 


Notice of redemption of
Securities to be redeemed at the election of the Company shall be given by the
Company or, at the Company’s request, by the Trustee in the name of and at the
expense of the Company.


 


Section 10.05.                       Effect of Notice of
Redemption.    Notice
of redemption having been given as provided in Section 10.04 hereof, the Securities
so to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued and
unpaid interest) such Securities shall cease to bear interest. Upon surrender
of any such Security for redemption in accordance with such notice, such
Security shall be paid by the Company at the Redemption Price plus accrued and
unpaid interest, if any; provided,
however, that the installments of
interest on Securities whose Stated Maturity is prior to or on the Redemption
Date shall be payable to the Holders of such Securities, or one or more
Predecessor Securities, registered as such on the relevant Record Date according
to their terms and the provisions of Section 2.01 hereof.


 


If any Security called
for redemption shall not be so paid upon surrender thereof for redemption, the
principal shall, until paid, bear interest from the Redemption Date at the
Interest Rate.


 


Section 10.06.                       Deposit of Redemption
Price.    Prior
to or on any Redemption Date, the Company shall deposit with the Trustee or
with a Paying Agent an amount of money sufficient to pay the Redemption Price
of all the Securities to be redeemed on that Redemption Date, other than any
Securities called for redemption on that date which have been converted prior
to the date of such deposit, and accrued and unpaid interest, if any, on such
Securities.


 


If any Security called
for redemption is converted, any money deposited with the Trustee or with a
Paying Agent or so segregated and held in trust for the redemption of such
Security shall (subject to any right of the Holder of such Security or any
Predecessor Security to receive interest as provided in the fourth to last
paragraph of Section 2.01 hereof) be paid to the Company on Company
Request or, if then held by the Company, shall be discharged from such trust.


 


Section 10.07.                       Securities Redeemed in
Part.    Any
Security which is to be redeemed only in part shall be surrendered at an office
or agency of the Company designated for that purpose pursuant to
Section 9.02 hereof (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 the Holder’s
attorney duly authorized in writing), and the Company shall execute, and the
Trustee shall authenticate and deliver to the Holder of such Security without
service charge, a new Security or Securities of any authorized denomination as
requested by such Holder in aggregate principal amount equal to and in exchange
for the unredeemed portion of the principal of the Security so surrendered.


 


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Section 10.08.                       Conversion Arrangement
On Call For Redemption.    In connection with any redemption of
Securities, the Company may arrange for the purchase and conversion of any
Securities called for redemption by an agreement with one or more investment
banks or other purchasers to purchase such Securities by paying to the Trustee
in trust for the Holders of the Securities, on or prior to 10:00 a.m. New
York City time on the Redemption Date, an amount that, together with any
amounts deposited with the Trustee by the Company for the redemption of such
Securities, is not less than the Redemption Price of, and any accrued and
unpaid interest (including Liquidated Damages, if any) with respect to, such
Securities. Notwithstanding anything to the contrary contained in this
Article 10, the obligation of the Company to pay the Redemption Prices of
such Securities shall be deemed to be satisfied and discharged to the extent
such amount is so paid by such purchasers. If such an agreement is entered
into, any Securities not duly surrendered for conversion by the Holders thereof
may, at the option of the Company, be deemed, to the fullest extent permitted
by law, acquired by such purchasers from such Holders and surrendered by such
purchasers for conversion, all as of immediately prior to the close of business
on the Business Day prior to the Redemption Date, subject to payment of the
above amount as aforesaid. The Trustee shall hold and pay to the Holders whose
Securities are selected for redemption any such amount paid to it for purchase
and conversion in the same manner as it would moneys deposited with it by the
Company for the redemption of Securities. Without the Trustee’s prior written
consent, no arrangement between the Company and such purchasers for the purchase
and conversion of any Securities shall increase or otherwise affect any of the
powers, duties, responsibilities or obligations of the Trustee as set forth in
this Indenture, and the Company agrees to indemnify the Trustee from, and hold
it harmless against, any loss, liability or expense arising out of or in
connection with any such arrangement for the purchase and conversion of any
Securities between the Company and such purchasers, including the costs and
expenses incurred by the Trustee in the defense of any claim or liability
arising out of or in connection with the exercise or performance of any of its
powers, duties, responsibilities or obligations under this Indenture.


 


ARTICLE 11

PURCHASE OF SECURITIES


 


Section 11.01.                       Purchase Right Upon
Fundamental Change.    (a) In
the event that a Fundamental Change shall occur, each Holder shall have the
right (the “Purchase Right”), at
the Holder’s option to require the Company to purchase, and upon the exercise
of such right in accordance with Section 11.03 hereof the Company shall
purchase, all of such Holder’s Securities not theretofore called for
redemption, or any portion of the principal amount thereof that is equal to
$1,000 or any multiple thereof (provided,
however, that no single Security
may be purchased in part unless the portion of the principal amount of such
Security to be Outstanding after such purchase is equal to $1,000 or multiples
thereof), on the date (the “Purchase Date”)
that is 45 days after the date of the Company Notice at a purchase price
equal to 100% of the principal amount of the Securities to be purchased (the “Purchase Price”), plus interest accrued
(including Liquidated Damages, if any) and unpaid to, but excluding, the
Purchase Date; provided, however, that installments of interest on
Securities whose Stated Maturity is prior to or on the Purchase Date shall be
payable to the Holders of such Securities, or one or more Predecessor
Securities, registered as such on the relevant Record Date according to their
terms and the provisions of Section 2.01 hereof.


 


(b)                                 Whenever in this Indenture (including
Sections 2.02, 4.01(a) and 4.07 hereof) or Exhibit A annexed hereto there
is a reference, in any context, to the principal of any Security as of any
time, such reference shall be deemed to include reference to the Purchase Price
or the Put Purchase Price, as the case may be, payable in respect to such
Security to the extent that such Purchase Price or the Put Purchase Price, as
the case may be, is, was or would be so payable at such time, and express
mention of the Purchase Price or the Put Purchase Price, as the case may be, in
any provision of this Indenture shall not be construed as excluding the
Purchase Price or the Put Purchase Price, as the case may be, in those
provisions of this Indenture when such express mention is not made; provided, however,
that


 


40

















 


for the purposes of Article 13 hereof, such
reference shall be deemed to include reference to the Purchase Price or the Put
Purchase Price, as the case may be, only to the extent the Purchase Price or
the Put Purchase Price, as the case may be, is payable in cash.


 


Section 11.02.                       Purchase of Securities
by the Company at Option of the Holder.    (a)    General.    Each
Holder shall have the right to require the Company to purchase all or a portion
of its Securities on May 15, 2011, May 15, 2014 and May 15, 2019
(or, if any such date is not a Business Day, on the immediately succeeding
Business Day) (each, a “Put Purchase Date”),
at 100% of the principal amount of the Securities to be so purchased, plus
accrued and unpaid interest, if any, (including Liquidated Damages, if any) to,
but excluding, such Put Purchase Date (the “Put
Purchase Price”).


 


(b)                                 Company Notice.    On or before the
twenty-third (23rd) Business Day prior to each Put Purchase Date, the Company
shall provide to the Trustee, the Paying Agent and to all Holders at their
respective addresses as shown on the Register, and to beneficial owners of the
Securities where required by applicable law, a notice stating, among other
things:


 


(i)  the name and address of the
Trustee, the Paying Agent and the Conversion Agent; and


 


(ii)  the procedures the Holders
must follow to require the Company to purchase their Securities.


 


Simultaneously with
providing such notice, the Company shall publish a notice containing this
information in a newspaper of general circulation in The City of New York or
publish the information on the Company’s website or through such other public
medium as the Company may use at that time.


 


(c)                                  Conditions to the
Company’s Obligation to Purchase.    The Company will be required
to purchase only Securities with respect to which each of the following
conditions has been satisfied:


 


(i)  delivery to the Paying Agent by
the Holder of a written notice of purchase (a “Purchase Notice”) during the period beginning at any time from
the opening of business on the date that is twenty-three (23) Business
Days prior to the relevant Put Purchase Date until the close of business on the
third (3rd) Business Day prior to such Put Purchase Date stating:


 


(A)                the applicable Depositary procedures or, in the case
of Physical Securities, the certificate number(s) of the Holder’s Securities to
be delivered for purchase;


 


(B)                  the portion of the principal amount of Securities to
be purchased, in multiples of $l,000; and


 


(C)                  that the Securities are to be purchased by the Company
pursuant to paragraph 6(b) of the Securities and this Section 11.02;


 


(ii)  delivery of such Securities
to the Trustee or Paying Agent prior to, on or after the Put Purchase Date
(together with all necessary endorsements); and


 


(iii)  there shall not have
occurred and be continuing an Event of Default, other than an Event of Default
that is cured with respect to all Securities by the payment of the Put Purchase
Price.


 


(d)                                 Withdrawal of Purchase
Notice.    A
Holder may withdraw any Purchase Notice in whole or in part by a written notice
of withdrawal delivered to the Trustee or the Paying Agent prior to the close
of business on the third (3rd) Business Day prior to the applicable Put
Purchase Date. The notice of withdrawal must state:


 


(i)  the principal amount of the
withdrawn Securities;


 


(ii)  with respect to Physical
Securities, the certificate number(s) of the withdrawn Securities; and


 


(iii)  the principal amount of
Securities, if any, which remains subject to the Purchase Notice.


 


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


 


The Put Purchase Price
shall be so paid pursuant to this Section 11.02 only if the Securities so
delivered by the Holder conform in all respects to the description thereof in
the related Purchase Notice, as determined by the Company in its sole
discretion.


 


(e)                                  Payment of Put Purchase
Price by the Company; Effect on Holders of Purchased Securities.    The Company shall
pay the Put Purchase Price to the Paying Agent promptly following the later of
the relevant Put Purchase Date or the time of book-entry transfer or delivery
of the purchased Securities. If either the Trustee or the Paying Agent holds
money or securities sufficient to pay the Put Purchase Price on the Business
Day immediately following the relevant Put Purchase Date, then:


 


(i)  the purchased Securities will
cease to be Outstanding and interest will cease to accrue (whether or not
book-entry transfer of the purchased Securities is made or whether or not the
purchased Securities are delivered to the Paying Agent); and


 


(ii)  all other rights of the
Holders of such purchased Securities will terminate (other than the right to
receive the Put Purchase Price upon delivery or transfer of such purchased
Securities).


 


Section 11.03.                       Fundamental Change
Notices; Method of Exercising Purchase Right, Etc.    (a) Unless
the Company shall have theretofore called for redemption all of the Outstanding
Securities, prior to or on the 30th day after the occurrence of a Fundamental
Change, the Company, or, at the written request and expense of the Company
prior to or on the 30th day after such occurrence, the Trustee shall give to
all Holders of Securities notice, in the manner provided in Section 14.02
hereof, of the occurrence of the Fundamental Change and of the Purchase Right
set forth herein arising as a result thereof (the “Company Notice”). The Company shall also deliver a copy of
such notice of a Purchase Right to the Trustee. Each notice of a Purchase Right
shall state:


 


(i)  the Purchase Date;


 


(ii)  the date by which the
Purchase Right must be exercised;


 


(iii)  the Purchase Price and
accrued and unpaid interest, if any;


 


(iv)  a description of the
procedure which a Holder must follow to exercise a Purchase Right, and the
place or places where such Securities, are to be surrendered for payment of the
Purchase Price and accrued and unpaid interest, if any;


 


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


 


(vi)  the conversion rate then in
effect, the date on which the right to convert the principal amount of the
Securities to be purchased will terminate and the place where such Securities
may be surrendered for conversion; and


 


(vii)  the place or places where
such Securities, together with the Notice of Exercise of Purchase Right
certificate included in Exhibit A annexed hereto are to be delivered for payment
of the Purchase Price and accrued and unpaid interest, if any.


 


No failure of the Company
to give the foregoing notices or defect therein shall limit any Holder’s right
to exercise a Purchase Right or affect the validity of the proceedings for the purchase
of Securities.


 


If any of the foregoing
provisions or other provisions of this Article 11 are inconsistent with
applicable law, such law shall govern.


 


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(b)                                 To exercise a Purchase Right, a Holder
shall deliver to the Trustee prior to or on the 30th day after the date of the
Company Notice:


 


(i)  written notice (“Fundamental Change Purchase Notice”) of the
Holder’s exercise of such right in the form of the Notice of Exercise of
Purchase Right certificate included in Exhibit A annexed hereto, which
notice shall set forth the name of the Holder, the principal amount of the
Securities to be purchased (and, if any Security is to be purchased in part,
the serial number thereof, the portion of the principal amount thereof to be
purchased) and a statement that an election to exercise the Purchase Right is
being made thereby, and


 


(ii)  applicable Depository
procedures or, in the case of Physical Securities, the certificate number(s) of
the Holder’s Securities with respect to which the Purchase Right is being
exercised.


 


Such written notice shall
be irrevocable, except that the right of the Holder to convert the Securities
with respect to which the Purchase Right is being exercised shall continue
until the close of business on the Business Day immediately preceding the
Purchase Date.


 


(c)                                  In the event a Purchase Right shall be
exercised in accordance with the terms hereof, the Company shall pay or cause
to be paid to the Trustee the Purchase Price in cash for payment to the Holder
on the Purchase Date as promptly after the Purchase Date as practicable,
together with accrued and unpaid interest to the Purchase Date payable in cash
with respect to the Securities as to which the Purchase Right has been
exercised; provided, however, that installments of interest
that mature prior to or on the Purchase Date shall be payable in cash to the
Holders of such Securities, or one or more Predecessor Securities, registered
as such at the close of business on the relevant Regular Record Date.


