Document:

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                                                                     Exhibit 4.3

                             SCHOOL SPECIALTY, INC.

                                       and

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

                            BNY MIDWEST TRUST COMPANY

                                   as Trustee

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

                                  $110,000,000

                 3.75% Convertible Subordinated Notes due 2023*

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

                                    INDENTURE

                            Dated as of July 18, 2003

----------
* Plus an over-allotment option to purchase up to $25,000,000 original principal
  amount of 3.75% Convertible Subordinated Notes due 2023.

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                                TABLE OF CONTENTS
                                                                            Page
                                                                            ----
                                    ARTICLE 1
                                   DEFINITIONS

Section 1.01    Definitions....................................................1
Section 1.02    Other Definitions..............................................8
Section 1.03    Incorporation by Reference of Trust Indenture Act..............9
Section 1.04    Rules of Construction.........................................10
                                    ARTICLE 2
                       THE CONVERTIBLE SUBORDINATED NOTES

Section 2.01    Form and Dating...............................................10
Section 2.02    Execution and Authentication..................................11
Section 2.03    Registrar, Paying Agent and Conversion Agent..................12
Section 2.04    Paying Agent to Hold Money in Trust...........................13
Section 2.05    Holder Lists..................................................13
Section 2.06    Transfer and Exchange.........................................13
Section 2.07    Replacement Convertible Subordinated Notes....................15
Section 2.08    Outstanding Convertible Subordinated Notes....................16
Section 2.09    When Treasury Convertible Subordinated
                Notes Disregarded.............................................16
Section 2.10    Temporary Convertible Subordinated Notes; Transfers
                of Global Security to Beneficial Owners.......................17
Section 2.11    Cancellation..................................................18
Section 2.12    Defaulted Interest............................................18
Section 2.13    CUSIP Number..................................................18
Section 2.14    Regulation S..................................................19
Section 2.15    Tax Treatment of Convertible Subordinated Notes...............19
                                    ARTICLE 3
                            REDEMPTION AND PURCHASES

Section 3.01    Optional Redemption...........................................20
Section 3.02    Notices to Trustee............................................20
Section 3.03    Selection of Convertible Subordinated Notes to Be
                Redeemed......................................................20
Section 3.04    Notice of Redemption..........................................21
Section 3.05    Effect of Notice of Redemption................................22
Section 3.06    Deposit of Redemption Price...................................22
Section 3.07    Convertible Subordinated Notes Redeemed in Part...............23
Section 3.08    Conversion Arrangement on Call for Redemption.................23
Section 3.09    Repurchase of Convertible Subordinated Notes at Option
                of the Holder.................................................24
Section 3.10    Repurchase Upon Designated Event..............................27
                                    ARTICLE 4
                                    COVENANTS

Section 4.01    Payment of Convertible Subordinated Notes.....................29

                                       i

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                                TABLE OF CONTENTS
                                   (continued)
                                                                            Page
                                                                            ----
Section 4.02    Commission Reports............................................30
Section 4.03    Compliance Certificate........................................30
Section 4.04    Maintenance of Office or Agency...............................30
Section 4.05    Continued Existence...........................................30
Section 4.06    Appointments to Fill Vacancies in Trustee's Office............31
Section 4.07    Stay, Extension and Usury Laws................................31
Section 4.08    Taxes.........................................................31
Section 4.09    Investment Company Act........................................31
Section 4.10    Optional Conversion to Semiannual Coupon Note Upon
                Tax Event.....................................................31
                                    ARTICLE 5
                                   SUCCESSORS

Section 5.01    When the Company May Merge, Etc...............................32
Section 5.02    Successor Corporation Substituted.............................33
Section 5.03    Purchase Option on Change of Control..........................33
                                    ARTICLE 6
                              DEFAULTS AND REMEDIES

Section 6.01    Events of Default.............................................33
Section 6.02    Acceleration..................................................36
Section 6.03    Other Remedies................................................36
Section 6.04    Waiver of Past Defaults.......................................36
Section 6.05    Control by Majority...........................................37
Section 6.06    Limitation on Suits...........................................37
Section 6.07    Rights of Holders to Receive Payment..........................38
Section 6.08    Collection Suit by Trustee....................................38
Section 6.09    Trustee May File Proofs of Claim..............................38
Section 6.10    Priorities....................................................38
Section 6.11    Undertaking for Costs.........................................39
                                    ARTICLE 7
                                   THE TRUSTEE

Section 7.01    Duties of the Trustee.........................................39
Section 7.02    Rights of the Trustee.........................................40
Section 7.03    Individual Rights of the Trustee..............................41
Section 7.04    Trustee's Disclaimer..........................................42
Section 7.05    Notice of Defaults............................................42
Section 7.06    Reports by the Trustee to Holders.............................42
Section 7.07    Compensation and Indemnity....................................42
Section 7.08    Replacement of the Trustee....................................43
Section 7.09    Successor Trustee by Merger, etc..............................44
Section 7.10    Eligibility, Disqualification.................................45

                                       ii

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                                TABLE OF CONTENTS
                                   (continued)
                                                                            Page
                                                                            ----
Section 7.11    Preferential Collection of Claims Against Company.............45
                                    ARTICLE 8
                     SATISFACTION AND DISCHARGE OF INDENTURE

Section 8.01    Discharge of Indenture........................................45
Section 8.02    Deposited Monies to Be Held in Trust by Trustee...............46
Section 8.03    Paying Agent to Repay Monies Held.............................46
Section 8.04    Return of Unclaimed Monies....................................46
Section 8.05    Reinstatement.................................................46
                                    ARTICLE 9
                                   AMENDMENTS

Section 9.01    Without the Consent of Holders................................47
Section 9.02    With the Consent of Holders...................................47
Section 9.03    Compliance With the Trust Indenture Act.......................49
Section 9.04    Revocation and Effect of Consents.............................49
Section 9.05    Notation on or Exchange of Convertible Subordinated
                Notes.........................................................50
Section 9.06    Trustee Protected.............................................50
                                   ARTICLE 10
                               GENERAL PROVISIONS

Section 10.01   Trust Indenture Act Controls..................................50
Section 10.02   Notices.......................................................50
Section 10.03   Communication by Holders With Other Holders...................51
Section 10.04   Certificate and Opinion as to Conditions Precedent............51
Section 10.05   Statements Required in Certificate or Opinion.................51
Section 10.06   Rules by Trustee and Agents...................................52
Section 10.07   Legal Holidays................................................52
Section 10.08   No Recourse Against Others....................................53
Section 10.09   Counterparts..................................................53
Section 10.10   Other Provisions..............................................53
Section 10.11   Governing Law.................................................54
Section 10.12   No Adverse Interpretation of Other Agreements.................54
Section 10.13   Successors....................................................54
Section 10.14   Severability..................................................54
Section 10.15   Table of Contents, Headings, etc..............................54
                                   ARTICLE 11
                                  SUBORDINATION

Section 11.01   Agreement to Subordinate......................................54
Section 11.02   Liquidation; Dissolution; Bankruptcy..........................54
Section 11.03   Default on Senior Debt and/or Designated Senior Debt..........55
Section 11.04   Acceleration of Convertible Subordinated Notes................56
Section 11.05   When Distribution Must Be Paid Over...........................56

                                      iii

<PAGE>

                                TABLE OF CONTENTS
                                   (continued)
                                                                            Page
                                                                            ----
Section 11.06   Notice by Company.............................................57
Section 11.07   Subrogation...................................................57
Section 11.08   Relative Rights...............................................57
Section 11.09   Subordination May Not Be Impaired by Company..................58
Section 11.10   Distribution or Notice to Representative......................58
Section 11.11   Rights of Trustee and Paying Agent............................58
Section 11.12   Authorization to Effect Subordination.........................58
Section 11.13   Article Applicable to Paying Agents...........................59
Section 11.14   Senior Debt Entitled to Rely..................................59
Section 11.15   Permitted Payments............................................59
                                   ARTICLE 12
                  CONVERSION OF CONVERTIBLE SUBORDINATED NOTES

Section 12.01   Right to Convert..............................................59
Section 12.02   Exercise of Conversion Privilege; Issuance of Common
                Stock on Conversion; No Adjustment for Interest
                or Dividends..................................................60
Section 12.03   Cash Payments in Lieu of Fractional Shares....................61
Section 12.04   Taxes on Shares Issued........................................62
Section 12.05   Reservation of Shares; Shares to Be Fully Paid; Listing
                of Common Stock...............................................62
Section 12.06   Adjustment for Change in Capital Stock........................62
Section 12.07   [Reserved]....................................................66
Section 12.08   [Reserved]....................................................66
Section 12.09   When Adjustment May Be Deferred...............................66
Section 12.10   When No Adjustment is Required................................66
Section 12.11   Notice of Adjustment..........................................67
Section 12.12   Voluntary Increase............................................67
Section 12.13   Notice of Certain Transactions................................67
Section 12.14   Reorganization of Company; Special Distributions..............68
Section 12.15   Company Determination Final...................................69
Section 12.16   Trustee's Adjustment Disclaimer...............................69
Section 12.17   Simultaneous Adjustments......................................69
Section 12.18   Successive Adjustments........................................69
Section 12.19   Restriction on Common Stock Issuable Upon Conversion..........69
Section 12.20   Company's Right to Elect to Pay Cash or Common Stock..........71

                                    EXHIBITS

Exhibit A       Form of Convertible Subordinated Note........................A-1
Exhibit B       Form of Transfer Certificate for Transfer of
                Restricted Common Stock......................................B-1
Exhibit C       Projected Payment Schedule...................................C-1

                                       iv

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                             CROSS-REFERENCE TABLE*

Trust Indenture                                                        Indenture
Act Section                                                             Section
-----------                                                             -------

310(a)(1).....................................................             7.10
     (a)(2)...................................................             7.10
     (a)(3)...................................................              n/a
     (a)(4)...................................................              n/a
     (b)......................................................7.08, 7.10, 10.02
     (c)......................................................              n/a
311(a)........................................................             7.11
     (b)......................................................             7.11
     (c)......................................................              n/a
312(a)........................................................             2.05
     (b)......................................................            10.03
     (c)......................................................            10.03
313(a)........................................................             7.06
     (b)(1)...................................................              n/a
     (b)(2)...................................................        5.7, 7.06
     (c)......................................................      7.06, 10.02
     (d)......................................................             7.06
314(a)........................................................     4.02, 10.02,
                                                                          10.05
     (b)......................................................              n/a
     (c)(1)...................................................            10.04
     (c)(2)...................................................            10.04
     (c)(3)...................................................              n/a
     (d)......................................................              n/a
     (e)......................................................            10.05
     (f)......................................................              n/a
315(a)........................................................          7.01(b)
     (b)......................................................      7.05, 10.02
     (c)......................................................          7.01(a)
     (d)......................................................          7.01(c)
     (e)......................................................             6.11
316(a)(last sentence).........................................             2.09
     (a)(1)(A)................................................             6.05
     (a)(1)(B)................................................             6.04
     (a)(2)...................................................              n/a
     (b)......................................................            11.08
     (c)......................................................             9.04
317(a)(1).....................................................             6.08
     (a)(2)...................................................             6.09
     (b)......................................................             2.04
318(a)........................................................            10.01
     (b)......................................................              n/a
     (c)......................................................            10.01

----------
"n/a" means not applicable.

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

                                        v

<PAGE>

     THIS INDENTURE, dated as of July 18, 2003, is between School Specialty,
Inc., a Wisconsin corporation (the "Company"), and BNY Midwest Trust Company, an
Illinois trust company (the "Trustee"). The Company has duly authorized the
creation of its 3.75% Convertible Subordinated Notes due 2023 (the "Convertible
Subordinated Notes"), and to provide therefor the Company and the Trustee have
duly authorized the execution and delivery of this Indenture. Each party agrees
as follows for the benefit of the other party and for the equal and ratable
benefit of the holders from time to time of the Convertible Subordinated Notes:

                                    ARTICLE 1

                                   DEFINITIONS

SECTION 1.01  Definitions.
              -----------

     "Accreted Conversion Price" has the meaning specified in paragraph 9 of the
Convertible Subordinated Notes.

     "Accreted Principal Amount" has the meaning specified in paragraph 1(b) of
the Convertible Subordinated Notes.

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

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

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

     "Applicable Procedures" means, with respect to any transfer or transaction
involving a Global Security or beneficial interest therein, the rules and
procedures of the Depositary for such Global Security to the extent applicable
to such transaction and as in effect from time to time.

     "Board of Directors" means the Board of Directors of the Company or any
authorized committee of the Board of Directors.

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

     "Change of Control" means the occurrence of one or more of the following
events: (a) any "person" or "group" (as such terms are used in Sections 13(d)
and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as defined
in Rules 13d-3 and 13d-5 under the Exchange Act) of shares representing more
than 50% of the combined voting power of the then outstanding Voting Stock of
the Company, (b) the Company consolidates with or merges into any other
corporation, any other corporation merges into the Company, or the Company
effects a

                                       1

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share exchange, and, in the case of any such transaction, the outstanding Common
Stock of the Company is reclassified into or exchanged for any other property or
securities, unless the shareholders of the Company immediately before such
transaction own, directly or indirectly immediately following such transaction,
at least a majority of the combined voting power of the then outstanding Voting
Stock of the corporation resulting from such transaction in substantially the
same proportion as their ownership of the Voting Stock of the Company
immediately before such transaction, (c) the Company or the Company and its
subsidiaries, taken as a whole, sells, assigns, conveys, transfers or leases all
or substantially all assets of the Company or of the Company and its
subsidiaries, taken as a whole, as applicable (other than to one or more
wholly-owned subsidiaries of the Company), or (d) any time the Continuing
Directors do not constitute a majority of the Board of Directors of the Company
(or, if applicable, a successor corporation to the Company); provided, that a
Change of Control under (a), (b) and (c) above shall not be deemed to have
occurred if either (y) the Closing Sale Price per share of Common Stock for any
five trading days within the period of ten consecutive trading days ending
immediately after the later of the Change of Control or the public announcement
of the Change of Control (in the case of a Change of Control under clause (a)
above) or the period of ten consecutive trading days ending immediately before
the Change of Control (in the case of a Change of Control under clause (b) or
(c) above) shall equal or exceed 110% of the Accreted Conversion Price in effect
on the date of such Change of Control or the public announcement of such Change
of Control, as applicable or (z) at least 90% of the consideration (excluding
cash payments for fractional shares) in the transaction or transactions
constituting the Change of Control 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 and, as a result of the transaction, the Convertible
Subordinated Notes become convertible solely into such common stock.

     "Closing Sale Price" of a security on any date means (a) the last reported
per share sale price (or, if the last sale price is not reported, the average of
the bid and ask prices or, if more than one in either case, the average of the
average bid and the average ask prices) on such date as reported on The Nasdaq
National Market or if such security is not then quoted on The Nasdaq National
Market, then as reported by the principal U.S. exchange or quotation system such
security is then listed or quoted or (b) in the absence of such quotation, such
price as the Company shall determine on the basis of such quotations as the
Company considers appropriate.

     "Commission" means the Securities and Exchange Commission.

     "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. Subject to the provisions
of Section 12.14, however, shares issuable on conversion of Convertible
Subordinated Notes shall include only shares of the class designated as Common
Stock of the Company at the date of this Indenture 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
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

                                       2

<PAGE>

total number of shares of such class resulting from all such reclassifications
bears to the total number of shares of all such classes resulting from all such
reclassifications.

     "Company" means the party named as such above until a successor replaces it
in accordance with Article 5 and thereafter means the successor. References to
the Company shall not include any Subsidiary.

     A "consolidated subsidiary" of any person means a subsidiary which for
financial reporting purposes is or, in accordance with GAAP, should be,
accounted for by such person as a consolidated subsidiary.

     "Contingent Interest" has the meaning specified in paragraph 1(c) of the
form of Convertible Subordinated Note, which is attached as Exhibit A hereto.

     "Continuing Directors" means, as of any date of determination, any member
of the Board of Directors who (i) was a member of such Board of Directors on the
date of this Indenture or (ii) was nominated for election or elected to such
Board of Directors with the approval of a majority of the Continuing Directors
who were members of such Board of Directors at the time of such nomination or
election, including directors of a successor corporation resulting from a
transaction referred to in clause (a), (b) or (c) of the definition of "Change
of Control."

     "Convertible Subordinated Notes" means the 3.75% Convertible Subordinated
Notes due 2023 issued, authenticated and delivered under this Indenture.

     "Corporate Trust Office" means the corporate trust office of the Trustee at
which at any particular time the trust created by this Indenture shall
principally be administered; as of the date hereof, the Corporate Trust Office
is located at 2 N. LaSalle Street, Suite 1020, Chicago, Illinois 60602.

     "Default" means any event that is, or after notice or passage of time, or
both, would be, an Event of Default.

     "Depositary" means, with respect to any Global Securities, a clearing
agency that is registered as such under the Exchange Act and is designated by
the Company to act as Depositary for such Global Securities (or any successor
securities clearing agency so registered), which shall initially be DTC.

     "Designated Event" means the occurrence of a Change of Control or a
Termination of Trading.

     "Designated Senior Debt" means (a) the Senior Bank Credit Facility and (ii)
any particular Senior Debt which has at the time of the giving of the Payment
Blockage Notice an aggregate outstanding principal amount in excess of $25
million, if the instrument creating or evidencing the same or the assumption or
guarantee thereof (or related agreements or documents to which the Company is a
party) expressly provides that such Indebtedness shall be "Designated Senior
Debt" for purposes of the Indenture (provided that such instrument, agreement or
other document may place limitations and conditions on the right of such Senior
Debt to exercise the rights of Designated Senior Debt.)

                                       3

<PAGE>

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

     "Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.

     "Ex-Dividend Date" for any issuance or distribution means the date
immediately prior to the commencement of "ex-dividend" trading for such issuance
or distribution on The Nasdaq National Market or the principal U.S. exchange or
quotation system on which the Common Stock is then listed or quoted.

     "fair market value" means the amount which a willing buyer would pay an
unaffiliated willing seller in an arm's length transaction.

     "GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession of the United States, which are in effect from time to time.

     "Global Securities Legend" means the legend labeled as such and that is set
forth in Exhibit A hereto.

     "Indebtedness" means, with respect to any person, all obligations, whether
or not contingent, of such person (i) (a) for borrowed money (including, but not
limited to, any indebtedness secured by a security interest, mortgage or other
lien on the assets of the Company that is (1) given to secure all or part of the
purchase price of property subject thereto, whether given to the vendor of such
property or to another, or (2) existing on property at the time of acquisition
thereof), (b) evidenced by a note, debenture, bond or other written instrument,
(c) under a lease required to be capitalized on the balance sheet of the lessee
under GAAP or under any lease or related document (including a purchase
agreement) that provides that the Company is contractually obligated to purchase
or cause a third party to purchase and thereby guarantee a minimum residual
value of the lease property to the lessor and the obligations of the Company
under such lease or related document to purchase or to cause a third party to
purchase such leased property, (d) in respect of letters of credit, bank
guarantees or bankers' acceptances (including reimbursement obligations with
respect to any of the foregoing), (e) with respect to Indebtedness secured by a
mortgage, pledge, lien, encumbrance, charge or adverse claim affecting title or
resulting in an encumbrance to which the property or assets of such person are
subject, whether or not the obligation secured thereby shall have been assumed
by or shall otherwise be such person's legal liability, (f) in respect of the
balance of deferred and unpaid purchase price of any property or assets, (g)
under interest rate or currency swap agreements, cap, floor and collar
agreements, spot and forward contracts and similar agreements and arrangements;
(ii) with respect to any obligation of others of the type described in the
preceding clause (i) or under clause (iii) below assumed by or guaranteed in any
manner by such person through an agreement to purchase (including, without
limitation, "take or pay" and similar arrangements), contingent or otherwise
(and the obligations of such person under any such assumptions, guarantees or
other such arrangements); and (iii) any and all deferrals, renewals,

                                       4

<PAGE>

extensions, refinancings and refundings of, or amendments, modifications or
supplements to, any of the foregoing.

     "Indenture" means this Indenture as amended or supplemented from time to
time.

     "Initial Purchasers" means Citigroup Global Markets Inc. and Banc of
America Securities LLC.

     "Interest Payment Date" means February 1 and August 1 of each year,
beginning February 1, 2004.

     "Issue Date" means the date on which Convertible Subordinated Notes are
first issued and authenticated under this Indenture.

     "Liquidated Damages" has the meaning specified in paragraph 18 of the form
of Convertible Subordinated Note, which is attached as Exhibit A hereto.

     "Material Subsidiary" means any subsidiary of the Company which at the date
of determination is a "significant subsidiary" as defined in Rule 1-02(w) of
Regulation S-X under the Securities Act and the Exchange Act.

     "Maturity Date" means August 1, 2023, unless earlier redeemed, repurchased
or converted.

     "Note Custodian" means BNY Midwest Trust Company, as custodian with respect
to any Global Security, or any successor entity thereto.

     "Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.

     "Offering Memorandum" means the offering memorandum dated July 14, 2003,
relating to the Convertible Subordinated Notes, including all amendments
thereto.

     "Officer" means the Chairman of the Board, the Chief Executive Officer, the
President, the Chief Financial Officer, the Chief Accounting Officer, any
Executive Vice President, Senior Vice President or Vice President (whether or
not designated by a number or numbers or word or words before or after the title
"Vice President"), the Treasurer and the Secretary of the Company.

     "Officers' Certificate" means a certificate signed by two Officers, one of
whom is the Chairman of the Board, the Chief Executive Officer, the President,
the Chief Financial Officer or the Treasurer of the Company.

     "Opinion of Counsel" means a written opinion from legal counsel who may be
an employee of or counsel to the Company or the Trustee except to the extent
otherwise indicated in this Indenture.

                                       5

<PAGE>

     "Original Principal Amount" of each Convertible Subordinated Note means the
original principal amount as set forth on the face of the Convertible
Subordinated Note.

     A "person" means any individual, corporation, partnership, joint venture,
trust, estate, unincorporated organization, limited liability company or
government or any agency or political subdivision thereof.

     "Redemption Date" when used with respect to any of the Convertible
Subordinated Notes to be redeemed, means the date fixed by the Company for such
redemption pursuant to Article 3 of this Indenture and the Convertible
Subordinated Notes.

     "Redemption Price" when used with respect to any of the Convertible
Subordinated Notes to be redeemed, means the price fixed for such redemption
pursuant to Article 3 of this Indenture and the Convertible Subordinated Notes.

     "Registration Rights Agreement" means the Registration Rights Agreement
relating to the Convertible Subordinated Notes and Common Stock issuable upon
conversion of such Convertible Subordinated Notes dated July 18, 2003, between
the Company and the Initial Purchasers, as such agreement may be amended,
modified or supplemented from time to time.

     "Regular Record Date" means the January 15 or July 15 immediately preceding
each Interest Payment Date.

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

     "Restricted Securities Legend" means the legend labeled as such and that is
set forth in Exhibit A hereto.

     "Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.

     "Senior Bank Credit Facility" means the Amended and Restated Credit
Agreement dated as of April 11, 2003 among the Company, as borrower, certain of
the Company's subsidiaries, as guarantors, the lenders identified therein, and
Bank of America, N.A., as administrative agent, including any deferrals,
renewals, extensions, replacements, refinancings or refundings thereof, or
amendments, modifications or supplements thereto and any agreement providing
therefor whether by or with the same or any other lender, creditor, group of
lenders or group of creditors and including the related notes, guarantee
agreements and other instruments and agreements executed in connection
therewith.

     "Senior Debt" means the principal of, premium, if any, and interest on,
rent under, and any other amounts payable on or in respect of any Indebtedness
of the Company (including,

                                       6

<PAGE>

without limitation, any Obligations in respect of such Indebtedness and any
interest accruing after the filing of a petition by or against the Company under
any bankruptcy law, whether or not allowed as a claim after such filing in any
proceeding under such bankruptcy law), whether outstanding on the date of this
Indenture or thereafter created, incurred, assumed, guaranteed or in effect
guaranteed by the Company (including all deferrals, renewals, extensions,
refinancings or refundings of, or amendments, modifications or supplements to
the foregoing); provided, however, that Senior Debt does not include (u)
Indebtedness evidenced by the Convertible Subordinated Notes, (v) the Company's
6% convertible subordinated notes due 2008, (w) any liability for federal,
state, local or other taxes owed or owing by the Company, (x) Indebtedness of
the Company to any Subsidiary of the Company except to the extent such
Indebtedness is of a type described in clause (ii) of the definition of
Indebtedness, (y) trade payables of the Company for goods, services or materials
purchased in the ordinary course of business (other than, to the extent they may
otherwise constitute trade payables, any obligations of the type described in
clause (ii) of the definition of Indebtedness), and (z) any particular
Indebtedness in which the instrument creating or evidencing the same expressly
provides that such Indebtedness shall not be senior in right of payment to, or
is pari passu with, or is subordinated or junior to, the Convertible
Subordinated Notes.

     "Shelf Registration Statement" shall have the meaning set forth in the
Registration Rights Agreement.

     A "subsidiary" means, with respect to any person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of capital stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
person or one or more of the other subsidiaries of that person (or a combination
thereof) and (ii) any partnership (a) the sole general partner or managing
general partner of which is such person or a subsidiary of such person or (b)
the only general partners of which are such person or of one or more
subsidiaries of such person (or any combination thereof).

     "Tax Event" means that the Company shall have received an opinion from
independent tax counsel experienced in such matters to the effect that as a
result of (i) any amendment to, or change (including any announced prospective
change) in, the laws (or any regulations thereunder) of the United States or any
political subdivision or taxing authority thereof or therein, or (ii) any
amendment to, or change in, an interpretation or application of such laws or
regulations by any legislative body, court, governmental agency or regulatory
authority, in each case which amendment or change is enacted, promulgated,
issued or announced or which interpretation is issued or announced or which
action is taken, on or after the date of this Indenture, there is more than an
insubstantial risk that accruals of Accreted Principal Amount payable on the
notes either (x) would not be deductible on a current accrual basis or (y) would
not be deductible under any other method, in either case in whole or in part, by
the Company (by reason of deferral, disallowance, or otherwise) for U.S. federal
income tax purposes.

     "Termination of Trading" will be deemed to have occurred if the Common
Stock (or other common stock into which the Convertible Subordinated Notes are
then convertible) is neither listed for trading on the New York Stock Exchange
nor approved for trading on The Nasdaq National Market.

                                       7

<PAGE>

     "TIA" means the Trust Indenture Act of 1939 (15 U.S. Code Sections
77aaa-77bbbb) as in effect on the date of execution of this Indenture, except as
provided in Sections 9.03 and 12.06.

     "trading day" means any day on which trades may be made on The Nasdaq
National Market or, if the applicable security is then listed on the New York
Stock Exchange, any day on which the New York Stock Exchange is open for trading
or, if the applicable security is not so listed, admitted for trading or quoted,
any business day.

     "Trustee" means the party named as such above until a successor replaces it
in accordance with the applicable provisions of this Indenture and thereafter
means the successor.

     "Trust Officer" means an officer in the Corporate Trust Office of the
Trustee and having direct responsibility for the administration of this
Indenture.

     "U.S. Government Obligations" means direct obligations of the United States
of America for the payment of which the full faith and credit of the United
States of America is pledged. In order to have money available on a payment date
to pay principal or interest on the Convertible Subordinated Notes, the U.S.
Government Obligations shall be payable as to principal or interest on or before
such payment date in such amounts as will provide the necessary money. U.S.
Government Obligations shall not be callable at the issuer's option.

     "Voting Stock" of a corporation means all classes of Capital Stock of such
corporation then outstanding and normally entitled to vote in the election of
directors.

SECTION 1.02  Other Definitions.
              -----------------

                                                                      Defined in
                                                                         Section

     "Agent Members"...............................................         2.01
     "Bankruptcy Law"..............................................         6.01
     "business day"................................................        10.07
     "Cash Amount".................................................        12.20
     "Cash Settlement Averaging Period"............................        12.20
     "Cash Settlement Notice Period"...............................        12.20
     "Clearstream".................................................         2.01
     "Commencement Date"...........................................        12.06
     "Contingent Payment Regulations"..............................         2.15
     "Conversion Agent"............................................         2.03
     "Conversion Date".............................................        12.02
     "Conversion Obligation".......................................        12.20
     "Conversion Rate".............................................        12.01
     "Conversion Retraction Period"................................        12.20
     "Conversion Shares"...........................................        12.02
     "Custodian"...................................................         6.01
     "Designated Event Date".......................................         3.10
     "Designated Event Offer"......................................         3.10
     "Designated Event Offer Termination Date".....................         3.10

                                       8

<PAGE>

     "Designated Event Payment"....................................         3.10
     "Designated Event Payment Termination Date"...................         3.10
     "Determination Date"..........................................        12.06
     "Distribution Date"...........................................        12.06
     "Euroclear"...................................................         2.01
     "Event of Default"............................................         6.01
     "Expiration Time".............................................        12.06
     "Global Security".............................................         2.01
     "Investment Company Act"......................................         4.09
     "Legal Holiday"...............................................        10.07
     "Measurement Date"............................................        12.06
     "Option Exercise Date"........................................         4.10
     "Paying Agent"................................................         2.03
     "Payment Blockage Notice".....................................        11.03
     "Payment Blockage Period".....................................        11.03
     "Payment Default".............................................         6.01
     "Purchase Agreement"..........................................         2.01
     "Purchased Shares"............................................        12.06
     "Registrar"...................................................         2.03
     "Register"....................................................         2.03
     "Regulation S"................................................         2.01
     "Repurchase Date".............................................         3.09
     "Repurchase Notice"...........................................         3.09
     "Repurchase Price"............................................         3.09
     "Restated Principal Amount"...................................         4.10
     "Restricted Common Stock Legend"..............................        12.19
     "Rights"......................................................        12.06
     "Rule 144A"...................................................         2.01
     "Tax Event Date"..............................................         4.10

SECTION 1.03  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:

          "Commission" means the Commission;

          "indenture securities" means the Convertible Subordinated Notes;

          "indenture security holder" means a holder of a Convertible
          Subordinated Note;

          "indenture to be qualified" means this Indenture;

          "indenture trustee" or "institutional trustee" means the Trustee; and

                                       9

<PAGE>

          "obligor" on the Convertible Subordinated Notes means the Company or
          any other obligor on the Convertible Subordinated Notes.

     All other terms in this Indenture that are defined by the TIA, defined by
TIA reference to another statute or defined by Commission rule under the TIA
have the meanings so assigned to them.

SECTION 1.04  Rules of Construction.
              ---------------------

     Unless the context otherwise requires:

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

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

          (3) "or" is not exclusive;

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

          (5) the male, female and neuter genders include one another.

                                    ARTICLE 2

                       THE CONVERTIBLE SUBORDINATED NOTES

SECTION 2.01  Form and Dating.
              ---------------

     (a)  GLOBAL SECURITIES. The Convertible Subordinated Notes are being
offered and sold by the Company pursuant to a Purchase Agreement relating to the
Convertible Subordinated Notes, dated July 14, 2003, among the Company and the
Initial Purchasers (the "Purchase Agreement").

     The Convertible Subordinated Notes are being offered and sold (i) in
reliance on Regulation S under the Securities Act ("Regulation S") or (ii) to
"qualified institutional buyers" as defined in Rule 144A in reliance on Rule
144A under the Securities Act ("Rule 144A"), each as provided in the Purchase
Agreement, and shall be issued in the form of one or more permanent global
securities in definitive, fully registered form without interest coupons with
the Global Securities Legend and Restricted Securities Legend set forth in
Exhibit A hereto (each, a "Global Security"). Any Global Security shall be
deposited on behalf of the purchasers of the Convertible Subordinated Notes
represented thereby with the Trustee, as custodian for the Depositary, and
registered in the name of the Depositary or a nominee of the Depositary for the
accounts of participants in the Depositary (and, in the case of Convertible
Subordinated Notes held in accordance with Regulation S, registered with the
Depositary for the accounts of designated agents holding on behalf of the
Euroclear System ("Euroclear") or Clearstream Banking, societe anonyme
("Clearstream")), duly executed by the Company and authenticated by the Trustee
as hereinafter provided. The aggregate principal amount of a Global Security may

                                       10

<PAGE>

from time to time be increased or decreased by adjustments made on the records
of the Trustee and the Depositary or its nominee as hereinafter provided.

     (b)  BOOK-ENTRY PROVISIONS. This Section 2.01(b) shall apply only to a
Global Security deposited with or on behalf of the Depositary.

     The Company shall execute and the Trustee shall, in accordance with this
Section 2.01(b) and the written order of the Company, authenticate and deliver
initially one or more Global Securities that (i) shall be registered in the name
of Cede & Co. or other nominee of such Depositary and (ii) shall be delivered by
the Trustee to such Depositary or pursuant to such Depositary's instructions or
held by the Trustee as custodian for the Depositary pursuant to a FAST Balance
Certificate Agreement between the Depositary and the Trustee.

     Except as provided in Section 2.10, members of, or participants in, the
Depositary ("Agent Members") shall have no rights under this Indenture with
respect to any Global Security held on their behalf by the Depositary or by the
Trustee as the Note Custodian of the Depositary 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, the registered holder of a
Global Security may grant proxies and otherwise authorize any person, including
Agent Members and persons that may hold interests through Agent Members, to take
any action that a Holder is entitled to take under this Indenture or the
Convertible subordinated Notes, and nothing herein shall prevent the Company,
the Trustee or any agent of the Company or the Trustee from giving effect to any
written certification, proxy or other authorization furnished by the Depositary
or impair, as between the Depositary and its Agent Members, the operation of
customary practices of such Depositary governing the exercise of the rights of a
holder of a beneficial interest in any Global Security.