 


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


 


(e)                                  Any Security which is to be purchased
only in part 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
unpurchased portion of the principal of the Security so surrendered.


 


(f)                                    All Securities delivered for purchase
shall be delivered to the Trustee to be canceled at the direction of the
Trustee, which shall dispose of the same as provided in Section 2.15
hereof.


 


ARTICLE 12

CONVERSION OF SECURITIES


 


Section 12.01.                       Conversion Right and
Conversion Rate.    (a) Subject
to and upon: (i) compliance with the provisions of this Article and
(ii) the occurrence of one or more of the conditions set forth in
paragraph 7(d) of the Securities, at the option of the Holder thereof, any
Security or any portion of the principal amount thereof which is $1,000 or a
multiple of $1,000 may be converted at the principal amount thereof, or of such
portion thereof, into the number of duly authorized, fully paid and
nonassessable shares of Common Stock at the Conversion Rate in effect at the
time of conversion. Such conversion right shall expire at the close of business
on May 15, 2024.


 


(b)                                 In case a Security or portion thereof is
called for redemption, such conversion right in respect of the Security or the
portion so called, shall expire at the close of business on the Business Day


 


43

















 


immediately preceding the Redemption Date, unless the
Company defaults in making the payment due upon redemption. If a Holder
exercises its Purchase Right or Put Purchase Right with respect to a Security
or portion thereof, such conversion right in respect of the Security or portion
thereof shall expire at the close of business on the Business Day preceding the
Purchase Date or Put Purchase Date, as applicable.


 


(c)                                  Each $1,000 principal amount of the
Securities shall be convertible into 41.0627 shares of Common Stock (herein
called the “Conversion Rate”),
subject to adjustment in certain instances as provided in paragraphs (a), (b),
(c), (d), (e), (f), (h) and (m) of Section 12.04 hereof.


 


Section 12.02.                       Exercise of Conversion
Right.    To
exercise the conversion right, the Holder of any Security to be converted shall
surrender such Security duly endorsed or assigned to the Company or in blank,
at the office of any Conversion Agent, accompanied by a duly signed conversion
notice substantially in the form attached to the Security to the Company
stating that the Holder elects to convert such Security or, if less than the
entire principal amount thereof is to be converted, the portion thereof to be
converted.


 


Any Holder which
surrenders any Security for conversion during the period between the close of
business on any Regular Record Date and ending with the opening of business on
the corresponding interest Payment Date (except in the case of any Security
whose Maturity is prior to such Interest Payment Date) shall be accompanied by
payment in New York Clearing House funds or other funds acceptable to the
Company of an amount equal to the interest (excluding Liquidated Damages, if
any) to be received on such interest Payment Date on the principal amount of
the Security being surrendered for conversion (but excluding any Defaulted
Interest on the principal amount of such Security so converted that exists at
the time such Holder surrenders such Security for conversion). Notwithstanding
the foregoing, any such Holder which surrenders for conversion any Security
(a) which has been called for redemption by the Company in a notice of
redemption given by the Company pursuant to Section 10.04 hereof on a
Redemption Date after such Regular Record Date and on or prior to the next
succeeding interest Payment Date or (b) with respect to which the Company
has specified a Purchase Date that is after such Regular Record Date and on or
prior to the next succeeding Interest Payment Date, in either case, need not
pay the Company an amount equal to the interest in the principal amount of such
Security so converted at the time such Holder surrenders such Security for
conversion.


 


Securities shall be
deemed to have been converted immediately prior to the close of business on the
day of surrender of such Securities for conversion in accordance with the
foregoing provisions, and at such time the rights of the Holders of such
Securities as Holders shall cease, and the Person or Persons entitled to
receive the Common Stock issuable upon conversion shall be treated for all
purposes as the record holder or holders of such Common Stock at such time.
Except as provided above in this Section 12.02, no adjustment shall be
made for interest and Liquidated Damages, if any, accrued on any Security
converted or for dividends on any shares issued upon the conversion of such
Security as provided in this Article 12. As promptly as practicable on or
after the conversion date, but in no event later than the fifth Business Day
thereafter, the Company shall cause to be issued and delivered to such
Conversion Agent a certificate or certificates for the number of full shares of
Common Stock issuable upon conversion, together with payment in lieu of any
fraction of a share as provided in Section 12.03 hereof.


 


In the case of any
Security which is converted in part only, upon such conversion the Company
shall execute and the Trustee shall authenticate and deliver to the Holder thereof,
at the expense of the Company, a new Security or Securities of authorized
denominations in aggregate principal amount equal to the unconverted portion of
the principal amount of such Securities.


 


If shares of Common Stock
to be issued upon conversion of a Restricted Security, or Securities to be
issued upon conversion of a Restricted Security in part only, are to be
registered in a name other than that of the Holder of such Restricted Security,
such Holder must deliver to the Conversion Agent a certificate in substantially
the form set forth in the form of Security set forth in Exhibit A annexed hereto, dated the
date of surrender of such Restricted Security and signed by such Holder, as to
compliance with the restrictions on transfer applicable to such Restricted
Security. Neither the Trustee nor any Conversion Agent, Registrar or Transfer
Agent shall be required to register in a name other than that of the Holder
shares of Common Stock or Securities issued upon conversion of any such
Restricted Security not so accompanied by a properly completed certificate.


 


44

















 


The Company hereby
initially appoints the Trustee as the Conversion Agent.


 


Section 12.03.                       Fractions of Shares.    No fractional
shares of Common Stock shall be issued upon conversion of any Security or
Securities. If more than one Security shall be surrendered for conversion at
one time by the same Holder, the number of full shares which shall be issued
upon conversion thereof shall be computed on the basis of the aggregate
principal amount of the Securities (or specified portions thereof) so
surrendered. Instead of any fractional share of Common Stock which would
otherwise be issued upon conversion of any Security or Securities (or specified
portions thereof), the Company shall pay a cash adjustment in respect of such
fraction (calculated to the nearest one-100th of a share) in an amount equal to
the same fraction of the Quoted Price of the Common Stock as of the Trading Day
preceding the date of conversion.


 


Section 12.04.                       Adjustment of
Conversion Rate.    The
Conversion Rate shall be subject to adjustments, calculated by the Company,
from time to time as follows:


 


(a)                                  In case the Company shall hereafter pay a
dividend or make a distribution to all holders of the outstanding Common Stock
in shares of Common Stock, the Conversion Rate in effect at the opening of
business on the date following the date fixed for the determination of
stockholders entitled to receive such dividend or other distribution shall be
increased by multiplying such Conversion Rate by a fraction:


 


(i)  the numerator of which shall
be the sum of the number of shares of Common Stock outstanding at the close of
business on the Record Date (as defined in Section 12.04(g)) fixed for
such determination plus the total number of shares constituting such dividend
or other distribution, and


 


(ii)  the denominator of which
shall be the number of shares of Common Stock outstanding at the close of
business on such Record Date fixed for such determination.


 


Such increase shall become effective immediately after
the opening of business on the day following the Record Date. If any dividend
or distribution of the type described in this Section 12.04(a) is declared
but not so paid or made, the Conversion Rate shall again be adjusted to the
Conversion Rate which would then be in effect if such dividend or distribution
had not been declared.


 


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


 


(c)                                  In case the Company shall issue rights or
warrants (other than any rights or warrants referred to in
Section 12.04(d)) to all holders of its outstanding shares of Common Stock
entitling them to subscribe for or purchase shares of Common Stock (or
securities convertible into Common Stock) at a price per share (or having a
conversion price per share) less than the Current Market Price (as defined in
Section 12.04(g)) on the Record Date fixed for the determination of
stockholders entitled to receive such rights or warrants, the Conversion Rate
shall be increased so that the same shall equal the rate determined by
multiplying the Conversion Rate in effect at the opening of business on the
date after such Record Date by a fraction:


 


(i)  the numerator of which shall
be the number of shares of Common Stock outstanding at the close of business on
the Record Date plus the total number of additional shares of Common Stock so
offered for subscription or purchase (or into which the convertible securities
so offered are convertible), and


 


45

















 


(ii)  the denominator of which
shall be the number of shares of Common Stock outstanding on the close of
business on the Record Date plus the number of shares which the aggregate
offering price of the total number of shares so offered for subscription or
purchase (or the aggregate conversion price of the convertible securities so
offered) would purchase at such Current Market Price.


 


Such adjustment shall become effective immediately
after the opening of business on the day following the Record Date fixed for
determination of stockholders entitled to receive such rights or warrants. To
the extent that shares of Common Stock (or securities convertible into Common
Stock) are not delivered pursuant to such rights or warrants, upon the
expiration or termination of such rights or warrants the Conversion Rate shall
be readjusted to the Conversion Rate which would then be in effect had the
adjustments made upon the issuance of such rights or warrants been made on the
basis of the delivery of only the number of shares of Common Stock (or
securities convertible into Common Stock) actually delivered. In the event that
such rights or warrants are not so issued, the Conversion Rate shall again be
adjusted to be the Conversion Rate which would then be in effect if such date
fixed for the determination of stockholders entitled to receive such rights or
warrants had not been fixed. Notwithstanding the foregoing, after a period of
60 days from the date of issuance of such rights or warrants, the
Conversion Rate shall be readjusted to the Conversion Rate which would then be
in effect had the adjustments made upon the issuance of such rights or warrants
been made on the basis of the delivery of only the number of shares of Common
Stock (or securities convertible into Common Stock) actually delivered during
such period. In determining whether any rights or warrants entitle the holders
to subscribe for or purchase shares of Common Stock at less than such Current
Market Price, and in determining the aggregate offering price of such shares of
Common Stock, there shall be taken into account any consideration received for
such rights or warrants, the value of such consideration if other than cash, to
be determined by the Board of Directors.


 


(d)                                 In case the Company shall, by dividend or
otherwise, distribute to all holders of its Common Stock shares of any class of
capital stock of the Company (other than any dividends or distributions to
which Section 12.04(a) applies) or evidences of its indebtedness, cash or
other assets, including securities, but excluding (1) any rights or
warrants referred to in Section 12.04(c), (2) any stock, securities
or other property or assets (including cash) distributed in connection with a
reclassification, change, merger, consolidation, statutory share exchange,
combination, sale or conveyance to which Section 12.11 hereof applies and
(3) dividends and distributions paid exclusively in cash (the securities
described in foregoing clauses (1), (2) and (3) hereinafter in this
Section 12.04(d) called the “securities”),
then, in each such case, subject to the second succeeding paragraph of this
Section 12.04(d), the Conversion Rate shall be increased so that the same
shall be equal to the rate determined by multiplying the Conversion Rate in
effect immediately prior to the close of business on the Record Date (as
defined in Section 12.04(g)) with respect to such distribution by a
fraction:


 


(i)  the numerator of which shall
be the Current Market Price (determined as provided in Section 12.04(g))
on such date, and


 


(ii)  the denominator of which
shall be such Current Market Price on such date less the fair market value (as
determined by the Board of Directors, whose determination shall be conclusive
and set forth in a Board Resolution) on such date of the portion of the shares
of capital stock, evidences of indebtedness, cash or other assets, including
securities, so distributed applicable to one share of Common Stock (determined
on the basis of the number of shares of the Common Stock outstanding on the
Record Date).


 


Such increase shall
become effective immediately prior to the opening of business on the day
following the Record Date. However, in the event that the then fair market
value (as so determined) of the portion of the securities so distributed
applicable to one share of Common Stock is equal to or greater than the Current
Market Price on the Record Date, in lieu of the foregoing adjustment, adequate
provision shall be made so that each Holder shall have the right to receive
upon conversion


 


46

















 


of a Security (or any portion thereof) the amount of
shares of capital stock, evidences of indebtedness, cash or other assets,
including securities, such Holder would have received had such Holder converted
such Security (or portion thereof) immediately prior to such Record Date. In
the event that such dividend or distribution is not so paid or made, the
Conversion Rate shall again be adjusted to be the Conversion Rate which would
then be in effect if such dividend or distribution had not been declared.


 


If the Board of Directors
determines the fair market value of any distribution for purposes of this
Section 12.04(d) by reference to the actual or when issued trading market
for any securities comprising all or part of such distribution, it must in
doing so consider the prices in such market over the same period (the “Reference Period”) used in computing the
Current Market Price pursuant to Section 12.04(g) to the extent possible,
unless the Board of Directors in a Board Resolution determines in good faith
that determining the fair market value during the Reference Period would not be
in the best interest of the Holder.


 


Rights or warrants
distributed by the Company to all holders of Common Stock entitling the holders
thereof to subscribe for or purchase shares of the Company’s capital stock
(either initially or under certain circumstances), which rights or warrants,
until the occurrence of a specified event or events (“Trigger Event”):


 


(i)  are deemed to be transferred
with such shares of Common Stock,


 


(ii)  are not exercisable, and


 


(iii)  are also issued in respect
of future issuances of Common Stock


 


shall be deemed not to have been distributed for
purposes of this Section 12.04(d) (and no adjustment to the Conversion
Rate under this Section 12.04(d) will be required) until the occurrence of
the earliest Trigger Event. If such right or warrant is subject to subsequent
events, upon the occurrence of which such right or warrant shall become
exercisable to purchase different securities, evidences of indebtedness or
other assets or entitle the holder to purchase a different number or amount of
the foregoing or to purchase any of the foregoing at a different purchase
price, then the occurrence of each such event shall be deemed to be the date of
issuance and record date with respect to a new right or warrant (and a
termination or expiration of the existing right or warrant without exercise by
the holder thereof). In addition, in the event of any distribution (or deemed
distribution) of rights or warrants, or any Trigger Event or other event (of
the type described in the preceding sentence) with respect thereto, that
resulted in an adjustment to the Conversion Rate under this
Section 12.04(d):


 


(1)                                  in the case of any
such rights or warrants which shall all have been redeemed or repurchased
without exercise by any holders thereof, the Conversion Rate shall be
readjusted upon such final redemption or repurchase to give effect to such
distribution or Trigger Event, as the case may be, as though it were a cash
distribution, equal to the per share redemption or repurchase price received by
a holder of Common Stock with respect to such rights or warrant (assuming such
holder had retained such rights or warrants), made to all holders of Common
Stock as of the date of such redemption or repurchase, and


 


(2)                                  in the case of such
rights or warrants all of which shall have expired or been terminated without
exercise, the Conversion Rate shall be readjusted as if such rights and
warrants had never been issued.


 


For purposes of this
Section 12.04(d) and Section 12.04(a), 12.04(b) and 12.04(c), any
dividend or distribution to which this Section 12.04(d) is applicable that
also includes shares of Common Stock, a subdivision or combination of Common Stock
to which Section 12.04(b) applies, or rights or warrants


 


47

















 


to subscribe for or purchase shares of Common Stock to
which Section 12.04(c) applies (or any combination thereof), shall be
deemed instead to be:


 


(1)                                  a dividend or
distribution of the evidences of indebtedness, assets, shares of capital stock,
rights or warrants other than such shares of Common Stock, such subdivision or
combination or such rights or warrants to which Section 12.04(a), 12.04(b)
and 12.04(c) apply, respectively (and any Conversion Rate increase required by
this Section 12.04(d) with respect to such dividend or distribution shall
then be made), immediately followed by


 


(2)                                  a dividend or
distribution of such shares of Common Stock, such subdivision or combination or
such rights or warrants (and any further Conversion Rate increase required by
Section 12.04(a), 12.04(b) and 12.04(c) with respect to such dividend or
distribution shall then be made), except:


 


(A)      the Record Date of such dividend or distribution
shall be substituted as (x) ”the date fixed for the determination of
stockholders entitled to receive such dividend or other distribution”, “Record
Date fixed for such determination” and “Record Date” within the meaning of
Section 12.04(a), (y) ”the day upon which such subdivision becomes
effective” and “the day upon which such combination becomes effective” within
the meaning of Section 12.04(b), and (z) ”the Record Date fixed for
the determination of stockholders entitled to receive such rights or warrants,”
such “Record Date,” “the Record Date fixed for the determination of
stockholders entitled to receive such rights or warrants” and “such dated fixed
for the determination of stockholders entitled to receive such rights or
warrants” within the meaning of Section 12.04(c), and


 


(B)        any shares of Common Stock included in such
dividend or distribution shall not be deemed “outstanding at the close of
business on the Record Date fixed for such determination” within the meaning of
Section 12.04(a) and any reduction or increase in the number of shares of
Common Stock resulting from such subdivision or combination shall be
disregarded in connection with such dividend or distribution.


 


(e)                                  In case the Company shall, by dividend or
otherwise, distribute to all holders of its Common Stock cash (excluding any
cash that is distributed upon a reclassification, change, merger,
consolidation, statutory share exchange, combination, sale or conveyance to
which Section 12.11 hereof applies or as part of a distribution referred
to in Section 12.04(d) hereof), then and in each such case, immediately
after the close of business on the Record Date with respect to such
distribution, the Conversion Rate shall be increased so that the same shall
equal the rate determined by multiplying the Conversion Rate in effect
immediately prior to the close of business on such Record Date by a fraction:


 


(i)  the numerator of which shall
be equal to the Current Market Price on the Record Date, and


 


(ii)  the denominator of which shall
be equal to the Current Market Price on such date less an amount equal to the
quotient of (x) the aggregate amount of the cash distribution and
(y) the number of shares of Common Stock outstanding on the Record Date.


 


In the event that such dividend or distribution is not
so paid or made, the Conversion Rate shall again be adjusted to be the
Conversion Rate which would then be in effect if such dividend or distribution
had not been declared.


 


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


 


48

















 


combined together with the aggregate of the cash plus
the fair market value (as determined by the Board of Directors, whose
determination shall be conclusive and set forth in a Board Resolution), as of
the expiration of the other tender or exchange offer referred to below, of
consideration per share payable in respect of any other tender or exchange
offers by the Company or any of its subsidiaries for all or any portion of the
Common Stock expiring within the preceding 12 months and in respect of
which no adjustment pursuant to this Section 12.04(f) has been made,
exceeds the Closing Price of a share of Common Stock on the Trading Day next
succeeding the last time (the “Expiration
Time”) tenders could have been made pursuant to such tender or
exchange offer, then, and in each such case, immediately prior to the opening
of business on the day after the date of the Expiration Time, the Conversion
Rate shall be adjusted so that the same shall equal the rate determined by
multiplying the Conversion Rate in effect immediately prior to close of
business on the date of the Expiration Time by a fraction:


 


(i)  the numerator of which shall
be the sum of (x) the fair market value (determined as aforesaid) of the
aggregate consideration payable to stockholders based on the acceptance (up to
any maximum specified in the terms of the tender or exchange offer) of all
shares validly tendered or exchanged and not withdrawn as of the Expiration
Time (the shares deemed so accepted, up to any such maximum, being referred to
as the “Purchased Shares”) and
(y) the number of shares of Common Stock outstanding (less any Purchased
Shares) at the Expiration Time multiplied by the Closing Price of the Common
Stock on the Trading Day next succeeding the Expiration Time, and


 


(ii)  the denominator shall be the
product of the number of shares of Common Stock outstanding (including any
tendered or exchanged shares) on the Expiration Time and the Closing Price of
the Common Stock on the Trading Day next succeeding the Expiration Time.


 


Such increase (if any)
shall become effective immediately prior to the opening of business on the day
following the Expiration Time. In the event that the Company is obligated to
purchase shares pursuant to any such tender offer, but the Company is
permanently prevented by applicable law from effecting any such purchases or
all such purchases are rescinded, the Conversion Rate shall again be adjusted
to be the Conversion Rate which would then be in effect if such tender or
exchange offer had not been made. If the application of this
Section 12.04(f) to any tender or exchange offer would result in a
decrease in the Conversion Rate, no adjustment shall be made for such tender or
exchange offer under this Section 12.04(f).


 


(g)                                 For purposes of this Section 12.04,
the following terms shall have the meanings indicated:


 


(1)                                  “Current
Market Price” shall mean the average of the daily Closing Prices per
share of Common Stock for the ten consecutive Trading Days immediately prior to
the date in question; provided, however, that if the “ex” date (as
hereinafter defined) for any event (other than the issuance or distribution
requiring such computation) that requires an adjustment to the Conversion Rate
pursuant to Section 12.04(a), (b), (c), (d), (e) or (f) occurs
during such ten consecutive Trading Days, “Current
Market Price” shall be calculated for such period in a manner
determined in good faith by the Board of Directors to reflect the impact of
such event on the Closing Price of the Common Stock during such period.


 


For purposes of this
paragraph, the term “ex” date, when used:


 


(A)                                            with respect to any issuance or
distribution, means the first date on which the Common Stock trades regular way
on the relevant exchange or in the relevant market from which the Closing Price
was obtained without the right to receive such issuance or distribution;


 


(B)                                              with
respect to any subdivision or combination of shares of Common Stock, means the
first date on which the Common Stock trades regular way on such exchange or in
such market after the time at which such subdivision or combination becomes
effective, and


 


49

















 


(C)                                              with
respect to any tender or exchange offer, means the first date on which the
Common Stock trades regular way on such exchange or in such market after the
Expiration Time of such offer.


 


Notwithstanding the
foregoing, whenever successive adjustments to the Conversion Rate are called
for pursuant to this Section 12.04, such adjustments shall be made to the
Current Market Price as may be necessary or appropriate to effectuate the
intent of this Section 12.04 and to avoid unjust or inequitable results as
determined in good faith by the Board of Directors.


 


(1)               “fair
market value” shall mean the amount which a willing buyer would pay
a willing seller in an arm’s length transaction.


 


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


 


(h)                                 The Company may make such increases in
the Conversion Rate, in addition to those required by Section 12.04(a),
(b), (c), (d), (e) or (f), as the Board of Directors considers to be
advisable to avoid or diminish any income tax to holders of Common Stock or
rights to purchase Common Stock resulting from any dividend or distribution of
stock (or rights to acquire stock) or from any event treated as such for income
tax purposes.


 


To the extent permitted
by applicable law, the Company from time to time may increase the Conversion
Rate by any amount for any period of time if the period is at least
20 days and the increase is irrevocable during the period and the Board of
Directors determines in good faith that such increase would be in the best
interests of the Company, which determination shall be conclusive and set forth
in a Board Resolution. Whenever the Conversion Rate is increased pursuant to
the preceding sentence, the Company shall mail to the Trustee and each Holder
at the address of such Holder as it appears in the Register a notice of the
reduction at least 15 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.


 


(i)                                     No adjustment in the Conversion Rate
shall be required unless such adjustment would require an increase or decrease
of at least 1% in the Conversion Price; provided,
however, that any adjustments
which by reason of this Section 12.04(i) are not required to be made
shall be carried forward and taken into account in any subsequent adjustment
and, in any case, such adjustment will become effective at the time the Company
delivers a notice of redemption. Except as otherwise provided in this
Article 12, no adjustment need be made for the issuance of Common Stock or
any securities convertible into or exchangeable for Common Stock or that carry
the right to purchase any of the foregoing. All calculations under this
Article 12 shall be made by the Company and shall be made to the nearest
cent or to the nearest one hundredth of a share, as the case may be. No adjustment
need be made for a change in the par value or no par value of the Common Stock.


 


(j)                                     To the extent the Holders of Securities
may participate on an as-converted basis equally with the holders of Common
Stock in any event or occurrence, then Section 12.04 hereof shall not
apply to such event on occurrence.


 


(k)                                  In any case in which this
Section 12.04 provides that an adjustment shall become effective
immediately after a Record Date for an event, the Company may defer until the
occurrence of such event (i) issuing to the Holder of any Security
converted after such Record Date and before the occurrence of such event the
additional shares of Common Stock issuable upon such conversion by


 


50

















 


reason of the adjustment required by such event over
and above the Common Stock issuable upon such conversion before giving effect
to such adjustment and (ii) paying to such holder any amount in cash in
lieu of any fraction pursuant to Section 12.03 hereof.


 


(l)                                     For purposes of this Section 12.04,
the number of shares of Common Stock at any time outstanding shall not include
shares held in the treasury of the Company but shall include shares issuable in
respect of scrip certificates issued in lieu of fractions of shares of Common
Stock. The Company will not pay any dividend or make any distribution on shares
of Common Stock held in the treasury of the Company.


 


(m)                               If the distribution date for the rights
provided in the Company’s rights agreement, if any, occurs prior to the date a
Security is converted, the Holder of the Security who converts such Security
after the distribution date is not entitled to receive the rights that would
otherwise be attached (but for the date of conversion) to the shares of Common
Stock received upon such conversion; provided,
however, that an adjustment shall
be made to the Conversion Rate pursuant to clause 12.04(b) as if the
rights were being distributed to the common stockholders of the Company
immediately prior to such conversion. If such an adjustment is made and the
rights are later redeemed, invalidated or terminated, then a corresponding
reversing adjustment shall be made to the Conversion Rate, on an equitable
basis, to take account of such event.


 


Section 12.05.                       Notice of Adjustments
of Conversion Rate.    Whenever
the Conversion Rate is adjusted as herein provided (other than in the case of
an adjustment pursuant to the second paragraph of Section 12.04(h) for
which the notice required by such paragraph has been provided), the Company shall
promptly file with the Trustee and any Conversion Agent other than the Trustee
an Officers’ Certificate setting forth the adjusted Conversion Rate and showing
in reasonable detail the facts upon which such adjustment is based. Unless and
until a Responsible Officer of the Trustee receives an Officers’ Certificate
describing an adjustment of the Conversion Price, the Trustee may assume
without inquiry that no such adjustment has been made. Promptly after delivery
of such Officers’ Certificate, the Company shall prepare a notice stating that
the Conversion Rate has been adjusted and setting forth the adjusted Conversion
Rate and the date on which each adjustment becomes effective, and shall mail
such notice to each Holder at the address of such Holder as it appears in the
Register within 20 days of the effective date of such adjustment. Failure
to deliver such notice shall not affect the legality or validity of any such
adjustment.