     The provisions of the "Operating Procedures of the Euroclear System" and
"Terms and Conditions Governing Use of Euroclear" and the "Management
Regulations and Instructions to Participants" of Clearstream shall be applicable
to interests in any Global Securities that are held by participants through
Euroclear or Clearstream. The Trustee shall have no obligation to notify holders
of any such procedures or to monitor or enforce compliance with the same.

     (c)  DEFINITIVE SECURITIES. Except as provided in Section 2.10, owners of
beneficial interests in Global Securities will not be entitled to receive
physical delivery of certificated Convertible Subordinated Notes in definitive
form. If applicable, certificated Convertible Subordinated Notes in definitive
form will bear the Restricted Securities Legend set forth on Exhibit A unless
removed in accordance with Section 2.06(c).

SECTION 2.02  Execution and Authentication.
              ----------------------------

     One Officer shall sign the Convertible Subordinated Notes for the Company
by manual or facsimile signature.

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

                                       11

<PAGE>

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

     Upon a written order of the Company signed by an Officer of the Company,
the Trustee shall authenticate Convertible Subordinated Notes for original issue
up to an aggregate Original Principal Amount of $110,000,000 (plus up to
$25,000,000 aggregate Original Principal Amount of Convertible Subordinated
Notes that may be sold by the Company pursuant to the over-allotment option
granted to the Initial Purchasers pursuant to the Purchase Agreement) to the
Initial Purchasers. The aggregate Original Principal Amount of Convertible
Subordinated Notes outstanding at any time may not exceed that amount except as
provided in Section 2.07.

     The Convertible Subordinated Notes shall be issuable only in registered
form without coupons and only in denominations of $1,000 or any integral
multiple thereof.

     The Trustee may appoint an authenticating agent acceptable to the Company
to authenticate Convertible Subordinated Notes. An authenticating agent may
authenticate Convertible Subordinated Notes whenever the Trustee may do so. Each
reference in this Indenture to authentication by the Trustee includes
authentication by such agent. An authenticating agent has the same right as an
Agent to deal with the Company or an Affiliate of the Company.

SECTION 2.03  Registrar, Paying Agent and Conversion Agent.
              --------------------------------------------

     The Company shall maintain or cause to be maintained in such locations as
it shall determine, which may be the Corporate Trust Office, an office or
agency: (i) where securities may be presented for registration of transfer or
for exchange ("Registrar"); (ii) where Convertible Subordinated Notes may be
presented for payment ("Paying Agent"); (iii) an office or agency where
Convertible Subordinated Notes may be presented for conversion (the "Conversion
Agent"); and (iv) where notices and demands to or upon the Company in respect of
Convertible Subordinated Notes and this Indenture may be served by the holders
of the Convertible Subordinated Notes. The Registrar shall keep a Register
("Register") of the Convertible Subordinated Notes and of their transfer and
exchange. The Company may appoint one or more co-registrars, one or more
additional paying agents and one or more additional conversion agents. The term
"Paying Agent" includes any additional paying agent, and the term "Conversion
Agent" includes any additional Conversion Agent. The Company may change any
Paying Agent, Registrar, Conversion Agent or co-registrar without prior notice.
The Company shall notify the Trustee of the name and address of any Agent not a
party to this Indenture and shall enter into an appropriate agency agreement
with any Registrar, Paying Agent, Conversion Agent or co-registrar not a party
to this Indenture. The agreement shall implement the provisions of this
Indenture that relate to such Agent. The Company or any of its subsidiaries may
act as Paying Agent, Registrar, Conversion Agent or co-registrar, except that
for purposes of Articles 3 and 8, neither the Company nor any of its
subsidiaries shall act as Paying Agent. If the Company fails to appoint or
maintain another entity as Registrar, or Paying Agent or Conversion Agent, the
Trustee shall act as such, and the Trustee shall initially act as such.

                                       12

<PAGE>

SECTION 2.04  Paying Agent to Hold Money in Trust.
              -----------------------------------

     The Company shall require each Paying Agent (other than the Trustee, who
hereby so agrees), to agree in writing that the Paying Agent will hold in trust
for the benefit of holders of the Convertible Subordinated Notes or the Trustee
all money held by the Paying Agent for the payment of principal or interest
(including Contingent Interest, if any) and Liquidated Damages, if any, on the
Convertible Subordinated Notes, and will notify the Trustee of any default by
the Company in respect of making any such payment. While any such default
continues, the Trustee may require a Paying Agent to pay all money held by it to
the Trustee. The Company at any time may require a Paying Agent to pay all money
held by it to the Trustee. Upon payment over to the Trustee, the Paying Agent
(if other than the Company or a subsidiary of the Company) shall have no further
liability for the money. If the Company or a subsidiary of the Company acts as
Paying Agent, it shall segregate and hold in a separate trust fund for the
benefit of the holders of the Convertible Subordinated Notes all money held by
it as Paying Agent.

SECTION 2.05  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 of Convertible Subordinated Notes and shall otherwise comply with TIA
Section 312(a). If the Trustee is not the Registrar, the Company shall furnish
to the Trustee at least seven business days before each Interest Payment Date,
and as the Trustee may request in writing within fifteen (15) days after receipt
by the Company of any such request (or such lesser time as the Trustee may
reasonably request in order to enable it to timely provide any notice to be
provided by it hereunder), a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of holders of
Convertible Subordinated Notes.

SECTION 2.06  Transfer and Exchange.
              ---------------------

     (a)  When Convertible Subordinated Notes are presented to the Registrar or
a co-registrar with a request to register a transfer or to exchange them for an
equal Original Principal Amount of Convertible Subordinated Notes for other
denominations, the Registrar shall register the transfer or make the exchange if
its requirements for such transactions are met. To permit registrations of
transfers and exchanges, the Company shall issue and the Trustee shall
authenticate Convertible Subordinated Notes at the Registrar's request, bearing
registration numbers not contemporaneously outstanding. No service charge shall
be made to a holder for any registration of transfer or exchange (except as
otherwise expressly permitted herein), but the Company and the Registrar may
require payment of a sum sufficient to cover any transfer tax or other
governmental charge payable upon exchanges pursuant to Sections 2.10, 3.07, 9.05
or 12.02.

     The Company or the Registrar shall not be required (i) to issue, register
the transfer of or exchange Convertible Subordinated Notes during a period
beginning at the opening of business fifteen (15) days before the day of any
selection of Convertible Subordinated Notes for redemption under Section 3.03
and ending at the close of business on the day of selection, (ii) to register
the transfer or exchange of any Convertible Subordinated Note so selected for
redemption in whole or in part, except the unredeemed portion of any Convertible
Subordinated

                                       13

<PAGE>

Note being redeemed in part or (iii) to register the transfer of any Convertible
Subordinated Notes surrendered for repurchase pursuant to Section 3.09 or
Section 3.10.

     All Convertible Subordinated Notes issued upon any transfer or exchange of
Convertible Subordinated Notes in accordance with this Indenture shall be the
valid obligations of the Company, evidencing the same debt, and entitled to the
same benefits under this Indenture as the Convertible Subordinated Notes
surrendered upon such registration of transfer or exchange.

     (b)  Notwithstanding any provision to the contrary herein, so long as a
Global Security remains outstanding and is held by or on behalf of the
Depositary, transfers of a Global Security, in whole or in part, or of any
beneficial interest therein, shall only be made in accordance with Sections
2.01(b) and 2.10; provided, however, that beneficial interests in a Global
Security may be transferred to persons who take delivery thereof in the form of
a beneficial interest in the Global Security in accordance with the transfer
restrictions set forth under the heading "Notice to Investors" in the Offering
Memorandum and, if applicable, in the Restricted Securities Legend.

     Except for transfers or exchanges made in accordance with Section 2.10,
transfers of a Global Security shall be limited to transfers of such Global
Security in whole, but not in part, to nominees of the Depositary or to a
successor of the Depositary or such successor's nominee.

     In the event that a Global Security is exchanged for Convertible
Subordinated Notes in definitive form pursuant to Section 2.10 prior to the
effectiveness of a Shelf Registration Statement with respect to such Convertible
Subordinated Notes, such exchange may occur, and such Convertible Subordinated
Notes may be further exchanged or transferred, only upon receipt by the
Registrar of (1) such Global Security or such Convertible Subordinated Notes in
definitive form, duly endorsed as provided herein, as applicable, (2)
instructions from the holder directing the Trustee to authenticate and deliver
one or more Convertible Subordinated Notes in definitive form of the same
aggregate principal amount as the Global Security or the Convertible
Subordinated Notes in definitive form (or portion thereof), as applicable, to be
transferred, such instructions to contain the name or names of the designated
transferee or transferees, the authorized denomination or denominations of the
Convertible Subordinated Notes in definitive form to be so issued and
appropriate delivery instructions, and (3) such certifications or other
information and, in the case of transfers pursuant to Rule 144 under the
Securities Act, legal opinions as the Company may reasonably require to confirm
that such transfer is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the Securities Act
(including the certification requirements intended to ensure that such transfers
comply with Rule 144A or Regulation S under the Securities Act, as the case may
be), and upon compliance with such other procedures as may from time to time be
adopted by the Company and the Registrar.

     (c)  Except in connection with a Shelf Registration Statement contemplated
by and in accordance with the terms of the Registration Rights Agreement, if
Convertible Subordinated Notes are issued upon the registration of transfer,
exchange or replacement of Convertible Subordinated Notes bearing a Restricted
Securities Legend, or if a request is made to remove such a Restrictive
Securities Legend on Convertible Subordinated Notes, the Convertible
Subordinated Notes so issued shall bear the Restricted Securities Legend, or a
Restricted Securities Legend shall not be removed, as the case may be, unless
there is delivered to the

                                       14

<PAGE>

Company such satisfactory evidence, which, in the case of a transfer made
pursuant to Rule 144 under the Securities Act, may include an opinion of counsel
given in accordance with the laws in the State of New York, as may be reasonably
required by the Company, that neither the legend nor the restrictions on
transfer set forth therein are required to ensure that transfers thereof comply
with the provisions of Rule 144A, Rule 144 or Regulation S under the Securities
Act or that such Convertible Subordinated Notes are not "restricted" within the
meaning of Rule 144 under the Securities Act. Upon provision to the Company of
such satisfactory evidence, the Trustee, at the written direction of the
Company, shall authenticate and deliver Convertible Subordinated Notes that do
not bear the legend. The Company shall not otherwise be entitled to require the
delivery of a legal opinion in connection with any transfer or exchange of
Securities.

     (d)  Neither the Trustee nor any Agent shall have any responsibility for
any actions taken or not taken by the Depositary.

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

SECTION 2.07  Replacement Convertible Subordinated Notes.
              ------------------------------------------

     If the holder of a Convertible Subordinated Note claims that its
Convertible Subordinated Note has been lost, destroyed or wrongfully taken, the
Company shall issue and the Trustee shall authenticate a replacement Convertible
Subordinated Note if the Trustee's and the Company's requirements are met. If
required by the Trustee or the Company as a condition of receiving a replacement
Convertible Subordinated Note, the holder of a Convertible Subordinated Note
must provide a certificate of loss and an indemnity and/or an indemnity bond
sufficient, in the judgment of both the Company and the Trustee, to fully
protect the Company, the Trustee, any Agent and any authenticating agent from
any loss, liability, cost or expense which any of them may suffer or incur if
the Convertible Subordinated Note is replaced. The Company and the Trustee may
charge the relevant holder for their expenses in replacing any Convertible
Subordinated Note.

     The Trustee or any authenticating agent may authenticate any such
substituted Convertible Subordinated Note, and deliver the same upon the receipt
of such security or indemnity as the Trustee, the Company and, if applicable,
such authenticating agent may require. Upon the issuance of any substituted
Convertible Subordinated Note, the Company and the Trustee 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 connected therewith.
In case any Convertible Subordinated Note which has matured or is about to
mature, or has been called for redemption pursuant to Article 3, submitted for
repurchase pursuant to Section 3.09 or Section 3.10 or is about to be converted
into Common Stock pursuant to Article 12, shall become mutilated or be
destroyed, lost or stolen, the Company may, instead of issuing a substitute

                                       15

<PAGE>

Convertible Subordinated Note, pay or authorize the payment of or convert or
authorize the conversion of the same (without surrender thereof except in the
case of a mutilated Convertible Subordinated Note), as the case may be, if the
applicant for such payment or conversion shall furnish to the Company, to the
Trustee and, if applicable, to the authenticating agent such security or
indemnity as may be required by them to save each of them harmless for any loss,
liability, cost or expense caused by or connected with such substitution, and,
in case of destruction, loss or theft, evidence satisfactory to the Company, the
Trustee and, if applicable, any paying agent or conversion agent of the
destruction, loss or theft of such Convertible Subordinated Note and of the
ownership thereof.

     Every replacement Convertible Subordinated Note is an additional obligation
of the Company and shall be entitled to all the benefits provided under this
Indenture equally and proportionately with all other Convertible Subordinated
Notes duly issued, authenticated and delivered hereunder.

SECTION 2.08  Outstanding Convertible Subordinated Notes.
              ------------------------------------------

     The Convertible Subordinated Notes outstanding at any time are all the
Convertible Subordinated Notes properly authenticated by the Trustee except for
those canceled by the Trustee, those delivered to it for cancellation, and those
described in this Section as not outstanding.

     If a Convertible Subordinated Note is replaced pursuant to Section 2.07, it
ceases to be outstanding unless the Trustee receives proof satisfactory to it
that the replaced Convertible Subordinated Note is held by a bona fide
purchaser.

     If Convertible Subordinated Notes are considered paid under Section 4.01 or
converted under Article 12, they cease to be outstanding, and interest
(including Contingent Interest and Liquidated Damages, if any) on them ceases to
accrue.

     Subject to Section 2.09 hereof, a Convertible Subordinated Note does not
cease to be outstanding because the Company or an Affiliate of the Company holds
the Convertible Subordinated Note.

SECTION 2.09  When Treasury Convertible Subordinated Notes Disregarded.
              --------------------------------------------------------

     In determining whether the holders of the required principal amount of
Convertible Subordinated Notes have concurred in any direction, waiver or
consent, Convertible Subordinated Notes owned by the Company or an Affiliate of
the Company shall be considered as though they are not outstanding except that
for the purposes of determining whether the Trustee shall be protected in
relying on any such direction, waiver or consent, only Convertible Subordinated
Notes which a Trust Officer of the Trustee actually knows are so owned shall be
so disregarded.

                                       16

<PAGE>

SECTION 2.10  Temporary Convertible Subordinated Notes; Transfers of Global
              -------------------------------------------------------------
              Security to Beneficial Owners.
              -----------------------------

     (a)  Until definitive Convertible Subordinated Notes are ready for
delivery, the Company may prepare and the Trustee shall authenticate temporary
Convertible Subordinated Notes. Temporary Convertible Subordinated Notes shall
be substantially in the form of definitive Convertible Subordinated Notes but
may have variations that the Company considers appropriate for temporary
Convertible Subordinated Notes and shall be reasonably acceptable to the
Trustee. Without unreasonable delay, the Company shall prepare and the Trustee
shall authenticate definitive Convertible Subordinated Notes in exchange for
temporary Convertible Subordinated Notes.

     (b)  A Global Security deposited with the Depositary or with the Trustee as
Note Custodian for the Depositary pursuant to Section 2.01 shall be transferred
to the beneficial owners thereof in the form of certificated Convertible
Subordinated Notes in definitive form only if such transfer complies with
Section 2.06 and (i) the Depositary notifies the Company that it is unwilling or
unable to continue as Depositary for such Global Security or if at any time such
Depositary ceases to be a "clearing agency" registered under the Exchange Act
and a successor Depositary is not appointed by the Company within 90 days of
such notice, or (ii) an Event of Default has occurred and is continuing and the
Registrar has received a request from the Depositary to effect such a transfer.

     In connection with the exchange of an entire Global Security for
certificated Convertible Subordinated Notes pursuant to this subsection (b),
such Global Security shall be deemed to be surrendered to the Trustee for
cancellation, and the Company shall execute, and upon Company order the Trustee
shall authenticate and deliver, to each beneficial owner identified by the
Depositary in exchange for its beneficial interest in such Global Security, an
equal aggregate principal amount of certificated Convertible Subordinated Notes
of authorized denominations. In the event that the certificated Convertible
Subordinated Notes are not issued to each such beneficial owner promptly after
the Registrar has received a request from the Depositary to issue such
certificated Convertible Subordinated Notes, the Company expressly acknowledges,
with respect to the right of any holder to pursue a remedy pursuant to Sections
6.06 or 6.07 hereof, the right of any beneficial owner of the Convertible
Subordinated Notes to pursue such remedy with respect to the portion of the
Convertible Subordinated Notes that represents such beneficial owner's
Convertible Subordinated Notes as if such certificated Convertible Subordinated
Notes had been issued, provided, however, that such beneficial owner provides
evidence reasonably satisfactory to the Company of such beneficial owner's
continuing beneficial ownership.

     (c)  Any Global Security or interest thereon that is transferable to the
beneficial owners thereof in the form of certificated Convertible Subordinated
Notes in definitive form shall, if held by the Depository, be surrendered by the
Depositary to the Trustee, without charge, and the Trustee shall authenticate
and deliver, upon such transfer of each portion of such Global Security, an
equal aggregate Original Principal Amount of Convertible Subordinated Notes of
authorized denominations in the form of certificated Convertible Subordinated
Notes in definitive form. Any portion of a Global Security transferred pursuant
to this Section shall be executed, authenticated and delivered only in
denominations of $1,000 of Original Principal Amount and any integral multiple
thereof and registered in such names as the Depositary shall

                                       17

<PAGE>

direct. Any Convertible Subordinated Notes in the form of certificated
Convertible Subordinated Notes in definitive form delivered in exchange for an
interest in the Global Security shall, except as otherwise provided by Section
2.06(c), bear the Restricted Securities Legend.

     (d)  Prior to any transfer pursuant to Section 2.10(b), the registered
holder of a Global Security may grant proxies and otherwise authorize any
person, including Agent Members and persons that may hold interests through
Agent Members, to take any action that a holder is entitled to take under this
Indenture or the Convertible Subordinated Notes.

SECTION 2.11  Cancellation.
              ------------

     The Company at any time may deliver Convertible Subordinated Notes to the
Trustee for cancellation. The Registrar and Paying Agent shall forward to the
Trustee any Convertible Subordinated Notes surrendered to them for registration
of transfer, exchange or payment. The Trustee and no one else may cancel
Convertible Subordinated Notes surrendered for registration of transfer,
exchange, payment, replacement, conversion, redemption, repurchase or
cancellation. Upon written instructions of the Company, the Trustee shall
destroy and dispose of canceled Convertible Subordinated Notes as the Company
directs and, after such destruction, shall deliver a certificate of destruction
to the Company. The Company may not issue new Convertible Subordinated Notes to
replace Convertible Subordinated Notes that it has paid, redeemed or repurchased
or that have been delivered to the Trustee for cancellation or that any holder
has (i) converted pursuant to Article 12 hereof, (ii) submitted for redemption
pursuant to Article 3 hereof or (iii) submitted for repurchase pursuant to
Section 3.09 or Section 3.10 hereof (unless revoked).

SECTION 2.12  Defaulted Interest.
              ------------------

     If the Company fails to make a payment of interest (including Contingent
Interest, if any) on the Convertible Subordinated Notes, it shall pay such
defaulted interest plus, to the extent lawful, any interest payable on the
defaulted interest. It may pay such defaulted interest, plus any such interest
payable on it, to the persons who are holders of Convertible Subordinated Notes
on a subsequent special record date. The Company shall fix any such record date
and payment date. At least 15 days before any such record date, the Company
shall mail to holders of the Convertible Subordinated Notes a notice that states
the record date, payment date and amount of such interest to be paid.

SECTION 2.13  CUSIP Number.
              ------------

     The Company in issuing the Convertible Subordinated Notes may use a "CUSIP"
number, and if so, such CUSIP number shall be included in notices of redemption,
repurchase or exchange as a convenience to holders of Convertible Subordinated
Notes; provided, however, that any such notice may state that no representation
is made as to the correctness or accuracy of the CUSIP number printed in the
notice or on the Convertible Subordinated Notes and that reliance may be placed
only on the other identification numbers printed on the Convertible Subordinated
Notes. The Company will promptly notify the Trustee of any change in the CUSIP
number.

                                       18

<PAGE>

SECTION 2.14  Regulation S.
              ------------

     The Company agrees that it will refuse to register any transfer of
Convertible Subordinated Notes or any shares of Common Stock issued upon
conversion of Convertible Subordinated Notes that is not made in accordance with
the provisions of 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 the provisions of this paragraph shall not be
applicable to any Convertible Subordinated Notes which do not bear a Restricted
Securities Legend or to any shares of Common Stock evidenced by certificates
which do not bear a Restricted Common Stock Legend.

SECTION 2.15  Tax Treatment of Convertible Subordinated Notes.
              -----------------------------------------------

     The Company agrees, and by purchasing a beneficial ownership interest in
the Convertible Subordinated Notes each Holder, and any person that acquires a
direct or indirect beneficial interest in the Convertible Subordinated Notes,
will be deemed to have agreed (i) for United States federal income tax purposes
to treat the Convertible Subordinated Notes as indebtedness of the Company that
is subject to Treas. Reg. Sec. 1.1275-4 (the "Contingent Payment Regulations"),
(ii) for all tax purposes to treat the Convertible Subordinated Notes as
indebtedness of the Company, (iii) for purposes of the Contingent Payment
Regulations, to treat the fair market value of any Common Stock beneficially
received by a beneficial holder upon any conversion of the Convertible
Subordinated Notes (or cash in lieu of Common Stock) as a contingent payment,
(iv) to be bound by the Company's determination that the Convertible
Subordinated Notes are contingent payment debt instruments subject to the
"noncontingent bond method" of accruing original issue discount within the
meaning of the Contingent Payment Regulations with respect to the Convertible
Subordinated Notes, and (v) to be bound by the Company's projected payment
schedule with respect to the Convertible Subordinated Notes. The provisions of
this Indenture shall be interpreted to further this intention and agreement of
the parties. The comparable yield and the schedule of projected payments are not
determined for any purpose other than for the determination of interest accruals
and adjustment thereof in respect of the Convertible Subordinated Notes for
United States federal income tax purposes. The comparable yield and the schedule
of projected payments do not constitute a projection or representation regarding
the future stock price or the amounts payable on the Convertible Subordinated
Notes. For purposes of the foregoing, the Company's determination of the
"comparable yield" is 8.00% per annum, compounded semiannually. A Holder of
Convertible Subordinated Notes may obtain the yield to maturity, issue date,
comparable yield and projected payment schedule (which schedule is attached
hereto as Exhibit C) by submitting a written request to: School Specialty, Inc.,
W6316 Design Drive, Greenville, Wisconsin 54942, Attention: Chief Financial
Officer.

                                       19

<PAGE>

                                    ARTICLE 3

                            REDEMPTION AND PURCHASES

SECTION 3.01  Optional Redemption.
              -------------------

     The Company, at its option, may redeem all or any portion of the
Convertible Subordinated Notes upon the terms and at the Redemption Prices set
forth in each of the Convertible Subordinated Notes. Any redemption shall be
made in accordance with the provisions of Paragraph 6 the Convertible
Subordinated Notes and this Article 3.

SECTION 3.02  Notices to Trustee.
              ------------------

     If the Company elects to redeem Convertible Subordinated Notes pursuant to
the optional redemption provisions of paragraph 6 of the Convertible
Subordinated Notes, it shall furnish to the Trustee, at least 15 (20 if less
than all of the then outstanding Convertible Subordinated Notes are to be
redeemed or if the Company requests the Trustee to give notice of redemption
pursuant to Section 3.04) days but not more than 60 days before a Redemption
Date (unless a shorter period shall be satisfactory to the Trustee), an
Officers' Certificate setting forth (i) the Section of this Indenture pursuant
to which the redemption shall occur, (ii) the Redemption Date, (iii) the
principal amount of Convertible Subordinated Notes (if less than all) to be
redeemed, (iv) the Redemption Price and (v) the CUSIP number of the Convertible
Subordinated Notes being redeemed.

SECTION 3.03  Selection of Convertible Subordinated Notes to Be Redeemed.
              ----------------------------------------------------------

     If less than all the Convertible Subordinated Notes are to be redeemed, the
Trustee shall select the Convertible Subordinated Notes to be redeemed pro rata
or by lot or by any other method the Trustee considers fair and appropriate (so
long as such method is not prohibited by the rules of any stock exchange on
which the Securities are then listed). The Trustee shall make the selection at
least 15 days but not more than 60 days before the Redemption Date from
outstanding Convertible Subordinated Notes not previously called for redemption.

     Convertible Subordinated Notes and any portions thereof that the Trustee
selects shall be in Original Principal Amounts of $1,000 or an integral multiple
of $1,000. Provisions of this Indenture that apply to Convertible Subordinated
Notes called for redemption also apply to portions of Convertible Subordinated
Notes called for redemption. The Trustee shall notify the Company promptly of
the Convertible Subordinated Notes or portions of Convertible Subordinated Notes
to be redeemed.

     If any Convertible Subordinated Note selected for partial redemption is
converted in part before termination of the conversion right with respect to the
portion of the Convertible Subordinated Note so selected, the converted portion
of such Convertible Subordinated Note shall be deemed (so far as may be) to be
the portion selected for redemption. The Convertible Subordinated Notes (or
portion thereof) so selected shall be deemed duly selected for redemption for
all purposes hereof, notwithstanding that any such Convertible Subordinated Note
is converted in whole or in part before the mailing of the notice of redemption.

                                       20

<PAGE>

SECTION 3.04  Notice of Redemption.
              --------------------

     At least 15 days but not more than 60 days before a Redemption Date, the
Company shall mail by first-class mail a notice of redemption to each holder
whose Convertible Subordinated Notes are to be redeemed, at such holder's
registered address.

     The notice shall identify the Convertible Subordinated Notes to be redeemed
and shall state:

          (1)  the Redemption Date;

          (2)  the Redemption Price and accrued and unpaid interest, if any,
payable on the Redemption Date;

          (3)  the Conversion Rate;

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

          (5)  that Convertible Subordinated Notes called for redemption may be
converted at any time prior to the close of business on the last trading day
immediately preceding the Redemption Date and if not converted prior to the
close of business on such date, the right of conversion will be lost;

          (6)  that holders who want to convert Convertible Subordinated Notes
must satisfy the requirements set forth in Paragraph 9 of the Convertible
Subordinated Notes;

          (7)  that Convertible Subordinated Notes called for redemption must be
surrendered to the Paying Agent to collect the Redemption Price and accrued and
unpaid cash interest (including Contingent Interest, if any) and Liquidated
Damages, if any;

          (8)  if fewer than all the outstanding Convertible Subordinated Notes
are to be redeemed, the certificate number and Original Principal Amounts of the
particular Convertible Subordinated Notes to be redeemed;

          (9)  that, unless the Company defaults in making payment of such
Redemption Price and any cash interest (including Contingent Interest) or
Liquidated Damages which are due and payable, the Accreted Principal Amount will
cease to increase and cash interest (including Contingent Interest, if any) and
Liquidated Damages, if any, will cease to accrue on and after the Redemption
Date;

          (10) the CUSIP number of the Convertible Subordinated Notes (provided
that the disclaimer permitted by Section 2.13 may be made);

          (11) that in the case of Convertible Subordinated Notes or portions
thereof called for redemption on a date that is also an Interest Payment Date,
the interest payment (including Contingent Interest, if any) and Liquidated
Damages, if any, due on such date shall be paid to the person in whose name the
Convertible Subordinated Notes are registered at the close of business on the
relevant Regular Record Date; and

                                       21

<PAGE>

          (12) any other information that the Company wants to present.

     The notice if mailed in the manner herein provided shall be conclusively
presumed to have been given, whether or not the holder receives such notice. In
any case, failure to give such notice by mail or any defect in the notice to the
holder of any Convertible Subordinated Note designated for redemption as a whole
or in part shall not affect the validity of the proceedings for the redemption
of any Convertible Subordinated Note.

     At the Company's request, the Trustee shall give the notice of redemption
to holders in the Company's name and at the Company's expense, provided that the
Company makes such request at least three Business days (unless a shorter period
shall be satisfactory to the Trustee) prior to the date such notice of
redemption must be mailed.

SECTION 3.05  Effect of Notice of Redemption.
              ------------------------------

     Once notice of redemption is given, Convertible Subordinated Notes called
for redemption become due and payable on the Redemption Date and at the
Redemption Price (together with accrued and unpaid interest (including
Contingent Interest, if any) and Liquidated Damages, if any, stated in the
notice except for Convertible Subordinated Notes which are converted in
accordance with the terms of this Indenture. Upon surrender to the Paying Agent,
such Convertible Subordinated Notes shall be paid at the Redemption Price,
together with accrued and unpaid interest (including Contingent Interest, if
any) and Liquidated Damages, if any, as stated in the notice.

SECTION 3.06  Deposit of Redemption Price.
              ---------------------------

     On or before the Redemption Date, the Company shall deposit with the Paying
Agent (or if the Company or a Subsidiary or an Affiliate of either of them is
the Paying Agent, shall segregate and hold in trust) in immediately available
funds sufficient to pay the Redemption Price of, and any accrued and unpaid
interest (including Contingent Interest, if any) and any Liquidated Damages on,
all Convertible Subordinated Notes to be redeemed on that date other than
Convertible Subordinated Notes or portions of Convertible Subordinated Notes
called for redemption which on or prior thereto have been delivered by the
Company to the Trustee for cancellation or have been converted. The Paying Agent
shall as promptly as practicable return to the Company any money not required
for that purpose.

     On and after the Redemption Date, unless the Company shall default in the
payment of the Redemption Price, no amount shall accrete on the Convertible
Subordinated Notes and interest (including Contingent Interest, if any) and
Liquidated Damages, if applicable, will cease to accrue on the Original
Principal Amount of the Convertible Subordinated Notes or portions thereof
called for redemption and for which funds have been set apart for payment, and
such Convertible Subordinated Notes, or portions thereof, shall cease after the
close of business on the trading day immediately preceding the Redemption Date
to be convertible into Common Stock and, except as provided in this Section 3.06
and Section 8.04, to be entitled to any benefit or security under this
Indenture, and the holders thereof shall have no right in respect of such
Convertible Subordinated Notes, or portions thereof, except the right to receive
the Redemption Price thereof and unpaid interest (including Contingent Interest,
if any) and Liquidated Damages,

                                       22

<PAGE>

if any, to (but excluding) the Redemption Date. In the case of Convertible
Subordinated Notes or portions thereof redeemed on a Redemption Date which is
also an Interest Payment Date, the interest payment (including Contingent
Interest, if any) and Liquidated Damages, if any, due on such date shall be paid
to the person in whose name the Convertible Subordinated Note is registered at
the close of business on the relevant Regular Record Date.

SECTION 3.07  Convertible Subordinated Notes Redeemed in Part.
              -----------------------------------------------

     Upon surrender of a Convertible Subordinated Note that is redeemed in part
only, the Company shall issue and the Trustee shall authenticate and deliver to
the holder of a Convertible Subordinated Note a new Convertible Subordinated
Note equal in Original Principal Amount to the unredeemed portion of the
Convertible Subordinated Note surrendered, at the expense of the Company, except
as specified in Section 2.06.

SECTION 3.08  Conversion Arrangement on Call for Redemption.
              ---------------------------------------------

     In connection with any redemption of Convertible Subordinated Notes, the
Company may arrange for the purchase and conversion of any Convertible
Subordinated Notes by an arrangement with one or more investment banks or other
purchasers to purchase such Convertible Subordinated Notes by paying to the
Trustee in trust for the holders, on or before 10:00 a.m. New York City time on
the Redemption Date, an amount not less than the applicable Redemption Price,
together with interest (including Contingent Interest, if any) and Liquidated
Damages, if any, accrued to the Redemption Date, of such Convertible
Subordinated Notes. Notwithstanding anything to the contrary contained in this
Article 3, the obligation of the Company to pay the Redemption Price of such
Convertible Subordinated Notes, together with interest (including Contingent
Interest, if any) and Liquidated Damages, if any, accrued to the Redemption
Date, shall be deemed to be satisfied and discharged to the extent such amount
is so paid by such purchasers. If such an agreement is entered into, a copy of
which will be filed with the Trustee prior to the Redemption Date, any
Convertible Subordinated Notes not duly surrendered for conversion by the
holders thereof may, at the option of the Company, be deemed, to the fullest
extent permitted by law, acquired by such purchasers from such holders and
(notwithstanding anything to the contrary contained in Article 12) surrendered
by such purchasers for conversion, all as of immediately prior to the close of
business on the Redemption Date (and the right to convert any such Convertible
Subordinated Notes shall be deemed to have been extended through such time),
subject to payment of the above amount as aforesaid. At the direction of the
Company, the Trustee shall hold and dispose of any such amount paid to it in the
same manner as it would monies deposited with it by the Company for the
redemption of Convertible Subordinated Notes. Without the Trustee's prior
written consent, no arrangement between the Company and such purchasers for the
purchase and conversion of any Convertible Subordinated Notes 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 defend 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 Convertible Subordinated Notes between the
Company and such purchasers to which the Trustee has not consented in writing,
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.

                                       23

<PAGE>

SECTION 3.09  Repurchase of Convertible Subordinated Notes at Option of the
              -------------------------------------------------------------
              Holder.
              ------

     (a)  Convertible Subordinated Notes shall be purchased by the Company
pursuant to the terms of the Convertible Subordinated Notes at the option of the
holder on August 1 of 2010, 2013 and 2018 (each, a "Repurchase Date"), at a
purchase price of 100% of the Accreted Principal Amount plus any accrued and
unpaid interest (including Contingent Interest, if any) and any Liquidated
Damages (the "Repurchase Price"), in each case, to, but excluding, such
Repurchase Date, subject to the provisions of this Section 3.09(a). The Accreted
Principal Amount of the Convertible Subordinated Notes on each of the Repurchase
Dates is as follows:

                                                                        (3)
                                                      (2)            Accreted
Repurchase Date                    (1)             Accreted         Principal
August 1:                    Note Issue Price       Amount        Amount (1)+(2)
-------------------------    ----------------    -------------    --------------

2010 ....................    $       1,000.00    $        0.00    $     1,000.00

2013 ....................    $       1,000.00    $      117.91    $     1,117.91

2018 ....................    $       1,000.00    $      346.11    $     1,346.11

     If the Company has converted the Convertible Subordinated Notes to
semiannual coupon notes following the occurrence of a Tax Event, the Repurchase
Price will be equal to 100% of the Restated Principal Amount plus accrued and
unpaid interest (including Contingent Interest, if any) and Liquidated Damages,
if any, from the date of conversion to, but excluding, the Repurchase Date.

     Notice of an upcoming Repurchase Date shall be mailed by or at the
direction of the Company to the holders of Convertible Subordinated Notes as
shown on the Register of such holders maintained by the Registrar not less than
20 business days prior to the Repurchase Date at the addresses as shown on the
Register of holders maintained by the Registrar. The Company will also give
notice to beneficial owners as required by applicable law. Such notice will
describe, among other things, the repurchase right at the option of the holder,
the Repurchase Date, the Repurchase Price, that the holder must exercise the
repurchase right at any time from the opening of business on the date that is 20
business days prior to the Repurchase Date until the close of business on the
third business day prior to the Repurchase Date, that the holder shall have the
right to withdraw any Convertible Subordinated Notes surrendered prior to the
close of business on the Repurchase Date, the procedures that a holder of
Convertible Subordinated Notes must follow in order to require the Company to
repurchase such holder's Convertible Subordinated Notes and to withdraw any
surrendered Convertible Subordinated Notes, the place or places where the holder
is to surrender such holder's Convertible Subordinated Notes, the amount of
interest (including Contingent Interest), if any, and Liquidated Damages, if
any) accrued on each Convertible Subordinated Note to (but excluding) the
Repurchase Date, and subject to Section 2.13, the CUSIP number or numbers of the
Convertible Subordinated Notes (if then generally in use).

     No failure of the Company to give the foregoing notices and no defect
therein shall limit the Convertible Subordinated Note holders' repurchase rights
or affect the validity of the proceedings for the repurchase of the Convertible
Subordinated Notes pursuant to this Section 3.09.

                                       24

<PAGE>

     Repurchases of Convertible Subordinated Notes under this Section 3.09 shall
be made, at the option of the holder thereof, upon:

          (1)  delivery to the Paying Agent by a holder of a written notice (a
     "Repurchase Notice") during the period beginning at any time from the
     opening of business on the date that is 20 business days prior to the
     applicable relevant Repurchase Date until the close of business on the
     third business day prior to such Repurchase Date stating:

               (A)  if certificated Convertible Subordinated Notes have been
               issued, the certificate numbers of the Convertible Subordinated
               Notes which the holder will deliver to be purchased (or if a
               holder's Convertible Subordinated Notes are not certificated,
               such holder's Repurchase Notice must comply with appropriate
               Depositary procedures),

               (B)  the portion of the Original Principal Amount of the
               Convertible Subordinated Notes which the holder will deliver to
               be purchased, which portion must be an Original Principal Amount
               of $1,000 or an integral multiple thereof,

               (C)  that such Convertible Subordinated Note shall be purchased
               as of the Repurchase Date pursuant to the terms and conditions
               specified in paragraph 7 of the Convertible Subordinated Notes
               and in this Indenture, and

          (2)  delivery or book-entry transfer of the Convertible Subordinated
     Notes to Paying Agent at any time after delivery of the applicable
     Repurchase Notice (together with all necessary endorsements) at the office
     of the Paying Agent, such delivery being a condition to receipt by the
     holder of the Repurchase Price therefor; provided that such Repurchase
     Price shall be so paid pursuant to this Section 3.09 only if the
     Convertible Subordinated Note so delivered to Paying Agent shall conform in
     all respects to the description thereof in the related Repurchase Notice.

     The Company shall purchase from the holder thereof, pursuant to this
Section 3.09, a portion of a Convertible Subordinated Note if the Original
Principal Amount of such portion is $1,000 or an integral multiple of $1,000.
Provisions of this Indenture that apply to the purchase of all of a Convertible
Subordinated Note also apply to the purchase of such portion of such Convertible
Subordinated Note.

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

     (b)  Upon receipt by the Paying Agent of the Repurchase Notice specified in
Section 3.09(a), the holder of the Convertible Subordinated Note in respect of
which such Repurchase Notice was given shall (unless such Repurchase Notice is
validly withdrawn) thereafter be entitled to receive solely the Repurchase Price
with respect to such Convertible Subordinated Note. Such Repurchase Price shall
be paid to such holder, subject to receipt of funds and/or Convertible
Subordinated Notes by the Paying Agent, promptly following the later of (x) the

                                       25

<PAGE>

Repurchase Date with respect to such Convertible Subordinated Note (provided the
holder has satisfied the conditions in Section 3.09(a)) and (y) the time of
delivery of such Convertible Subordinated Note to the Paying Agent by the holder
thereof in the manner required by Section 3.09(a). Notwithstanding anything
herein to the contrary, Convertible Subordinated Notes in respect of which a
Repurchase Notice has been given by the holder thereof may not be converted
pursuant to Article 12 hereof on or after the date of the delivery of such
Repurchase Notice unless such Repurchase Notice has first been validly
withdrawn.

     A Repurchase Notice may be withdrawn by means of a written notice of
withdrawal delivered to the office of the Paying Agent in accordance with the
Repurchase Notice at any time prior to the close of business on the Repurchase
Date so long as delivery or book-entry transfer of the Convertible Subordinated
Notes in exchange for the Repurchase Price has not occurred, specifying:

          (1)  the certificate number, if any, of the Convertible Subordinated
          Note in respect of which such notice of withdrawal is being submitted,
          or the appropriate Depositary information if the Convertible
          Subordinated Note in respect of which such notice of withdrawal is
          being submitted is represented by a Global Security,

          (2)  the Original Principal Amount of the Convertible Subordinated
          Note with respect to which such notice of withdrawal is being
          submitted, and

          (3)  the Original Principal Amount, if any, of such Convertible
          Subordinated Note which remains subject to the original Repurchase
          Notice and which has been or will be delivered for purchase by the
          Company.

     (c)  On or prior to the Repurchase Date, the Company shall deposit with the
Paying Agent (or, if the Company or a Subsidiary or an Affiliate of either of
them is acting as the Paying Agent, shall segregate and hold in trust as
provided in Section 2.04) an amount of cash (in immediately available funds if
deposited on such business day) sufficient to pay the aggregate Repurchase Price
of all the Convertible Subordinated Notes or portions thereof that are to be
purchased as of the Repurchase Date.

     (d)  Upon presentation of any Convertible Subordinated Note repurchased
only in part, the Company shall execute and the Trustee shall authenticate and
make available for delivery to the holder thereof, at the expense of the
Company, a new Convertible Subordinated Note or Convertible Subordinated Notes,
of any authorized denomination, in aggregate Original Principal Amount equal to
the unrepurchased portion of the Convertible Subordinated Notes presented.

     (e)  The Paying Agent shall return to the Company any cash that remains
unclaimed, together with interest, if any, thereon, held by them for the payment
of the Repurchase Price; provided that to the extent that the aggregate amount
of cash deposited by the Company pursuant to Section 3.09 exceeds the aggregate
Repurchase Price of the Convertible Subordinated Notes or portions thereof which
the Company is obligated to purchase as of the Repurchase Date then, unless
otherwise agreed in writing with the Company, promptly after the business day
following the Repurchase Date, the Paying Agent shall return any such excess to
the Company together

                                       26

<PAGE>

with interest, if any, thereon. If the Paying Agent holds money sufficient to
pay the Repurchase Price of a Convertible Subordinated Note on the business day
following the Repurchase Date, then on or after that date, such Convertible
Subordinated Note shall cease to be outstanding, and no amount shall accrete on
such Convertible Subordinated Note and interest (including Contingent Interest,
if any) and Liquidated Damages, if applicable, will cease to accrue on the
Original Principal Amount of the Convertible Subordinated Note and the holders
thereof shall have no right in respect of such Convertible Subordinated Note
except the right to receive the Repurchase Price thereof and unpaid interest
(including Contingent Interest, if any) and Liquidated Damages, if any, to (but
excluding) the Repurchase Date.

SECTION 3.10  Repurchase Upon Designated Event.
              --------------------------------

     Following a Designated Event (the date of each such occurrence being the
"Designated Event Date"), the Company shall notify the holders of Convertible
Subordinated Notes in writing of such occurrence and shall make an offer (the
"Designated Event Offer") to repurchase all Convertible Subordinated Notes then
outstanding at a repurchase price in cash (the "Designated Event Payment") equal
to 100% of the Accreted Principal Amount thereof, plus accrued and unpaid
interest (including Contingent Interest, if any) and Liquidated Damages, if any,
to, but excluding, the Designated Event Payment Date (as defined below).

     Notice of a Designated Event shall be mailed by or at the direction of the
Company to the holders of Convertible Subordinated Notes as shown on the
Register of such holders maintained by the Registrar not more than 20 days after
the applicable Designated Event Date at the addresses as shown on the Register
of holders maintained by the Registrar, with a copy to the Trustee and the
Paying Agent. The Designated Event Offer shall remain open until a specified
date (the "Designated Event Offer Termination Date") which is at least 20
business days from the date such notice is mailed. During the period specified
in such notice, holders of Convertible Subordinated Notes may elect to tender
their Convertible Subordinated Notes in whole or in part in integral multiples
of $1,000 of Original Principal Amount in exchange for cash. Payment shall be
made by the Company in respect of Convertible Subordinated Notes properly
tendered pursuant to this Section on a specified business day (the "Designated
Event Payment Date") which shall be no later than 60 days after the applicable
Designated Event.

     The notice, which shall govern the terms of the Designated Event Offer,
shall include such disclosures as are required by law and shall state:

     (a)  that a Designated Event Offer is being made pursuant to this Section
3.10 and that all Convertible Subordinated Notes will be accepted for payment;

     (b)  the event, transaction or transactions that constitute the Designated
Event;

     (c)  the Designated Event Payment for each Convertible Subordinated Note,
the Designated Event Offer Termination Date and the Designated Event Payment
Date;

     (d)  that any Convertible Subordinated Note not accepted for payment will
continue to accrue interest (including Contingent Interest, if any) and
Liquidated Damages, if applicable, in accordance with the terms thereof;

                                       27

<PAGE>

     (e)  that, unless the Company defaults on making the Designated Event
Payment, any Convertible Subordinated Note accepted for payment pursuant to the
Designated Event Offer shall cease to accrue interest (including Contingent
Interest, if any) and Liquidated Damages, if applicable, on the Designated Event
Payment Date and no further interest (including Contingent Interest, if any) or
Liquidated Damages shall accrue on or after such date;

     (f)  that holders electing to have Convertible Subordinated Notes
repurchased pursuant to a Designated Event Offer will be required to surrender
their Convertible Subordinated Notes to the Paying Agent at the address
specified in the notice prior to 5:00 p.m., New York City time, on the
Designated Event Offer Termination Date and must complete any form letter of
transmittal proposed by the Company and acceptable to the Trustee and the Paying
Agent;

     (g)  that holders of Convertible Subordinated Notes will be entitled to
withdraw their election if the Paying Agent receives, not later than 5:00 p.m.,
New York City time, on the Designated Event Offer Termination Date, a facsimile
transmission or letter setting forth the name of the holder, the principal
amount of Convertible Subordinated Notes the holder delivered for purchase, the
Convertible Subordinated Note certificate number (if any) and a statement that
such holder is withdrawing his election to have such Convertible Subordinated
Notes purchased;

     (h)  that holders whose Convertible Subordinated Notes are repurchased only
in part will be issued Convertible Subordinated Notes equal in Original
Principal Amount to the unpurchased portion of the Convertible Subordinated
Notes surrendered;

     (i)  the instructions that holders must follow in order to tender their
Convertible Subordinated Notes; and

     (j)  that in the case of a Designated Event Offer Termination Date that is
also an interest payment date, the interest payment (including Contingent
Interest, if any) and Liquidated Damages, if any, due on such date shall be paid
to the person in whose name the Convertible Subordinated Note is registered at
the close of business on the relevant Designated Event Offer Termination Date.

     On the Designated Event Offer Termination Date, the Company shall (i)
accept for payment all Convertible Subordinated Notes or portions thereof
properly tendered pursuant to the Designated Event Offer, (ii) deposit with the
Paying Agent money sufficient to pay the Designated Event Payment with respect
to all Convertible Subordinated Notes or portions thereof so tendered and
accepted and (iii) deliver or cause to be delivered to the Trustee the
Convertible Subordinated Notes so accepted together with an Officers'
Certificate setting forth the aggregate principal amount of Convertible
Subordinated Notes or portions thereof tendered to and accepted for payment by
the Company. On the Designated Event Payment Date, the Paying Agent shall send
or deliver the Designated Event Payment to the holders of Convertible
Subordinated Notes so accepted and the Trustee shall promptly authenticate and
send or cause to be transferred by book entry to such holders a new Convertible
Subordinated Note equal in principal amount to any unpurchased portion of the
Convertible Subordinated Note surrendered, if any; provided that such new
Convertible Subordinate Notes will be in an Original Principal

                                       28

<PAGE>

Amount of $1,000 or an integral multiple thereof. Any Convertible Subordinated
Notes not so accepted shall be promptly mailed or delivered by the Company to
the holder thereof.

     In the case of any reclassification, change, consolidation, merger, share
exchange, combination or sale or conveyance to which Section 12.14 applies in
which the Common Stock of the Company is changed or exchanged as a result into
the right to receive stock, securities or other property or assets (including
cash) which includes shares of common stock of the Company or another person
that are, or upon issuance will be, traded on a United States national
securities exchange or approved for trading on an established automated
over-the-counter trading market in the United States and such shares constitute
at the time such change or exchange becomes effective in excess of 50% of the
aggregate fair market value of such stock, securities other property and assets
(including cash) (as determined by the Company, which determination shall be
conclusive and binding), then the person formed by such consolidation or
resulting from such merger or share exchange or which acquires such assets, as
the case may be, shall execute and deliver to the Trustee a supplemental
indenture (which shall comply with the TIA as in force at the date of execution
of such supplemental indenture) modifying the provisions of this Indenture
relating to the right of holders of Convertible Subordinated Notes to cause the
Company to repurchase Convertible Subordinated Notes following a Designated
Event, including the applicable provisions of this Section 3.10 and the
definitions of Designated Event, Change of Control and Termination of Trading,
as appropriate, as determined in good faith by the Company (which determination
shall be conclusive and binding), to make such provision apply to such common
stock and the issuer thereof if different from the Company and Common Stock of
the Company (in lieu of the Company and the Common Stock of the Company).

     The Designated Event Offer shall be made by the Company in compliance with
all applicable provisions of the Exchange Act, and all applicable tender offer
rules promulgated thereunder, to the extent such laws and regulations are then
applicable and shall include all instructions and materials that the Company
shall reasonably deem necessary to enable such holders of Convertible
Subordinated Notes to tender their Convertible Subordinated Notes.

                                    ARTICLE 4

                                    COVENANTS

SECTION 4.01  Payment of Convertible Subordinated Notes.
              -----------------------------------------

     The Company shall pay the principal of and interest (including Contingent
Interest, if any) and Liquidated Damages, if any, on the Convertible
Subordinated Notes on the dates and in the manner provided in the Convertible
Subordinated Notes. Principal, interest (including Contingent Interest, if any)
and Liquidated Damages, if any, the Redemption Price, Repurchase Price and the
Designated Event Payment shall be considered paid on the date due if the Trustee
or Paying Agent (other than the Company or a subsidiary of the Company) holds as
of 10:00 a.m., New York City time, on that date immediately available funds
designated for and sufficient to pay all principal, interest (including
Contingent Interest), Liquidated Damages, if any, the Redemption Price,
Repurchase Price or the Designated Event Payment then due, provided, however,
that money held by the Agent for the benefit of holders of Senior Debt pursuant
to the provisions of Article 11 hereof or the payment of which to the holders of
the Convertible

                                       29

<PAGE>

Subordinated Notes is prohibited by Article 11 shall not be considered to be
designated for the payment of any principal of or interest (including Contingent
Interest, if any) or any Liquidated Damages on the Convertible Subordinated
Notes within the meaning of this Section 4.01.

     To the extent lawful, the Company shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on (i)
overdue principal, at the rate borne by Convertible Subordinated Notes,
compounded semiannually; and (ii) overdue installments of interest (without
regard to any applicable grace period) at the same rate, compounded
semiannually.

SECTION 4.02  Commission Reports.
              ------------------

     The Company shall comply with Section 314(a) of the TIA.

SECTION 4.03  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 that a review
of the activities of the Company and its subsidiaries during the preceding
fiscal year has been made under the supervision of the signing Officers with a
view to determining whether the Company has fully performed its obligations
under this Indenture and further stating, as to each such Officer signing such
certificate, that to the best of his or her knowledge, the Company is not in
default in the performance or observance of any of the terms and conditions
hereof (or, if any Default or Event of Default shall have occurred, describing
all such Defaults or Events of Default of which he or she may have knowledge)
and, that to the best of his or her knowledge, no event has occurred and remains
in existence by reason of which payments on account of the principal of or
interest (including Contingent Interest, if any) or Liquidated Damages, if any,
on the Convertible Subordinated Notes are prohibited.

     The Company shall, so long as any of the Convertible Subordinated Notes are
outstanding, deliver to the Trustee, forthwith upon becoming aware of any
Default or Event of Default, an Officers' Certificate specifying such Default or
Event of Default and what action the Company is taking or proposes to take with
respect thereto.

SECTION 4.04  Maintenance of Office or Agency.
              -------------------------------

     The Company shall maintain or cause to be maintained the office or agency
required under Section 2.03. The Company shall give prompt written notice to the
Trustee of the location, and any change in the location, of such office or
agency not maintained by the Trustee. If at any time the Company shall fail to
maintain any such required office or agency or shall fail to furnish the Trustee
with the address thereof, presentations, surrenders, notices and demands with
respect to the Convertible Subordinated Notes may be made or served at the
Corporate Trust Office of the Trustee.

     The Company may also from time to time designate one or more other offices
or agencies where the Convertible Subordinated Notes may be presented or
surrendered for any or all such purposes and may from time to time rescind such
designation.

                                       30

<PAGE>

SECTION 4.05   Continued Existence.
               -------------------

     Subject to Article 5, the Company shall do or cause to be done all things
necessary to preserve and keep in full force and effect its corporate existence.

SECTION 4.06   Appointments to Fill Vacancies in Trustee's Office.
               --------------------------------------------------

     The Company, whenever necessary to avoid or fill a vacancy in the office of
Trustee, will appoint, in the manner provided in Section 7.08, a Trustee, so
that there shall at all times be a Trustee hereunder.

SECTION 4.07   Stay, Extension and Usury Laws.
               ------------------------------

     The Company covenants (to the extent that it may lawfully do so) that it
shall not at any time insist upon, plead or in any manner whatsoever claim or
take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter enforced, that may affect the Company's
obligation to pay the Convertible Subordinated Notes; and the Company (to the
extent that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law insofar as such law applies to the Convertible
Subordinated Notes, and covenants that it shall not, by resort to any such law,
hinder, delay or impede the execution of any power herein granted to the
Trustee, but will suffer and permit the execution of every such power as though
no such law has been enacted.

SECTION 4.08   Taxes.
               -----

     The Company shall, and shall cause each of its subsidiaries to, pay prior
to delinquency all taxes, assessments and government levies; provided, however,
that the Company shall not be required to pay or cause to be paid any such tax,
assessment or levy (A) if the failure to do so will not, in the aggregate, have
a material adverse impact on the Company and its subsidiaries taken as a whole,
or (B) if the amount, applicability or validity is being contested in good faith
by appropriate proceedings.

SECTION 4.09   Investment Company Act.
               ----------------------

     As long as any Convertible Subordinated Notes are outstanding, the Company
will conduct its business and operations so as not to become an "investment
company" within the meaning of the Investment Company Act of 1940, as amended
(the "Investment Company Act"), and will take all steps required in order for it
to continue not to be an "investment company" and not to be required to be
registered under the Investment Company Act, including, if necessary,
redeployment of the assets of the Company.

SECTION 4.10   Optional Conversion to Semiannual Coupon Note Upon Tax Event.
               ------------------------------------------------------------

     From and after the date (the "Tax Event Date") of the occurrence of a Tax
Event following July 31, 2010, the Company shall have the option to elect, in
lieu of having the Original Principal Amount of the Convertible Subordinated
Notes accrete, to have interest accrue and be paid in cash at the rate of 3.75%
per annum, on a Restated Principal Amount, per $1,000 Original Principal Amount
(the "Restated Principal Amount") equal to the accrued Accreted

                                       31

<PAGE>

Principal Amount through the date the Company exercises the option provided for
in this Section 4.10 (the "Option Exercise Date"). Such interest shall be
payable semiannually on the interest payment dates of February 1 and August 1 of
each year to holders of record at the close of business on the January 15 and
July 15 immediately preceding such interest payment date. From and after the
Option Exercise Date, interest will accrue from such date or such later date to
which interest has been paid or provided for, whichever is later. Within 15 days
of the occurrence of a Tax Event, the Company shall deliver a written notice of
such Tax Event by facsimile and first-class mail to the Trustee and within 15
days of its exercise of such option the Company shall deliver a written notice
of the Option Exercise Date by facsimile and first-class mail to the Trustee and
by first-class mail to the holders of the Convertible Subordinated Notes. From
and after the Option Exercise Date, (i) the Company shall be obligated to pay at
Stated Maturity, in lieu of the Accreted Principal Amount of a Convertible
Subordinated Note, the Restated Principal Amount thereof plus accrued and unpaid
interest on such Convertible Subordinated Note and (ii) "Accreted Principal
Amount" or similar words, as used herein, shall mean Restated Principal Amount
plus accrued and unpaid interest with respect to any Convertible Subordinated
Note. Convertible Subordinated Notes authenticated and delivered after the
Option Exercise Date may bear a notation as to the conversion of the Convertible
Subordinated Notes to semiannual coupon notes. No other changes to this
Indenture shall result as a result of the events described in this Section 4.10.

                                    ARTICLE 5

                                   SUCCESSORS

SECTION 5.01   When the Company May Merge, Etc.
               -------------------------------

     The Company may not, in a single transaction or series of related
transactions, consolidate or merge with or into or effect a share exchange with
(whether or not the Company is the surviving corporation), or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
properties or assets to, any person as an entirety or substantially as an
entirety unless:

     (a)  either

          (i)  the Company shall be the surviving or continuing corporation or

          (ii) the person formed by or surviving any such consolidation or share
     exchange or into which the Company is merged (if other than the Company) or
     the person which acquires by sale, assignment, transfer, lease, conveyance
     or other disposition the properties and assets of the Company substantially
     as an entirety

               (1)  shall be a corporation organized and validly existing under
the laws of the United States or any State thereof or the District of Columbia
and

               (2)  shall expressly assume, by supplemental indenture in form
reasonably satisfactory to the Trustee, executed and delivered to the Trustee,
the due and punctual payment of the principal of, and premium, if any, and
interest (including Contingent Interest, if any) and Liquidated Damages, if any,
on all of the Convertible Subordinated Notes

                                       32

<PAGE>

and the performance of every covenant of the Convertible Subordinated Notes and
this Indenture and the Registration Rights Agreement on the part of the Company
to be performed or observed, including, without limitation, modifications to
rights of holders to cause the repurchase of Convertible Subordinated Notes upon
a Designated Event in accordance with the penultimate paragraph of Section 3.10
and conversion rights in accordance with Section 12.14 to the extent required by
such Sections;

     (b)  immediately after giving effect to such transaction no Default and no
Event of Default shall have occurred and be continuing and

     (c)  the Company or such person shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel each stating that such
consolidation, merger, share exchange, conveyance, transfer or lease and, if a
supplemental indenture is required in connection with such transaction, such
supplemental indenture, comply with this provision of this Indenture and that
all conditions precedent in this Indenture relating to such transaction have
been satisfied.

     For purposes of this Section 5.01, the transfer (by lease, assignment, sale
or otherwise, in a single transaction or series of transactions) of all or
substantially all of the properties or assets of one or more subsidiaries of the
Company, the capital stock of which constitutes all or substantially all of the
properties and assets of the Company, shall be deemed to be the transfer of all
or substantially all of the properties and assets of the Company.

SECTION 5.02   Successor Corporation Substituted.
               ---------------------------------

     Upon any such consolidation, merger, share exchange, sale, assignment,
conveyance, lease, transfer or other disposition in accordance with Section
5.01, the successor person formed by such consolidation, or share exchange or
into which the Company is merged or to which such assignment, conveyance, lease,
transfer or other disposition is made will succeed to, and be substituted for,
and may exercise every right and power of, the Company under this Indenture with
the same effect as if such successor had been named as the Company therein, and
thereafter (except in the case of a sale, assignment, transfer, lease,
conveyance or other disposition) the predecessor corporation will be relieved of
all further obligations and covenants under this Indenture and the Convertible
Subordinated Notes.

SECTION 5.03   Purchase Option on Change of Control.
               ------------------------------------

     This Article 5 does not affect the obligations of the Company (including
without limitation any successor to the Company) under Section 3.10.

                                    ARTICLE 6

                              DEFAULTS AND REMEDIES

SECTION 6.01   Events of Default.
               -----------------

     An "Event of Default" with respect to any Convertible Subordinated Notes
occurs if:

                                       33

<PAGE>

     (a)  the Company defaults in the payment (whether or not such payment is
prohibited by the subordination provisions set forth in Article 11 of this
Indenture) of principal of, or premium, if any, on the Convertible Subordinated
Notes when due at maturity, upon repurchase, upon acceleration or otherwise,
including, without limitation, failure of the Company to make any optional
redemption payment when required pursuant to Article 3; or

     (b)  the Company defaults in the payment (whether or not such payment is
prohibited by the subordination provisions set forth in Article 11 of this
Indenture) of any installment of interest (including Contingent Interest, if
any) or Liquidated Damages on the Convertible Subordinated Notes when due
(including any interest (including Contingent Interest, if any) or Liquidated
Damages, if any, payable in connection with a repurchase pursuant to Section
3.09 or Section 3.10 or in connection with any optional redemption payment
pursuant to Article 3) and continuance of such default for 30 days or more; or

     (c)  the Company defaults (other than a default set forth in clauses (a)
and (b) above and clauses (d) and (e) below) in the performance of, or breaches,
any other covenant or warranty of the Company set forth in this Indenture or the
Convertible Subordinated Notes and fails to remedy such default or breach within
a period of 60 days after the receipt of written notice from the Trustee or the
holders of at least 25% in aggregate Accreted Principal Amount of the then
outstanding Convertible Subordinated Notes; or

     (d)  the Company defaults in the payment of the Designated Event Payment in
respect of the Convertible Subordinated Notes on the date therefor, whether or
not such payment is prohibited by the subordination provisions set forth in
Article 11 of this Indenture; or

     (e)  the Company fails to provide timely notice of any Designated Event in
accordance with Section 3.10; or

     (f)  a default under any credit agreement, mortgage, indenture or
instrument under which there may be issued or by which there may be secured or
evidenced any Indebtedness for money borrowed by the Company or any Material
Subsidiary of the Company (or the payment of which is guaranteed by the Company
or any of its Material Subsidiaries), whether such Indebtedness or guarantee
exists on the date of this Indenture or is created thereafter, which default (i)
is caused by a failure to pay when due any principal of or interest on such
Indebtedness within the grace period provided for in such Indebtedness (which
failure continues beyond any applicable grace period) (a "Payment Default") or
(ii) results in the acceleration of such Indebtedness prior to its express
maturity (without such acceleration being rescinded or annulled) and, in each
case, the principal amount of such Indebtedness, together with the principal
amount of any other such Indebtedness under which there is a Payment Default or
the maturity of which has been so accelerated, aggregates $15,000,000 or more
and such Payment Default is not cured or such acceleration is not annulled
within 30 days after receipt of written notice by the Company from the Trustee
or by the Company and the Trustee from any holder of Convertible Subordinated
Notes; or

     (g)  a final, non-appealable judgment or final, non-appealable judgments
(other than any judgment as to which a reputable insurance company has accepted
full liability) for the payment of money are entered by a court or courts of
competent jurisdiction against the

                                       34

<PAGE>

Company or any Material Subsidiaries of the Company and remain unstayed,
unbonded or undischarged for a period (during which execution shall not be
effectively stayed) of 60 days, provided that the aggregate amount of all such
judgments exceeds $15,000,000; or

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

          (i)   commences a voluntary case,

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

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

          (iv)  makes a general assignment for the benefit of its creditors,

          (v)   makes the admission in writing that it generally is unable to
pay its debts as the same become due; or

     (i)  a court of competent jurisdiction enters a judgment, order or decree
under any Bankruptcy Law that:

          (i)   is for relief against the Company or any Material Subsidiary in
an involuntary case,

          (ii)  appoints a Custodian of the Company or any Material Subsidiary,
and the order or decree remains unstayed and in effect for 90 days or

          (iii) orders the liquidation of the Company or any Material
Subsidiary, and the order or decree remains unstayed and in effect for 90 days.

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

     In the case of any Event of Default, pursuant to the provisions of this
Section 6.01, occurring by reason of any willful action (or inaction) taken (or
not taken) by or on behalf of the Company with the intention of avoiding payment
of the premium which the Company would have had to pay if the Company then had
elected to redeem the Convertible Subordinated Notes pursuant to Paragraph 6 of
the Convertible Subordinated Notes, an equivalent premium shall also become and
be immediately due and payable to the extent permitted by law, upon the
acceleration of the Convertible Subordinated Notes notwithstanding anything
contained in this Indenture or in the Convertible Subordinated Notes to the
contrary.

     If an Event of Default occurs prior to any date on which the Company is
prohibited from redeeming the Convertible Subordinated Notes pursuant to
Paragraph 6 of the Convertible Subordinated Notes, by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Company with
the intention of avoiding the prohibition on redemption of the

                                       35

<PAGE>

Convertible Subordinated Notes prior to such date, then the premium specified in
this Indenture shall also become immediately due and payable to the extent
permitted by law upon the acceleration of the Convertible Subordinated Notes.

SECTION 6.02   Acceleration.
               ------------

     If an Event of Default (other than an Event of Default with respect to the
Company specified in clauses (h) and (i) of Section 6.01) occurs and is
continuing, then and in every such case the Trustee, by written notice to the
Company, or the holders of at least 25% in aggregate Accreted Principal Amount
of the then outstanding Convertible Subordinated Notes, by written notice to the
Company and the Trustee, may declare the unpaid Accreted Principal Amount of,
premium, if any, and accrued and unpaid interest (including Contingent Interest,
if any) and Liquidated Damages, if any, on all the Convertible Subordinated
Notes to be due and payable. Upon such declaration such Accreted Principal
amount, premium, if any, and accrued and unpaid interest (including Contingent
Interest, if any) and Liquidated Damages, if any, shall become immediately due
and payable, notwithstanding anything contained in this Indenture or the
Convertible Subordinated Notes to the contrary, but subject to the provisions of
Article 11 hereof. If any Event of Default with respect to the Company specified
in clauses (h) or (i) of Section 6.01 occurs, all unpaid Accreted Principal
Amount of and premium, if any, and accrued and unpaid interest (including
Contingent Interest, if any) and Liquidated Damages, if any, on the Convertible
Subordinated Notes then outstanding shall become automatically due and payable
subject to the provisions of Article 11 hereof, without any declaration or other
act on the part of the Trustee or any holder of Convertible Subordinated Notes.

     The holders of a majority in aggregate Accreted Principal Amount of the
then outstanding Convertible Subordinated Notes by notice to the Trustee may
rescind an acceleration of the Convertible Subordinated Notes and its
consequences if all existing Events of Default (other than nonpayment of
principal of or premium, if any, and interest (including Contingent Interest, if
any) and Liquidated Damages, if any, on the Convertible Subordinated Notes which
has become due solely by virtue of such acceleration) have been cured or waived
and if the rescission would not conflict with any judgment or decree of any
court of competent jurisdiction. No such rescission shall affect any subsequent
Default or Event of Default or impair any right consequent thereto.