 


Section 12.06.                       Notice Prior to Certain
Actions.    In
case at any time after the date hereof:


 


(1)                                  the Company shall
declare a dividend (or any other distribution) on its Common Stock payable
otherwise than in cash out of its capital surplus or its consolidated retained
earnings;


 


(2)                                  the Company shall
authorize the granting to the holders of its Common Stock of rights or warrants
to subscribe for or purchase any shares of capital stock of any class (or of
securities convertible into shares of capital stock of any class) or of any
other rights;


 


(3)                                  there shall occur any
reclassification of the Common Stock of the Company (other than a subdivision
or combination of its outstanding Common Stock, a change in par value, a change
from par value to no par value or a change from no par value to par value), or
any merger, consolidation, statutory share exchange or combination to which the
Company is a party and for which approval of any shareholders of the Company is
required, or the sale, transfer or conveyance of all or substantially all of
the assets of the Company; or


 


(4)                                  there shall occur the
voluntary or involuntary dissolution, liquidation or winding up of the Company;


 


the Company shall cause to be filed at each office or
agency maintained for the purpose of conversion of securities pursuant to
Section 9.02 hereof, and shall cause to be provided to the Trustee and all
Holders in accordance with Section 14.02 hereof, at least 20 days (or
10 days in any case specified in


 


51

















 


clause (1) or (2) above) prior to the
applicable record or effective date hereinafter specified, a notice stating:


 


(A)                              the date on which a
record is to be taken for the purpose of such dividend, distribution, rights or
warrants, or, if a record is not to be taken, the date as of which the holders
of Common Stock of record to be entitled to such dividend, distribution, rights
or warrants are to be determined, or


 


(B)                                the date on which such
reclassification, merger, consolidation, statutory share exchange, combination,
sale, transfer, conveyance, dissolution, liquidation or winding up is expected
to become effective, and the date as of which it is expected that holders of
Common Stock of record shall be entitled to exchange their shares of Common
Stock for securities, cash or other property deliverable upon such reclassification,
merger, consolidation, statutory share exchange, sale, transfer, dissolution,
liquidation or winding up.


 


Neither the failure to
give such notice nor any defect therein shall affect the legality or validity
of the proceedings or actions described in clauses (1) through (4) of
this Section 12.06.


 


Section 12.07.                       Company to Reserve
Common Stock.    The
Company shall at all times use its best efforts to reserve and keep available,
free from preemptive rights, out of its authorized but unissued Common Stock,
for the purpose of effecting the conversion of Securities, the full number of
shares of fully paid and non-assessable Common Stock then issuable upon the
conversion of all Outstanding Securities.


 


Section 12.08.                       Taxed on Conversions.    Except as provided
in the next sentence, the Company will pay any and all taxes (other than taxes
on income) and duties that may be payable in respect of the issue or delivery
of shares of Common Stock on conversion of Securities pursuant hereto. A Holder
delivering a Security for conversion shall be liable for and will be required
to pay any tax or duty which may be payable in respect of any transfer involved
in the issue and delivery of shares of Common Stock in a name other than that
of the Holder of the Security or Securities to be converted, and no such issue
or delivery shall be made unless the Person requesting such issue has paid to
the Company the amount of any such tax or duty, or has established to the
satisfaction of the Company that such tax or duty has been paid.


 


Section 12.09.                       Covenant as to Common
Stock.    The
Company covenants that all shares of Common Stock which may be issued upon
conversion of Securities will upon issue be fully paid and nonassessable and,
except as provided in Section 12.08, the Company will pay all taxes, liens
and charges with respect to the issue thereof.


 


Section 12.10.                       Cancellation of
Converted Securities.    All Securities delivered for conversion shall
be delivered to the Trustee to be canceled by or at the direction of the
Trustee, which shall dispose of the same as provided in Section 2.09.


 


Section 12.11.                       Effect of
Recapitalization, Reclassification, Consolidation, Merger or Sale.    If any of
following events occur, namely:


 


(i)  any recapitalization,
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 subdivision or combination),


 


(ii)  any merger, consolidation,
statutory share exchange or combination of the Company with another corporation
as a result of which holders of Common Stock shall be entitled to receive
stock, securities or other property or assets (including cash) with respect to
or in exchange for such Common Stock or


 


(iii)  any sale, conveyance or
lease of the properties and assets of the Company as, or substantially as, an
entirety to any other corporation as a result of which holders of Common Stock
shall be entitled to receive stock, securities or other property or assets
(including cash) with respect to or in exchange for such Common Stock,


 


52

















 


the Company or the successor or purchasing
corporation, as the case may be, shall execute with the Trustee a supplemental
indenture (which shall comply with the TIA as in force at the date of execution
of such supplemental indenture if such supplemental indenture is then required
to so comply) providing that each Security shall be convertible into the kind
and amount of shares of stock and other securities or property or assets
(including cash) which such Holder would have been entitled to receive upon
such recapitalization, reclassification, change, merger, consolidation,
statutory share exchange, combination, sale or conveyance had such Securities
been converted into Common Stock immediately prior to such recapitalization,
reclassification, change, merger, consolidation, statutory share exchange,
combination, sale or conveyance assuming such holder of Common Stock did not
exercise its rights of election, if any, as to the kind or amount of
securities, cash or other property receivable upon such recapitalization,
reclassification, change, merger, consolidation, statutory share exchange,
combination, sale or conveyance (provided
that, if the kind or amount of securities, cash or other property receivable
upon such recapitalization, reclassification, change, merger, consolidation,
statutory share exchange, combination, sale or conveyance is not the same for
each share of Common Stock in respect of which such rights of election shall
not have been exercised (“Non-Electing Share”),
then for the purposes of this Section 12.11 the kind and amount of
securities, cash or other property receivable upon such recapitalization,
reclassification, change, merger, consolidation, statutory share exchange,
combination, sale or conveyance for each Non-Electing Share shall be deemed to
be the kind and amount so receivable per share by a plurality of the
Non-Electing Shares). Such supplemental indenture shall provide for adjustments
which shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Article 12. If, in the case of any such
recapitalization, reclassification, change, merger, consolidation, statutory share
exchange, combination, sale or conveyance, the stock or other securities and
assets receivable thereupon by a holder of shares of Common Stock includes
shares of stock or other securities and assets of a corporation other than the
successor or purchasing corporation, as the case may be, in such
recapitalization, reclassification, change, merger, consolidation, statutory
share exchange, combination, sale or conveyance, then such supplemental
indenture shall also be executed by such other corporation and shall contain
such additional provisions to protect the interests of the Holders of the
Securities as the Board of Directors shall reasonably consider necessary by
reason of the foregoing, including to the extent practicable the provisions
providing for the Purchase Rights set forth in Article 11 hereof.


 


The Company shall cause
notice of the execution of such supplemental indenture to be mailed to each
Holder, at the address of such Holder as it appears on the Register, within
20 days after execution thereof. Failure to deliver such notice shall not
affect the legality or validity of such supplemental indenture.


 


The above provisions of
this Section 12.11 shall similarly apply to successive recapitalizations,
reclassifications, mergers, consolidations, statutory share exchanges,
combinations, sales and conveyances.


 


If this
Section 12.11 applies to any event or occurrence, Section 12.04
hereof shall not apply.


 


Section 12.12.                       Responsibility of
Trustee for Conversion Provisions.    The Trustee, subject to the
provisions of Section 5.01 hereof, and any Conversion Agent shall not at
any time be under any duty or responsibility to any Holder of Securities to
determine whether any facts exist which may require any adjustment of the
Conversion Price, or with respect to the nature or intent of any such
adjustments when made, or with respect to the method employed, or herein or in
any supplemental indenture provided to be employed, in making the same. Neither
the Trustee, subject to the provisions of Section 5.01 hereof, nor any
Conversion Agent shall be accountable with respect to the validity or value (of
the kind or amount) of any Common Stock, or of any other securities or
property, which may at any time be issued or delivered upon the conversion of
any Security; and it or they do not make any representation with respect
thereto. Neither the Trustee, subject to the provisions of Section 5.01
hereof, nor any Conversion Agent shall be responsible for any failure of the
Company to make any


 


53






















cash payment or to issue, transfer or deliver any
shares of stock or share certificates or other securities or property upon the
surrender of any Security for the purpose of conversion; and the Trustee,
subject to the provisions of Section 5.01 hereof, and any Conversion Agent
shall not be responsible or liable for any failure of the Company to comply
with any of the covenants of the Company contained in this Article.


 


ARTICLE 13

SUBORDINATION


 


Section 13.01.                       Securities Subordinated
to Senior Debt.    The
Company covenants and agrees, and each Holder of Securities, by such Holder’s
acceptance thereof, likewise covenants and agrees, that the Indebtedness
represented by the Securities and the payment of the principal of and interest
(including Liquidated Damages, if any) on each and all of the Securities is
hereby expressly subordinated and junior, to the extent and in the manner set
forth and as set forth in this Section 13.01, in right of payment to the
prior payment in full of all Senior Debt.


 


(a)                                  In the event of any distribution of
assets of the Company upon any dissolution, winding up, liquidation or
reorganization of the Company, whether in bankruptcy, insolvency,
reorganization or receivership proceedings or upon an assignment for the
benefit of creditors or any other marshalling of the assets and liabilities of
the Company or otherwise, the holders of all Senior Debt shall first be
entitled to receive payment of the full amount due thereon in respect of all
such Senior Debt and all other amounts due or provision shall be made for such
amount in cash, or other payments satisfactory to the holders of Senior Debt,
before the Holders of any of the Securities are entitled to receive any payment
or distribution of any character, whether in cash, securities or other
property, on account of the principal of or interest (including Liquidated
Damages, if any) on the Securities.


 


(b)                                 In the event of any acceleration of
Maturity of the Securities because of an Event of Default, unless the full
amount due in respect of all Senior Debt is paid in cash or other form of
payment satisfactory to the holders of Senior Debt, no payment shall be made by
the Company with respect to the principal of or interest (including Liquidated
Damages, if any) on the Securities or to acquire any of the Securities
(including any redemption, conversion or cash purchase pursuant to the exercise
of the Purchase Right or the Put Purchase Right), and the Company shall give
prompt written notice of such acceleration to such holders of Senior Debt.


 


(c)                                  In the event of and during the
continuance of any default in payment of the principal of or interest on, or
rent or other payment obligation in respect of, any Senior Debt, whether by
acceleration or otherwise, unless (i) all such payments due in respect of
such Senior Debt have been paid in full in cash or other payments satisfactory
to the holders of Senior Debt and (ii) at the time of, or immediately
after giving effect to, any payment made by the Company with respect to the
principal of, or interest (including Liquidated Damages, if any) on the
Securities or to acquire any of the Securities (including any redemption,
conversion or cash purchase pursuant to the exercise of the Purchase Right or
the Put Purchase Right), there does not exist under any Senior Debt or any
agreement pursuant to which any Senior Debt has been issued any default which
shall not have been cured or waived and which shall have resulted in the full
amount of such Senior Debt being declared due and payable, the Company shall not
make the payment with respect to the Securities contemplated in
clause (ii) above. The Company shall give prompt written notice to the
Trustee of any default under any Senior Debt or under any agreement pursuant to
which Senior Debt may have been issued.


 


(d)                                 During the continuance of any event of
default with respect to any Designated Senior Debt, as such event of default is
defined under any such Designated Senior Debt or in any agreement pursuant to
which any Designated Senior Debt has been issued (other than a default in
payment of the principal of or interest on, rent or other payment obligation in
respect of any Designated Senior Debt), permitting the holder or holders of
such Designated Senior Debt to accelerate the maturity thereof (or in the case of
any lease, permitting the landlord either to terminate the lease or to require
the


 


54

















 


Company to make an irrevocable offer to terminate the
lease following an event of default thereunder), no payment shall be made by
the Company, directly or indirectly, with respect to principal of or interest
(including Liquidated Damages, if any) on the Securities for 179 days (the
“Payment Blockage Period”)
following notice in writing (a “Payment
Blockage Notice”) to the Company, from any holder or holders of such
Designated Senior Debt or their representative or representatives or the
trustee or trustees under any indenture or under which any instrument
evidencing any such Designated Senior Debt may have been issued, that such an
event of default has occurred and is continuing, unless such event of default
has been cured or waived or such Designated Senior Debt has been paid in full
in cash or other payment satisfactory to the holders of such Designated Senior
Debt.


 


Notwithstanding the
foregoing (but subject to the provisions described above limiting payment on
the Securities in certain circumstances), unless the Holders of such Designated
Senior Debt or the representative of such Holders shall have accelerated the
maturity of such Designated Senior Debt, the Company may resume payments on the
Securities after the end of the Payment Blockage Period.


 


For purposes of this
Section 13.01(d), such Payment Blockage Notice shall be deemed to include
notice of all other events of default under such indenture or instrument which
are continuing at the time of the event of default specified in such Payment
Blockage Notice. Not more than one Payment Blockage Notice may be given in any
consecutive 365-day period, irrespective of the number of events of default,
with respect to one or more issues of Designated Senior Debt during such
period, and no such continuing event of default that existed or was continuing
on the date of delivery of any Payment Blockage Notice shall be, or shall be
made, the basis for a subsequent Payment Blockage Notice.