SECTION 6.03   Other Remedies.
               --------------

     If an Event of Default occurs and is continuing, the Trustee may pursue any
available remedy by proceeding at law or in equity to collect the payment of
Accreted Principal Amount of or interest (including Contingent Interest, if any)
or Liquidated Damages, if applicable, on the Convertible Subordinated Notes or
to enforce the performance of any provision of the Convertible Subordinated
Notes or this Indenture. The Trustee may maintain a proceeding even if it does
not possess any of the Convertible Subordinated Notes or does not produce any of
them in the proceeding. A delay or omission by the Trustee or any holder of a
Convertible Subordinated Note in exercising any right or remedy occurring upon
an Event of Default shall not impair the right or remedy or constitute a waiver
of or acquiescence in the Event of Default. All remedies are cumulative to the
extent permitted by law.

                                       36

<PAGE>

SECTION 6.04   Waiver of Past Defaults.
               -----------------------

     The holders of a majority in aggregate Accreted Principal Amount of the
Convertible Subordinated Notes then outstanding may, on behalf of the holders of
all the Convertible Subordinated Notes, waive an existing Default or Event of
Default and its consequences, except a Default or Event of Default in the
payment of the principal of, premium, if any, or interest (including Contingent
Interest, if any) or Liquidated Damages, if applicable, on the Convertible
Subordinated Notes (other than the non-payment of principal of and premium, if
any, and interest (including Contingent Interest, if any) and Liquidated
Damages, if any, on the Convertible Subordinated Notes which has become due
solely by virtue of an acceleration which has been duly rescinded as provided
above), or in respect of a covenant or provision of this Indenture which cannot
be modified or amended without the consent of all holders of Convertible
Subordinated Notes. When a Default or Event of Default is waived, it is cured
and stops continuing. No waiver shall extend to any subsequent or other Default
or Event of Default or impair any right consequent thereon.

SECTION 6.05   Control by Majority.
               -------------------

     The holders of a majority in aggregate Accreted Principal Amount of the
then outstanding Convertible Subordinated Notes may direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on it. However, the Trustee may refuse
to follow any direction that conflicts with law or this Indenture that the
Trustee determines may be unduly prejudicial to the rights of other holders of
Convertible Subordinated Notes or that may involve the Trustee in personal
liability; provided that the Trustee shall have no duty or obligation (subject
to Section 7.01) to ascertain whether or not such actions of forebearances are
unduly prejudicial to such holders; provided, further, that the Trustee may take
any other action the Trustee deems proper that is not inconsistent with such
directions.

SECTION 6.06   Limitation on Suits.
               -------------------

     A holder of a Convertible Subordinated Note may not pursue any remedy with
respect to this Indenture or the Convertible Subordinated Notes unless:

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

          (2)  the holders of at least 25% in Accreted Principal Amount of the
then outstanding Convertible Subordinated Notes make a request to the Trustee to
pursue the remedy;

          (3)  the Trustee does not comply with the request within 60 days after
receipt of the request and the offer and, if requested, the provision of
indemnity; and

          (4)  during such 60-day period the holders of a majority in Accreted
Principal Amount of the then outstanding Convertible Subordinated Notes do not
give the Trustee a direction inconsistent with the request.

     A holder of a Convertible Subordinated Note may not use this Indenture to
prejudice the rights of another holder or to obtain a preference or priority
over another holder.

                                       37

<PAGE>

SECTION 6.07   Rights of Holders to Receive Payment.
               ------------------------------------

     Subject to the provisions of Article 11 hereof, notwithstanding any other
provision of this Indenture, the right of any holder of a Convertible
Subordinated Note to receive payment of principal, premium, if any, and interest
(including Contingent Interest, if any) and Liquidated Damages, if any, on the
Convertible Subordinated Note, on or after the respective due dates expressed in
the Convertible Subordinated Note, or to bring suit for the enforcement of any
such payment on or after such respective dates, or to bring suit for the
enforcement of the right to convert the Convertible Subordinated Note shall not
be impaired or affected without the consent of the holder of a Convertible
Subordinated Note.

SECTION 6.08   Collection Suit by Trustee.
               --------------------------

     If an Event of Default specified in Section 6.01(a), (b) or (d) occurs and
is continuing, the Trustee may recover judgment in its own name and as trustee
of an express trust against the Company for the whole amount of principal and
interest (including Contingent Interest, if any) and Liquidated Damages, if any,
remaining unpaid on the Convertible Subordinated Notes and interest on overdue
principal and interest (including Contingent Interest, if any) and Liquidated
Damages, if any, and such further amount as shall be sufficient to cover the
costs and, to the extent lawful, expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel.

SECTION 6.09   Trustee May File Proofs of Claim.
               --------------------------------

     The Trustee may file such proofs of claim and other papers or documents as
may be necessary or advisable in order to have the claims of the Trustee and the
holders of Convertible Subordinated Notes allowed in any judicial proceedings
relative to the Company, its creditors or its property. 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 Convertible Subordinated Note any plan of
reorganization, arrangement, adjustment or composition affecting the Convertible
Subordinated Notes or the rights of any holder thereof, or to authorize the
Trustee to vote in respect of the claim of any holder in any such proceeding.

SECTION 6.10   Priorities.
               ----------

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

          First: to the Trustee for amounts due under Section 7.07, including
     payment of all compensation, expenses and liabilities incurred, and all
     advances made, by the Trustee, and the costs and expenses of collection;

          Second: to holders of Senior Debt to the extent required by Article
     11;

          Third: to holders of Convertible Subordinated Notes for amounts due
     and unpaid on the Convertible Subordinated Notes for principal, premium, if
     any, and interest (including Contingent Interest, if any) and Liquidated
     Damages, if any, ratably, without preference or priority of any kind,
     according to the amounts due and payable on the

                                       38

<PAGE>

     Convertible Subordinated Notes for principal, premium, if any, and interest
     (including Contingent Interest, if any) and Liquidated Damages, if any,
     respectively; and

          Fourth: to the Company.

     Except as otherwise provided in Section 2.12, the Trustee may fix a record
date and payment date for any payment to holders of Convertible Subordinated
Notes.

SECTION 6.11   Undertaking for Costs.
               ---------------------

     In any suit for the enforcement of any right or remedy under this Indenture
or in any suit against the Trustee for any action taken or omitted by it as a
Trustee, a court in its discretion may require the filing by any party litigant
in the suit, other than the Trustee, of an undertaking to pay the costs of the
suit, and the court in its discretion may assess reasonable costs, including
reasonable attorneys fees, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses made by the party
litigant. This Section does not apply to a suit by the Trustee, a suit by a
holder pursuant to Section 6.07 or a suit by holders of more than 10% in
aggregate Accreted Principal Amount of the then outstanding Convertible
Subordinated Notes.

                                    ARTICLE 7

                                   THE TRUSTEE

     The Trustee hereby accepts the trust imposed upon it by this Indenture and
covenants and agrees to perform the same, as herein expressed. 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 Article 7.

SECTION 7.01   Duties of the Trustee.
               ---------------------

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

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

               (1)  The duties of the Trustee shall be determined solely by the
express provisions of this Indenture, and the Trustee need perform only those
duties that are specifically set forth in this Indenture and no others, and no
implied covenants or obligations shall be read into this Indenture against the
Trustee; and

               (2)  In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon any statements, certificates or opinions
furnished to the Trustee and conforming to the requirements of this Indenture.
However, the Trustee shall examine the certificates and opinions to determine
whether or not they conform to the form required by this Indenture.

                                       39

<PAGE>

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

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

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

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

     (d)  Whether or not therein expressly so provided, every provision of this
Indenture that is in any way related to the Trustee is subject to paragraphs
(a), (b) and (c) of this Section 7.01.

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

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

SECTION 7.02   Rights of the Trustee.
               ---------------------

     (a)  The Trustee may rely on and shall be protected in acting or refraining
from acting upon any resolution, Officers' Certificate, or any other
certificate, statement, instrument, opinion, report, notice, request, consent,
order, security or other 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 contained therein.

     (b)  Any request, direction, order or demand of the Company mentioned
herein shall be sufficiently evidenced by an Officers' Certificate (unless other
evidence in respect thereof is herein specifically prescribed). In addition,
before the Trustee acts or refrains from acting, it may require an Officers'
Certificate, an Opinion of Counsel or both. The Trustee shall not be liable for
any action it takes or omits to take in good faith in reliance on such Officers'
Certificate or Opinion of Counsel. The Trustee may consult with counsel and the
written advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection from liability in respect of any action
taken, suffered or omitted by it hereunder in good faith and in reliance
thereon.

     (c)  The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through its attorneys and
agents and other persons not

                                       40

<PAGE>

regularly in its employ and shall not be responsible for the misconduct or
negligence of any attorney or agent appointed with due care.

     (d)  The Trustee shall not be liable for any action it takes or omits to
take in good faith without negligence or willful misconduct which it believes to
be authorized or within its discretion, rights or powers.

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

     (f)  The Trustee shall not be required to give any bond or surety in
respect of the performance of its powers and duties hereunder.

     (g)  The Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request, order or discretion of
any of the holders of Convertible Subordinated Notes pursuant to the provisions
of this Indenture, unless such holders have offered to the Trustee security or
indemnity satisfactory to it against the costs, expenses and liabilities which
might be incurred therein or thereby.

     (h)  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, consent, order, security or other document
unless requested in writing to do so by the holders of not less than a majority
in aggregate Accreted Principal Amount of the Convertible Subordinated Notes
then outstanding, provided that if the Trustee determines in its discretion to
make any such investigation, then it shall be entitled, upon reasonable prior
notice and during normal business hours, to examine the books and records and
the premises of the Company, personally or by agent or attorney, and the
reasonable expenses of every such examination shall be paid by the Company or,
if paid by the Trustee or any predecessor Trustee, shall be reimbursed by the
Company upon demand.

     (i)  The permissive rights of the Trustee to do things enumerated in this
Indenture shall not be construed as a duty, and the Trustee shall not be
answerable for other than its negligence or willful misconduct.

     (j)  The Trustee shall not be responsible for the computation of any
adjustment to the Conversion Rate or for any determination as to whether an
adjustment is required and shall not be deemed to have knowledge of any
adjustment unless and until it shall have received the notice from the Company
contemplated by Section 12.11.

SECTION 7.03   Individual Rights of the Trustee.
               --------------------------------

     Subject to Sections 7.10 and 7.11, the Trustee in its individual or any
other capacity may become the owner or pledgee of Convertible Subordinated Notes
with the same rights it would have if it were not the Trustee and may otherwise
deal with the Company or an Affiliate of the Company and receive, collect, hold
and retain collections from the Company with the same rights it would have if it
were not Trustee. Any Agent may do the same with like rights.

                                       41

<PAGE>

SECTION 7.04   Trustee's Disclaimer.
               --------------------

     The Trustee shall not be responsible for and makes no representation as to
the validity or adequacy of this Indenture or the Convertible Subordinated
Notes. It shall not be accountable for the Company's use of the proceeds from
the Convertible Subordinated Notes or any money paid to the Company or upon the
Company's direction under any provision of this Indenture. It shall not be
responsible for the use or application of any money received by any Paying Agent
other than the Trustee, and it shall not be responsible for any statement or
recital herein or any statement in the Convertible Subordinated Notes or any
other document in connection with the sale of the Convertible Subordinated Notes
or pursuant to this Indenture other than its certificate of authentication.

SECTION 7.05   Notice of Defaults.
               ------------------

     If a Default or Event of Default occurs and is continuing and if it is
known to a Trust Officer of the Trustee, the Trustee shall mail to each holder
of a Convertible Subordinated Note a notice of the Default or Event of Default
within 60 days after it occurs. A Default or an Event of Default shall not be
considered known to a Trust Officer of the Trustee unless it is a Default or
Event of Default in the payment of principal, interest (including Contingent
Interest, if any) or Liquidated Damages, if any, when due under Section 6.01(a),
(b) or (d), as applicable, or a Trust Officer of the Trustee shall have received
notice thereof, in accordance with this Indenture, from the Company or from the
holders of a majority in aggregate Accreted Principal Amount of the outstanding
Convertible Subordinated Notes. Except in the case of a Default or Event of
Default in payment of principal of, premium, if any, or interest (including
Contingent Interest, if any) or Liquidated Damages, if any, on any Convertible
Subordinated Note, the Trustee may withhold the notice if and so long as a
committee of its Trust Officers in good faith determines that withholding the
notice is in the interest of the holders of the Convertible Subordinated Notes.

SECTION 7.06   Reports by the Trustee to Holders.
               ---------------------------------

     Within 60 days after the reporting date stated in Section 10.10, the
Trustee shall mail to holders of Convertible Subordinated Notes a brief report
dated as of such reporting date that complies with TIA Section 313(a) (but if no
event described in TIA Section 313(a) has occurred within twelve months
preceding the reporting date, no report need be transmitted). The Trustee also
shall comply with TIA Section 313(b)(2). The Trustee shall also transmit by mail
all reports as required by TIA Section 313(c) and TIA Section 313(d).

     A copy of each report at the time of its mailing to holders of Convertible
Subordinated Notes shall be filed, at the expense of the Company, by the Trustee
with the Commission and each stock exchange or securities market, if any, on
which the Convertible Subordinated Notes are listed. The Company shall timely
notify the Trustee when the Convertible Subordinated Notes are listed or quoted
on any stock exchange or securities market.

SECTION 7.07   Compensation and Indemnity.
               --------------------------

     The Company shall pay to the Trustee from time to time, and the Trustee
shall be entitled to, reasonable compensation for its acceptance of this
Indenture and its services hereunder. The Trustee's compensation shall not be
limited by any law on compensation of a trustee of an

                                       42

<PAGE>

express trust. The Company shall reimburse the Trustee promptly upon request for
all reasonable disbursements, advances and expenses incurred or made by or on
behalf of it in addition to the compensation for its services. Such expenses may
include the reasonable compensation, disbursements and expenses of the Trustee's
agents, counsel and other persons not regularly in its employ.

     The Company shall indemnify the Trustee against, and defend and hold the
Trustee harmless from, any loss, liability or expense incurred by it arising out
of or in connection with the acceptance or administration of its duties under
this Indenture and the trusts hereunder, including the costs and expenses of
defending itself against or investigating any claim of liability in the
premises, except as set forth in the next paragraph. The Trustee shall notify
the Company promptly of any claim for which it may seek indemnity. Failure by
the Trustee to so notify the Company shall not relieve the Company of its
obligations hereunder. The Company shall defend the claim with counsel
designated by the Company, who may be outside counsel to the Company but shall
in all events be reasonably satisfactory to the Trustee, and the Trustee shall
cooperate in the defense. In addition, the Trustee may retain one separate
counsel and, if deemed advisable by such counsel, local counsel, and the Company
shall pay the reasonable fees and expenses of such separate counsel and local
counsel. The indemnification herein extends to any settlement, provided that the
Company will not be liable for any settlement made without its consent,
provided, further, that such consent will not be unreasonably withheld.

     The Company need not reimburse any expense or indemnify against any loss or
liability incurred by the Trustee through its own negligence or willful
misconduct.

     The Trustee shall have a lien prior to the Convertible Subordinated Notes
on all money or property held or collected by the Trustee to secure the
Company's payment obligations in this Section 7.07, except that held in trust to
pay principal, interest (including Contingent Interest, if any) and Liquidated
Damages, if any, on Convertible Subordinated Notes. Such liens and the Company's
obligations under this Section 7.07 shall survive the satisfaction and discharge
of this Indenture.

     When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(h) or (i) occurs, the expenses and the
compensation for the services (including the fees and expenses of its agents and
counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.

SECTION 7.08   Replacement of the 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 7.08.

     The Trustee may resign at any time and be discharged from the trust hereby
created by so notifying the Company. The holders of a majority in aggregate
Accreted Principal Amount of the then outstanding Convertible Subordinated Notes
may remove the Trustee by so notifying the Trustee and the Company in writing.
The Company may remove the Trustee if:

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

                                       43

<PAGE>

               (2)  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;

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

               (4)  the Trustee becomes incapable of acting.

     If the Trustee resigns or is removed or if a vacancy exists in the office
of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the holders
of a majority in aggregate Accreted Principal Amount of the then outstanding
Convertible Subordinated Notes may appoint a successor Trustee to replace the
successor Trustee appointed by the Company.

     If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
holders of at least 10% in aggregate Accreted Principal Amount of the then
outstanding Convertible Subordinated Notes may petition any court of competent
jurisdiction for the appointment of a successor Trustee.

     If the Trustee after written request by any holder of a Convertible
Subordinated Note who has been a holder for at least six months fails to comply
with Section 7.10, such holder may petition any court of competent jurisdiction
for the removal of the Trustee and the appointment of a successor Trustee.

     A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Company. Thereupon the resignation or removal
of the retiring Trustee shall become effective, and the successor Trustee shall
have all the rights, powers and duties of the Trustee under this Indenture. The
successor Trustee shall mail a notice of its succession to holders of
Convertible Subordinated Notes. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, provided that all sums
owing to the retiring Trustee hereunder have been paid and subject to the lien
provided for in Section 7.07. Notwithstanding the replacement of the Trustee
pursuant to this Section 7.08, the Company's obligations under Section 7.07
shall continue for the benefit of the retiring Trustee with respect to expenses
and liabilities incurred by it prior to such replacement.

     Upon request of any such successor Trustee, the Company shall execute any
and all instruments for more fully and certainly vesting in and confirming to
such successor Trustee all such rights, powers and trusts referred to in the
preceding paragraph.

SECTION 7.09   Successor Trustee by Merger, etc.
               --------------------------------

     If the Trustee consolidates with, merges or converts into, or transfers all
or substantially all of its corporate trust business (including the trust
created by this Indenture) to, another corporation or national banking
association, the resulting, surviving or transferee corporation or national
banking association without any further act shall be the successor Trustee with
the same effect as if the successor Trustee had been named as the Trustee
herein.

                                       44

<PAGE>

SECTION 7.10   Eligibility, Disqualification.
               -----------------------------

     This Indenture shall always have a Trustee who satisfies the requirements
of TIA Section 310(a)(1). The Trustee shall always have a combined capital and
surplus as stated in Section 10.10. The Trustee is subject to TIA Section 310(b)
regarding the disqualification of a trustee upon acquiring a conflicting
interest.

SECTION 7.11   Preferential Collection of Claims Against Company.
               -------------------------------------------------

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

                                    ARTICLE 8

                     SATISFACTION AND DISCHARGE OF INDENTURE

SECTION 8.01   Discharge of Indenture.
               ----------------------

     When (a) the Company delivers to the Trustee for cancellation all
Convertible Subordinated Notes theretofore authenticated (other than any other
Convertible Subordinated Notes which have been destroyed, lost or stolen and in
lieu of or in substitution for which other Convertible Subordinated Notes have
been authenticated and delivered) and not theretofore canceled, or (b) all the
Convertible Subordinated Notes not theretofore canceled or delivered to the
Trustee for cancellation have become due and payable, or are by their terms will
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 the Company deposits with the Trustee, in trust, amounts
sufficient to pay at maturity or upon redemption of all of the Convertible
Subordinated Notes (other than any Convertible Subordinated Notes which have
been mutilated, destroyed, lost or stolen and in lieu of or in substitution for
which other Convertible Subordinated Notes have been authenticated and
delivered) not theretofore canceled or delivered to the Trustee for
cancellation, including principal and premium, if any, interest (including
Contingent Interest, if any) and Liquidated Damages, if any, due or to become
due to such Maturity Date or Redemption Date, as the case may be, and if in
either case the Company also pays, or causes to be paid, all other sums payable
hereunder by the Company, then this Indenture shall cease to be of further
effect (except as to (i) rights of registration of transfer, substitution,
replacement and exchange and conversion of Convertible Subordinated Notes, (ii)
rights hereunder of holders of Convertible Subordinated Notes to receive
payments of principal of and premium, if any, interest (including Contingent
Interest, if any), and Liquidated Damages, if any, on, the Convertible
Subordinated Notes, (iii) the obligations under Sections 2.03 and 8.05 hereof
and (iv) 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 required by Section 10.04 and at the Company's cost
and expense, shall execute proper instruments acknowledging satisfaction of and
discharging this Indenture; the Company, however, hereby agrees to reimburse the
Trustee for any costs or expenses thereafter reasonably and properly incurred by
the Trustee and to compensate the Trustee for any

                                       45

<PAGE>

services thereafter reasonably and properly rendered by the Trustee in
connection with this Indenture or the Convertible Subordinated Notes.

SECTION 8.02   Deposited Monies to Be Held in Trust by Trustee.
               -----------------------------------------------

     Subject to Section 8.04, all monies deposited with the Trustee pursuant to
Section 8.01 shall be held in trust and applied by it to the payment,
notwithstanding the provisions of Article 11, either directly or through the
Paying Agent, to the holders of the particular Convertible Subordinated Notes
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, interest
(including Contingent Interest, if any) and Liquidated Damages, if any, and
premium, if any.

SECTION 8.03   Paying Agent to Repay Monies Held.
               ---------------------------------

     Upon the satisfaction and discharge of this Indenture, all monies then held
by any Paying Agent (other than the Trustee) shall, upon the Company's demand,
be repaid to it or paid to the Trustee, and thereupon such Paying Agent shall be
released from all further liability with respect to such monies.

SECTION 8.04   Return of Unclaimed Monies.
               --------------------------

     Subject to the requirements of applicable law, any monies deposited with or
paid to the Trustee for payment of the principal of, premium, if any, interest
(including Contingent Interest, if any) or Liquidated Damages, if any, on
Convertible Subordinated Notes and not applied but remaining unclaimed by the
holders thereof for two years after the date upon which the principal of,
premium, if any, interest (including Contingent Interest, if any) or Liquidated
Damages, if any, on such Convertible Subordinated Notes, as the case may be,
have become due and payable, shall be repaid to the Company by the Trustee on
demand; provided, however, that the Company, or the Trustee at the request of
the Company, shall have first caused notice of such payment to the Company to be
mailed to each holder of a Convertible Subordinated Note entitled thereto no
less than 30 days prior to such payment and all liability of the Trustee shall
thereupon cease with respect to such monies; and the holder of any of the
Convertible Subordinated Notes shall thereafter look only to the Company for any
payment which such holder may be entitled to collect unless an applicable
abandoned property law designates another person.

SECTION 8.05   Reinstatement.
               -------------

     If the Trustee or the Paying Agent is unable to apply any money in
accordance with Section 8.02 by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, the Company's obligations under this Indenture and the Convertible
Subordinated Notes shall be revived and reinstated as though no deposit had
occurred pursuant to Section 8.01 until such time as the Trustee or the Paying
Agent is permitted to apply all such money in accordance with Section 8.02;
provided, however, that if the Company makes any payment of interest (including
Contingent Interest, if any) or Liquidated Damages, if any, on or principal of
any Convertible Subordinated Note following the reinstatement of its
obligations, the Company shall be subrogated to the rights of the holders
thereof to receive such payment from the money held by the Trustee or Paying
Agent.

                                       46

<PAGE>

                                    ARTICLE 9

                                   AMENDMENTS

SECTION 9.01  Without the Consent of Holders.
              ------------------------------

     The Company and the Trustee may amend this Indenture or the Convertible
Subordinated Notes without notice to or the consent of any holder of a
Convertible Subordinated Note for the purposes of:

     (a)  curing any ambiguity or correcting or supplementing any defective or
inconsistent provision contained in this Indenture or making any other changes
in the provisions of this Indenture which the Company and the Trustee may deem
necessary or desirable provided such amendment does not materially and adversely
affect the legal rights under the Indenture of the holders of Convertible
Subordinated Notes.

     (b)  providing for uncertificated Convertible Subordinated Notes in
addition to or in place of certificated Convertible Subordinated Notes;

     (c)  evidencing the succession of another person to the Company and
providing for the assumption by such successor of the covenants and obligations
of the Company thereunder and in the Convertible Subordinated Notes as permitted
by Section 5.01;

     (d)  providing for conversion rights and/or repurchase rights of holders of
Convertible Subordinated Notes in the event of consolidation, merger, share
exchange or sale of all or substantially all of the assets of the Company as
required to comply with Sections 5.01 and/or 12.14;

     (e)  increasing the Conversion Rate;

     (f)  evidence and provide for the acceptance of appointment under this
Indenture of a successor Trustee;

     (g)  making any changes that would provide the holders of the Convertible
Subordinated Notes with any additional rights or benefits or that does not
adversely affect the legal rights under this Indenture of any such holder; or

     (h)  complying with the requirements of the Commission in order to effect
or maintain the qualification of the Indenture under the TIA.

SECTION 9.02  With the Consent of Holders.
              ---------------------------

     Subject to Section 6.07, the Company and the Trustee may amend this
Indenture or the Convertible Subordinated Notes with the written consent of the
holders of at least a majority in aggregate Accreted Principal Amount of the
then outstanding Convertible Subordinated Notes (including consents obtained in
connection with a tender offer or exchange offer for Convertible Subordinated
Notes).

                                       47

<PAGE>

     Subject to Sections 6.04 and 6.07, the holders of a majority in aggregate
Accreted Principal Amount of the Convertible Subordinated Notes then outstanding
may also waive compliance in a particular instance by the Company with any
provision of this Indenture or the Convertible Subordinated Notes.

     However, without the consent of each holder of a Convertible Subordinated
Note affected, an amendment or waiver under this Section may not (with respect
to any Convertible Subordinated Notes held by a non-consenting holder):

     (a)  reduce the principal amount of Convertible Subordinated Notes whose
holders must consent to an amendment, supplement or waiver;

     (b)  reduce the principal of or premium on or change the fixed maturity of
any Convertible Subordinated Note or, except as permitted pursuant to Section
9.01(a), (d), (g) or (h), alter the redemption or repurchase provisions with
respect thereto;

     (c)  reduce the rate of, or change the time for payment of, interest,
including defaulted interest or Contingent Interest, if any, or Liquidated
Damages on any Convertible Subordinated Note;

     (d)  waive a Default or Event of Default in the payment of principal of or
premium, if any, or interest (including Contingent Interest, if any) or
Liquidated Damages, if any, on the Convertible Subordinated Notes (except a
rescission of acceleration of the Convertible Subordinated Notes by the holders
of at least a majority in aggregate Accreted Principal Amount of the Convertible
Subordinated Notes then outstanding and a waiver of the payment default that
resulted from such acceleration);

     (e)  make the principal of, or premium, if any, or interest (including
Contingent Interest, if any) or Liquidated Damages, if any, on, any Convertible
Subordinated Note payable in money other than as provided for herein and in the
Convertible Subordinated Notes;

     (f)  make any change in the provisions of this Indenture relating to
waivers of past Defaults or Events of Default or the rights of holders of
Convertible Subordinated Notes to receive payments of principal of, premium, if
any, or interest or Liquidated Damages on the Convertible Subordinated Notes;

     (g)  waive a redemption or repurchase payment with respect to any
Convertible Subordinated Notes;

     (h)  except as permitted herein (including Section 9.01(a)), decrease the
Conversion Rate or modify the provisions contained herein relating to conversion
of the Convertible Subordinated Notes in a manner adverse to the holders
thereof; or

     (i)  make any change to the abilities of holders of Convertible
Subordinated Notes to enforce their rights hereunder or the provisions of
clauses (a) through (i) of this Section 9.02.

                                       48

<PAGE>

     To secure a consent of the holders of Convertible Subordinated Notes under
this Section, it shall not be necessary for such holders to approve the
particular form of any proposed amendment or waiver, but it shall be sufficient
if such consent approves the substance thereof.

     After an amendment or waiver under this Section becomes effective, the
Company shall mail to holders of Convertible Subordinated Notes a notice briefly
describing the amendment or waiver.

     In order to amend any provisions of Article 11, holders of at least 75% in
aggregate Accreted Principal Amount of Convertible Subordinated Notes then
outstanding must consent to such amendment if such amendment would adversely
affect the rights of holders of Convertible Subordinated Notes.

SECTION 9.03  Compliance With the Trust Indenture Act.
              ---------------------------------------

     Every amendment to this Indenture or the Convertible Subordinated Notes
shall be set forth in a supplemental indenture that complies with the TIA as
then in effect.

SECTION 9.04  Revocation and Effect of Consents.
              ---------------------------------

     Until an amendment or waiver becomes effective, a consent to it by a holder
of a Convertible Subordinated Note is a continuing consent by the holder and
every subsequent holder of a Convertible Subordinated Note or portion of a
Convertible Subordinated Note that evidences the same debt as the consenting
holder's Convertible Subordinated Note, even if notation of the consent is not
made on any Convertible Subordinated Note. However, any such holder or
subsequent holder may revoke the consent as to his or her Convertible
Subordinated Note or portion of a Convertible Subordinated Note if the Trustee
receives the notice of revocation before the date on which the Trustee receives
an Officers' Certificate certifying that the holders of the requisite principal
amount of Convertible Subordinated Notes have consented to the amendment or
waiver.

     The Company may, but shall not be obligated to, fix a record date for the
purpose of determining the holders of Convertible Subordinated Notes entitled to
consent to any amendment or waiver. If a record date is fixed, then
notwithstanding the provisions of the immediately preceding paragraph, those
persons who were holders of Convertible Subordinated Notes at such record date
(or their duly designated proxies), and only those persons, shall be entitled to
consent to such amendment or waiver or to revoke any consent previously given,
whether or not such persons continue to be holders after such record date. No
consent shall be valid or effective for more than 90 days after such record date
unless consents from holders of the principal amount of Convertible Subordinated
Notes required hereunder for such amendment or waiver to be effective shall have
also been given and not revoked within such 90-day period.

     After an amendment or waiver becomes effective it shall bind every holder
of a Convertible Subordinated Note, unless it is of the type described in
clauses (a) - (i) of Section 9.02. In such case, the amendment or waiver shall
bind each holder of a Convertible Subordinated Note who has consented to it and
every subsequent holder of a Convertible Subordinated Note or portion of a
Convertible Subordinated Note that evidences the same debt as the consenting
holder's Convertible Subordinated Note.

                                       49

<PAGE>

SECTION 9.05  Notation on or Exchange of Convertible Subordinated Notes.
              ---------------------------------------------------------

     Convertible Subordinated Notes authenticated and delivered after the
execution of any supplemental indenture pursuant to this Article 9 may, and
shall if required by the Trustee, bear a notation in the form approved by the
Trustee as to any matter provided for in such supplemental indenture. If the
Company shall so determine, new Convertible Subordinated Notes so modified as to
conform, in the opinion of the Company and the Trustee, to any such supplemental
indenture may be prepared and executed by the Company and authenticated and
delivered by the Trustee in exchange for outstanding Convertible Subordinated
Notes without charge to the holders of the Convertible Subordinated Notes,
except as specified in Section 2.06.

SECTION 9.06  Trustee Protected.
              -----------------

     The Trustee shall sign any amendment or supplemental indenture authorized
pursuant to this Article 9 if such amendment or supplemental indenture does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
If such amendment or supplemental indenture does adversely affect the rights,
duties, liabilities or immunities of the Trustee, the Trustee may, but need not,
sign it. In signing such amendment or supplemental indenture, 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 or supplemental indenture is authorized or permitted by this
Indenture, that it is not inconsistent herewith, and that it will be valid and
binding upon the Company in accordance with its terms.

                                   ARTICLE 10

                               GENERAL PROVISIONS

SECTION 10.01 Trust Indenture Act Controls.
              ----------------------------

     If any provision of this Indenture limits, qualifies or conflicts with the
duties imposed by TIA Section 318(c), such duties imposed by such section of the
TIA shall control. If any provision of this Indenture expressly modifies or
excludes any provision of the TIA that may be so modified or excluded, the
Indenture provision so modifying or excluding such provision of the TIA shall be
deemed to apply.

SECTION 10.02 Notices.
              -------

     Any notice or communication by the Company or the Trustee to the other is
duly given if in writing and delivered in person or mailed by first-class mail,
with postage prepaid (registered or certified, return receipt requested), or
sent by facsimile or overnight air couriers guaranteeing next day delivery, to
the other's address as stated in Section 10.10. The Company or the Trustee by
notice to the other may designate additional or different addresses for
subsequent notices or communications.

     All notices and communications (other than those sent to holders of
Convertible Subordinated Notes) shall be deemed to have been duly given at the
time delivered by hand, if personally delivered; five business days after being
deposited in the mail, postage prepaid, if mailed; when transmission is
confirmed, if transmitted by facsimile; and the next business day

                                       50

<PAGE>

after timely delivery to the courier, if sent by overnight air courier
guaranteeing next day delivery. Notwithstanding the foregoing, all notices to
the Trustee shall be effective only upon receipt by a Trust Officer.

     Any notice or communication to a holder of a Convertible Subordinated Note
shall be mailed by first-class mail, with postage prepaid, to his or her address
shown on the Register kept by the Registrar. Failure to mail a notice or
communication to a holder or any defect in it shall not affect its sufficiency
with respect to other holders.

     If a notice or communication to a holder of a Convertible Subordinated Note
is sent in the manner provided above within the time prescribed, it is duly
given, whether or not the addressee receives it.

     If the Company sends a notice or communication to holders of Convertible
Subordinated Notes, it shall send a copy to the Trustee and each Agent at the
same time.

     All notices or communications shall be in writing.

SECTION 10.03 Communication by Holders With Other Holders.
              -------------------------------------------

     Holders may communicate pursuant to TIA Section 312(b) with other holders
with respect to their rights under this Indenture or the Convertible
Subordinated Notes. The Company, the Trustee, the Registrar and the paying agent
shall have the protection of TIA Section 312(c).

SECTION 10.04 Certificate and Opinion as to Conditions Precedent.
              --------------------------------------------------

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

               (1)  an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 10.05) stating that, in the opinion of such person, all conditions
precedent and covenants, if any, provided for in this Indenture relating to the
proposed action have been complied with; and

               (2)  an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 10.05) stating that, in the opinion of such counsel, all such conditions
precedent and covenants have been complied with.

SECTION 10.05 Statements Required in Certificate or Opinion.
              ---------------------------------------------

     Each certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture (other than a certificate provided
pursuant to TIA Section 314(a)(4)) shall include:

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

                                       51

<PAGE>

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

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

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

     Any Officers' Certificate may be based, insofar as it relates to legal
matters, upon an Opinion of Counsel, unless such Officer knows that the opinion
with respect to the matters upon which his or her certificate may be based as
aforesaid is erroneous. Any Opinion of Counsel may be based, insofar as it
relates to factual matters, upon certificates, statements or opinions of, or
representations by an officer or officers of the Company, or other persons or
firms deemed appropriate by such counsel, unless such counsel knows that the
certificates, statements or opinions or representations with respect to the
matters upon which his or her opinion may be based as aforesaid are erroneous.

     Any Officers' Certificate, statement or Opinion of Counsel may be based,
insofar as it relates to accounting matters, upon a certificate or opinion of or
representation by an accountant (who may be an employee of the Company), or firm
of accountants, unless such Officer or counsel, as the case may be, knows that
the certificate or opinion or representation with respect to the accounting
matters upon which his or her certificate, statement or opinion may be based as
aforesaid is erroneous.

SECTION 10.06 Rules by Trustee and Agents.
              ---------------------------

     The Trustee may make reasonable rules for action by, or a meeting of,
holders of Convertible Subordinated Notes. The Registrar or Paying Agent may
make reasonable rules and set reasonable requirements for its functions.

SECTION 10.07 Legal Holidays.
              --------------

     A "Legal Holiday" is a Saturday, a Sunday or a day on which banking
institutions in the City of New York or the city in which the Corporate Trust
Office of the Trustee is located are not required to be open, and a "business
day" is any day that is not a Legal Holiday. If a payment date is a Legal
Holiday at a place of payment, payment may be made at that place on the next
succeeding day that is not a Legal Holiday, and no interest shall accrue for the
intervening period. If any date specified in this Indenture, including, without
limitation, a Redemption Date under Paragraph 6 of the Convertible Subordinated
Notes or a purchase by the Company under paragraph 7 of the Convertible
Subordinated Notes, is a Legal Holiday, then such date shall be the next
succeeding business day.

                                       52

<PAGE>

SECTION 10.08 No Recourse Against Others.
              --------------------------

     No director, officer, employee, shareholder or Affiliate, as such, of the
Company from time to time shall have any liability for any obligations of the
Company under the Convertible Subordinated Notes or this Indenture or for any
claim based on, in respect of, or by reason of such obligations or their
creation. Each holder by accepting a Convertible Subordinated Note waives and
releases all such liability. This waiver and release are part of the
consideration for the Convertible Subordinated Notes. Each of such directors,
officers, employees, shareholders and Affiliates is a third party beneficiary of
this Section 10.08.

SECTION 10.09 Counterparts.
              ------------

     This Indenture may be executed in any number of counterparts and by the
parties hereto in separate counterparts, each of which when so executed shall be
deemed to be an original and all of which taken together shall constitute one
and the same agreement.

SECTION 10.10 Other Provisions.
              ----------------

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

     The reporting date for Section 7.06 is April 30 of each year. The first
reporting date is the April 30 following the issuance of Convertible
Subordinated Notes hereunder.

     The Trustee shall always have, or shall be a subsidiary of a bank or bank
holding company which has, a combined capital and surplus of at least
$50,000,000 as set forth in its most recent published annual report of
condition.

     The Company's address is:

          School Specialty, Inc.
          W6316 Design Drive
          Greenville, Wisconsin 54942
          Attention:  Chief Financial Officer
          Facsimile:  (920) 882-5863
          Telephone:  (920) 734-5712

     The Trustee's address is:

          BNY Midwest Trust Company
          2 North LaSalle Street
          Suite 1020
          Chicago, Illinois 60602
          Attention:  Roxane Ellwanger
          Facsimile:  (312) 827-8542
          Telephone:  (312) 827-8574

                                       53

<PAGE>

SECTION 10.11 Governing Law.
              -------------

     The internal laws of the State of New York shall govern this Indenture and
the Convertible Subordinated Notes, without regard to the conflict of laws
provisions thereof.

SECTION 10.12 No Adverse Interpretation of Other Agreements.
              ---------------------------------------------

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

SECTION 10.13 Successors.
              ----------

     All agreements of the Company in this Indenture and the Convertible
Subordinated Notes shall bind its successor. All agreements of the Trustee in
this Indenture shall bind its successor.

SECTION 10.14 Severability.
              ------------

     In case any provision in this Indenture or in the Convertible Subordinated
Notes 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 10.15 Table of Contents, Headings, etc.
              --------------------------------

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

                                   ARTICLE 11

                                  SUBORDINATION

SECTION 11.01 Agreement to Subordinate.
              ------------------------

     The Company agrees, and each holder of Convertible Subordinated Notes by
accepting a Convertible Subordinated Note agrees, that the indebtedness
evidenced by the Convertible Subordinated Note is subordinated in right of
payment, to the extent and in the manner provided in this Article 11, to the
prior payment in full in cash or payment satisfactory to holders of Senior Debt
of all Senior Debt (whether outstanding on the date hereof or hereafter created,
incurred, assumed or guaranteed), and that the subordination is for the benefit
of the holders of Senior Debt.

SECTION 11.02 Liquidation; Dissolution; Bankruptcy.
              ------------------------------------

     Upon any distribution to creditors of the Company in a liquidation or
dissolution of the Company or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Company or its property, in
an assignment for the benefit of creditors or any marshaling of the Company's
assets and liabilities:

                                       54

<PAGE>

               (1)  holders of Senior Debt shall be entitled to receive payment
in full of all Obligations due in respect of such Senior Debt (including
interest after the commencement of any such proceeding at the rate specified in
the applicable Senior Debt) in cash or other payment satisfactory to the holders
of the Senior Debt before holders of Convertible Subordinated Notes shall be
entitled to receive any payment with respect to the Convertible Subordinated
Notes; and

               (2)  until all Senior Debt is paid in full in cash or other
payment satisfactory to the holders of the Senior Debt, any distribution to
which holders of Convertible Subordinated Notes would be entitled but for this
Article 11 shall be made to holders of Senior Debt, as their interests may
appear.

SECTION 11.03 Default on Senior Debt and/or Designated Senior Debt.
              ----------------------------------------------------

     Anything in this Indenture to the contrary notwithstanding, no payment on
account of principal of or premium, if any, interest (including Contingent
Interest, if any) or Liquidated Damages, if any, on or other amounts due on the
Convertible Subordinated Notes (including without limitation the making of a
deposit pursuant to Section 3.06, 3.09 or 3.10), and no redemption, repurchase,
or other acquisition of the Convertible Subordinated Notes, shall be made by or
on behalf of the Company unless:

     (a)  full payment of all amounts then due for principal of and interest on,
and of all other amounts then due on, all Senior Debt has been made or duly
provided for pursuant to the terms of the instruments governing such Senior
Debt; and

     (b)  at the time for, and immediately after giving effect to, such payment,
redemption, repurchase or other acquisition, there shall not exist under any
Senior Debt, or any agreement pursuant to which any Senior Debt is issued, any
default which shall not have been cured or waived and which default shall have
resulted in the full amount of such Senior Debt being declared due and payable.

     In addition, if the Trustee shall receive written notice from the holders
of Designated Senior Debt or their Representative (a "Payment Blockage Notice")
that there has occurred and is continuing under such Designated Senior Debt, or
any agreement pursuant to which such Designated Senior Debt is issued, any
default, which default shall not have been cured or waived, giving the holders
of such Designated Senior Debt the right to declare such Designated Senior Debt
immediately due and payable, then, anything in this Indenture to the contrary
notwithstanding, no payment on account of the principal of or premium, if any,
interest (including Contingent Interest, if any) or Liquidated Damages, if any,
on or any other amounts due on the Convertible Subordinated Notes (including
without limitation the making of a deposit pursuant to Section 3.06, 3.09 or
3.10), and no redemption, repurchase or other acquisition of the Convertible
Subordinated Notes, shall be made by or on behalf of the Company during the
period (the "Payment Blockage Period") commencing on the date of receipt of the
Payment Blockage Notice and ending (unless earlier terminated by notice given to
the Trustee by the holders or the Representative of the holders of such
Designated Senior Debt) on the earlier of (i) the date on which such default
shall have been cured or waived and (ii) 180 days from the receipt of the
Payment Blockage Notice. Notwithstanding the provisions described in the
immediately

                                       55

<PAGE>

preceding sentence (but subject to the provisions contained in Section 11.01 and
the first sentence of this Section 11.03), 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
Convertible Subordinated Notes after the end of such Payment Blockage Period.
Not more than one Payment Blockage Notice may be given in any consecutive
365-day period, irrespective of the number of defaults with respect to Senior
Debt during such period.

SECTION 11.04 Acceleration of Convertible Subordinated Notes.
              ----------------------------------------------

     In the event of the acceleration of the Convertible Subordinated Notes
because of an Event of Default, the Company may not make any payment or
distribution to the Trustee or any holder of Convertible Subordinated Notes in
respect of Obligations with respect to Convertible Subordinated Notes and may
not acquire or purchase from the Trustee or any holder of Convertible
Subordinated Notes any Convertible Subordinated Notes until all Senior Debt has
been paid in full in cash or other payment satisfactory to the holders of Senior
Debt or such acceleration is rescinded in accordance with the terms of this
Indenture.

     If payment of the Convertible Subordinated Notes is accelerated because of
an Event of Default, the Company or the Trustee shall promptly notify holders of
Senior Debt or trustee(s) of such Senior Debt of the acceleration.

SECTION 11.05 When Distribution Must Be Paid Over.
              -----------------------------------

     In the event that the Trustee, any holder of Convertible Subordinated Notes
or any other person receives any payment or distributions of assets of the
Company of any kind with respect to the Convertible Subordinated Notes in
contravention of any terms contained in this Indenture, whether in cash,
property or securities, including, without limitation by way of set-off or
otherwise, then such payment shall be held by the recipient in trust for the
benefit of holders of Senior Debt, and shall be immediately paid over and
delivered to the holders of Senior Debt or the representative(s), to the extent
necessary to make payment in full of all Senior Debt remaining unpaid, after
giving effect to any concurrent payment or distribution or provision therefor,
to or for the holders of Senior Debt; provided that the foregoing shall apply to
the Trustee only if a Trust Officer of the Trustee has actual knowledge (as
determined in accordance with Section 11.11) that such payment or distribution
is prohibited by this Indenture.

     With respect to the holders of Senior Debt, the Trustee undertakes to
perform only such obligations on the part of the Trustee as are specifically set
forth in this Article 11, 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 shall not be liable to any such holders if the
Trustee shall pay over or distribute to or on behalf of holders of Convertible
Subordinated Notes or the Company or any other person money or assets to which
any holders of Senior Debt shall be entitled by virtue of this Article 11,
except if such payment is made as a result of the willful misconduct or gross
negligence of the Trustee.

                                       56

<PAGE>

SECTION 11.06 Notice by Company.
              -----------------

     The Company shall promptly notify the Trustee of any facts known to the
Company that would cause a payment of any Obligations with respect to the
Convertible Subordinated Notes or the purchase of any Convertible Subordinated
Notes by the Company to violate this Article, but failure to give such notice
shall not affect the subordination of the Convertible Subordinated Notes to the
Senior Debt as provided in this Article.

SECTION 11.07 Subrogation.
              -----------

     After all Senior Debt is paid in full and until the Convertible
Subordinated Notes are paid in full, holders of Convertible Subordinated Notes
shall be subrogated (equally and ratably with all other indebtedness pari passu
with the Convertible Subordinated Notes) to the rights of holders of Senior Debt
to receive distributions applicable to Senior Debt to the extent that
distributions otherwise payable to the holders of Convertible Subordinated Notes
have been applied to the payment of Senior Debt. A distribution made under this
Article to holders of Senior Debt that otherwise would have been made to holders
of Convertible Subordinated Notes is not, as between the Company and holders of
Convertible Subordinated Notes, a payment by the Company on the Convertible
Subordinated Notes.

SECTION 11.08 Relative Rights.
              ---------------

     This Article 11 defines the relative rights of holders of Convertible
Subordinated Notes and holders of Senior Debt. Nothing in this Indenture shall:

               (1)  impair, as between the Company and holders of Convertible
Subordinated Notes, the obligation of the Company, which is absolute and
unconditional, to pay principal of, premium, if any, interest (including
Contingent Interest, if any) and Liquidated Damages, if any, on the Convertible
Subordinated Notes in accordance with their terms;

               (2)  affect the relative rights of holders of Convertible
Subordinated Notes and creditors (other than with respect to Senior Debt) of the
Company, other than their rights in relation to holders of Senior Debt; or

               (3)  prevent the Trustee or any holder of Convertible
Subordinated Notes from exercising its available remedies upon a Default or
Event of Default, subject to the rights of holders and owners of Senior Debt to
receive distributions and payments otherwise payable to holders of Convertible
Subordinated Notes.

     If the Company fails because of this Article 11 to pay principal of or
interest (including Contingent Interest, if any) and Liquidated Damages, if any,
on a Convertible Subordinated Note on the due date, the failure is still a
Default or Event of Default.

SECTION 11.09 Subordination May Not Be Impaired by Company.
              --------------------------------------------

     No right of any holder of Senior Debt to enforce the subordination of the
indebtedness evidenced by the Convertible Subordinated Notes shall be impaired
by any act or failure to act

                                       57

<PAGE>

by the Company or any holder of Convertible Subordinated Notes or by the failure
of the Company or any such holder to comply with this Indenture.

SECTION 11.10 Distribution or Notice to Representative.
              ----------------------------------------

     Whenever a distribution is to be made or a notice given to holders of
Senior Debt, the distribution may be made and the notice given to their
Representative(s).

     Upon any payment or distribution of assets of the Company referred to in
this Article 11, the Trustee and the holders of Convertible Subordinated Notes
shall be entitled to rely upon any order or decree made by any court of
competent jurisdiction or upon any certificate of such Representative or of the
liquidating trustee or agent or other person making any distribution to the
Trustee or to the holders of Convertible Subordinated Notes for the purpose of
ascertaining the persons entitled to participate in such distribution, the
holders of the Senior Debt and other indebtedness of the Company, the amount
thereof or payable thereon, the amount or amounts paid or distributed thereon
and all other facts pertinent thereto or to this Article 11.

SECTION 11.11 Rights of Trustee and Paying Agent.
              ----------------------------------

     Notwithstanding the provisions of this Article 11 or any other provision of
this Indenture, the Trustee shall not be charged with knowledge of the existence
of any facts that would prohibit the making of any payment or distribution by
the Trustee (other than pursuant to Section 11.04), and the Trustee may continue
to make payments on the Convertible Subordinated Notes, unless a Trust Officer
shall have received at least two business days prior to the date of such payment
or distribution written notice of facts that would cause such payment or
distribution with respect to the Convertible Subordinated Notes to violate this
Article. Only the Company or a Representative may give the notice.

     Nothing in this Article 11 shall impair the claims of, or payments to, the
Trustee under or pursuant to Section 7.07 hereof.

     The Trustee in its individual or any other capacity may hold Senior Debt
with the same rights it would have if it were not Trustee. Any Agent may do the
same with like rights.

SECTION 11.12 Authorization to Effect Subordination.
              -------------------------------------

     Each holder of a Convertible Subordinated Note by the holder's acceptance
thereof authorizes and directs the Trustee on the holder's behalf to take such
action as may be necessary or appropriate to effectuate the subordination as
provided in this Article 11, and appoints the Trustee to act as the holder's
attorney-in-fact for any and all such purposes. If the Trustee does not file a
proper proof of claim or proof of debt in the form required in any proceeding
referred to in Section 6.09 hereof at least 30 days before the expiration of the
time to file such claim, the holders of any Senior Debt or their Representatives
are hereby authorized to file an appropriate claim for and on behalf of the
holders of the Convertible Subordinated Notes.

                                       58

<PAGE>

SECTION 11.13 Article Applicable to Paying Agents.
              -----------------------------------

     In case at any time any Paying Agent other than the Trustee shall have been
appointed by the Company and be then acting hereunder, the term "Trustee" as
used in this Article shall in such case (unless the context otherwise requires)
be construed as extending to and including such Paying Agent within its meaning
as fully for all intents and purposes as if such Paying Agent were named in this
Article in addition to or in place of the Trustee; provided, however, that the
second and third paragraphs of Section 11.11 shall not apply to the Company or
any subsidiary of the Company if it or such subsidiary acts as Paying Agent.

SECTION 11.14 Senior Debt Entitled to Rely.
              ----------------------------

     The holders of Senior Debt shall have the right to rely upon this Article
11, and no amendment or modification of the provisions contained herein shall
diminish the rights of such holders unless such holders shall have agreed in
writing thereto.

SECTION 11.15 Permitted Payments.
              ------------------

     Notwithstanding anything to the contrary in this Article 11, the holders of
Convertible Subordinated Notes may receive and retain at any time on or prior to
the Maturity Date (i) securities that are subordinated to at least the same
extent as the Convertible Subordinated Notes to (a) Senior Debt and (b) any
securities issued in exchange for Senior Debt and (ii) payments and other
distributions made from any trust created pursuant to Section 8.01 hereof.

                                   ARTICLE 12

                  CONVERSION OF CONVERTIBLE SUBORDINATED NOTES

SECTION 12.01 Right to Convert.
              ----------------

          A holder of a Convertible Subordinated Note may convert such
Convertible Subordinated Note into shares of Common Stock at any time during the
periods and subject to the conditions stated in paragraph 9 of the Convertible
Subordinated Notes, subject to the provisions of this Article 12. The number of
shares of Common Stock issuable upon conversion of a Convertible Subordinated
Note per $1,000 of Original Principal Amount thereof (the "Conversion Rate")
shall be determined in accordance with the provisions of paragraph 9 of the
Convertible Subordinated Notes. The initial Conversion Rate shall equal 25
shares of Common Stock per $1,000 of Original Principal Amount of Convertible
Subordinated Notes, subject to adjustment as described in this Article 12.

          A holder may convert a portion of the Original Principal Amount of a
Convertible Subordinated Note if the portion is $1,000 or an integral multiple
of $1,000. Provisions of this Indenture that apply to conversion of all of a
Convertible Subordinated Note also apply to conversion of a portion of a
Convertible Subordinated Note.

     The Trustee (or other conversion agent appointed by the Company) shall, on
behalf of the Company, determine on a daily basis whether the Convertible
Subordinated Notes shall be

                                       59

<PAGE>

convertible as a result of the occurrence of an event specified above and, if
the Convertible Subordinated Notes shall be convertible, the Trustee (or other
conversion agent appointed by the Company) shall promptly deliver to the Company
and the Trustee (if the Trustee is not the conversion agent) written notice
thereof. Whenever the Convertible Subordinated Notes shall become convertible
pursuant to the foregoing condition, the Company or, at the Company's request,
the Trustee in the name and at the expense of the Company, shall notify the
holders of the event triggering such convertibility in the manner provided
herein, and, in connection with providing such notice, the Company will issue a
press release containing information regarding the event triggering such
convertibility or publish such information on the Company's then existing
website or through such other public medium as the Company shall determine. Any
notice so given shall be conclusively presumed to have been duly given, whether
or not the holder receives such notice.

SECTION 12.02 Exercise of Conversion Privilege; Issuance of Common Stock on
              -------------------------------------------------------------
              Conversion; No Adjustment for Interest or Dividends.
              ---------------------------------------------------

          To convert a Convertible Subordinated Note into Common Stock (the
shares of Common Stock issuable upon such conversion, the "Conversion Shares"),
a holder must satisfy the requirements in paragraph 9 of the Convertible
Subordinated Notes. The date on which the holder satisfies all those
requirements is the conversion date (the "Conversion Date"). Following the
Conversion Date, the Company shall deliver to the holder through the Conversion
Agent, in accordance with Section 12.20, a certificate for the number of full
shares of Common Stock issuable upon the conversion (or, at the option of the
Company, cash in lieu thereof) and cash in lieu of any fractional share
determined pursuant to Section 12.03. The Company shall determine such full
number of shares and the amounts of the required cash with respect to any
fractional share, and shall set forth such information in an Officers'
Certificate delivered to the Conversion Agent. The Conversion Agent shall have
no duties under this paragraph unless and until it has received such
certificate.

          The Person in whose name the certificate is registered shall be
treated as a stockholder of record on and after the Conversion Date; provided,
however, that no surrender of a Convertible Subordinated Note on any date when
the stock transfer books of the Company shall be closed shall be effective to
constitute the Person or Persons entitled to receive the shares of Common Stock
upon such conversion as the record holder or holders of such shares of Common
Stock on such date, but such surrender shall be effective to constitute the
Person or Persons entitled to receive such shares of Common Stock as the record
holder or holders thereof for all purposes at the close of business on the next
succeeding day on which such stock transfer books are open; such conversion
shall be at the Conversion Rate in effect on the date that such Security shall
have been surrendered for conversion, as if the stock transfer books of the
Company had not been closed. Upon conversion of a Convertible Subordinated Note,
such Person shall no longer be a holder of such Convertible Subordinated Note.

          Holders may surrender a Convertible Subordinated Note for conversion
by means of book-entry delivery in accordance with paragraph 9 of the
Convertible Subordinated Notes and the regulations of the applicable book-entry
facility.

                                       60

<PAGE>

          No payment or adjustment will be made for dividends on, or other
distributions with respect to, any Common Stock except as provided in this
Article 12. On conversion of a Convertible Subordinated Note, the increases in
Accreted Principal Amount and accrued cash interest (including Contingent
Interest, if any) attributable to the period from the Issue Date of the
Convertible Subordinated Note through the Conversion Date, with respect to the
converted Convertible Subordinated Note shall not be cancelled, extinguished or
forfeited, but rather shall be deemed to be paid in full to the holder thereof
through delivery of the Common Stock (together with the cash payment, if any, in
lieu of fractional shares) in exchange for the Convertible Subordinated Note
being converted pursuant to the provisions hereof; and the fair market value of
such shares of Common Stock (together with any such cash payment in lieu of
fractional shares) shall be treated as issued, to the extent thereof, first in
exchange for the increases in Accreted Principal Amount and accrued cash
interest (including Contingent Interest, if any) through the Conversion Date,
and the balance, if any, of such fair market value of such Common Stock (and any
such cash payment) shall be treated as issued in exchange for the Issue Price of
the Convertible Subordinated Note being converted pursuant to the provisions
hereof. Notwithstanding the foregoing, accrued cash interest will be payable
upon conversion of Convertible Subordinated Notes made concurrently with or
after acceleration of Convertible Subordinated Notes following an Event of
Default.

          If the holder converts more than one Convertible Subordinated Note at
the same time, the number of shares of Common Stock issuable upon conversion
shall be based on the aggregate Original Principal Amount of the Convertible
Subordinated Notes converted.

          A Convertible Subordinated Note surrendered for conversion based on
(a) the Common Stock price may be surrendered for conversion until the close of
business on July 31, 2023, (b) the Convertible Subordinated Note being called
for redemption may be surrendered for conversion at any time prior to the close
of business on the business day immediately preceding the Redemption Date, even
if it is not otherwise convertible at such time, and (c) the occurrence of
certain corporate transactions more fully described in paragraph 9 of the
Convertible Subordinated Notes under clause (a) of "Conversion Upon Occurrence
of Certain Corporate Transactions" may be surrendered for conversion at any time
from and after the date which is 15 days prior to the anticipated effective date
of such transaction until 15 days after the actual date of such transaction, and
if such day is not a business day, the next occurring business day following
such day.

          Upon surrender of a Convertible Subordinated Note that is converted in
part, the Company shall execute, and the Trustee shall authenticate and deliver
to the holder, a new Convertible Subordinated Note in an authorized denomination
equal in Original Principal Amount to the unconverted portion of the Convertible
Subordinated Note surrendered.

          Convertible Subordinated Note or portion thereof surrendered for
conversion during the period from the close of business on the Regular Record
Date next preceding any Interest Payment Date to the opening of business on such
Interest Payment Date (except for Convertible Subordinated Notes to be redeemed
within the period) shall be accompanied by payment, in funds acceptable to the
Company, of an amount equal to the interest (including Contingent Interest, if
any and interest payable upon the occurrence of a Tax Event, if any) otherwise
payable on such Interest Payment Date on the Accreted Principal Amount being

                                       61

<PAGE>

converted; provided however, that no such payment need be made if there exists
at the time of conversion a default in the payment of interest (including
Contingent Interest, if any and interest payable upon the occurrence of a Tax
Event, if any) on the Convertible Subordinated Notes. An amount equal to such
payment shall be paid by the Company on such Interest Payment Date to the holder
of such Convertible Subordinated Note at the close of business on such Regular
Record Date; provided, however, that if the Company defaults in the payment of
interest (including Contingent Interest, if any), on such Interest Payment Date,
such amount shall be paid to the person who made such required payment.

SECTION 12.03  Cash Payments in Lieu of Fractional Shares.
               ------------------------------------------

     The Company will not issue a fractional share of Common Stock upon
conversion of a Convertible Subordinated Note. Instead, the Company will deliver
cash for the current market value of the fractional share. The current market
value of a fractional share shall be determined, to the nearest 1/1,000/th/ of a
share, by multiplying the per share Closing Sale Price of the Common Stock, on
the last trading day prior to the Conversion Date, by the fractional amount and
rounding the product to the nearest whole cent.

SECTION 12.04  Taxes on Shares Issued.
               ----------------------

     If a holder converts a Convertible Subordinated Note, the Company shall pay
any documentary, stamp or similar issue or transfer tax due on the issue of
shares of Common Stock upon the conversion. However, the holder shall pay any
such tax which is due because the holder requests the shares to be issued in a
name other than the holder's name and any income tax which is imposed on the
holder as a result of the conversion. The Conversion Agent may refuse to deliver
the certificates representing the Common Stock being issued in a name other than
the holder's name until the Conversion Agent receives a sum sufficient to pay
any tax which will be due because the shares are to be issued in a name other
than the holder's name. Nothing herein shall preclude the Company from any tax
withholding or directing the withholding of any tax required by law or
regulations.

SECTION 12.05  Reservation of Shares; Shares to Be Fully Paid; Listing of
               ----------------------------------------------------------
               Common Stock.
               ------------

     The Company shall provide, free from preemptive rights, out of its
authorized but unissued shares or shares held in treasury, sufficient shares to
provide for the conversion of the Convertible Subordinated Notes from time to
time as such Convertible Subordinated Notes are presented for conversion.

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

     The Company covenants that all shares of Common Stock issued upon
conversion of Convertible Subordinated Notes shall be newly issued shares or
treasury shares, shall be duly and validly issued and fully paid and
nonassessable (except as provided in Wis. Stat.

                                       62

<PAGE>

Section 180.0622(2)(b) and successor provisions or court interpretations
thereof) and shall be free from preemptive rights and free of any tax, lien or
adverse claim created by the Company.

     The Company further covenants that as long as the Common Stock is quoted on
the Nasdaq National Market, or its successor, the Company shall cause all Common
Stock issuable upon conversion of the Convertible Subordinated Notes to be
eligible for such quotation in accordance with, and at the times required under,
the requirements of such market, and if at any time the Common Stock becomes
listed any other national securities exchange, the Company shall cause all
Common Stock issuable upon conversion of the Convertible Subordinated Notes to
be so listed and kept listed.

SECTION 12.06  Adjustment for Change in Capital Stock.
               --------------------------------------

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

     (a)  In case the Company shall (1) pay a dividend in shares of Common Stock
to all holders of Common Stock, (2) make a distribution in shares of Common
Stock to all or substantially all holders of Common Stock, (3) subdivide the
outstanding shares of Common Stock into a greater number of shares of Common
Stock or (4) combine the outstanding shares of Common Stock into a smaller
number of shares of Common Stock or (5) reclassify its outstanding Common Stock,
the Conversion Rate in effect immediately prior to such action shall be adjusted
so that the holder of any Convertible Subordinated Note thereafter surrendered
for conversion shall be entitled to receive the number of shares of Common Stock
which he would have owned immediately following such action had such Convertible
Subordinated Notes been converted immediately prior thereto. Any adjustment made
pursuant to this Section 12.06(a) shall become effective immediately after the
record date in the case of a dividend or distribution and shall become effective
immediately after the effective date in the case of a subdivision, combination,
or reclassification.

     (b)  In case the Company shall issue rights, options or warrants to all or
substantially all holders of Common Stock, as the case may be, entitling them
(for a period commencing no earlier than the record date for the determination
of holders of Common Stock entitled to receive such rights, options or warrants
and expiring not more than 60 days after such record date) to subscribe for or
purchase shares of Common Stock (or securities convertible into Common Stock),
at a price per share less than the then current market price (as determined
pursuant to Section 12.06(f) below) of Common Stock at the time of the
announcement of the distribution, the Conversion Rate shall be increased by
multiplying the Conversion Rate in effect immediately prior to such record date
by a fraction of which the numerator shall be the number of shares of Common
Stock outstanding on such record date, plus the number of shares of Common Stock
so offered for subscription or purchase, and the denominator of which shall be
the number of shares of Common Stock outstanding at the close of business on
such record date plus the number of shares of Common Stock which the aggregate
of the offering price of the total number of shares of Common Stock so offered
for subscription or purchase would purchase at such current market price. Such
adjustments shall become effective immediately after such record date. To the
extent that shares of Common Stock are not delivered pursuant to such rights,
options or warrants, upon the expiration or termination of such rights, options
or warrants the Conversion Rate shall be readjusted to be the Conversion Rate
which would then be in effect had the adjustments made

                                       63

<PAGE>

upon the issuance of such rights, options or warrants been made on the basis of
delivery of only the number of shares of Common Stock actually delivered. If
such rights, options 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 shareholders entitled to receive such
rights, options or warrants had not been fixed. In determining whether any
rights, options 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, options
or warrants, with the value of such consideration, if other than cash, to be
determined by the Board of Directors.

     (c)  In case the Company shall distribute to all holders of Common Stock
shares of capital stock of the Company, evidences of indebtedness or other
assets (including cash and securities), or shall distribute to all holders of
Common Stock rights, options or warrants to subscribe for securities (in each
case other than those referred to in Section 12.06(a) and (b) above and Section
12.06(d) and Section 12.14 below), then in each such case the Conversion Rate
shall be increased by multiplying the Conversion Rate in effect immediately
prior to the close of business on the record date for the determination of
shareholders entitled to such distribution by a fraction of which the numerator
shall be the current market price of Common Stock (determined as provided in
Section 12.06(f) below) on such date and the denominator shall be such current
market price less the fair market value (as determined by the Board of Directors
whose determination shall be conclusive and described in a Board Resolution) on
such date of the portion of the evidences of indebtedness, shares of capital
stock, cash and other assets to be distributed or of such subscription rights,
options or warrants applicable to one share of Common Stock, such increase to
become effective immediately prior to the opening of business on the day
following such record date. Notwithstanding the foregoing, in the event that the
Company shall distribute rights, options or warrants (other than those referred
to in Section 12.06(b) above) ("Rights") pro rata to holders of Common Stock,
the Company may, in lieu of making any adjustment pursuant to this Section
12.06(c), make proper provision so that each holder of a Convertible
Subordinated Note who converts such Convertible Subordinated Note (or any
portion thereof) after the record date for such distribution and prior to the
expiration or redemption of the Rights shall be entitled to receive upon such
conversion, in addition to the Conversion Shares, a number of Rights to be
determined as follows: (i) if such conversion occurs on or prior to the date for
the distribution to the holders of Rights of separate certificates evidencing
such Rights (the "Distribution Date"), the same number of Rights to which a
holder of a number of shares of Common Stock equal to the number of shares of
Conversion Shares is entitled at the time of such conversion in accordance with
the terms and provisions of and applicable to the Rights; and (ii) if such
conversion occurs after the Distribution Date, the same number of Rights to
which a holder of the number of shares of Common Stock into which the principal
amount of the Convertible Subordinated Note so converted was convertible
immediately prior to the Distribution Date would have been entitled on the
Distribution Date in accordance with the terms and provisions of and applicable
to the Rights.

     (d)  In case the Company shall make a distribution consisting exclusively
of cash to all or substantially all holders of Common Stock, then the Conversion
Rate shall be increased by multiplying the Conversion Rate in effect immediately
prior to the close of business on the record date for the determination of
shareholders entitled to such distribution by a fraction of

                                       64

<PAGE>

which the numerator shall be the current market price of Common Stock
(determined as provided in Section 12.06(f) below) on such date and the
denominator shall be such current market price less the amount of cash to be
distributed per share of Common Stock, such increase to become effective
immediately prior to the opening of business on the day following such record
date.

     (e)  If, after the Issue Date of the Convertible Subordinated Notes, the
Company or any Subsidiary of the Company pays holders of the Company's Common
Stock in respect of a tender or exchange offer for the Company's Common Stock
consideration per share of Common Stock having a fair market value, as
determined in good faith by the Board of Directors of the Company, whose
determination shall be conclusive, in excess of the Current Market Price of the
Common Stock as of the first business day (the "Measurement Date") next
succeeding the last business day tenders or exchanges may be made pursuant to
the offer (the "Expiration Time"), 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 effectiveness of the Conversion Rate
adjustment contemplated by this Section 12.06(e) by a fraction, the numerator of
which shall be the sum of (x) the fair market value of the aggregate
consideration payable to stockholders based on the acceptance of all shares
validly tendered or exchanged and not withdrawn as of the Expiration Time up to
the maximum specified in the tender or exchange offer (the "Purchased Shares")
and (y) the product of the number of shares of Common Stock outstanding (less
any Purchased Shares) at the Expiration Time and the Closing Sale Price of a
share of Common Stock on the Measurement Date, and the denominator of which
shall be the number of shares of Common Stock outstanding (including any
tendered or exchanged shares) at the Expiration Time (including the Purchased
Shares) multiplied by the Closing Sale Price of one share of Common Stock on the
Measurement Date. Such reduction shall become effective immediately prior to the
opening of business on the day following the Measurement Date.