 


(e)                                  In the event that, notwithstanding the
foregoing provisions of Section 13.01(a), 13.01(b), 13.01(c) and 13.01(d),
any payment on account of principal or interest (including Liquidated Damages,
if any) on the Securities shall be made by or on behalf of the Company and
received by the Trustee, by any Holder or by any Paying Agent (or, if the
Company is acting as its own Paying Agent, money for any such payment shall be
segregated and held in trust):


 


(i)  after
the occurrence of an event specified in Section 13.01(a) or 13.01(b),
then, unless all Senior Debt is paid in full in cash, or provision shall be
made therefor,


 


(ii)  after
the happening of an event of default of the type specified in Section 13.01(c)
above, then, unless the amount of such Senior Debt then due shall have been
paid in full, or provision made therefor or such event of default shall have
been cured or waived, or


 


(iii)  after
the happening of an event of default of the type specified in
Section 13.01(d) above and delivery of a Payment Blockage Notice, then,
unless such event of default shall have been cured or waived or the 179-day
period specified in Section 13.01(d) shall have expired,


 


such payment (subject, in
each case, to the provisions of Section 13.07 hereof) shall be held in
trust for the benefit of, and shall be immediately paid over to, the holders of
Designated Senior Debt (unless an event described in Section 13.01(a),
(b) or (c) has occurred, in which case the payment shall be held in
trust for the benefit of, and shall be immediately paid over to all holders of
Senior Debt) or their representative or representatives or the trustee or
trustees under any indenture under which any instruments evidencing any of the
Designated Senior Debt or Senior Debt, as the case may be, may have been
issued, as their interests may appear.


 


Section 13.02.                       Subrogation.    Subject to the
payment in full of all Senior Debt to which the Indebtedness evidenced by the
Securities is in the circumstances subordinated as provided in
Section 13.01 hereof, the Holders of the Securities shall be subrogated to
the rights of the holders of such Senior Debt to receive payments or
distributions of cash, property or securities of the Company applicable to such
Senior Debt until all amounts owing on the Securities shall be paid in full,
and, as between the Company, its creditors other than holders of such Senior
Debt, and the Holders of the Securities, no such payment or distribution made
to the holders of Senior Debt by virtue of this Article


 


55

















 


which otherwise would have been made to the holders of
the Securities shall be deemed to be a payment by the Company on account of
such Senior Debt; provided, however, that the provisions of this
Article are and are intended solely for the purpose of defining the
relative rights of the Holders of the Securities, on the one hand, and the
holders of Senior Debt, on the other hand.


 


Section 13.03.                       Obligation of the Company
is Absolute and Unconditional.    Nothing contained in this
Article or elsewhere in this Indenture or in the Securities is intended to
or shall impair, as between the Company, its creditors other than the holders
of Senior Debt, and the Holders of the Securities, the obligation of the
Company, which is absolute and unconditional, to pay to the Holders of the
Securities the principal of and interest (including Liquidated Damages, if any)
on the Securities as and when the same shall become due and payable in
accordance with their terms, or is intended to or shall affect the relative
rights of the Holders of the Securities and creditors of the Company other than
the holders of Senior Debt, nor shall anything contained herein or therein
prevent the Trustee or the Holder of any Security from exercising all remedies
otherwise permitted by applicable law upon default under this Indenture,
subject to the rights, if any, under this Article of the holders of Senior
Debt in respect of cash, property or securities of the Company received upon
the exercise of any such remedy.


 


Section 13.04.                       Maturity of or Default
on Senior Debt.    Upon
the maturity of any Senior Debt by lapse of time, acceleration or otherwise,
all principal of or interest on, rent or other payment obligations in respect
of all such matured Senior Debt shall first be paid in full, or such payment
shall have been duly provided for, before any payment on account of principal
or interest (including Liquidated Damages, if any) is made upon the Securities.


 


Section 13.05.                       Payments on Securities
Permitted.    Except
as expressly provided in this Article, nothing contained in this
Article shall affect the obligation of the Company to make, or prevent the
Company from making, payments of the principal of or interest (including
Liquidated Damages, if any) on the Securities in accordance with the provisions
hereof and thereof, or shall prevent the Trustee or any Paying Agent from
applying any moneys deposited with it hereunder to the payment of the principal
of or interest (including Liquidated Damages, if any) on the Securities.


 


Section 13.06.                       Effectuation of
Subordination by Trustee.    Each Holder of Securities, by such Holder’s
acceptance thereof, authorizes and directs the Trustee on such Holder’s behalf to
take such action as may be necessary or appropriate to effectuate the
subordination provided in this Article and appoints the Trustee such
Holder’s attorney-in-fact for any and all such purposes.


 


Upon any payment or
distribution of assets of the Company referred to in this Article, the Trustee
and the Holders of the Securities shall be entitled to rely upon any order or
decree made by any court of competent jurisdiction in which any such
dissolution, winding up, liquidation or reorganization proceeding affecting the
affairs of the Company is pending or upon a certificate of the trustee in
bankruptcy, receiver, assignee for the benefit of creditors, liquidating
trustee or agent or other Person making any payment or distribution, delivered
to the Trustee or to the Holders of the Securities, for the purpose of
ascertaining the Persons entitled to participate in such payment or
distribution, and as to other facts pertinent to the right of such Persons
under this Article, and if such evidence is not furnished, the Trustee may
defer any payment to such Persons pending judicial determination as to the
right of such Persons to receive such payment.


 


Section 13.07.                       Knowledge of Trustee.    Notwithstanding
the provision of this Article or any other provisions of this Indenture,
the Trustee shall not be charged with knowledge of the existence of any Senior
Debt, of any default in payment of principal of or interest on, rent or other
payment obligation in respect of any Senior Debt, or of any facts which would
prohibit the making of any payment of moneys to or by the Trustee, or the
taking of any other action by the Trustee, unless a Responsible Officer of the
Trustee having responsibility for the administration of the trust established
by this Indenture shall have received written notice thereof from the Company,
any Holder of Securities, any Paying or Conversion Agent of the Company or the
holder or representative of any class of Senior


 


56

















 


Debt, and, prior to the receipt of any such written
notice, the Trustee shall be entitled in all respects to assume that no such
default or facts exist; provided,
however, that unless on the third
Business Day prior to the date upon which by the terms hereof any such moneys
may become payable for any purpose the Trustee shall have received the notice
provided for in this Section 13.07, then, anything herein contained to the
contrary notwithstanding, the Trustee shall have full power and authority to
receive such moneys and apply the same to the purpose for which they were
received, and shall not be affected by any notice to the contrary which may be
received by it on or after such date.


 


Section 13.08.                       Trustee’s Relation to
Senior Debt.    The
Trustee shall be entitled to all the rights set forth in this Article with
respect to any Senior Debt at the time held by it, to the same extent as any
other holder of Senior Debt and nothing in this Indenture shall deprive the
Trustee of any of its rights as such holder.


 


Nothing contained in this
Article shall apply to claims of or payments to the Trustee under or
pursuant to Section 5.08 hereof


 


With respect to the
holders of Senior Debt, the Trustee undertakes to perform or to observe only
such of its covenants and obligations as are specifically set forth in this
Article, and no implied covenants or obligations with respect to the holders of
Senior Debt shall be read into this Indenture against the Trustee. The Trustee
shall not be deemed to owe any fiduciary duty to the holders of Senior Debt and
the Trustee shall not be liable to any holder of Senior Debt if it shall pay
over or deliver to Holders, the Company or any other Person moneys or assets to
which any holder of Senior Debt shall be entitled by virtue of this
Article or otherwise.


 


Section 13.09.                       Rights of Holders of
Senior Debt Not Impaired.    No right of any present or future holder of any
Senior Debt to enforce the subordination herein shall at any time or in any way
be prejudiced or impaired by any act or failure to act on the part of the
Company or by any noncompliance by the Company with the terms, provisions and
covenants of this Indenture, regardless of any knowledge thereof any such
holder may have or be otherwise charged with.


 


Section 13.10.                       Modification of Terms
of Senior Debt.    Any
renewal or extension of the time of payment of any Senior Debt or the exercise
by the holders of Senior Debt of any of their rights under any instrument
creating or evidencing Senior Debt, including without limitation the waiver of
default thereunder, may be made or done all without notice to or assent from
the Holders of the Securities or the Trustee.


 


No compromise,
alteration, amendment, modification, extension, renewal or other change of, or
waiver, consent or other action in respect of, any liability or obligation
under or in respect of, or of any of the terms, covenants or conditions of any
indenture or other instrument under which any Senior Debt is outstanding or of
such Senior Debt, whether or not such release is in accordance with the provisions
or any applicable document, shall in any way alter or affect any of the
provisions of this Article or of the Securities relating to the
subordination thereof.


 


Section 13.11.                       Certain Conversions Not
Deemed Payment.    For
the purposes of this Article 13 only:


 


(1)                                  the issuance and delivery of junior
securities upon conversion of Securities in accordance with Article 12
hereof shall not be deemed to constitute a payment or distribution on account
of the principal of or interest (including Liquidated Damages, if any) on
Securities or on account of the purchase or other acquisition of Securities,
and


 


(2)                                  the payment, issuance or delivery of cash
(except in satisfaction of fractional shares pursuant to Section 12.03
hereof), property or securities (other than junior securities) upon conversion
of a Security shall be deemed to constitute payment on account of the principal
of or interest (including Liquidated Damages, if any) on such Security.


 


57

















 


For the purposes of this
Section 13.11, the term “junior
securities” means:


 


(a)                                  shares of any common stock of the Company
or


 


(b)                                 other securities of the Company that are
subordinated in right of payment to all Senior Debt that may be outstanding at
the time of issuance or delivery of such securities to substantially the same
extent as, or to a greater extent than, the Securities are so subordinated as
provided in this Article.


 


Nothing contained in this
Article 13 or elsewhere in this Indenture or in the Securities is intended
to or shall impair, as among the Company, its creditors (other than holders of
Senior Debt) and the Holders of Securities, the right, which is absolute and
unconditional, of the Holder of any Security to convert such Security in
accordance with Article 12 hereof.


 


ARTICLE 14

OTHER PROVISIONS OF GENERAL APPLICATION


 


Section 14.01.                       Trust Indenture Act
Controls.    This
Indenture is subject to the provisions of the TIA which are required to be part
of this Indenture, and shall, to the extent applicable, be governed by such
provisions.


 


Section 14.02.                       Notices.    Any notice or
communication to the Company or the Trustee is duly given if in writing and
delivered in person or mailed by first-class mail to the address set forth
below:


 


(a)  if to the Company:


 


Pixelworks, Inc.

8100 Nyberg Street, Suite 300

Tualatin, Oregon 97062

Attention: Jeffrey Bouchard


 


with a copy (which shall not constitute notice) to:


 


O’Melveny &
Myers LLP

2765 Sand Hill Road

Menlo Park, California 94025-7019

Attention: Karen Dreyfus, Esq.


 


(b)  if to the
Trustee:


 


Wells Fargo Bank,
National Association

707 Wilshire Boulevard, 17th Floor

Los Angeles, CA 90017

Attention: Corporate Trust Department


 


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


 


Any notice or
communication to a Holder shall be mailed by first-class mail to his address
shown on the Register kept by the Registrar. Failure to mail a notice or
communication to a Holder or any defect in such notice or communication shall
not affect its sufficiency with respect to other Holders.


 


If a notice or
communication is mailed or sent in the manner provided above within the time
prescribed, it is duly given as of the date it is mailed, whether or not the
addressee receives it, except that notice to the Trustee shall only be
effective upon receipt thereof by the Trustee.


 


If the Company mails a
notice or communication to Holders, it shall mail a copy to the Trustee at the
same time.


 


Section 14.03.                       Communication by
Holders with Other Holders.    Holders may communicate
pursuant to Section 312(b) of the TIA with other Holders with respect to
their rights under the


 


58

















 


Securities or this Indenture. The Company, the
Trustee, the Registrar and anyone else shall have the protection of
Section 3 12(c) of the TIA.


 


Section 14.04.                       Acts of Holders of
Securities.    (a) Any
request, demand, authorization, direction, notice, consent, waiver or other
action provided by this Indenture to be given or taken by Holders of Securities
may be embodied in and evidenced by:


 


(1)  one
or more instruments of substantially similar tenor signed by such Holders in
person or by agent or proxy duly appointed in writing;


 


(2)  the
record of Holders of Securities voting in favor thereof, either in person or by
proxies duly appointed in writing, at any meeting of Holders of Securities duly
called and held in accordance with the provisions of Article 8; or


 


(3)  a
combination of such instruments and any such record.


 


Except as herein
otherwise expressly provided, such action shall become effective when such
instrument or instruments or record or both are delivered to the Trustee and,
where it is hereby expressly required, to the Company. Such instrument or
instruments and record (and the action embodied therein and evidenced thereby)
are herein sometimes referred to as the “Act” of the Holders of Securities
signing such instrument or instruments and so voting at such meeting. Proof of
execution of any such instrument or of a writing appointing any such agent or
proxy, or of the holding by any Person of a Security, shall be sufficient for
any purpose of this Indenture and (subject to Section 5.01 hereof)
conclusive in favor of the Trustee and the Company if made in the manner
provided in this Section. The record of any meeting of Holders of Securities
shall be proved in the manner provided in Section 8.06 hereof.


 


(b)                                 The fact and date of the execution by any
Person of any such instrument or writing may be provided in any manner which
the Trustee reasonably deems sufficient.


 


(c)                                  The principal amount and serial numbers
of Securities held by any Person, and the date of such Person holding the same,
shall be proved by the Register.


 


(d)                                 Any request, demand, authorization,
direction, notice, consent, election, waiver or other Act of the Holders 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.


 


Section 14.05.                       Certificate and Opinion
as to Conditions Precedent.    In any case where several
matters are required to be certified by, or covered by an opinion of, any
specified Person, it is not necessary that all such matters be certified by, or
covered by the opinion of, only one such Person, or that they be so certified
or covered by only one document, but one such Person may certify or give an
opinion with respect to some matters and one or more other such Persons as to
other matters, and any such Person may certify or give an opinion as to such
matters in one or several documents.