     To the extent such purchase pursuant to such tender or exchange offer
described in Section 12.06(e) does not occur, the Conversion Rate shall be
readjusted to eliminate any adjustment made to the Conversion Rate on account of
such purchase pursuant to such tender or exchange offer. If the application of
this Section 12.06(e) to any repurchase (including by way of tender offer or
exchange offer) would result in a decrease in the Conversion Rate, no adjustment
shall be made for such repurchase under this Section 12.06(e).

     (f)  For the purpose of any computation under subsections (a), (b), (c),
(d) and (e) above of this Section 12.06, the "current market price" per share of
Common Stock on the date fixed for determination of the stockholders entitled to
receive the issuance or distribution requiring such computation (the
"Determination Date") shall be deemed to be the average of the Closing Sale
Price for the ten consecutive trading days immediately preceding the
Determination Date; provided, however, that (i) if the "ex" date for any event
(other than the issuance or distribution requiring such computation) that
requires an adjustment to the Conversion Rate pursuant to subsection (a), (b),
(c), (d) or (e) above occurs on or after the tenth trading day prior to the
Determination Date and prior to the "ex" date for the issuance or distribution
requiring such computation, the Closing Sale Price for each trading day prior to
the "ex" date for such other event shall be adjusted by multiplying such Closing
Sale Price by the reciprocal of the fraction by which the Conversion Rate is so
required to be adjusted as a result of such other event, (ii) if the "ex" date
for any event (other than the issuance or distribution requiring such
computation) that requires an adjustment to the Conversion Rate pursuant to
subsection (a), (b),

                                       65

<PAGE>

(c), (d) or (e) above occurs on or after the "ex" date for the issuance or
distribution requiring such computation and on or prior to the Determination
Date, the Closing Sale Price for each business day on and after the "ex" date
for such other event shall be adjusted by multiplying such Closing Sale Price by
the same fraction by which the Conversion Rate is so required to be adjusted as
a result of such other event, and (iii) if the "ex" date for the issuance or
distribution requiring such computation is on or prior to the Determination
Date, after taking into account any adjustment required pursuant to clause (i)
or (ii) of this proviso, the Closing Sale Price for each trading day on and
after the "ex" date shall be adjusted by adding thereto the amount of any cash
and the fair market value (as determined by the Board of Directors in a manner
consistent with any determination of such value for the purposes of this Section
12.06, whose determination shall be conclusive and described in a Resolution of
the Board of Directors) of the evidences of indebtedness, shares of capital
stock or other securities or assets being distributed (in the distribution
requiring such computation) applicable to one share of Common Stock as of the
close of business on the day before such "ex" date. For the purpose of any
computation under subsection (e) of this Section 12.06, the current market price
per share of Common Stock at the expiration time for the repurchase requiring
such computation shall be deemed to be the average of the Closing Sale Price for
the ten consecutive trading days commencing on the business day immediately
following the expiration time of such repurchase (the "Commencement Date");
provided, however, that if the "ex" date for any event (other than the
repurchase requiring such computation) that requires an adjustment to the
Conversion Rate pursuant to subsection (a), (b), (c), (d) or (e) above occurs on
or after the expiration time for the repurchase requiring such computation and
prior to the day in question, the Closing Sale Price for each trading day on or
after the "ex" date for such other event shall be adjusted by multiplying such
Closing Sale Price by the same fraction by which the Conversion Rate is so
required to be adjusted as a result of such other event. For purposes of this
subsection, the term "ex" date, (i) when used with respect to any issuance or
distribution, means the first date on which the Common Stock trades regular way
on the relevant exchange or in the relevant market from which the Closing Sale
Price was obtained without the right to receive such issuance or distribution,
(ii) when used with respect to any subdivision or combination of shares of
Common Stock, means the first date on which the Common Stock trades regular way
on such exchange or in such market after the time at which such subdivision or
combination becomes effective, and (iii) when used with respect to any
repurchase 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 repurchase (as
it may be amended or extended).

     (g)  In case the Company shall have a rights plan in effect, upon
conversion of the Convertible Subordinated Notes into Common Stock, holders will
receive, in addition to the Common Stock, the rights under the rights plan,
unless the rights have separated from the Common Stock at the time of
conversion, in which case the Conversion Rate will be adjusted as if the Company
distributed to all holders of Common Stock shares of the Company's Capital
Stock, evidence of the Company's indebtedness or other assets, subject to
readjustment in the event of the expiration, termination or redemption of such
rights.

                                       66

<PAGE>

SECTION 12.07  [Reserved].
               ----------

SECTION 12.08  [Reserved].
               ----------

SECTION 12.09  When Adjustment May Be Deferred.
               -------------------------------

     No adjustment in the Conversion Rate need be made unless the adjustment
would require an increase or decrease of at least 1% in the Conversion Rate. Any
adjustments that are not made shall be carried forward and taken into account in
any subsequent adjustment and all adjustments that are made and carried forward
shall be taken in the aggregate in order to determine if the 1% threshold is
met.

     All calculations under this Article 12 shall be made to the nearest cent or
to the nearest 1/1,000th of a share, as the case may be.

SECTION 12.10  When No Adjustment is Required.
               ------------------------------

     No adjustment need be made for a transaction referred to in Section 12.06
or 12.14 if Convertible Subordinated Note holders are to participate in the
transaction on a basis and with notice that the Board of Directors determines to
be fair and appropriate in light of the basis and notice on which holders of
Common Stock participate in the transaction. Such participation by holders may
include participation upon conversion provided that an adjustment shall be made
at such time as the holders are no longer entitled to participate.

     No adjustment need be made for rights to purchase Common Stock pursuant to
a Company plan for reinvestment of dividends or interest.

     No adjustment need be made for a change in the par value of the Common
Stock.

     To the extent the Convertible Subordinated Notes become convertible
pursuant to this Article 12 into cash, no adjustment need be made thereafter as
to the cash. Interest will not accrue on the cash.

     No adjustment will be made pursuant to this Article 12 that would result,
through the application of two or more provisions hereof, in the duplication of
any adjustment.

SECTION 12.11  Notice of Adjustment.
               --------------------

     Whenever the Conversion Rate is adjusted, the Company shall promptly mail
to Convertible Subordinated Note holders a notice of the adjustment. The Company
shall file with the Trustee and the Conversion Agent such notice and a
certificate from the Company's independent public accountants briefly stating
the facts requiring the adjustment and the manner of computing it. Upon receipt
by it of such notice, and at the written request of the Company, the Conversion
Agent will promptly mail such notice to Convertible Subordinated Note holders at
the Company's expense. The certificate shall be conclusive evidence that the
adjustment is correct. Neither the Trustee nor any Conversion Agent shall be
under any duty or responsibility with respect to any such certificate except to
exhibit the same to any holder desiring inspection thereof.

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<PAGE>

SECTION 12.12  Voluntary Increase.
               ------------------

     The Company from time to time may increase the Conversion Rate by any
amount for any period of time. Whenever the Conversion Rate is increased, the
Company shall mail to Convertible Subordinated Note holders and deliver to the
Trustee and the Conversion Agent a notice of the increase. The Company shall
mail the notice at least 20 days before the date the increased Conversion Rate
takes effect. The notice shall state the increased Conversion Rate and the
period it will be in effect.

     A voluntary increase of the Conversion Rate does not change or adjust the
Conversion Rate otherwise in effect for purposes of Section 12.06 or 12.14.

SECTION 12.13  Notice of Certain Transactions.
               ------------------------------

     If:

     (a)  the Company takes any action that would require an adjustment in the
Conversion Rate pursuant to Section 12.06 (unless no adjustment is to occur
pursuant to Section 12.10); or

     (b)  the Company takes any action that would require a supplemental
indenture pursuant to Section 12.14; or

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

then the Company shall mail to Convertible Subordinated Note holders and deliver
to the Trustee and the Conversion Agent a notice stating the proposed record
date for a dividend or distribution or the proposed effective date of a
subdivision, combination, reclassification, consolidation, merger, binding share
exchange, transfer, liquidation or dissolution. The Company shall so deliver and
mail the notice at least 20 days before such date. Failure to deliver or mail
the notice or any defect in it shall not affect the validity of the transaction.

SECTION 12.14  Reorganization of Company; Special Distributions.
               ------------------------------------------------

     If the Company is a party to a transaction subject to Article 5 (other than
a sale of all or substantially all of the assets of the Company in a transaction
in which the holders of Common Stock immediately prior to such transaction do
not receive securities, cash, property or other assets of the Company or any
other Person) or a merger or binding share exchange which reclassifies or
changes its outstanding Common Stock, the Person obligated to deliver
securities, cash or other assets upon conversion of Securities shall enter into
a supplemental indenture. If the issuer of securities deliverable upon
conversion of Convertible Subordinated Notes is an Affiliate of the successor
Company, that issuer shall join in the supplemental indenture.

     The supplemental indenture shall provide that the holder of a Convertible
Subordinated Note may convert it into the kind and amount of securities, cash or
other assets which such holder would have received immediately after the
consolidation, merger, binding share exchange or transfer if such holder had
converted the Convertible Subordinated Note immediately before the effective
date of the transaction, assuming (to the extent applicable) that such holder
(i) was not a constituent Person or an Affiliate of a constituent Person to such
transaction; (ii) made no

                                       68

<PAGE>

election with respect thereto; and (iii) was treated alike with the plurality of
non-electing holders. The supplemental indenture shall provide for adjustments
which shall be as nearly equivalent as may be practical to the adjustments
provided for in this Article 12. The successor Company shall mail to Convertible
Subordinated Note holders a notice briefly describing the supplemental
indenture.

     If this Section applies, Section 12.06 does not apply.

     If the Company makes a distribution to all holders of its Common Stock of
any of its assets, or debt securities or any rights, warrants or options to
purchase securities of the Company that would otherwise result in an adjustment
in the Conversion Rate pursuant to the provisions of Section 12.06, then, from
and after the record date for determining the holders of Common Stock entitled
to receive the distribution, a holder of a Convertible Subordinated Note that
converts such Convertible Subordinated Note in accordance with the provisions of
this Indenture shall upon such conversion be entitled to receive, in addition to
the shares of Common Stock into which the Convertible Subordinated Note is
convertible, the kind and amount of securities, cash or other assets comprising
the distribution that such holder would have received if such holder had
converted the Convertible Subordinated Note immediately prior to the record date
for determining the holders of Common Stock entitled to receive the
distribution.

SECTION 12.15  Company Determination Final.
               ---------------------------

     Any determination that the Company or the Board of Directors must make
pursuant to Section 12.03, 12.06, 12.09, 12.10, 12.14, 12.17 or 12.20 is
conclusive.

SECTION 12.16  Trustee's Adjustment Disclaimer.
               -------------------------------

     The Trustee has no duty to determine when an adjustment under this Article
12 should be made, how it should be made or what it should be. The Trustee has
no duty to determine whether a supplemental indenture under Section 12.14 need
be entered into or whether any provisions of any supplemental indenture are
correct. The Trustee shall not be accountable for and makes no representation as
to the validity or value of any securities or assets issued upon conversion of
Convertible Subordinated Notes. The Trustee shall not be responsible for the
Company's failure to comply with this Article 12. Each Conversion Agent (other
than the Company or an Affiliate of the Company) shall have the same protection
under this Section 12.16 as the Trustee.

SECTION 12.17  Simultaneous Adjustments.
               ------------------------

     In the event that this Article 12 requires adjustments to the Conversion
Rate under more than one clause of Section 12.06, and the record dates for the
distributions giving rise to such adjustments shall occur on the same date, then
such adjustments shall be made by applying, first, the provisions of clause (a),
second, the provisions of clause (c) and, third, the provisions of Section
clause (b).

                                       69

<PAGE>

SECTION 12.18  Successive Adjustments.
               ----------------------

     After an adjustment to the Conversion Rate under this Article 12, any
subsequent event requiring an adjustment under this Article 12 shall cause an
adjustment to the Conversion Rate as so adjusted.

SECTION 12.19  Restriction on Common Stock Issuable Upon Conversion.
               ----------------------------------------------------

     (a)  Shares of Common Stock to be issued upon conversion of the Convertible
Subordinated Notes prior to the effectiveness of a Shelf Registration Statement
shall be physically delivered in certificated form to the holders converting
such Convertible Subordinated Notes, and the certificate representing such
shares of Common Stock shall bear the following legend (the "Restricted Common
Stock Legend") unless removed in accordance with Section 12.19(c):

     THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
     AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING THIS
     SECURITY, AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS SECURITY MAY NOT
     BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE SECOND
     ANNIVERSARY, OF THE ISSUANCE HEREOF (OR ANY PREDECESSOR SECURITY HERETO) OR
     (Y) BY ANY HOLDER THAT WAS AN "AFFILIATE" (WITHIN THE MEANING OF RULE 144
     UNDER THE SECURITIES ACT) OF THE COMPANY AT ANY TIME DURING THE THREE
     MONTHS PRECEDING THE DATE OF SUCH TRANSFER, IN EITHER CASE OTHER THAN (1)
     TO THE COMPANY, (2) SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE
     PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON
     WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
     WITHIN THE MEANING OF RULE 144A, PURCHASING FOR ITS OWN ACCOUNT OR FOR THE
     ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE
     RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A,
     (3) IN AN OFFSHORE TRANSACTION (AS DEFINED IN REGULATION S UNDER THE
     SECURITIES ACT) IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT,
     (4) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
     PROVIDED BY RULE 144 (IF APPLICABLE) UNDER THE SECURITIES ACT OR (5)
     PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT,
     IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE
     OF THE UNITED STATES. PRIOR TO A TRANSFER OF THIS SECURITY, THE HOLDER OF
     THIS SECURITY MUST FURNISH TO THE COMPANY AND THE TRUSTEE SUCH CERTIFICATES
     AND OTHER INFORMATION AS THEY MAY REASONABLY REQUIRE TO CONFIRM THAT ANY
     TRANSFER BY IT OF THIS SECURITY COMPLIES WITH THE FOREGOING RESTRICTIONS.
     THE HOLDER HEREOF, BY PURCHASING THIS SECURITY, REPRESENTS AND AGREES FOR
     THE BENEFIT OF THE COMPANY THAT IT IS (1) A QUALIFIED INSTITUTIONAL BUYER
     OR (2) NOT A U.S. PERSON AND IS OUTSIDE THE UNITED STATES

                                       70

<PAGE>

     WITHIN THE MEANING OF (OR AN ACCOUNT SATISFYING THE REQUIREMENTS OF
     PARAGRAPH (k)(2) OF RULE 902 UNDER) REGULATION S UNDER THE SECURITIES ACT.
     IN ANY CASE THE HOLDER HEREOF WILL NOT, DIRECTLY OR INDIRECTLY, ENGAGE IN
     ANY HEDGING TRANSACTION WITH REGARD TO THIS SECURITY EXCEPT AS PERMITTED BY
     THE SECURITIES ACT.

     (b)  If (i) shares of Common Stock to be issued upon conversion of a
Convertible Subordinated Note prior to the effectiveness of a Shelf Registration
Statement are to be registered in a name other than that of the holder of such
Convertible Subordinated Note or (ii) shares of Common Stock represented by a
certificate bearing the Restricted Common Stock Legend are transferred
subsequently by such holder, then, unless the Shelf Registration Statement has
become effective and such shares are being transferred pursuant to the Shelf
Registration Statement, the holder must deliver to the transfer agent for the
Common Stock a certificate in substantially the form of Exhibit B as to
compliance with the restrictions on transfer applicable to such shares of Common
Stock, and neither the transfer agent nor the registrar for the Common Stock
shall be required to register any transfer of such Common Stock not so
accompanied by a properly completed certificate.

     (c)  Except for transfers in connection with a Shelf Registration
Statement, if certificates representing shares of Common Stock are issued upon
the registration of transfer, exchange or replacement of any other certificate
representing shares of Common Stock bearing the Restricted Common Stock Legend,
or if a request is made to remove such Restricted Common Stock Legend from
certificates representing shares of Common Stock, the certificates so issued
shall bear the Restricted Common Stock Legend, or the Restricted Common Stock
Legend shall not be removed, as the case may be, unless there is delivered to
the Company, the Conversion Agent and the Transfer Agent such satisfactory
evidence, which, in the case of a transfer made pursuant to Rule 144 under the
Securities Act, may include an opinion of counsel as may be reasonably required
by the Company, that neither the legend nor the restrictions on transfer set
forth therein are required to ensure that transfers thereof comply with the
provisions of Rule 144A, Rule 144 or Regulation S under the Securities Act or
that such shares of Common Stock are securities that are not "restricted" within
the meaning of Rule 144 under the Securities Act. Upon provision to the Company
of such reasonably satisfactory evidence, the Company shall cause the transfer
agent for the Common Stock to countersign and deliver certificates representing
shares of Common Stock that do not bear the legend.

SECTION 12.20  Company's Right to Elect to Pay Cash or Common Stock.
               ----------------------------------------------------

     If a holder elects to convert all or any portion of a Convertible
Subordinated Note into shares of Common Stock as set forth in this Article 12,
the Company may choose to satisfy all or any portion of its conversion
obligation (the "Conversion Obligation") in cash. If the Company elects to
satisfy all or any portion of its Conversion Obligation in cash at any time
other than following the delivery of a notice of redemption or within 20 days of
the Maturity Date, the Company will notify such holder through the Trustee of
the dollar amount to be satisfied in cash (which must be expressed either as
100% of the Conversion Obligation or as a fixed dollar amount) at any time on or
before the date that is two business days following receipt of written notice of
conversion as specified in Sections 12.01 and 12.02 (such period, the "Cash
Settlement

                                       71

<PAGE>

Notice Period"). If the Company elects to pay cash for any portion of the shares
of Common Stock otherwise issuable to the holder, the holder may retract the
conversion notice at any time during the two business day period beginning on
the day after the final day of the Cash Settlement Notice Period (a "Conversion
Retraction Period"); no such retraction can be made (and a conversion notice
shall be irrevocable) if the Company does not elect to deliver cash in lieu of
shares of Common Stock (other than cash in lieu of fraction shares). Unless the
conversion notice has been retracted, settlement (in cash and/or shares) will
occur on the business day following the final day of the ten trading day period
beginning on the day after the final day of the Conversion Retraction Period
(the "Cash Settlement Averaging Period"). Cash to be paid in the event of the
election to pay all or a portion of the Conversion Obligation in cash will be
the product obtained by multiplying (x) the number of shares the holders would
have been entitled had the Company elected to pay all or such specified
percentage, as the case may be, of the Conversion Obligation in Common Stock and
(y) the average Closing Sale Price of a share of Common Stock during the Cash
Settlement Averaging Period (the "Cash Amount"). If the Company elects to
satisfy a fixed portion (other than 100%) of the Conversion Obligation in Cash,
the Company will deliver to such Holder such fixed percentage of the Cash Amount
and a number of shares equal to the excess, if any, of (A) the number of shares
equal to (1) the aggregate Original Principal Amount of the Convertible
Subordinated Notes to be converted divided by 1,000, multiplied by (2) the
Conversion Rate, over (B) the number of shares equal to the sum, for each day of
the Cash Settlement Averaging Period, of (x) the pro rated portion of the Cash
Amount each such day divided by (y) the Closing Sale Price of the Common Stock
on such day.

     Notwithstanding the foregoing, a Convertible Subordinated Note in respect
of which a holder has delivered a Purchase Notice or Designated Event notice
exercising such holder's option to require the Company to repurchase such
Convertible Subordinated Note may be converted as described in Section 2.01 and
2.02 or this Section 2.13 only if such notice of exercise is withdrawn in
accordance with Sections 3.09 and 3.10 hereof.

     If a holder elects to convert all or any portion of a Convertible
Subordinated Note into shares of Common Stock after the Company has delivered a
notice of redemption or within 20 days of the Maturity Date, the Company may
choose to satisfy all or any portion of the Conversion Obligation in Cash
provided the Company notified such holder through the Trustee of the dollar
amount to be satisfied in cash (which must be expressed either a 100% of the
Conversion Obligation or as a fixed dollar amount) at any time on or before the
date that is 20 days prior to Stated Maturity or Redemption Date. Cash
settlement amounts will be computed in the same manner as set forth above in
this Section 12.20.

                                       72

<PAGE>

     IN WITNESS WHEREOF, the parties have caused this Indenture to be duly
executed and attested, all as of the date first above written, signifying their
agreements contained in this Indenture.

                                        SCHOOL SPECIALTY, INC.

                                        By /s/ Mary M. Kabacinski
                                           -------------------------------------
                                           Name:  Mary M. Kabacinski
                                           Title: EVP/CFO

                                        BNY MIDWEST TRUST COMPANY

                                        By /s/ Roxanne Ellwanger
                                           -------------------------------------
                                           Name:  Roxanne Ellwanger
                                           Title: Assistant Vice President

                                       73

<PAGE>

                                    EXHIBIT A

                               (Face of Security)

     The following legend shall appear on the face of each Global Security:

FOR PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED, THIS SECURITY IS A CONTINGENT PAYMENT DEBT INSTRUMENT AND WILL
ACCRUE ORIGINAL ISSUE DISCOUNT AT THE ISSUER'S "COMPARABLE YIELD" FOR UNITED
STATES FEDERAL INCOME TAX PURPOSES. PURSUANT TO SECTION 2.15 OF THE INDENTURE,
THE COMPANY AGREES, AND BY PURCHASING A BENEFICIAL OWNERSHIP INTEREST IN THE
CONVERTIBLE SUBORDINATED NOTES EACH HOLDER, AND ANY PERSON (INCLUDING AN ENTITY)
THAT ACQUIRES A DIRECT OR INDIRECT BENEFICIAL INTEREST IN THE CONVERTIBLE
SUBORDINATED NOTES, WILL BE DEEMED TO HAVE AGREED (I) FOR UNITED STATES FEDERAL
INCOME TAX PURPOSES TO TREAT THE CONVERTIBLE SUBORDINATED NOTES AS INDEBTEDNESS
OF THE COMPANY THAT IS SUBJECT TO TREAS. REG. SEC. 1.1275-4 (THE "CONTINGENT
PAYMENT REGULATIONS"), (II) FOR ALL TAX PURPOSES TO TREAT THE CONVERTIBLE
SUBORDINATED NOTES AS INDEBTEDNESS OF THE COMPANY, (III) FOR PURPOSES OF THE
CONTINGENT PAYMENT REGULATIONS, TO TREAT THE FAIR MARKET VALUE OF ANY COMMON
STOCK BENEFICIALLY RECEIVED BY A BENEFICIAL HOLDER UPON ANY CONVERSION OF THE
CONVERTIBLE SUBORDINATED NOTES (OR CASH IN LIEU OF COMMON STOCK) AS A CONTINGENT
PAYMENT, (IV) TO BE BOUND BY THE COMPANY'S DETERMINATION THAT THE CONVERTIBLE
SUBORDINATED NOTES ARE CONTINGENT PAYMENT DEBT INSTRUMENTS SUBJECT TO THE
"NONCONTINGENT BOND METHOD" OF ACCRUING ORIGINAL ISSUE DISCOUNT WITHIN THE
MEANING OF THE CONTINGENT PAYMENT REGULATIONS WITH RESPECT TO THE CONVERTIBLE
SUBORDINATED NOTES, AND (V) TO BE BOUND BY THE COMPANY'S PROJECTED PAYMENT
SCHEDULE WITH RESPECT TO THE CONVERTIBLE SUBORDINATED NOTES. THE PROVISIONS OF
THIS INDENTURE SHALL BE INTERPRETED TO FURTHER THIS INTENTION AND AGREEMENT OF
THE PARTIES. THE COMPARABLE YIELD AND THE SCHEDULE OF PROJECTED PAYMENTS ARE NOT
DETERMINED FOR ANY PURPOSE OTHER THAN FOR THE DETERMINATION OF INTEREST ACCRUALS
AND ADJUSTMENT THEREOF IN RESPECT OF THE CONVERTIBLE SUBORDINATED NOTES FOR
UNITED STATES FEDERAL INCOME TAX PURPOSES. THE COMPARABLE YIELD AND THE SCHEDULE
OF PROJECTED PAYMENTS DO NOT CONSTITUTE A PROJECTION OR REPRESENTATION REGARDING
THE FUTURE STOCK PRICE OR THE AMOUNTS PAYABLE ON THE CONVERTIBLE SUBORDINATED
NOTES. FOR PURPOSES OF THE FOREGOING, THE COMPANY'S DETERMINATION OF THE
"COMPARABLE YIELD" IS 8.00% PER ANNUM, COMPOUNDED SEMIANNUALLY. A HOLDER OF
CONVERTIBLE SUBORDINATED NOTES MAY OBTAIN THE YIELD TO MATURITY, ISSUE DATE,
COMPARABLE YIELD AND PROJECTED PAYMENT SCHEDULE (WHICH SCHEDULE IS ATTACHED AS
EXHIBIT C TO

                                      A-1

<PAGE>

THE INDENTURE) BY SUBMITTING A WRITTEN REQUEST TO: SCHOOL SPECIALTY, INC., W6316
DESIGN DRIVE, GREENVILLE, WISCONSIN 54942, ATTENTION: CHIEF FINANCIAL OFFICER.

                           [Global Securities Legend]

     UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR THE INDIVIDUAL
NOTES REPRESENTED HEREBY, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE
BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE
DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE
DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH
SUCCESSOR DEPOSITARY.

     The following legend shall appear on the face of each Global Security for
which The Depository Trust Company is to be the Depositary:

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

                         [Restricted Securities Legend]

     THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING THIS SECURITY,
AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS SECURITY MAY NOT BE RESOLD,
PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE SECOND ANNIVERSARY OF THE
ISSUANCE HEREOF (OR ANY PREDECESSOR SECURITY HERETO) OR (Y) BY ANY HOLDER THAT
WAS AN "AFFILIATE" (WITHIN THE MEANING OF RULE 144 UNDER THE SECURITIES ACT) OF
THE COMPANY AT ANY TIME DURING THE THREE MONTHS PRECEDING THE DATE OF SUCH
TRANSFER, IN EITHER CASE OTHER THAN (1) TO THE COMPANY, (2) SO LONG AS THIS
SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT
("RULE 144A") TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A, PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS
GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, (3) IN AN OFFSHORE

                                      A-2

<PAGE>

TRANSACTION (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT) IN ACCORDANCE
WITH REGULATION S UNDER THE SECURITIES ACT, (4) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 (IF APPLICABLE) UNDER
THE SECURITIES ACT OR (5) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES. PRIOR TO A TRANSFER OF THIS SECURITY,
THE HOLDER OF THIS SECURITY MUST FURNISH TO THE COMPANY AND THE TRUSTEE SUCH
CERTIFICATES AND OTHER INFORMATION AS THEY MAY REASONABLY REQUIRE TO CONFIRM
THAT ANY TRANSFER BY IT OF THIS SECURITY COMPLIES WITH THE FOREGOING
RESTRICTIONS. THE HOLDER HEREOF, BY PURCHASING THIS SECURITY, REPRESENTS AND
AGREES FOR THE BENEFIT OF THE COMPANY THAT IT IS (1) A QUALIFIED INSTITUTIONAL
BUYER OR (2) NOT A U.S. PERSON AND IS OUTSIDE THE UNITED STATES WITHIN THE
MEANING OF (OR AN ACCOUNT SATISFYING THE REQUIREMENTS OF PARAGRAPH (k)(2) OF
RULE 902 UNDER) REGULATION S UNDER THE SECURITIES ACT. IN ANY CASE THE HOLDER
HEREOF 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 AS PERMITTED BY THE SECURITIES ACT.

                                      A-3

<PAGE>

                             SCHOOL SPECIALTY, INC.
                  3.75% Convertible Subordinated Note due 2023

No. ___                                                      CUSIP:  807863 AD 7
Issue Date:  July 18, 2003               Original Principal Amount:  $__________
Issue Price:  $1,000.00
(for each $1,000
Original Principal Amount)

     SCHOOL SPECIALTY, INC., a Wisconsin corporation, promises to pay to
______________ or registered assigns, on August 1, 2023, the Accreted Principal
Amount of this Convertible Subordinated Note on such date. This Convertible
Subordinated Note is issued with an Original Principal Amount of
________________________ DOLLARS ($____________).

     This Convertible Subordinated Note shall not bear interest except as
specified on the other side of this Convertible Subordinated Note. The Accreted
Principal Amount of this Convertible Subordinated Note will accrue as specified
on the other side of this Convertible Subordinated Note. This Convertible
Subordinated Note is convertible as specified on the other side of this
Convertible Subordinated Note.

     Additional provisions of this Convertible Subordinated Note are set forth
on the other side of this Convertible Subordinated Note.

                                      A-4

<PAGE>

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

Dated:

                                                     SCHOOL SPECIALTY, INC.

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

TRUSTEE'S CERTIFICATE OF
AUTHENTICATION

BNY MIDWEST TRUST COMPANY,
as Trustee, certifies that this
is one of the Convertible Subordinated Notes referred
to in the within-mentioned Indenture.

By:
   -------------------------------
          Authorized Officer

Dated:

                                      A-5

<PAGE>

                               (Back of Security)

                             SCHOOL SPECIALTY, INC.

                  3.75% CONVERTIBLE SUBORDINATED NOTE DUE 2023

1.   Interest and Contingent Interest.

     (a)  The Convertible Subordinated Notes will bear cash interest on the
Original Principal Amount at the rate of 3.75% per year from the Issue Date, or
from the most recent date to which interest has been paid or provided for, until
August 1, 2010. During such period, the Company will pay cash interest
semiannually in arrears on each Interest Payment Date to holders of record at
the close of business on each Regular Record Date immediately preceding such
Interest Payment Date. Each payment of cash interest on the Convertible
Subordinated Notes will include interest (including Contingent Interest, if any)
and Liquidated Damages, if any, accrued through the day immediately preceding
the most recent Interest Payment Date (or the Repurchase Date, Redemption Date,
the Designated Event Payment Date or, in certain circumstances, the Conversion
Date, as the case may be). Any payment required to be made on any day that is
not a business day will be made on the next succeeding business day.

     (b)  Until August 1, 2010, the accreted principal amount (the "Accreted
Principal Amount") of a Convertible Subordinated Note will be equal to the
Original Principal Amount of $1,000. Beginning August 1, 2010, the Convertible
Subordinated Note shall not bear interest, except as specified in this paragraph
or in Section 4.10 of the Indenture. From such date, the Original Principal
Amount shall commence increasing daily by the annual rate of 3.75% to produce
the Accreted Principal Amount. The Accreted Principal Amount will compound
semiannually, not daily. On the Maturity Date, the holder of this Convertible
Subordinated Note will receive $1,620.91 for each $1,000 Original Principal
Amount of Convertible Subordinated Notes, which is the fully Accreted Principal
Amount of this Convertible Subordinated Note on such date, unless the
Convertible Subordinated Note has been earlier redeemed, repurchased or
converted, which for each $1,000 Original Principal Amount will be equal to such
Original Principal Amount of $1,000 per Convertible Subordinated Note increased
daily by 3.75% per year as provided in the Indenture. The yield will be
calculated using a 360-day year composed of twelve 30-day months. If the
Accreted Principal Amount hereof or any portion of such Accreted Principal
Amount is not paid when due (whether upon acceleration pursuant to Section 6.02
of the Indenture, upon the date set for payment of the Redemption Price pursuant
to paragraph 6 hereof, upon the date set for payment of the Repurchase Price or
Designated Event Payment pursuant to paragraph 7 hereof or upon the Maturity
Date of this Convertible Subordinated Note) or if installments of cash interest
due hereon are not paid when due in accordance with this paragraph, then in each
such case the overdue amount shall, to the extent permitted by law, bear
interest at 3.75% per year, as the case may be, in effect following the date
such overdue amount was due, compounded semiannually, which interest shall
accrue from the date such overdue amount was originally due to the date payment
of such amount, including interest thereon, has been made or duly provided for.
All such interest shall be payable on demand. The accrual of such interest on
overdue amounts shall be in lieu of, and not in addition to, any subsequent
increase in the Accreted Principal Amount.

                                      A-6

<PAGE>

     (c)  The Company will pay contingent interest ("Contingent Interest") to
the holders of the Convertible Subordinated Notes in respect of any six-month
interest period from August 1 to January 31 or from February 1 to July 31,
commencing on or after August 1, 2008 for which the average Trading Price of a
Convertible Subordinated Notes for the applicable five trading day reference
period equals or exceeds 120% or more of the sum of the Accreted Principal
Amount and accrued interest, if any, for a Convertible Subordinated Note as of
the day immediately preceding the first day of the applicable six-month interest
period. The "five trading day reference period" means the five trading days
ending on the third trading day immediately preceding the relevant six-month
interest period. For any six-month interest period in respect of which
Contingent Interest is payable, the Contingent Interest payable on each $1,000
principal amount of Notes shall equal 0.5% of the Original Principal Amount. No
Contingent Interest shall be payable on Convertible Subordinated Notes redeemed
pursuant to this paragraph 6 on August 7, 2008 (or, if August 7, 2008 is not a
business day, on the next following business day).