 


Any certificate or
opinion of an officer of the Company may be based, insofar as it relates to
legal matters, upon an Opinion of Counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the Opinion of Counsel with
respect to the matters upon which such certificate or opinion is based is
erroneous. Any such Opinion of Counsel may be based, insofar as it relates to
factual matters, upon a certificate 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,
or in the exercise of reasonable care should know, that the certificate or
representations with respect to such matters are erroneous.


 


59

















 


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.


 


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 an Officers’
Certificate stating that all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with, except that
in the case of any such application or request as to which the furnishing of
such document is specifically required by any provision of this Indenture
relating to such particular application or request, no additional certificate
need be furnished.


 


Section 14.06.                       Statements Required in
Certificate or Opinion.    Each certificate or opinion with respect to
compliance with a condition or covenant provided for in this Indenture shall
include:


 


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


 


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


 


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


 


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


 


Section 14.07.                       Effect of Headings and
Table of Contents.    The
Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.


 


Section 14.08.                       Successors and Assigns.    All covenants and
agreements in this Indenture by the Company shall bind its successors and
assigns, whether so expressed or not.


 


Section 14.09.                       Separability Clause.    In case any
provision in this Indenture or the Securities shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.


 


Section 14.10.                       Benefits of Indenture.    Nothing contained
in this Indenture or in the Securities, express or implied, shall give to any
Person, other than the parties hereto and their successors hereunder, the
holders of Senior Debt and the Holders of Securities, any benefit or legal or
equitable right, remedy or claim under this Indenture.


 


Section 14.11.                       Governing Law.    THIS INDENTURE
AND THE SECURITIES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK.


 


Section 14.12.                       Counterparts.    This instrument
maybe executed in any number of counterparts, each of which when so executed
shall be deemed to be an original but all such counterparts shall together
constitute but one and the same instrument.


 


Section 14.13.                       Legal Holidays.    In any case where
any Interest Payment Date, Redemption Date or Stated Maturity of any Security
or the last day on which a Holder of a Security has a right to convert such
Security shall not be a Business Day at any Place of Payment or Place of
Conversion, then (notwithstanding any other provision of this Indenture or of
the Securities) payment of interest (including Liquidated Damages, if any) or
principal or conversion of the Securities, need not be made at such Place of
Payment or Place of Conversion on such day, but may be made on the next
succeeding Business Day at such Place of Payment or Place of Conversion with
the same force and effect as if made on the Interest Payment Date or Redemption
Date or at the Stated Maturity or on such last day for conversion; provided,
however, that in the case that payment is made on such succeeding Business Day,
no interest shall accrue on the amount so payable for the period from and after
such Interest Payment Date, Redemption Date or Stated Maturity, as the case may
be.


 


Section 14.14.                       Recourse Against
Others.    No
recourse for the payment of the principal of or interest (including Liquidated
Damages, if any) on any Security, or for any claim based thereon or otherwise
in respect thereof, shall be had against any incorporator, shareholder, officer
or director, as such, past, present or future, of the Company or of any
successor corporation, whether by virtue of any constitution, statute or rule
of law or by the enforcement of any assessment or penalty or otherwise, all
such liability being, by the acceptance thereof and as part of the
consideration for the issue thereof, expressly waived and released.


 


60

















 


SIGNATURES


 


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


 


	
   

  	
   

  	
  PIXELWORKS, INC., as
  Issuer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/  JEFFREY
  BOUCHARD

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Jeffrey Bouchard

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Chief Financial
  Officer, Vice

  President—Finance, and Secretary

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  WELLS FARGO BANK,
  NATIONAL ASSOCIATION, as Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/  JEANIE
  MAR

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Jeanie Mar

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Vice President

  



 


61

















 


EXHIBIT
A


 


FORM OF SECURITY


 


[FACE OF
SECURITY]


 


UNLESS THIS CERTIFICATE
IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY
(“DTC”) TO PIXELWORKS, INC. (OR ITS SUCCESSOR) OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE, CONVERSION OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR OF SUCH OTHER ENTITY
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON
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 SINCE THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.(1)


 












(1)                                  This
legend should be included only if the Security is issued in global form.


 


THIS DEBENTURE (OR ITS
PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION
UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE “SECURITIES ACT”), AND THIS
DEBENTURE AND THE COMMON STOCK ISSUABLE UPON CONVERSION THEREOF MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR
AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS DEBENTURE IS HEREBY
NOTIFIED THAT THE SELLER OF THIS DEBENTURE MAY BE RELYING ON THE EXEMPTION FROM
THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A OR
REGULATION S THEREUNDER.


 


THE HOLDER OF THIS
DEBENTURE AGREES FOR THE BENEFIT OF PIXELWORKS, INC. THAT (A) THIS
DEBENTURE AND THE COMMON STOCK ISSUABLE UPON CONVERSION THEREOF MAY BE OFFERED,
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (I) IN THE UNITED STATES TO
A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
(AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (II) OUTSIDE THE UNITED STATES IN AN OFFSHORE
TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT,
(III) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), OR (IV) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH
(IV) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES, (B) THE HOLDER WILL NOT, DIRECTLY OR INDIRECTLY, ENGAGE IN
ANY HEDGING TRANSACTION WITH REGARD TO THIS SECURITY OR ANY COMMON STOCK
ISSUABLE UPON CONVERSION OF THIS SECURITY EXCEPT IN COMPLIANCE WITH THE
SECURITIES ACT, AND (C) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS
REQUIRED TO, NOTIFY ANY PURCHASER OF THIS DEBENTURE FROM IT OF THE RESTRICTIONS
REFERRED TO IN (A) AND (B) ABOVE.


 


A-1

















 


PIXELWORKS, INC.


 


1.75%
Convertible Subordinated Debenture due 2024 


 


	
   

  	
   

  	
   

  	
  CUSIP NO.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  No.

  	
   

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  



 


PIXELWORKS, INC., an
Oregon corporation (the “Company”,
which term includes any successor corporation under the Indenture hereinafter
referred to), for value received, hereby promises to pay
to                       ,
or its registered assigns, the principal sum of    U.S.
Dollars ($    ) on May 15, 2024.


 


Interest Payment Dates: May 15 and
November 15, commencing November 15, 2004.


 


Regular Record Dates: May 1 and November 1.


 


Reference is hereby made
to the further provisions of this Security set forth on the reverse hereof,
which further provisions shall for all purposes have the same effect as if set
forth at this place.


 


A-2

















 


IN WITNESS WHEREOF, the
Company has caused this Security to be duly executed manually or by facsimile
by its duly authorized officers. 


 


	
  Dated:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  PIXELWORKS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  



 


A-3

















 


Trustee’s
Certificate of Authentication


 


This is one of the 1.75%
Convertible Subordinated Debentures due 2024 described in the within-named
Indenture. 


 


	
   

  	
  WELLS
  FARGO BANK, NATIONAL

  ASSOCIATION, as Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Authorized
  Signatory

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
  Dated:

  	
   

  	
   

  	
   

  



 


A-4

















 


[REVERSE
OF SECURITY]


 


PIXELWORKS, INC.


 


1.75%
Convertible Subordinated Debenture due 2024


 


Capitalized terms used
herein but not defined shall have the meanings assigned to them in the
Indenture referred to below unless otherwise indicated.


 


1.                                       Principal and Interest.    Pixelworks, Inc.,
an Oregon corporation (the “Company”),
promises to pay interest on the principal amount of this Security at the
Interest Rate from the date of issuance until repayment at Maturity, redemption
or purchase. The Company shall pay interest on this Security semiannually in
arrears on May 15 and November 15 of each year (each an “Interest Payment Date”), commencing
November 15, 2004.


 


Interest on this Security
shall be computed on the basis of a 360-day year of twelve 30-day months and
for any period shorter than a full semiannual period for which interest is
calculated, on the basis of a 30-day month and, for such periods of less than a
month, the actual number of days elapsed over a 30-day month.


 


Subject to
Section 2.17 of the Indenture, a Holder of any Security at the close of
business on a Regular Record Date shall be entitled to receive interest on such
Security on the corresponding Interest Payment Date. A Holder of any Security
which is converted after the close of business on a Regular Record Date and
prior to the corresponding Interest Payment Date (other than any Security whose
Maturity is prior to such Interest Payment Date) shall be entitled to receive
interest (including Liquidated Damages, if any) on the principal amount of such
Security, notwithstanding the conversion of such Security prior to such
Interest Payment Date. However, any such Holder which surrenders any such
Security for conversion during the period between the close of business on such
Regular Record Date and ending with the opening of business on the
corresponding Interest Payment Date shall be required to pay the Company an
amount equal to the interest (excluding Liquidated Damages, if any) on the
principal amount of such Security so converted (but excluding any Defaulted
Interest on the principal amount of such Security so converted that exists at
the time such Holder surrenders such Security for conversion), which is payable
by the Company to such Holder on such Interest Payment Date, at the time such
Holder surrenders such Security for conversion. Notwithstanding the foregoing,
any such Holder which surrenders for conversion any Security (a) which has
been called for redemption by the Company in a notice of redemption given by
the Company pursuant to Section 10.04 of the Indenture on a Redemption
Date after such Regular Record Date and on or prior to the next succeeding
Interest Payment Date or (b) with respect to which the Company has
specified a Purchase Date that is after such Regular Record Date and on or
prior to the next succeeding Interest Payment Date, in either case, shall be
entitled to receive (and retain) such interest and need not pay the Company an
amount equal to the interest on the principal amount of such Security so
converted at the time such Holder surrenders such Security for conversion.


 


In accordance with the
terms of the Registration Rights Agreement, during the first 90 days
following a Registration Default (as defined in the Registration Rights
Agreement), the Interest Rate borne by this Security shall be increased by
0.25%. From and after the 91st day following such Registration Default, the
Interest Rate borne by this Security shall be increased by 0.50%. In no event
shall the Interest Rate borne by this Security be increased by more than 0.50%.


 


Any amount of additional
interest shall be payable in cash semiannually, in arrears, on each Interest
Payment Date and shall cease to accrue on the date the Registration Default is
cured. The Holder of this Security is entitled to the benefits of the
Registration Rights Agreement.


 


A-5

















 


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


 


Principal of and interest
on, Global Securities shall be payable to the Depositary in immediately
available funds.


 


Principal of Physical
Securities shall be payable at the office or agency of the Company maintained
for such purpose, initially the Corporate Trust Office of the Trustee. Interest
on Physical Securities shall be payable by (i) U.S. Dollar check drawn on
a bank located in the city where the Corporate Trust Office of the Trustee is
located mailed to the address of the Person entitled thereto as such address
shall appear in the Register, or (ii) upon application to the Registrar
not later than the relevant Record Date by a Holder of an aggregate principal
amount of Securities in excess of $5,000,000, wire transfer in immediately
available funds.


 


3.                                       Paying Agent and
Registrar.    Initially,
Wells Fargo Bank, National Association, the Trustee under the Indenture, will
act as Paying Agent and Registrar. The Company may change the Paying Agent or
Registrar without notice to any Holder.


 


4.                                       Indenture.    The Company
issued this Security under an Indenture, dated as of May 18, 2004 (the “Indenture”), between the Company and Wells
Fargo Bank, National Association, as trustee (the “Trustee”). The terms of this Security include those stated in
the Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (“TIA”).
This Security is subject to all such terms, and Holders are referred to the Indenture
and the TIA for a statement of all such terms. To the extent permitted by
applicable law, in the event of any inconsistency between the terms of this
Security and the terms of the Indenture, the terms of the Indenture shall
control.


 


5.                                       Optional Redemption.    This Security is
not redeemable prior to May 15, 2011. This Security may be redeemed in
whole or in part, upon not less than 30 nor more than 60 days’ notice, at
any time on or after May 15, 2011, at the option of the Company, at a
redemption price equal to 100% of the principal amount of the Securities plus
any interest accrued (including Liquidated Damages, if any) but not paid prior
to, but excluding, the Redemption Date.


 


If fewer than all the
Securities are to be redeemed, the Trustee shall select the particular
Securities to be redeemed from the Outstanding Securities by the methods as
provided in the Indenture. If any Security selected for partial redemption is
converted in part before termination of the conversion right with respect to the
portion of the Security so selected, the converted portion of such Security
shall be deemed to be the portion selected for redemption (provided, however,
that the Holder of such Security so converted and deemed redeemed shall not be
entitled to any additional interest payment as a result of such deemed
redemption than such Holder would have otherwise been entitled to receive upon
conversion of such Security). Securities which have been converted during a
selection of Securities to be redeemed may be treated by the Trustee as
Outstanding for the purpose of such selection.


 


On and after the
Redemption Date, interest shall cease to accrue on Securities or portions of
Securities called for redemption, unless the Company defaults in the payment of
the Optional Redemption Price and accrued and unpaid interest.


 


Notice of redemption
shall be given by the Company to the Holders as provided in the Indenture.


 


6.                                       Purchase Rights.


 


(a)          Purchase Right Upon a Fundamental Change.    If
a Fundamental Change occurs, the Holder of Securities, at the Holder’s option,
shall have the right, in accordance with the provisions of the Indenture, to
require the Company to purchase the Securities (or any portion of the principal
amount hereof that is at least $1,000 or a multiple thereof; provided, however,
that the


 


A-6

















 


portion of the principal
amount of this Security to be Outstanding after such purchase is at least equal
to $1,000) at a purchase price equal to 100% of the principal amount of the
Securities to be purchased (the “Purchase
Price”), plus interest accrued (including Liquidated Damages, if
any) and unpaid to, but excluding, the Purchase Date.


 


A Company Notice shall be
given by the Company to the Holders as provided in the Indenture. To exercise a
Purchase Right, a Holder must deliver to the Trustee a written notice as
provided in the Indenture.


 


(b)         Purchase by the Company at the Option of the Holder.    Subject
to the terms and conditions of the Indenture, each Holder shall have the right
to require the Company to purchase all or a portion of their Securities on
May 15, 2011, May 15, 2014 and May 15, 2019 (or, if any such
date is not a Business Day, on the immediately succeeding Business Day) (each,
a “Put Purchase Date”), at 100% of
the principal amount of the Securities to be so purchased, plus accrued
(including Liquidated Damages, if any) and unpaid interest, if any, to, but
excluding, such Put Purchase Date (the “Put
Purchase Price”). On or before the twenty-third (23rd) Business Day
prior to each Put Purchase Date, the Company shall provide to the Trustee, the
Paying Agent and to all Holders at their respective addresses as shown on the
Register, and to beneficial owners of the Securities where required by applicable
law, a notice as provided in the Indenture. The Company will be required to
purchase only Securities with respect to which a Holder has delivered a
Purchase Notice in accordance with the terms and conditions of the Indenture
and subject to the satisfaction of the other conditions set forth in the
Indenture.


 


7.                                       Conversion Rights.    (a) Subject
to and upon compliance with the provisions of the Indenture and the occurrence
of one or more of the conditions set forth in clause (d) of this
paragraph 7, the Holder of Securities shall be entitled, at such Holder’s
option, at any time before the close of business on May 15, 2024, to
convert the Holder’s Securities (or any portion of the principal amount hereof
which is $1,000 or a multiple thereof), at the principal amount thereof or of
such portion thereof into duly authorized, fully paid and nonassessable shares
of Common Stock of the Company at the Conversion Rate in effect at the time of
conversion.


 


(b)         In the case
of a Security (or a portion thereof) called for redemption, such conversion
right in respect of the Security (or such portion thereof) so called shall
expire at the close of business on the Business Day immediately preceding the
Redemption Date, unless the Company defaults in making the payment due upon
redemption. If a Holder exercises its Purchase Right or Put Purchase Right with
respect to a Security (or a portion thereof), such conversion right in respect
of the Security (or portion thereof) shall expire at the close of business on
the Business Day preceding the Purchase Date or Put Purchase Date, as
applicable.


 


(c)          Each
$1,000 principal amount of the Securities shall initially be convertible into
41.0627 shares of Common Stock (referred to as the “Conversion Rate”). The
Conversion Price shall be initially equal approximately $24.35 per share of
Common Stock. The Conversion Rate shall be adjusted under certain circumstances
as provided in the Indenture.


 


(d)         Regardless
of anything else contained herein, Holders may surrender their Securities for
conversion into shares of the Company’s Common Stock prior to Stated Maturity
in the following circumstances:


 


(i)             Conversion Upon Satisfaction of Sale Price Condition.


 


(A)                              A
Holder may surrender any of its Securities for conversion into shares of the
Company’s Common Stock in any calendar quarter (and only during such calendar
quarter) after the quarter ending September 30, 2004 if the sale price of
the Company’s Common Stock, for at least 20 Trading Days during the period of
30 consecutive Trading Days ending on the last Trading Day of the previous
calendar quarter, is greater than or


 


A-7

















 


equal to 130% of the
applicable Conversion Price per share of the Company’s Common Stock on such
last Trading Day.


 


(B)                                The
“sale price” of the Company’s
Common Stock on any date means the closing sale price per share (or if no
closing sale price is reported, the average of the bid and asked prices or, if
more than one in either case, the average of the average bid and the average
asked prices) on that date as reported in transactions for the principal U.S.
securities exchange on which the Company’s Common Stock is traded or, if the
Company’s Common Stock is not listed on a U.S. national or regional securities
exchange, as reported by the Nasdaq National Market. The sale price shall be
determined without reference to after-hours or extended market trading. If the
Company’s Common Stock is not listed for trading on a U.S. national or regional
securities exchange and not reported by the Nasdaq National Market on the
relevant date, the “sale price”
shall be the last quoted bid price for the Company’s Common Stock in the
over-the-counter market on the relevant date as reported by the National
Quotation Bureau or similar organization. If the Company’s Common Stock is not
so quoted, the “sale price” shall
be the average of the mid-point of the last bid and asked prices for the
Company’s Common Stock on the relevant date from each of at least three
nationally recognized independent investment banking firms selected by the
Company for this purpose.


 


(ii)     Conversion Upon Satisfaction of Trading Price Condition.


 


(A)                              A
Holder may surrender its Securities for conversion into the Company’s Common
Stock during the five Business Days immediately following any five consecutive
Trading-Day period in which the Trading Price per $1,000 principal amount of
Securities (as determined following a request by a Holder of the Securities in
accordance with the procedures described below) for each day of that period was
less than 98% of the product of the sale price of the Company’s Common Stock
and the then applicable Conversion Rate; provided,
however, that a Holder may not
convert Securities in reliance on this clause (d)(ii) of this
paragraph 7 after May 15, 2019 if on any Trading Day during the five
consecutive Trading-Day period, the sale price of the Company’s Common Stock
was between 100% and 130% of the Conversion Price in effect on such Trading
Day.


 


(B)                                In
connection with any conversion upon satisfaction of the condition set forth in
clause (A) above, the Trustee shall have no obligation to determine the
Trading Price of the Securities unless the Company has requested such
determination, and the Company shall have no obligation to make such request
unless the Holder provides the Company with reasonable evidence that the
Trading Price per $1,000 principal amount of the Securities would be less than
98% of the product of the sale price of the Company’s Common Stock and the then
applicable Conversion Rate; at which time the Company shall instruct the
Trustee to determine the Trading Price of the Securities beginning on the next
Trading Day and on each successive Trading Day until the trading price is
greater than or equal to 98% of the product of the sale price of the Company’s
Common Stock and the then applicable Conversion Rate.


 


(iii)       Conversion Upon Notice of Redemption.    If
the Company calls any or all of the Securities for redemption pursuant to the
provisions of Article 10 of the Indenture, Holders may convert Securities
into the Company’s Common Stock at any time prior to the close of business on
the Business Day immediately preceding the Redemption Date, even if the
Securities are not otherwise convertible at such time. If a Holder already has delivered
a purchase notice with respect to a Security, however, the Holder may not
surrender that Security for conversion until the Holder has withdrawn the
purchase notice in accordance with this Indenture.


 


A-8

















 


(iv)      Conversion Upon Specified Corporate Transactions.


 


(A)                              If
the Company elects to: (1) distribute to all holders of the Company’s
Common Stock rights entitling them to purchase shares of the Company’s Common
Stock at less than the sale price of a share of the Company’s Common Stock on
the Trading Day immediately preceding the declaration date of the distribution,
or (2) distribute to all holders of the Company’s Common Stock the
Company’s assets, debt securities or rights to purchase the Company’s
securities, which distribution has a per share value as determined by the
Company’s board of directors exceeding 10% of the sale price of a share of the
Company’s Common Stock on the Trading Day immediately preceding the declaration
date of the distribution, the Company must notify the Holders of the Securities
at least 20 days prior to the ex-dividend date for such distribution. Upon
such notice, Holders may surrender their Securities for conversion at any time
until the earlier of the close of business on the Business Day immediately
prior to the ex-dividend date or the Company’s announcement that such
distribution will not take place, even if the Securities are not otherwise
convertible at such time. No Holder may exercise this right to convert if the Holder
otherwise may participate in the distribution without conversion. The
ex-dividend date is the first date upon which a sale of the Common Stock does
not automatically transfer the right to receive the relevant distribution from
the seller of the Common Stock to its buyer.


 


(B)                                If
the Company is a party to a consolidation, merger or binding share exchange
pursuant to which the Company’s Common Stock would be converted into cash,
securities or property, a Holder may surrender Securities for conversion at any
time from and after the date that is 15 days prior to the anticipated
effective date of the transaction until 15 days after the actual effective
date of such transaction, and at the effective time of the transaction, the
right to convert a Security into the Company’s Common Stock shall be changed
into a right to convert a Security into the kind and amount of cash, securities
or other property that the Holder would have received if the Holder had
converted its Securities immediately prior to the applicable record date for
such transaction. If the transaction also constitutes a Fundamental Change, a
Holder may require the Company to purchase all or a portion of its Securities
as set forth in Article 11 of the Indenture.


 


(e)          To
exercise the conversion right, the Holder must surrender the Security (or
portion thereof) duly endorsed or assigned to the Company or in blank, at the
office of the Conversion Agent, accompanied by a duly signed conversion notice
to the Company. Any Security surrendered for conversion during the period
between the close of business on any Regular Record Date and the opening of
business on the corresponding Interest Payment Date (other than any Security
whose Maturity is prior to such Interest Payment Date) shall be accompanied by payment
in New York Clearing House funds or other funds acceptable to the Company of an
amount equal to the interest (excluding Liquidated Damages, if any) payable on
such Interest Payment Date by the Company on the principal amount of the
Security being surrendered for conversion (but excluding any overdue interest
on the principal amount of such Security so converted that exists at the time
such Holder surrenders such Security for conversion). Notwithstanding the
foregoing, any such Holder which surrenders for conversion any Security
(a) which has been called for redemption by the Company in a notice of
redemption given by the Company pursuant to Section 10.04 of the Indenture
on a Redemption Date after such Regular Record Date and on or prior to the next
succeeding Interest Payment Date or (b) with respect to which the Company
has specified a Purchase Date that is after such Regular Record Date and on or
prior to the next succeeding Interest Payment Date, in either case, need not
pay the Company an amount equal to the interest on the principal amount of such
Security so converted at the time such Holder surrenders such Security for
conversion.


 


(f)            No
fractional shares of Common Stock shall be issued upon conversion of any
Securities. Instead of any fractional share of Common Stock which would
otherwise be issued upon conversion of such Securities, the Company shall pay a
cash adjustment as provided in the Indenture.


 


A-9

















 


8.                                       Subordination.    The Indebtedness
evidenced by this Security is, to the extent and in the manner provided in the
Indenture, subordinated and subject in right of payment to the prior payment in
full of all amounts then due on all Senior Debt of the Company. Each Holder of
this Security, by accepting the same, (a) agrees to and shall be bound by
such provisions, (b) authorizes and directs the Trustee on such Holder’s
behalf to take such action as may be necessary or appropriate to effectuate the
subordination so provided and (c) appoints the Trustee such Holder’s
attorney-in-fact for any and all such purposes.


 


9.                                       Denominations;
Transfer; Exchange.    The
Securities are issuable in registered form, without coupons, in denominations
of $1,000 and multiples of $1,000 in excess thereof. A Holder may register the
transfer or exchange of Securities in accordance with the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and the Company may require a Holder to pay
any taxes and fees required by law or permitted by the Indenture.


 


In the event of a
redemption in part, the Company shall not be required (a) to register the
transfer of, or exchange, Securities for a period of 15 days immediately
preceding the date notice is given identifying the serial numbers of the
Securities called for such redemption, or (b) to register the transfer of,
or exchange, any such Securities, or portion thereof, called for redemption.


 


In the event of
redemption, conversion or purchase of the Securities in part only, a new
Security or Securities for the unredeemed, unconverted or unpurchased portion
thereof shall be issued in the name of the Holder hereof.


 


10.                                 Persons Deemed Owners.    The registered
Holder of this Security shall be treated as its owner for all purposes.


 


11.                                 Unclaimed Money.    The Trustee and
the Paying Agent shall pay to the Company any money held by them for the
payment of principal or interest that remains unclaimed for two years after the
date upon which such payment shall have become due. After payment to the
Company, Holders entitled to the money must look to the Company for payment as
general creditors unless an applicable abandoned property law designates
another Person, and all liability of the Trustee and the Paying Agent with
respect to such money shall cease.


 


12.                                 Discharge Prior to
Redemption or Maturity.    Subject to certain conditions contained in the
Indenture, the Company may discharge its obligations under the Securities and
the Indenture if (1) (a) all of the Outstanding Securities have become due
and payable or shall become due and payable at their scheduled Maturity within
one year or (b) all of the Outstanding Securities are scheduled for
redemption within one year, and (2) the Company shall have deposited with
the Trustee an amount in cash sufficient to pay the principal of and interest
on, all of the Outstanding Securities on the date of Maturity or redemption, as
the case may be.


 


13.                                 Amendment; Supplement;
Waiver.    The
Indenture permits, with certain exceptions as therein provided, the amendment
thereof and the modification of the rights and obligations of the Company and
the rights of the Holders of the Securities under the Indenture at any time by
the Company and the Trustee with the consent of the Holders of a majority in
aggregate principal amount of the Outstanding Securities (or such lesser amount
as shall have acted at a meeting pursuant to the provisions of the Indenture).
The Indenture also contains provisions permitting the Holders of specified percentages
in principal amount of the Securities at the time Outstanding, on behalf of the
Holders of all the Securities, to waive compliance by the Company with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder of this Security
shall be conclusive and binding upon such Holder and upon all future Holders of
this Security and of any Security issued upon registration of transfer hereof
or in exchange herefor


 


A-10

















 


or in lieu hereof, whether or not notation of such
consent or waiver is made upon this Security or such other Security.