     Upon determination that holders will be entitled to receive Contingent
Interest in respect of a six-month period which may become payable, the Company
shall notify the holders. In connection with providing such notice, the Company
will issue a press release containing information regarding the Contingent
Interest determination or publish such information on the Company's then
existing website or through such other public medium as the Company may use at
that time.

     (d)  Interest, including Contingent Interest, if any, on any Convertible
Subordinated Note that is payable, and is punctually paid or duly provided for,
on any Interest Payment Date shall be paid to the person in whose name that
Convertible Subordinated Note is registered at the close of business on the
Regular Record Date for such interest or Contingent Interest, if any, at the
office or agency of the Company maintained for such purpose. Each installment of
interest or Contingent Interest, if any, on any Convertible Subordinated Note
shall be paid in same-day funds by transfer to an account maintained by the
payee located inside the United States.

     (e)  The amount of interest, including Contingent Interest, if any, payable
for any period shall be computed on the basis of a 360-day year of twelve 30-day
months. The amount of interest, including Contingent Interest, if any, payable
for any partial period shall be computed on the basis of a 360-day year of
twelve 30-day months and the days elapsed in any partial month. In the event
that any date on which interest is payable on a Convertible Subordinated Note is
not a business day, then a payment of the interest, including Contingent
Interest, if any, payable on such date will be made on the next succeeding day
which is a business day (and without any interest or other payment in respect of
any such delay) with the same force and effect as if made on the date the
payment was originally payable.

2.   Method of Payment.

     Subject to the terms and conditions of the Indenture, the Company will make
payments in respect of Accreted Principal Amount, Redemption Prices, Repurchase
Prices, Designated Event Payment and on the Maturity Date to holders who
surrender Convertible Subordinated Notes to a Paying Agent to collect such
payments in respect of the Convertible Subordinated Notes. In addition, the
Company will pay cash interest beginning February 1, 2004 until August 1, 2010,

                                      A-7

<PAGE>

as more fully described in paragraph 1 hereof. The Company will pay any cash
amounts in money of the United States that at the time of payment is legal
tender for payment of public and private debts. However, the Company may make
such cash payments by check payable in such money.

3.   Paying Agent, Conversion Agent and Registrar.

     Initially, BNY Midwest Trust Company (the "Trustee") will act as Paying
Agent, Conversion Agent and Registrar. The Company may appoint and change any
Paying Agent, Conversion Agent and Registrar or co-registrar without notice,
other than notice to the Trustee except that the Company will maintain at least
one Paying Agent in the State of New York, City of New York, Borough of
Manhattan, which shall initially be an office or agency of the Trustee. The
Company or any of its Subsidiaries or any of their Affiliates may act as Paying
Agent, Conversion Agent, Registrar or co-registrar.

4.   Indenture.

     The Company issued the Convertible Subordinated Notes pursuant to an
Indenture dated as of July 18, 2003 (the "Indenture"), between the Company and
the Trustee. The terms of the Convertible Subordinated Notes include those
stated in the Indenture and those made part of the Indenture by reference to the
Convertible Subordinated Notes themselves and the Trust Indenture Act of 1939,
as in effect from time to time (the "TIA"). Capitalized terms used herein and
not defined herein have the meanings ascribed thereto in the Indenture. The
Convertible Subordinated Notes are subject to all such terms, and Convertible
Subordinated Note holders are referred to the Indenture and the TIA for a
statement of those terms. In the event of any inconsistency between the terms
hereof and the terms of the Indenture, the terms of the Indenture shall prevail.

     The Convertible Subordinated Notes are unsecured and subordinated
obligations of the Company limited to $110,000,000 aggregate Original Principal
Amount (plus up to $25,000,000 aggregate Original Principal Amount that may be
sold by the Company to the Initial Purchasers pursuant to the over-allotment
option granted to the Initial Purchasers pursuant to the Purchase Agreement)
(subject to Section 2.07 of the Indenture). The Indenture does not limit other
indebtedness of the Company, secured or unsecured.

5.   [Reserved].

6.   Redemption at the Option of the Company.

     No sinking fund is provided for the Convertible Subordinated Notes. The
Convertible Subordinated Notes are redeemable as a whole, or from time to time
in part, at any time at the option of the Company in accordance with the
Indenture at the Redemption Prices set forth below, provided that the
Convertible Subordinated Notes are not redeemable prior to August 7, 2008.

     If redeemed at the option of the Company, the Convertible Subordinated
Notes will be redeemed at a Redemption Prices equal to the following, plus
accrued and unpaid interest (including Contingent Interest, if any) and
Liquidated Damages, if any:

                                      A-8

<PAGE>

     (a)  Beginning on August 7, 2008 through July 31, 2009: 101.071% of the
Original Principal Amount;

     (b)  Beginning on August 1, 2009 through August 1, 2010: 100.536% of the
Original Principal Amount; and

     (c)  On or after August 1, 2010, 100% of the Accreted Principal Amount.

     No Contingent Interest shall be payable on Convertible Subordinated Notes
redeemed pursuant to this paragraph 6 on August 7, 2008 (or, if August 7, 2008
is not a business day, on the following business day).

     The table below shows the Redemption Price of a Convertible Subordinated
Note on August 1, 2010 and each August 1 thereafter prior to the Maturity Date
and at the Maturity Date (assuming there is no accrued and unpaid interest or
Contingent Interest). In addition, the Redemption Price of a Convertible
Subordinated Note that is redeemed between the dates listed below would include
an additional amount reflecting the Accreted Principal Amount since the
immediately preceding date in the table below.

                                                      (2)              (3)
                                      (1)          Accreted        Redemption
Redemption Date                    Note Issue      Principal         Price
August 1:                            Price          Amount          (1)+(2)
-----------------------------     ------------    ------------    ------------
2010 ........................     $   1,000.00    $       0.00    $   1,000.00

2011 ........................     $   1,000.00    $      37.85    $   1,037.85

2012 ........................     $   1,000.00    $      77.14    $   1,077.14

2013 ........................     $   1,000.00    $     117.91    $   1,117.91

2014 ........................     $   1,000.00    $     160.22    $   1,160.22

2015 ........................     $   1,000.00    $     204.14    $   1,204.14

2016 ........................     $   1,000.00    $     249.72    $   1,249.72

2017 ........................     $   1,000.00    $     297.02    $   1,297.02

2018 ........................     $   1,000.00    $     346.11    $   1,346.11

2019 ........................     $   1,000.00    $     397.07    $   1,397.07

2020 ........................     $   1,000.00    $     449.95    $   1,449.95

2021 ........................     $   1,000.00    $     504.83    $   1,504.83

2022 ........................     $   1,000.00    $     561.79    $   1,561.79

At stated maturity ..........     $   1,000.00    $     620.91    $   1,620.91

     If this Convertible Subordinated Note has been converted to a semiannual
coupon note following the occurrence of a Tax Event, the Redemption Price will
be equal to the Restated Principal Amount plus accrued and unpaid interest
(including Contingent Interest, if any) and Liquidated Damages, if any, from the
date of such conversion to but not including the Redemption Date; but in no
event will this Convertible Subordinated Note be redeemable before August 7,
2008.

                                      A-9

<PAGE>

7.   Purchase by the Company at the Option of the Holder.

     Subject to the terms and conditions of the Indenture, the Company shall
become obligated to purchase, at the option of the holder, the Convertible
Subordinated Notes held by such holder on August 1 of 2010, 2013 and 2018 at a
Repurchase Price equal to 100% of the Accreted Principal Amount of such
Convertible Subordinated Notes on the applicable Repurchase Date plus accrued
and unpaid interest (including Contingent Interest, if any) and Liquidated
Damages, if any, to but not including the Repurchase Date, upon delivery of a
Repurchase Notice containing the information set forth in the Indenture, at any
time from the opening of business on the date that is 20 business days prior to
such Repurchase Date until the close of business on the third business day prior
to such Repurchase Date and upon delivery of the Convertible Subordinated Notes
to the Paying Agent by the holder as set forth in the Indenture.

     If prior to a Repurchase Date this Convertible Subordinated Note has been
converted to a semiannual coupon note following the occurrence of a Tax Event,
the Repurchase Price will be equal to the Restated Principal Amount plus accrued
and unpaid cash interest (including Contingent Interest, if any) and Liquidated
Damages, if any, from the date of conversion to the Repurchase Date but not
including the Repurchase Date as provided in the Indenture.

     At the option of the holder and subject to the terms and conditions of the
Indenture, the Company shall become obligated to purchase in cash all or a
portion of the Convertible Subordinated Notes in integral multiples of $1,000
Original Principal Amount held by such holder no later than 60 business days
after the occurrence of a Designated Event of the Company for a Designated Event
Payment equal to 100% of the Accreted Principal Amount of such Convertible
Subordinated Notes plus accrued and unpaid interest (including Contingent
Interest, if any) and Liquidated Damages, if any, to but not including the
Designated Event Payment Date, which Designated Event Payment shall be paid in
cash.

     Holders have the right to withdraw any Repurchase Notice or Designated
Event notice, as the case may be, by delivering to the Paying Agent a written
notice of withdrawal in accordance with the provisions of the Indenture.

     Payment of the Repurchase Price for a Convertible Subordinated Note for
which a Repurchase Notice has been delivered and not withdrawn is conditioned
upon book-entry transfer or delivery of such Convertible Subordinated Note,
together with any necessary endorsements, to the Paying Agent at its office in
the Borough of Manhattan, The City of New York, or any other office or the
Paying Agent, at any time after delivery of the Repurchase Notice.

     If cash sufficient to pay the Repurchase Price or Designated Event Payment,
as the case may be, of all Convertible Subordinated Notes or portions thereof to
be purchased as of the Repurchase Date or the Designated Event Payment Date, as
the case may be, is deposited with the Paying Agent on the business day
immediately following to the Repurchase Date or on the Designated Event Payment
Date, as the case may be, such Convertible Subordinated Notes (or portions
thereof) will cease to be outstanding, the Accreted Principal Amount shall cease
to increase, and cash interest (including Contingent Interest, if any) and
Liquidated Damages, if

                                      A-10

<PAGE>

any, shall cease to accrue on such Convertible Subordinated Notes (or portions
thereof) on such Repurchase Date or Designated Event Payment Date, as the case
may be, and the holder thereof shall have no other rights as such (other than
the right to receive the Repurchase Price or Designated Event Payment, as the
case may be, if any, upon surrender of such Convertible Subordinated Notes).
This will be the case whether or not book-entry transfer of the Convertible
Subordinated Note has been made or the Convertible Subordinated Note has been
delivered to the Paying Agent.

8.   [Reserved].

9.   Conversion.

     Conversion Based on Common Stock Price. Subject to the provisions of this
paragraph 9 and notwithstanding the fact that any other condition to conversion
described below has not been satisfied, holders may convert the Convertible
Subordinated Notes into Common Stock on a Conversion Date at any time starting
with the first day of any calendar quarter commencing after September 30, 2003
if the Closing Sale Price of the Common Stock for at least 20 trading days in a
period of 30 consecutive trading days ending on the last trading day of such
preceding calendar quarter is greater than the conversion trigger price per
share. The "conversion trigger price" for any calendar quarter shall be 120% of
the accreted conversion price per share (as defined below) of Common Stock on
the last trading day of such preceding calendar quarter. If the foregoing
condition is satisfied, then the Convertible Subordinated Notes will be
convertible at any time of the option of the holder, through their maturity.

     The "accreted conversion price" per share of Common Stock as of any day
equals the quotient of:

..  the Accreted Principal Amount on that day, divided by

..  the number of shares of Common Stock issuable upon conversion of $1,000
   Original Principal Amount of Convertible Subordinated Notes on that day,
   subject to any adjustments to the Conversion Rate through that day.

     For example, the accreted conversion price of a Convertible Subordinated
Note at the Issue Date will be $40.00 per share ($1,000 / 25); and the accreted
conversion price of a Convertible Subordinated Note that has an accreted
principal amount of $1,100 will be $44.00 per share ($1,100 / 25).

     Until August 1, 2010, the accreted principal amount of a Convertible
Subordinated Note will be equal to the original principal amount of $1,000.
During this period the conversion trigger price per share of Common Stock will
be $48.00. This conversion trigger price reflects the accreted conversion price
per share of Common Stock multiplied by 120% and assumes that no events have
occurred that would require an adjustment to the Conversion Rate.

     Beginning August 1, 2010, the accreted principal amount of a Convertible
Subordinated Note will be equal to the original principal amount of $1,000
increased daily by the rate of 3.75% per year. The following table sets forth
the accreted conversion price and conversion

                                      A-11

<PAGE>

trigger prices for each quarterly period until August 1, 2023, the Maturity Date
of the Convertible Subordinated Notes, and assumes that no events have occurred
that would require an adjustment to the Conversion Rate. The accreted conversion
price and the conversion trigger price for each of the calendar quarters
indicated in the following table are calculated as of the last day of the
preceding quarter, and would determine whether the notes are convertible in each
such calendar quarter and thereafter.

            Accreted Conversion Prices and Conversion Trigger Prices

                                                Accreted
                                               Conversion     Conversion
Quarter                                          Price       Trigger Price
------------------------------------------    ------------   -------------
   Through Third Quarter 2010 ............    $      40.00   $      48.00
   Fourth Quarter 2010 ...................    $      40.24   $      48.29
2011
   First Quarter .........................    $      40.62   $      48.74
   Second Quarter ........................    $      41.00   $      49.20
   Third Quarter .........................    $      41.38   $      49.66
   Fourth Quarter ........................    $      41.77   $      50.12
2012
   First Quarter .........................    $      42.16   $      50.59
   Second Quarter ........................    $      42.55   $      51.06
   Third Quarter .........................    $      42.95   $      51.54
   Fourth Quarter ........................    $      43.35   $      52.02
2013
   First Quarter .........................    $      43.75   $      52.50
   Second Quarter ........................    $      44.16   $      52.99
   Third Quarter .........................    $      44.57   $      53.48
   Fourth Quarter ........................    $      44.99   $      53.99
2014
   First Quarter .........................    $      45.41   $      54.49
   Second Quarter ........................    $      45.83   $      55.00
   Third Quarter .........................    $      46.26   $      55.51
   Fourth Quarter                             $      46.69   $      56.03
2015
   First Quarter .........................    $      47.13   $      56.56
   Second Quarter ........................    $      47.57   $      57.08
   Third Quarter .........................    $      48.01   $      57.61
   Fourth Quarter ........................    $      48.46   $      58.15
2016
   First Quarter .........................    $      48.91   $      58.69
   Second Quarter ........................    $      49.37   $      59.24
   Third Quarter .........................    $      49.83   $      59.80
   Fourth Quarter ........................    $      50.29   $      60.35
2017
   First Quarter .........................    $      50.76   $      60.91
   Second Quarter ........................    $      51.24   $      61.49

                                      A-12

<PAGE>

                                                Accreted
                                               Conversion     Conversion
Quarter                                          Price       Trigger Price
------------------------------------------    ------------   -------------
   Third Quarter .........................    $      51.72   $      62.06
   Fourth Quarter ........................    $      52.20   $      62.64
2018
   First Quarter .........................    $      52.68   $      63.22
   Second Quarter ........................    $      53.18   $      63.82
   Third Quarter .........................    $      53.67   $      64.40
   Fourth Quarter ........................    $      54.17   $      65.00
2019
   First Quarter .........................    $      54.68   $      65.62
   Second Quarter ........................    $      55.19   $      66.23
   Third Quarter .........................    $      55.70   $      66.84
   Fourth Quarter ........................    $      56.22   $      67.46
2020
   First Quarter .........................    $      56.75   $      68.10
   Second Quarter ........................    $      57.28   $      68.74
   Third Quarter .........................    $      57.81   $      69.37
   Fourth Quarter ........................    $      58.35   $      70.02
2021
   First Quarter .........................    $      58.90   $      70.68
   Second Quarter ........................    $      59.45   $      71.34
   Third Quarter .........................    $      60.00   $      72.00
   Fourth Quarter ........................    $      60.56   $      72.67
2022
   First Quarter .........................    $      61.13   $      73.36
   Second Quarter ........................    $      61.70   $      74.04
   Third Quarter .........................    $      62.27   $      74.72
   Fourth Quarter ........................    $      62.85   $      75.42
2023
First Quarter ...........................     $      63.44   $      76.13
Second Quarter ..........................     $      64.03   $      76.84
Third Quarter ...........................     $      64.63   $      77.56

     Conversion Based on Trading Price of Convertible Subordinated Notes.
Subject to the provisions of this paragraph 9 and notwithstanding the fact that
any other condition to conversion described below has not been satisfied,
Holders may convert the Convertible Subordinated Notes into Common Stock during
each of the five business day periods after any ten consecutive trading day
period in which the Trading Price per $1,000 Original Principal Amount of the
Convertible Subordinated Notes for each day of such ten day period was less than
98% of the product of the Closing Sale Price on the applicable date and the
number of shares of Common Stock issuable upon conversion of $1,000 Original
Principal Amount of the Convertible Subordinated Notes. Upon conversion, the
Company has the right to deliver cash or a combination of cash and Common Stock.

                                      A-13

<PAGE>

     The "Trading Price" means, on any date, the average of the secondary market
bid quotations for the Convertible Subordinated Notes obtained by the Trustee
for $10,000,000 Original Principal Amount of Convertible Subordinated Notes at
approximately 3:30 p.m., New York City time, on such date from three independent
nationally recognized securities dealers selected by the Company; provided that
if at least three such bids cannot reasonably be obtained by the Trustee, but
two 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, one bid shall be
used; and provided further that if the Trustee cannot reasonably obtain at least
one bid for $10,000,000 Original Principal Amount of Convertible Subordinated
Notes from a nationally recognized securities dealer or in the Company's
reasonable judgment, the bid quotations are not indicative of the secondary
market value of the Convertible Subordinated Notes, then the Trading Price per
$1,000 Original Principal Amount of Convertible Subordinated Notes shall be
deemed to be less than 98% of the product of (a) the number of shares of Common
Stock issuable upon conversion of $1,000 Original Principal Amount of
Convertible Subordinated Notes and (b) the Closing Sale Price on such date.

     The Trustee (or other conversion agent appointed by the Company) shall have
no obligation to determine the Trading Price unless the Company has requested
such a determination; and the Company shall have no obligation to make such
request unless a holder provides it with reasonable evidence that the Trading
Price per $1,000 Original Principal Amount of Convertible Subordinated Notes
would be less than 98% of the product of the Closing Sale Price of Common Stock
and the number of shares of Common Stock issuable upon conversion of $1,000
Original Principal Amount of Convertible Subordinated Notes. If such evidence is
provided, the Company shall instruct the Trustee (or other conversion agent) to
determine the Trading Price of the Convertible Subordinated Notes beginning on
the next trading day and on each successive trading day until the Trading Price
per $1,000 Original Principal Amount of Convertible Subordinated Notes is
greater than 98% of the product of the Closing Sale Price and the number of
shares issuable upon conversion of $1,000 Original Principal Amount of the
Convertible Subordinated Notes.

     Conversion upon Redemption. Subject to the provisions of this paragraph 9
and notwithstanding the fact that any other condition described herein to
conversion has not been satisfied, a holder may convert into Common Stock a
Convertible Subordinated Note or portion of a Convertible Subordinated Note
which has been called for redemption pursuant to paragraph 6 hereof, provided
such Convertible Subordinated Notes are surrendered for conversion prior to the
close of business on the business day immediately preceding the Redemption Date.

     Conversion Upon Occurrence of Certain Corporate Transactions. (a) Subject
to the provisions of this paragraph 9 and notwithstanding the fact that any
other condition described herein to conversion has not been satisfied, in the
event the Company is a party to a consolidation, merger or binding share
exchange or a transfer of all or substantially all of the Company's assets
pursuant to which the Common Stock would be converted into cash, securities or
other property as set forth in Section 12.14 of the Indenture, the Convertible
Subordinated Notes may be surrendered for conversion at any time from and after
the date which is 15 days prior to the date announced by the Company as the
anticipated effective time until 15 days after the actual effective date of such
transaction, and at the effective time of such transaction the right to convert
a Convertible Subordinated Note into Common Stock will be deemed to have changed

                                      A-14

<PAGE>

into a right to convert it into the kind and amount of cash, securities or other
assets of the Company or another person which the holder would have received if
the holder had converted its Convertible Subordinated Note into Common Stock
immediately prior to the transaction. If such transaction also constitutes a
Designated Event, a holder will be able to require the Company to purchase all
or a portion of such holder's Convertible Subordinated Notes pursuant to
Paragraph 7 and Section 3.10 of the Indenture.

     (b)  Subject to the provisions of this paragraph 9 and notwithstanding the
fact that any other condition to conversion has not been satisfied, in the event
that the Company declares a dividend or distribution described in Section
12.06(b) of the Indenture, or a dividend or a distribution described in Section
12.06(c) of the Indenture where, the fair market value, per share, of such
dividend or distribution per share of Common Stock, as determined in the
Indenture, exceeds 10% of the Closing Sale Price of the Common Stock on the
business day immediately preceding the date of declaration for such dividend or
distribution or a Designated Event occurs other than pursuant to a transaction
described in clause (a) hereof, the Convertible Subordinated Notes may be
surrendered for conversion beginning on the date the Company gives notice to the
holders of such right, which shall not be less than 20 days prior to the
Ex-Dividend Date for such dividend or distribution or which shall be within 20
days of the occurrence of such Designated Event, as the case may be, and
Convertible Subordinated Notes may be surrendered for conversion at any time
thereafter until the earlier of the close of business on the business day prior
to the Ex-Dividend Date or until the Company announces that such dividend or
distribution will not take place, with respect to a dividend or distribution, or
within 30 days of such Designated Event notice, in the case of such a Designated
Event. No adjustment to the Conversion Rate or the ability of the holders to
convert this Convertible Subordinated Note will be made if the Company provides,
as permitted in the Indenture, for holders to participate in the transaction
without conversion or in other cases specified in the Indenture.

     A Convertible Subordinated Note in respect of which a holder has delivered
a Repurchase Notice or notice of a Designated Event exercising the option of
such holder to require the Company to purchase such Convertible Subordinated
Note may be converted only if such notice of exercise is withdrawn in accordance
with the terms of the Indenture.

     The initial Conversion Rate is 25 shares of Common Stock per $1,000
Original Principal Amount of each Convertible Subordinated Note, subject to
adjustment for certain events described in the Indenture. The Company will
deliver cash or a check in lieu of any fractional share of Common Stock. The
ability to surrender Convertible Subordinated Notes for conversion will expire
at the close of business on July 31, 2023.

     In the event the Company exercises its option pursuant to Section 4.10 of
the Indenture to have, in lieu of having the Accreted Principal Amount increase,
interest accrue on the Convertible Subordinated Note following a Tax Event, the
holder will be entitled on conversion to receive the same number of shares of
Common Stock such holder would have received if the Company had not exercised
such option.

     Increases in the Accreted Principal Amount and cash interest (including
Contingent Interest, if any, and interest payable upon the occurrence of a Tax
Event, if any) will not be paid on Convertible Subordinated Notes that are
converted, except accrued cash interest will be

                                      A-15

<PAGE>

payable upon conversion of Convertible Subordinated Notes made concurrently with
or after acceleration of Convertible Subordinated Notes following an Event of
Default. Convertible Subordinated Notes surrendered for conversion during the
period from the close of business on any Regular Record Date next preceding any
Interest Payment Date to the opening of business on such Interest Payment Date
shall be entitled to receive such interest payable on such Convertible
Subordinated Notes on the corresponding Interest Payment Date and, except
Convertible Subordinated Notes to be redeemed within this period, Convertible
Subordinated Notes surrendered for conversion during such periods must be
accompanied by payment of an amount equal to the interest, including Contingent
Interest, with respect thereto that the registered holder is to receive.

     To exercise its conversion right, a holder must (1) complete and manually
sign the conversion notice (or complete and manually sign a facsimile of such
notice) and deliver such notice to the Conversion Agent, (2) surrender the
Convertible Subordinated Note to the Conversion Agent, (3) furnish appropriate
endorsements and transfer documents if required by the Conversion Agent, the
Company or the Trustee and (4) pay any transfer or similar taxes, if required.

     A holder may convert a portion of a Convertible Subordinated Note if the
Original Principal Amount of such portion is $1,000 or an integral multiple of
$1,000. No payment or adjustment will be made for dividends on the Common Stock
except as provided in the Indenture. On conversion of a Convertible Subordinated
Note, increases in the Accreted Principal Amount or cash interest (or interest
if the Company has exercised its option provided for in paragraph 11 hereof)
attributable to the period from the Issue Date (or, if the Company has exercised
the option referred to in paragraph 11 hereof, the later of (x) the date of such
exercise and (y) the date on which interest was last paid) through the
Conversion Date shall not be cancelled, extinguished or forfeited, but rather
shall be deemed to be paid in full to the holder thereof through the delivery of
the Common Stock (together with the cash payment, if any, in lieu of fractional
shares) in exchange for the Convertible Subordinated Note being converted
pursuant to the terms hereof; and the fair market value of such shares of Common
Stock (together with any such cash payment in lieu of fractional shares) shall
be treated as issued, to the extent thereof, first in exchange for increases in
the Accreted Principal Amount or cash interest (or interest, if the Company has
exercised its option provided for in paragraph 11 hereof) accrued through the
Conversion Date, and the balance, if any, of such fair market value of such
Common Stock (and any such cash payment) shall be treated as issued in exchange
for the Issue Price of the Convertible Subordinated Note being converted
pursuant to the provisions hereof.

     The Conversion Rate will be adjusted for dividends or distributions on
Common Stock payable in Common Stock or other Capital Stock of the Company;
subdivisions, combinations or certain reclassifications of Common Stock;
distributions to all holders of Common Stock of certain rights to purchase
Common Stock for a period expiring within 60 days of the record date for such
distribution at less than the current market price of the Common Stock at the
time of the announcement of the distribution, distributions to such holders of
assets or debt securities of the Company or certain rights to purchase
securities of the Company (including cash dividends or distributions) and
payments in respect of a tender offer or exchange offer for Common Stock to the
extent that the cash and value of any other consideration included in the
payment per share of Common Stock exceed the current market price per share of
Common Stock on the trading day

                                      A-16

<PAGE>

next succeeding the last date on which tenders or exchanges may be made pursuant
to such tender or exchange offer. However, no adjustment need be made if
Convertible Subordinated Note holders may participate in the transaction or in
certain other cases. The Company from time to time may voluntarily increase the
Conversion Rate.

     If the Company is a party to a consolidation, merger or binding share
exchange or a transfer of all or substantially all of its assets, or upon
certain distributions described in the Indenture, the right to convert a
Convertible Subordinated Note into Common Stock may be changed into a right to
convert it into securities, cash or other assets of the Company or another
person.

     The Conversion Rate will not be adjusted for increases in the Accreted
Principal Amount or accrued cash interest, Contingent Interest or Liquidated
Damages, if any.

     If a holder elects to convert all or a portion of a Convertible
Subordinated Note into shares of Common Stock as set forth above, the Company
may choose to satisfy all or any portion of its Conversion Obligation in cash as
set forth in Section 12.20 of the Indenture.

10.  Conversion Arrangement on Call for Redemption.

     Any Convertible Subordinated Notes called for redemption, unless
surrendered for conversion before the close of business on the Redemption Date,
may be deemed to be purchased from the holders of such Convertible Subordinated
Notes at an amount not less than the Redemption Price, by one or more investment
bankers or other purchasers who may agree with the Company to purchase such
Convertible Subordinated Notes from the holders, to convert them into Common
Stock of the Company and to make payment for such Convertible Subordinated Notes
to the Trustee in trust for such holders.

11.  Tax Event.

     From and after the date (the "Tax Event Date") of the occurrence of a Tax
Event after July 31, 2010, the Company shall have the option to elect, in lieu
of having Accreted Principal Amount increase, to have interest accrue and be
paid in cash at the rate of 3.75% per annum, on a Restated Principal Amount, per
$1,000 Original Principal Amount (the "Restated Principal Amount") equal to the
accrued Accreted Principal Amount through the Tax Event Date or the date the
Company exercises the option provided for in this paragraph 11, whichever is
later (the "Option Exercise Date"). Such interest shall be payable semiannually
on February 1 and August 1 of each year to Holders of record at the close of
business on January 15 and July 15 immediately preceding such interest payment
date. Interest will accrue from the most recent date on which interest has been
paid or, if no interest has been paid, from the Option Exercise Date.

     The Trustee shall notify holders of Convertible Subordinated Notes within
15 days after the Option Exercise Date that the Company has exercised the option
provided for in this paragraph 11.

                                      A-17

<PAGE>

12.  Defaulted Interest.

     Except as otherwise specified with respect to the Convertible Subordinated
Notes, any defaulted interest on any Convertible Subordinated Note shall
forthwith cease to be payable to the registered holder thereof on the relevant
Regular Record Date or accrual date, as the case may be, by virtue of having
been such holder, and such defaulted interest may be paid by the Company as
provided for in Section 2.12 of the Indenture.

13.  Denominations; Transfer; Exchange.

     The Convertible Subordinated Notes are in fully registered form, without
coupons, in denominations of $1,000 of Original Principal Amount and integral
multiples of $1,000. A holder may transfer or exchange Convertible Subordinated
Notes in accordance with the Indenture. The Registrar may require a holder,
among other things, to furnish appropriate endorsements and transfer documents
and to pay any taxes and fees required by law or permitted by the Indenture. The
Registrar need not transfer or exchange any Convertible Subordinated Notes
selected for redemption (except, in the case of a Convertible Subordinated Note
to be redeemed in part, the portion of the Convertible Subordinated Note not to
be redeemed) or any Convertible Subordinated Notes in respect of which a
Repurchase Notice or Designated Event notice has been given and not withdrawn
(except, in the case of a Convertible Subordinated Note to be purchased in part,
the portion of the Convertible Subordinated Note not to be purchased) or any
Convertible Subordinated Notes for a period of 15 days before the mailing of a
notice of redemption of Convertible Subordinated Notes to be redeemed.

14.  Persons Deemed Owners.

     The registered holder of this Convertible Subordinated Note may be treated
as the owner of this Convertible Subordinated Note for all purposes.

15.  Unclaimed Money or Securities.

     The Trustee and the Paying Agent shall return to the Company, upon written
request any money or securities held by them for the payment of any amount with
respect to the Convertible Subordinated Notes that remains unclaimed for two
years, subject to applicable unclaimed property laws. After return to the
Company holders entitled to the money or securities must look to the Company for
payment as general creditors unless an applicable abandoned property law
designates another person.

16.  Amendment; Waiver.

     Subject to certain exceptions, the Indenture or the Convertible
Subordinated Notes may be amended or supplemented with the consent of the
holders of at least a majority in principal amount of the then outstanding
Convertible Subordinated Notes, and any existing default may be waived with the
consent of the holders of a majority in aggregate Accreted Principal Amount of
the then outstanding Convertible Subordinated Notes.

     Without the consent of any holder, the Indenture or the Convertible
Subordinated Notes may be amended to: (a) cure any ambiguity or correct or
supplement any defective or

                                      A-18

<PAGE>

inconsistent provision contained in the Indenture, or make any other changes in
the provisions of the Indenture which the Company and the Trustee may deem
necessary or desirable provided such amendment does not materially and adversely
affect the legal rights under the Indenture of the holders of Convertible
Subordinated Notes; (b) provide for uncertificated Convertible Subordinated
Notes in addition to or in place of certificated Convertible Subordinated Notes;
(c) evidence the succession of another person to the Company and providing for
the assumption by such successor of the covenants and obligations of the Company
thereunder and in the Convertible Subordinated Notes as permitted by Section
5.01 of the Indenture; (d) provide for conversion rights and/or repurchase
rights of holders of Convertible Subordinated Notes in the event of
consolidation, merger, share exchange or sale of all or substantially all of the
assets of the Company as required to comply with Sections 5.01 and/or 12.14 of
the Indenture; (e) increase the Conversion Rate; (f) evidence and provide for
the acceptance of the appointment under the Indenture of a successor Trustee;
(g) make any change that would provide any additional rights or benefits to the
holders of Convertible Subordinated Notes or that does not adversely affect the
legal rights under the Indenture of any such holder; or (h) comply with the
requirements of the Commission in order to effect or maintain the qualification
of the Indenture under the TIA.