 


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


 


14.                                 Defaults and Remedies.    The Indenture
provides that an Event of Default with respect to the Securities occurs when
any of the following occurs:


 


(a)          the
Company defaults in the payment of the principal on any of the Securities when
it becomes due and payable, at Maturity, upon redemption or exercise of a
Purchase Right or Put Purchase Right or otherwise, whether or not such payment
is prohibited by the subordination provisions of Article 13 of the
Indenture; or


 


(b)         the Company
defaults in the payment of interest (including Liquidated Damages, if any) on
any of the Securities when it becomes due and payable and such default
continues for a period of 30 days, whether or not such payment is
prohibited by the subordination provisions of Article 13 of the Indenture;
or


 


(c)          the
Company fails to deliver shares of Common Stock, together with cash instead of
fractional shares, when those shares of Common Stock or cash instead of
fractional shares is required to be delivered following conversion of a
Security in accordance with the provisions of Article 12 of the Indenture
and that failure continues for 10 days; or


 


(d)         the Company
fails to perform or observe any other term, covenant or agreement contained in
the Securities or the Indenture and such default continues for a period of
60 days after written notice of such failure is given as specified in the
Indenture; or


 


(e)          (i) the
Company fails to make any payment by the end of the applicable grace period, if
any, after the maturity of any Indebtedness for borrowed money in an amount in
excess of $10,000,000, or (ii) there is an acceleration of any
Indebtedness for borrowed money in an amount in excess of $10,000,000 because
of a default with respect to such Indebtedness without such Indebtedness having
been discharged or such acceleration having been cured, waived, rescinded or
annulled, in the case of either clause (i) or (ii) above, for a
period of 30 days after written notice is given to the Company as
specified in the Indenture; or


 


(f)            the
Company fails, within 30 days after the occurrence of a Fundamental
Change, to give to each Holder of Securities notice pursuant to
Section 11.03 of the Indenture; or


 


(g)         there are
certain events of bankruptcy, insolvency or reorganization of the Company.


 


If an Event of Default
shall occur and be continuing, the principal of all the Securities maybe
declared due and payable in the manner and with the effect provided in the
Indenture.


 


15.                                 Authentication.    This Security
shall not be valid until the Trustee (or authenticating agent) executes the
certificate of authentication on the other side of this Security.


 


16.                                 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 right of survivorship and not as tenants in common), CUST
(= Custodian) and U/G/M/A (=Uniform Gifts to Minors Act).


 


17.                                 Additional Rights of
Holders of Registrable Securities.    In addition to the rights
provided to Holders under the Indenture, Holders of Registrable Securities
shall have all the rights set forth in the Registration Rights Agreement.


 


A-11

















 


18.                                 CUSIP Numbers.    Pursuant to a
recommendation promulgated by the Committee on Uniform Security Identification
Procedures, the Company has caused CUSIP numbers to be printed on this Security
and the Trustee may use CUSIP 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 this Security or as contained in any notice of redemption and
reliance may be placed only on the other identification numbers placed thereon.


 


19.                                 Governing Law.    The Indenture and
this Security shall be governed by, and construed in accordance with, the law
of the State of New York.


 


20.                                 Successor Corporation.    In the event a
successor corporation assumes all the obligations of the Company under this
Security, pursuant to the terms hereof and of the Indenture, the Company shall
be released from all such obligations.


 


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ASSIGNMENT FORM


 


To assign this Security,
fill in the form below and have your signature guaranteed: (I) or (we)
assign and transfer this Security to: 


 


	
   

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

  
	
   

  
	
   

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

  



 


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


 


	
  Dated:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Your Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  (Print your name
  exactly as it appears on the face of this Security)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Your Signature:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  



 


Signature
Guarantee*:


 












*                                         Participant in
a recognized Signature Guarantee Medallion Program (or other signature
guarantor acceptable to the Trustee).


 


In connection with any transfer of this Security
occurring prior to the end of the period referred to in Rule 144(k) under
the Securities Act, the undersigned confirms that without utilizing any general
solicitation or general advertising:


 


[Check One]


 


o                                    (a) this Security is being
transferred in compliance with the exemption from registration under the
Securities Act of 1933, as amended, provided by Rule 144A thereunder.


 


or


 


o                                    (b) this Security is being
transferred in compliance with the exemption from registration under the
Securities Act of 1933, as amended, provided by Regulation S thereunder.


 


or


 


o                                    (c) this Security is being
transferred other than in accordance with (a) or (b) above and
documents are being furnished which comply with the conditions of transfer set
forth in this Security and the Indenture.


 


If none of the foregoing boxes is checked, the Trustee
or other Registrar shall not be obligated to register this Security in the name
of any Person other than the Holder hereof unless the conditions to any such
transfer of registration set forth herein and in Sections 2.07, 2.08 and 2.09
of the Indenture shall have been satisfied. 


 


	
  Dated:

  	
   

  	
   

  



 


A-13

















 


NOTICE:                        The signature to this assignment must
correspond with the name as written upon the face of the within-mentioned
instrument in every particular, without alteration or any change whatsoever. 


 


	
  Signature Guarantee:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature must be
  guaranteed by a participant in a recognized signature guaranty medallion
  program or other signature guarantor acceptable to the Trustee.

  	
   

  



 


TO BE COMPLETED BY PURCHASER IF
(a) ABOVE IS CHECKED.


 


The undersigned represents and warrants that it is
purchasing this Security for its own account or an account with respect to which
it exercises sole investment discretion, in each case for investment and not
with a view to distribution, and that it and any such account is a “Qualified
Institutional Buyer” within the meaning of Rule 144A under the Securities
Act of 1933 and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding
the Company as the undersigned has requested pursuant to Rule 144A or has
determined not to request such information and that it is aware that the
transferor is relying upon the undersigned’s foregoing representations in order
to claim the exemption from registration provided by Rule 144A. 


 


	
  Dated:

  	
   

  	
   

  



 


NOTICE:                        To be executed by an executive officer


 


TO BE COMPLETED BY PURCHASER IF (b) ABOVE
IS CHECKED.


 


The undersigned represents and warrants that the
transfer is being effected pursuant to and in accordance with Rule 903 or
Rule 904 under the Securities Act and, accordingly, the undersigned
further certifies that (A) the transfer is not being made to a person in
the United States and (1) at the time the buy order was originated, the
transferee was outside the United States or such transferor and any Person
acting on its behalf reasonably believed and believes that the transferee was
outside the United States or (2) the transaction was executed in, on or
through the facilities of a designated offshore securities market and neither
such transferor nor any Person acting on its behalf knows that the transaction
was prearranged with a buyer in the United States; (B) no directed selling
efforts have been made in contravention of the requirements of Rule 903(b)
or Rule 904(b) of Regulation S under the Securities Act; (C) the
transaction is not part of a plan or scheme to evade the registration requirements
of the Securities Act; and (D) if the proposed transfer is not being made
prior to the expiration of the Restricted Period, the transfer is not being
made to a U.S. Person. 


 


	
  Dated:

  	
   

  	
   

  



 


NOTICE:                        To be
executed by an executive officer


 


A-14

















 


CONVERSION NOTICE


 


TO:         PIXELWORKS, INC.

8100 Nyberg Street, Suite 300

Tualatin, Oregon 97062

Attention: Chief Financial Officer


 


The undersigned
registered owner of this Security hereby irrevocably exercises the option to
convert this Security, or the portion hereof (which is $1,000 principal amount
or a multiple thereof) below designated, into shares of Common Stock in
accordance with the terms of the Indenture referred to in this Security, and
directs that the shares issuable and deliverable upon such conversion, together
with any check in payment for fractional shares 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. If
shares or any portion of this Security not converted is to be issued in the
name of a person other than the undersigned, the undersigned will pay all
transfer taxes payable with respect thereto. Any amount required to be paid to
the undersigned on account of interest accompanies this Security. 


 


	
  Dated:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Your Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  (Print your name
  exactly as it appears on the face of this Security)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Your Signature:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature Guarantee*:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Social Security or
  other Taxpayer Identification Number:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  



 


	
  Principal amount to be converted (if less than all):

  	
   

  	
  $

  
	
   

  	
   

  	
   

  



 












*                                         Participant
in a recognized Signature Guarantee Medallion Program (or other signature
guarantor acceptable to the Trustee).


 


A-15

















 


Fill in for registration of shares (if to be issued)
and Securities (if to be delivered) other than to and in the name of the
registered holder: 


 


	
   

  
	
  (Name)

  
	
   

  
	
  (Street Address)

  
	
   

  
	
  (City, State and
  Zip Code)

  



 


In connection with any conversion of this Security
occurring prior to the end of the period referred to in Rule 144(k) under
the Securities Act, if any shares of the Common Stock to be issued upon
conversion of this Security are to be registered in a name other than that of
the undersigned registered owner, the undersigned confirms that without
utilizing any general solicitation or general advertising:


 


[Check One]


 


o                                    (a) this Security and the shares of
Common Stock to be issued upon conversion of this Security are being
transferred in compliance with the exemption from registration under the
Securities Act of 1933, as amended, provided by Rule 144A thereunder.


 


or


 


o                                    (b) this Security and the shares of
Common Stock to be issued upon conversion of this Security are being
transferred in compliance with the exemption from registration under the
Securities Act of 1933, as amended, provided by Regulation S thereunder.


 


or


 


o                                    (c) this Security and the shares of
Common Stock to be issued upon conversion of this Security are being
transferred other than in accordance with (a) or (b) above and
documents are being furnished which comply with the conditions of transfer set
forth in this Security and the Indenture.


 


If none of the foregoing boxes is checked, the Trustee
or other Registrar shall not be obligated to register this Security or the
shares of Common Stock to be issued upon conversion of this Security in the
name of any Person other than the Holder hereof unless the conditions to any
such transfer of registration set forth herein and in Sections 2.07, 2.08 and
2.09 of the Indenture shall have been satisfied.


 


TO BE COMPLETED BY TRANSFEREE IF
(a) ABOVE IS CHECKED.


 


The undersigned represents and warrants that it is
purchasing this Security for its own account or an account with respect to
which it exercises sole investment discretion, in each case for investment and
not with a view to distribution, and that it and any such account is a
“Qualified Institutional Buyer” within the meaning of Rule 144A under the
Securities Act of 1933 and is aware that the sale to it is being made in
reliance on Rule 144A and acknowledges that it has received such
information regarding the Company as the undersigned has requested pursuant to
Rule 144A or has determined not to request such information and that it is
aware that the transferor is relying upon the undersigned’s foregoing
representations in order to claim the exemption from registration provided by
Rule 144A. 


 


	
  Dated:

  	
   

  	
   

  



 


NOTICE:                                                To be executed by an executive officer


 


A-16

















 


TO BE COMPLETED BY TRANSFEREE IF
(b) ABOVE IS CHECKED.


 


The undersigned represents and warrants that the
transfer is being effected pursuant to and in accordance with Rule 903 or
Rule 904 under the Securities Act and, accordingly, the undersigned
further certifies that (A) the transfer is not being made to a person in
the United States and (1) at the time the buy order was originated, the
transferee was outside the United States or such transferor and any Person
acting on its behalf reasonably believed and believes that the transferee was
outside the United States or (2) the transaction was executed in, on or
through the facilities of a designated offshore securities market and neither
such transferor nor any Person acting on its behalf knows that the transaction
was prearranged with a buyer in the United States; (B) no directed selling
efforts have been made in contravention of the requirements of Rule 903(b)
or Rule 904(b) of Regulation S under the Securities Act; (C) the
transaction is not part of a plan or scheme to evade the registration
requirements of the Securities Act; and (D) if the proposed transfer is
not being made prior to the expiration of the Restricted Period, the transfer
is not being made to a U.S. Person. 


 


	
  Dated:

  	
   

  	
   

  



 


NOTICE:                                                To be executed by an executive officer


 


A-17

















 


NOTICE
OF EXERCISE OF PURCHASE RIGHT


 


TO:         PIXELWORKS, INC.

8100 Nyberg Street, Suite 300

Tualatin, Oregon 97062

Attention: Chief Financial Officer


 


The undersigned
registered owner of this Security hereby irrevocably acknowledges receipt of a
notice from Pixelworks, Inc. (the “Company”)
as to the occurrence of a Fundamental Change with respect to the Company and
requests and instructs the Company to repay the entire principal amount of this
Security, or the portion thereof (which is $1,000 principal amount or a
multiple thereof) below designated, in accordance with the terms of the
Indenture referred to in this Security, together with interest (including
Liquidated Damages, if any) accrued and unpaid to, but excluding, such date, to
the registered holder hereof, in cash. 


 


	
  Dated:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Your Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  (Print your name
  exactly as it appears on

  the face of this Security)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Your Signature:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  (Sign exactly as your
  name appears on

  the face of this Security)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature Guarantee*:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Social Security or
  other Taxpayer Identification Number:

  	
   

  	
   

  



 


 


	
  Principal amount to be repurchased (if less than all):

  	
   

  	
  $

  
	
   

  	
   

  	
   

  



 












*                                         Participant
in a recognized Signature Guarantee Medallion Program (or other signature
guarantor acceptable to the Trustee).


 


	
  Serial Number:

  



 


 


	
  Certificate Number (if Physical Security):

  



 


A-18

















 


SCHEDULE OF
EXCHANGES FOR PHYSICAL SECURITIES(2)


 


The following exchanges
of a part of this Global Security for Physical Securities 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 officer of

  Trustee

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 












(2)                                  This
schedule should be included only if the Security is issued in global form.


 


A-19