     Without the consent of each holder affected, an amendment or waiver may not
(with respect to any Convertible Subordinated Notes held by a non-consenting
holder): (a) reduce the principal amount of Convertible Subordinated Notes whose
holders must consent to an amendment, supplement or waiver; (b) reduce the
principal of, or premium on, or change the fixed maturity of any Convertible
Subordinated Note or, except as permitted pursuant to clause (a), (d), (g) or
(h) of the immediately preceding paragraph, alter the provisions with respect to
the redemption or repurchase of the Convertible Subordinated Notes; (c) reduce
the rate of or change the time for payment of interest, including contingent
interest, defaulted interest, or Liquidated Damages on any Convertible
Subordinated Notes; (d) waive a Default or Event of Default in the payment of
principal of or premium, if any, or interest (including Contingent Interest, if
any) or Liquidated Damages, if any, on the Convertible Subordinated Notes
(except a rescission of acceleration of the Convertible Subordinated Notes by
the holders of at least a majority in aggregate Accreted Principal Amount of the
Convertible Subordinated Notes and a waiver of the payment default that resulted
from such acceleration); (e) make the principal of, or premium, if any, or
interest (including Contingent Interest, if any) or Liquidated Damages, if any,
on, any Convertible Subordinated Note payable in money other than as provided
for in the Indenture and in the Convertible Subordinated Notes; (f) make any
change in the provisions of the Indenture relating to waivers of past Defaults
or the rights of holders of Convertible Subordinated Notes to receive payments
of principal of, premium, if any, or interest (including Contingent Interest, if
any) or Liquidated Damages, if any, on the Convertible Subordinated Notes; (g)
waive a redemption or repurchase payment with respect to any Convertible
Subordinated Note; (h) except as permitted by the Indenture (including Section
9.01(a)), decrease the Conversion Rate or modify the provisions of the Indenture
relating to conversion of the Convertible Subordinated Notes in a manner adverse
to the holders thereof or (i) make any change to the ability of holder of
Convertible Subordinated Notes to enforce their rights under the Indenture or
the provisions of clauses (a) through (i) of Section 9.02 of the Indenture. In
addition, any amendment to the provisions of Article 11 of the Indenture (which
relate to subordination) will require the consent of the holders of at least 75%
in aggregate Accreted Principal Amount of the

                                      A-19

<PAGE>

Convertible Subordinated Notes then outstanding if such amendment would
adversely affect the rights of holders of Convertible Subordinated Notes.

17.  Defaults and Remedies.

     An Event of Default is: (a) default in payment of the principal of, or
premium, if any, on the Convertible Subordinated Notes, when due at maturity,
upon repurchase, upon acceleration or otherwise, whether or not such payment is
prohibited by the subordination provisions of the Indenture; (b) default for 30
days or more in payment of any installment of interest (including contingent
interest, if any) or Liquidated Damages, if any, on the Convertible Subordinated
Notes, whether or not such payment is prohibited by the subordination provisions
of the Indenture; (c) default by the Company for 60 days or more after notice as
provided in the Indenture in the observance or performance of any other
covenants in the Indenture; (d) default in the payment of the Designated Event
Payment in respect of the Convertible Subordinated Notes on the date therefor,
whether or not such payment is prohibited by the subordination provisions of the
Indenture; (e) failure to provide timely notice of a Designated Event; (f)
default under any credit agreement, mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any of its Material
Subsidiaries (or the payment of which is guaranteed by the Company or any of its
Material Subsidiaries), whether such Indebtedness or guarantee exists on the
date of the Indenture or is created thereafter, which default (i) is caused by a
failure to pay when due any principal of or interest on such Indebtedness within
the grace period provided for in such Indebtedness (which failure continues
beyond any applicable grace period) (a "Payment Default") or (ii) results in the
acceleration of such Indebtedness prior to its express maturity (without such
acceleration being rescinded or annulled) and, in each case, the principal
amount of such Indebtedness, together with the principal amount of any other
such Indebtedness under which there is a Payment Default or the maturity of
which has been so accelerated, aggregates $15,000,000 or more and such Payment
Default is not cured or such acceleration is not annulled within 30 days after
notice; or (g) failure by the Company or any Material Subsidiary of the Company
to pay final, non-appealable judgments (other than any judgment as to which a
reputable insurance company has accepted full liability) aggregating in excess
of $15,000,000, which judgments are not stayed, bonded or discharged within 60
days after their entry; or (h) certain events involving bankruptcy, insolvency
or reorganization of the Company or any Material Subsidiary. If an Event of
Default occurs and is continuing, the Trustee or the holders of at least 25% in
aggregate Accreted Principal Amount of the then outstanding Convertible
Subordinated Notes may declare the unpaid principal of, premium, if any, and
accrued and unpaid interest (including Contingent Interest, if any) and
Liquidated Damages, if any, on all Convertible Subordinated Notes then
outstanding to be due and payable immediately, except that in the case of an
Event of Default arising from certain events of bankruptcy, insolvency, or
reorganization with respect to the Company or any of its Material Subsidiaries,
all outstanding Convertible Subordinated Notes become due and payable without
further action or notice. Holders of Convertible Subordinated Notes may not
enforce the Indenture or the Convertible Subordinated Notes except as provided
in the Indenture. The Trustee may require an indemnity satisfactory to it before
it enforces the Indenture or the Convertible Subordinated Notes. Subject to
certain limitations, holders of a majority in principal amount of the then
outstanding Convertible Subordinated Notes may direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from holders notice of
any continuing default (except a default in payment

                                      A-20

<PAGE>

of principal, premium, if any, or interest (including Contingent Interest, if
any) or Liquidated Damages, if applicable) if it determines that withholding
notice is in their interests. The Company must furnish annual compliance
certificates to the Trustee.

18.  Registration Rights Agreement.

     The holder of this Convertible Subordinated Note is entitled to the
benefits of a Registration Rights Agreement, dated July 18, 2003, between the
Company and the Initial Purchasers (the "Registration Rights Agreement").
Pursuant to the Registration Rights Agreement the Company has agreed for the
benefit of the holders of the Convertible Subordinated Notes and the Common
Stock issued and issuable upon conversion of the Convertible Subordinated Notes,
that (i) it will, at its cost, within 90 days after the Issue Date, file a shelf
registration statement (the "Shelf Registration Statement") with the Securities
and Exchange Commission (the "Commission") with respect to resales of the
Convertible Subordinated Notes and the Common Stock issuable upon conversion
thereof, (ii) the Company will use its reasonable best efforts to cause such
Shelf Registration Statement to be declared effective by the Commission under
the Securities Act within 180 days after the Issue Date and (iii) the Company
will use its reasonable best efforts to keep such Shelf Registration Statement
continuously effective under the Securities Act until the earliest of (a) the
second anniversary of the Issue Date or, if later, the second anniversary of the
last date on which any Convertible Subordinated Notes are issued upon exercise
of the Initial Purchasers' over-allotment option, (b) the date on which the
Convertible Subordinated Notes or the Common Stock issuable upon conversion
thereof may be sold to persons who are not "affiliates" (as defined in Rule 144)
of the Company pursuant to paragraph (k) of Rule 144 (or any successor
provision) promulgated by the Commission under the Securities Act, (c) the date
as of which the Convertible Subordinated Notes or the Common Stock issuable upon
conversion thereof have been transferred pursuant to Rule 144 under the
Securities Act (or any similar provision then in force) and (d) the date as of
which all the Convertible Subordinated Notes or the Common Stock issuable upon
conversion thereof have been sold pursuant to such Shelf Registration Statement.

     If the Shelf Registration Statement (i) is not filed with the Commission on
or prior to 90 days, or has not been declared effective by the Commission within
180 days, after the Issue Date or (ii) is filed and declared effective but shall
thereafter cease to be effective (without being succeeded immediately by a
replacement shelf registration statement filed and declared effective) or cease
to be usable (including, without limitation, as a result of a Suspension Period
as defined below) for the offer and sale of Transfer Restricted Securities (as
defined below) for a period of time (including any Suspension Period) which
shall exceed 60 days in the aggregate in any 12-month period during the period
beginning on the Issue Date and ending on the second anniversary of the Issue
Date or, if later, the second anniversary of the last date on which any
Convertible Subordinated Notes are issued upon exercise of the Initial
Purchasers' over-allotment option (each such event referred to in clauses (i)
and (ii) being referred to herein as a "Registration Default"), the Company will
pay liquidated damages ("Liquidated Damages") to each holder of Transfer
Restricted Securities which has complied with its obligations under the
Registration Rights Agreement. The amount of Liquidated Damages payable during
any period in which a Registration Default shall have occurred and be continuing
is that amount which is equal to one-quarter of one percent (25 basis points)
per annum per $1,000 principal amount of Securities and $2.50 per annum per 25
shares of Common Stock (subject to adjustment from

                                      A-21

<PAGE>

time to time in the event of a stock split, stock recombination, stock dividend
and the like) constituting Transfer Restricted Securities for the first 90 days
during which a Registration Default has occurred and is continuing and one-half
of one percent (50 basis points) per annum per $1,000 principal amount of
Securities and $5.00 per annum per 25 shares of Common Stock (subject to
adjustment as set forth above) constituting Transfer Restricted Securities for
any additional days during which such Registration Default has occurred and is
continuing. The Company will pay all accrued Liquidated Damages by wire transfer
of immediately available funds or by federal funds check on each Damages Payment
Date (as defined in the Registration Rights Agreement), and Liquidated Damages
will be calculated on the basis of a 360-day year consisting of twelve 30-day
months. Following the cure of a Registration Default, Liquidated Damages will
cease to accrue with respect to such Registration Default.

     "Transfer Restricted Securities" means each Convertible Subordinated Note
and each share of Common Stock issued on conversion thereof until the date on
which such Convertible Subordinated Note or share, as the case may be, (i) has
been transferred pursuant to the Shelf Registration Statement or another
registration statement covering such Convertible Subordinated Note or share
which has been filed with the Commission pursuant to the Securities Act, in
either case after such registration statement has become and while such
registration statement is effective under the Securities Act, (ii) has been
transferred pursuant to Rule 144 under the Securities Act (or any similar
provision then in force), or (iii) may be sold or transferred pursuant to Rule
144(k) under the Securities Act (or any similar provision then in force).

     Pursuant to the Registration Rights Agreement, the Company may suspend the
use of the prospectus which is a part of the Shelf Registration Statement for a
period not to exceed 30 days in any three-month period or for three periods not
to exceed an aggregate of 60 days in any twelve-month period under certain
circumstances (each, a "Suspension Period"); provided that the existence of a
Suspension Period will not prevent the occurrence of a Registration Default or
otherwise limit the obligation of the Company to pay Liquidated Damages.

     The above description of certain provisions of the Registration Rights
Agreement is qualified by reference to, and is subject in its entirety to, the
more complete description thereof contained in the Registration Rights
Agreement.

19.  Trustee Dealings with the Company.

     Subject to certain limitations imposed by the TIA, the Trustee under the
Indenture, in its individual or any other capacity, may become the owner or
pledgee of Convertible Subordinated Notes and may otherwise deal with and
collect obligations owed to it by the Company or its Affiliates and may
otherwise deal with the Company or its Affiliates with the same rights it would
have if it were not Trustee.

20.  No Recourse Against Others.

     A director, officer, employee, agent, representative, stockholder or equity
holder, as such, of the Company shall not have any liability for any obligations
of the Company under the Convertible Subordinated Notes or this Indenture or for
any claim based on, in respect of or by reason of such obligations or their
creation. By accepting a Convertible Subordinated Note, each

                                      A-22

<PAGE>

Convertible Subordinated Note holder shall waive and release all such liability.
The waiver and release shall be part of the consideration for the issue of the
Convertible Subordinated Notes.

21.  Authentication.

     This Convertible Subordinated Note shall not be valid until an authorized
signatory of the Trustee manually signs the Trustee's Certificate of
Authentication on the other side of this Convertible Subordinated Note.

22.  Abbreviations.

     Customary abbreviations may be used in the name of a Convertible
Subordinated Note 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 Gift to Minors Act).

23.  GOVERNING LAW.

     THE LAW OF THE STATE OF NEW YORK SHALL GOVERN THE INDENTURE AND THIS
CONVERTIBLE SUBORDINATED NOTE.

                                   ----------

                                      A-23

<PAGE>

     The Company will furnish to any Convertible Subordinated Note holder upon
written request and without charge a copy of the Indenture that has in it the
text of this Convertible Subordinated Note in larger type. Requests may be made
to:

          School Specialty, Inc.
          W6316 Design Drive
          Greenville, Wisconsin 54945
          Attention:  Chief Financial Officer

                                      A-24

<PAGE>

           ASSIGNMENT FORM                           CONVERSION NOTICE

To assign this Convertible Subordinated    To convert this Convertible
Note, fill in the form below:              Subordinated Note into Common  Stock
                                           of the  Company, check the box: [ ]

I or we assign and transfer this
Convertible Subordinated Note to:

_______________________________________    To convert only part of this
                                           Convertible Subordinated Note, state
_______________________________________    the Original Principal Amount to be
                                           converted (which must be $1,000 or an
(Insert assignee's soc. sec. or tax        integral multiple of $1,000):
ID no.)

_______________________________________    $____________________________________

_______________________________________    If you want the stock certificate
                                           made out in another person's name,
_______________________________________    fill in the form below:
(Print or type assignee's name, address    _____________________________________
and zip code)                              _____________________________________
                                           (Insert other person's soc. sec. or
                                           tax ID no.)
and irrevocably appoint

_______________________________agent to    _____________________________________
transfer this Convertible Subordinated
Note on the books of the Company. The      _____________________________________
agent may substitute another to act for
him.
                                           _____________________________________

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

_______________________________________

Date:                                      Your Signature:
     ----------------------------------                   ----------------------

--------------------------------------------------------------------------------
    (Sign exactly as your name appears on the other side of this Convertible
                               Subordinated Note)

                                      A-25

<PAGE>

                      OPTION OF HOLDER TO ELECT REPURCHASE

     If you wish to have this Convertible Subordinated Note repurchased by the
Company pursuant to Section 3.09 of the Indenture, check the Box: [ ]

     If you wish to have a portion of this Convertible Subordinated Note
purchased by the Company pursuant to Section 3.09 of the Indenture, state the
amount (in multiples of $1,000): $_____.

Date:                            Your Signature:
      -----------------------                   --------------------------------
                                       (Sign exactly as your name appears on the
                                            other side of this Convertible
                                                  Subordinated Note)

Medallion Signature Guarantee:
                              --------------------------------------------------

                                      A-26

<PAGE>

                                    EXHIBIT B

                    FORM OF TRANSFER CERTIFICATE FOR TRANSFER
                           OF RESTRICTED COMMON STOCK

            (Transfers pursuant to Section 12.19(c) of the Indenture)

[NAME AND ADDRESS OF COMMON STOCK TRANSFER AGENT]

     Re:   School Specialty, Inc. 3.75% Convertible Subordinated Notes
           due 2023 (the "Convertible Subordinated Notes")

     Reference is hereby made to the Indenture dated as of July 18, 2003 (the
"Indenture") between School Specialty, Inc. and BNY Midwest Trust Company, as
Trustee. Capitalized terms used but not defined herein shall have the meanings
given them in the Indenture.

     This letter relates to _________ shares of Common Stock represented by the
accompanying certificate(s) that were issued upon conversion of Convertible
Subordinated Notes and which are held in the name of [name of transferor] (the
"Transferor") to effect the transfer of such Common Stock.

     In connection with the transfer of such shares of Common Stock, the
undersigned confirms that such shares of Common Stock are being transferred:

CHECK ONE BOX BELOW

     (1)  [ ]  to the Company; or

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

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

     (4)  [ ]  pursuant to an exemption from registration under the Securities
               Act of 1933 provided by Rule 144 thereunder.

                                      B-1

<PAGE>

     Unless one of the boxes is checked, the transfer agent will refuse to
register any of the Common Stock evidenced by this certificate in the name of
any person other than the registered holder thereof; provided, however, that if
box (3) or (4) is checked, the transfer agent may require, prior to registering
any such transfer of the Common Stock such certifications and other information,
and if box (4) is checked such legal opinions, as the Company has reasonably
requested in writing, by delivery to the transfer agent of a standing letter of
instruction, to confirm that such transfer is being made pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act of 1933.

                                        [Name of Transferor],

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

Dated:

                                      B-2

<PAGE>

                                    EXHIBIT C

                           PROJECTED PAYMENT SCHEDULE

--------------------------------------------------------------------------------
                                                                     Projected
                  Date                                               Payments
--------------------------------------------------------------------------------
July 1, 2003                                                                  --
--------------------------------------------------------------------------------
February 1, 2004                                                   $       20.10
--------------------------------------------------------------------------------
July 1, 2004                                                       $       18.75
--------------------------------------------------------------------------------
February 1, 2005                                                   $       18.75
--------------------------------------------------------------------------------
July 1, 2005                                                       $       18.75
--------------------------------------------------------------------------------
February 1, 2006                                                   $       18.75
--------------------------------------------------------------------------------
July 1, 2006                                                       $       18.75
--------------------------------------------------------------------------------
February 1, 2007                                                   $       18.75
--------------------------------------------------------------------------------
July 1, 2007                                                       $       18.75
--------------------------------------------------------------------------------
February 1, 2008                                                   $       18.75
--------------------------------------------------------------------------------
July 1, 2008                                                       $       18.75
--------------------------------------------------------------------------------
February 1, 2009                                                   $       18.75
--------------------------------------------------------------------------------
July 1, 2009                                                       $       18.75
--------------------------------------------------------------------------------
February 1, 2010                                                   $       18.75
--------------------------------------------------------------------------------
July 1, 2010                                                       $       23.75
--------------------------------------------------------------------------------
February 1, 2011                                                   $        5.00
--------------------------------------------------------------------------------
July 1, 2011                                                       $        5.00
--------------------------------------------------------------------------------
February 1, 2012                                                   $        5.00
--------------------------------------------------------------------------------
July 1, 2012                                                       $        5.00
--------------------------------------------------------------------------------
February 1, 2013                                                   $        5.00
--------------------------------------------------------------------------------
July 1, 2013                                                       $        5.00
--------------------------------------------------------------------------------
February 1, 2014                                                   $        5.00
--------------------------------------------------------------------------------
July 1, 2014                                                       $        5.00
--------------------------------------------------------------------------------
February 1, 2015                                                   $        5.00
--------------------------------------------------------------------------------
July 1, 2015                                                       $        5.00
--------------------------------------------------------------------------------
February 1, 2016                                                   $        5.00
--------------------------------------------------------------------------------
July 1, 2016                                                       $        5.00
--------------------------------------------------------------------------------
February 1, 2017                                                   $        5.00
--------------------------------------------------------------------------------
July 1, 2017                                                       $        5.00
--------------------------------------------------------------------------------
February 1, 2018                                                   $        5.00
--------------------------------------------------------------------------------
July 1, 2018                                                       $        5.00
--------------------------------------------------------------------------------
February 1, 2019                                                   $        5.00
--------------------------------------------------------------------------------
July 1, 2019                                                       $        5.00
--------------------------------------------------------------------------------
February 1, 2020                                                   $        5.00
--------------------------------------------------------------------------------
July 1, 2020                                                       $        5.00
--------------------------------------------------------------------------------
February 1, 2021                                                   $        5.00
--------------------------------------------------------------------------------
July 1, 2021                                                       $        5.00
--------------------------------------------------------------------------------
February 1, 2022                                                   $        5.00
--------------------------------------------------------------------------------
July 1, 2022                                                       $        5.00
--------------------------------------------------------------------------------
February 1, 2023                                                   $        5.00
--------------------------------------------------------------------------------
July 1, 2023                                                       $    3,627.08
--------------------------------------------------------------------------------

                                      C-1Indenture, dated as of June 10, 2003

 Exhibit 4.2 
  
 K2 INC. 
  
 ISSUER 
  
 TO 
  
 U.S. BANK NATIONAL ASSOCIATION 
  
 TRUSTEE 
  

  
 INDENTURE 
  
 Dated as of June 10, 2003 
  

  
 5.00% CONVERTIBLE SENIOR NOTES DUE JUNE 15, 2010

  

 TABLE OF CONTENTS 
  

	 	  	Page

	 ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
	  	1
			
	         SECTION 1.1
	  	 Definitions.
	  	1
	         SECTION 1.2
	  	 Compliance Certificates And Opinions.
	  	9
	         SECTION 1.3
	  	 Form of Documents Delivered to the Trustee.
	  	9
	         SECTION 1.4
	  	 Acts of Holders of Securities.
	  	10
	         SECTION 1.5
	  	 Notices, Etc. to the Trustee and Company.
	  	12
	         SECTION 1.6
	  	 Notice to Holders of Securities; Waiver.
	  	12
	         SECTION 1.7
	  	 Effect of Headings and Table of Contents.
	  	13
	         SECTION 1.8
	  	 Successors and Assigns.
	  	13
	         SECTION 1.9
	  	 Separability Clause.
	  	13
	         SECTION 1.10
	  	 Benefits of Indenture.
	  	13
	         SECTION 1.11
	  	 Governing Law.
	  	13
	         SECTION 1.12
	  	 Legal Holidays.
	  	13
	         SECTION 1.13
	  	 Conflict With Trust Indenture Act.
	  	14
		
	 ARTICLE II SECURITY FORMS
	  	14
			
	         SECTION 2.1
	  	 Form Generally.
	  	14
	         SECTION 2.2
	  	 Form of Security.
	  	15
	         SECTION 2.3
	  	 Form of Certificate of Authentication.
	  	15
	         SECTION 2.4
	  	 Form of Conversion Notice.
	  	15
	         SECTION 2.5
	  	 Form of Assignment.
	  	15
		
	 ARTICLE III THE SECURITIES
	  	15
			
	         SECTION 3.1
	  	 Title and Terms.
	  	15
	         SECTION 3.2
	  	 Denominations.
	  	16
	         SECTION 3.3
	  	 Execution, Authentication, Delivery and Dating.
	  	16
	         SECTION 3.4
	  	 Global Securities; Non-global Securities; Book-entry Provisions.
	  	17
	         SECTION 3.5
	  	 Registration; Registration of Transfer and Exchange; Restrictions on Transfer.
	  	18
	         SECTION 3.6
	  	 Mutilated, Destroyed, Lost or Stolen Securities.
	  	21
	         SECTION 3.7
	  	 Payment of Interest; Interest Rights Preserved.
	  	22
	         SECTION 3.8
	  	 Persons Deemed Owners.
	  	23
	         SECTION 3.9
	  	 Cancellation.
	  	24
	         SECTION 3.10
	  	 Computation of Interest.
	  	24
	         SECTION 3.11
	  	 CUSIP Numbers.
	  	24

  

 i 

 Table of Contents 
 (Continued) 
  

	 	  	 	  	Page

	 ARTICLE IV SATISFACTION AND DISCHARGE
	  	24
			
	         SECTION 4.1
	  	 Satisfaction and Discharge of Indenture.
	  	24
	         SECTION 4.2
	  	 Application of Trust Money.
	  	25
		
	 ARTICLE V REMEDIES
	  	26
			
	         SECTION 5.1
	  	 Events of Default.
	  	26
	         SECTION 5.2
	  	 Acceleration of Maturity; Rescission and Annulment.
	  	27
	         SECTION 5.3
	  	 Collection of Indebtedness and Suits for Enforcement by Trustee.
	  	28
	         SECTION 5.4
	  	 Trustee May File Proofs of Claim.
	  	28
	         SECTION 5.5
	  	 Trustee May Enforce Claims Without Possession of Securities.
	  	29
	         SECTION 5.6
	  	 Application of Money Collected.
	  	29
	         SECTION 5.7
	  	 Limitation on Suits.
	  	30
	         SECTION 5.8
	  	 Unconditional Right of Holders to Receive Principal, Premium and Interest and to Convert.
	  	30
	         SECTION 5.9
	  	 Restoration of Rights and Remedies.
	  	31
	         SECTION 5.10
	  	 Rights and Remedies Cumulative.
	  	31
	         SECTION 5.11
	  	 Delay or Omission Not Waiver.
	  	31
	         SECTION 5.12
	  	 Control by Holders of Securities.
	  	31
	         SECTION 5.13
	  	 Waiver of Past Defaults.
	  	32
	         SECTION 5.14
	  	 Undertaking for Costs.
	  	32
	         SECTION 5.15
	  	 Waiver of Stay, Usury or Extension Laws.
	  	32
		
	 ARTICLE VI THE TRUSTEE
	  	33
			
	         SECTION 6.1
	  	 Certain Duties and Responsibilities.
	  	33
	         SECTION 6.2
	  	 Notice of Defaults.
	  	34
	         SECTION 6.3
	  	 Certain Rights of Trustee.
	  	34
	         SECTION 6.4
	  	 Not Responsible for Recitals or Issuance of Securities.
	  	35
	         SECTION 6.5
	  	 May Hold Securities, Act as Trustee under Other Indentures.
	  	35
	         SECTION 6.6
	  	 Money Held in Trust.
	  	36
	         SECTION 6.7
	  	 Compensation and Reimbursement.
	  	36
	         SECTION 6.8
	  	 Corporate Trustee Required; Eligibility.
	  	37
	         SECTION 6.9
	  	 Resignation and Removal; Appointment of Successor.
	  	37
	         SECTION 6.10
	  	 Acceptance of Appointment by Successor.
	  	38
	         SECTION 6.11
	  	 Merger, Conversion, Consolidation or Succession to Business.
	  	38
	         SECTION 6.12
	  	 Authenticating Agents.
	  	39
	         SECTION 6.13
	  	 Disqualification; Conflicting Interests.
	  	40
	         SECTION 6.14
	  	 Preferential Collection of Claims Against Company.
	  	40

  

 ii 

 Table of Contents 
 (Continued) 
  

	 	  	 	  	Page

	 ARTICLE VII CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER, LEASE OR OTHER DISPOSITION
	  	40
			
	         SECTION 7.1
	  	 Company May Consolidate, Etc. Only on Certain Terms.
	  	40
	         SECTION 7.2
	  	 Successor Substituted.
	  	41
		
	 ARTICLE VIII SUPPLEMENTAL INDENTURES
	  	41
			
	         SECTION 8.1
	  	 Supplemental Indentures Without Consent of Holders of Securities.
	  	41
	         SECTION 8.2
	  	 Supplemental Indentures with Consent of Holders of Securities.
	  	42
	         SECTION 8.3
	  	 Execution of Supplemental Indentures.
	  	43
	         SECTION 8.4
	  	 Effect of Supplemental Indentures.
	  	43
	         SECTION 8.5
	  	 Reference in Securities to Supplemental Indentures.
	  	44
	         SECTION 8.6
	  	 Notice of Supplemental Indentures.
	  	44
		
	 ARTICLE IX MEETINGS OF HOLDERS OF SECURITIES
	  	44
			
	         SECTION 9.1
	  	 Purposes for Which Meetings May Be Called.
	  	44
	         SECTION 9.2
	  	 Call Notice and Place of Meetings.
	  	44
	         SECTION 9.3
	  	 Persons Entitled to Vote at Meetings.
	  	45
	         SECTION 9.4
	  	 Quorum; Action.
	  	45
	         SECTION 9.5
	  	 Determination of Voting Rights; Conduct and Adjournment of Meetings.
	  	45
	         SECTION 9.6
	  	 Counting Votes and Recording Action of Meetings.
	  	46
		
	 ARTICLE X COVENANTS
	  	47
			
	         SECTION 10.1
	  	 Payment of Principal, Premium and Interest.
	  	47
	         SECTION 10.2
	  	 Maintenance of Offices or Agencies.
	  	47
	         SECTION 10.3
	  	 Money for Security Payments to Be Held in Trust.
	  	48
	         SECTION 10.4
	  	 Existence.
	  	49
	         SECTION 10.5
	  	 Payment of Taxes and Other Claims.
	  	49
	         SECTION 10.6
	  	 Registration and Listing.
	  	49
	         SECTION 10.7
	  	 Statement by Officers as to Default.
	  	49
	         SECTION 10.8
	  	 Delivery of Certain Information.
	  	50
	         SECTION 10.9
	  	 Resale of Certain Securities.
	  	50
	         SECTION 10.10
	  	 Registration Rights.
	  	50
	         SECTION 10.11
	  	 Waiver of Certain Covenants.
	  	51
		
	 ARTICLE XI REDEMPTION OF SECURITIES
	  	51
			
	         SECTION 11.1
	  	 Right of Redemption.
	  	51

  

 iii 

 Table of Contents 
 (Continued) 
  

	 	  	 	  	Page

	         SECTION 11.2
	  	 Applicability of Article.
	  	52
	         SECTION 11.3
	  	 Election to Redeem; Notice to Trustee.
	  	52
	         SECTION 11.4
	  	 Selection by Trustee of Securities to Be Redeemed.
	  	52
	         SECTION 11.5
	  	 Notice of Redemption.
	  	52
	         SECTION 11.6
	  	 Deposit of Redemption Price.
	  	53
	         SECTION 11.7
	  	 Securities Payable on Redemption Date.
	  	54
		
	 ARTICLE XII CONVERSION OF SECURITIES
	  	54
			
	         SECTION 12.1
	  	 Conversion Privilege and Conversion Rate.
	  	54
	         SECTION 12.2
	  	 Exercise of Conversion Privilege.
	  	55
	         SECTION 12.3
	  	 Fractions of Shares.
	  	56
	         SECTION 12.4
	  	 Adjustment of Conversion Rate.
	  	57
	         SECTION 12.5
	  	 Notice of Adjustments of Conversion Rate.
	  	62
	         SECTION 12.6
	  	 Notice of Certain Corporate Action.
	  	62
	         SECTION 12.7
	  	 Company to Reserve Common Stock.
	  	63
	         SECTION 12.8
	  	 Taxes on Conversions.
	  	63
	         SECTION 12.9
	  	 Covenant as to Common Stock.
	  	64
	         SECTION 12.10
	  	 Cancellation of Converted Securities.
	  	64
	         SECTION 12.11
	  	 Provision in Case of Consolidation, Merger or Sale of Assets.
	  	64
	         SECTION 12.12
	  	 Rights Issued in Respect of Common Stock.
	  	65
	         SECTION 12.13
	  	 Responsibility of Trustee for Conversion Provisions.
	  	66
		
	 ARTICLE XIII  REPURCHASE OF SECURITIES AT THE OPTION OF THE HOLDER UPON A CHANGE IN
CONTROL
	  	66
			
	         SECTION 13.1
	  	 Right to Require Repurchase.
	  	66
	         SECTION 13.2
	  	 Conditions to the Company's Election to Pay the Repurchase Price in Common Stock.
	  	67
	         SECTION 13.3
	  	 Notices; Method of Exercising Repurchase Right, Etc.
	  	67
	         SECTION 13.4
	  	 Certain Definitions.
	  	70
	         SECTION 13.5
	  	 Consolidation, Merger, etc.
	  	72
		
	 ARTICLE XIV  HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY; NON-RECOURSE
	  	72
			
	         SECTION 14.1
	  	 Company to Furnish Trustee Names and Addresses of Holders.
	  	72
	         SECTION 14.2
	  	 Preservation of Information.
	  	73
	         SECTION 14.3
	  	 Reports by Trustee.
	  	73
	         SECTION 14.4
	  	 Reports by Company.
	  	73

  

 iv 

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	 	  	 	  	Page

	 ARTICLE XV IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS
	  	74
			
	         SECTION 15.1
	  	 Indenture and Securities Solely Corporate Obligations.
	  	74

  

 v 

 INDENTURE, dated as of June 10, 2003, between K2 Inc., a corporation duly organized and existing under
the laws of the State of Delaware, having its principal office at 2051 Palomar Airport Road, Carlsbad, California 92009 (herein called the “Company”), and U.S. Bank National Association, a national banking association, as Trustee hereunder
(herein called the “Trustee”). 
  
 RECITALS OF THE
COMPANY 
  
 The Company has duly authorized the creation of an
issue of its 5.00% Convertible Senior Notes due June 15, 2010 (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, 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. Further, all things necessary to duly authorize the issuance of the Common Stock (as defined below) of the Company issuable upon the conversion of the Securities, and to duly reserve for issuance the number of shares of Common Stock
issuable upon such conversion, have been done. 
  
 NOW, THEREFORE,
THIS INDENTURE WITNESSETH: 
  
 For and in consideration of the
premises and the purchase of the Securities by the Holders (as defined below) thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Securities, as follows: 
  
 ARTICLE I 
  
 DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION 
  
 SECTION 1.1 Definitions. 
  
 For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires: 
  
 (1) the terms defined in this Article have the meanings assigned to them in
this Article and include the plural as well as the singular; 
  
 (2) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles in the United States, and, except as otherwise herein expressly provided, the term
“generally accepted accounting principles” with respect to any computation required or permitted hereunder shall mean such accounting principles as are generally accepted at the date of such computation; and 
  

 1 

 (3) the words “herein,” “hereof” and “hereunder” and other words of similar
import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision. 
  
 “Act,” when used with respect to any Holder of a Security, has the meaning specified in Section 1.4. 
  
 “Affiliate” of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, “control”, when used with respect to any specified Person, means the power to direct the
management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the
foregoing. 
  
 “Agent Member” means any member of, or
participant in, the Depositary. 
  
 “Applicable
Procedures” means, with respect to any transfer or transaction involving a Global Security or beneficial interest therein, the rules and procedures of DTC or any successor Depository, in each case to the extent applicable to such transaction
and as in effect from time to time. 
  
 “Authenticating
Agent” means any Person authorized pursuant to Section 6.12 to act on behalf of the Trustee to authenticate Securities. 
  
 “Board of Directors” means either the board of directors of the Company or any duly authorized committee of that board. 
  
 “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 have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification, shall have been delivered to
the Trustee. 
  
 “Business Day,” when used with respect
to any Place of Payment, Place of Conversion or any other place, as the case may be, means each day of the year other than a Saturday or a Sunday or other day on which banking institutions in The City of New York are required or authorized by law or
regulation to close. 
  
 “Change in Control” has the
meaning specified in Section 13.4(2). 
  
 “Closing Price Per
Share” means, with respect to the Common Stock, for any day, (i) the last reported sale price regular way on The New York Stock Exchange or, (ii) if the Common Stock is not quoted on The New York Stock Exchange, the last reported sale price
regular way per share or, in case no such reported sale takes place on such day, the average of the reported closing bid and asked prices regular way, in either case, on the principal national securities exchange on which the Common Stock is listed
or admitted to trading, (iii) if the Common Stock is not quoted on The New York Stock Exchange or listed or admitted to trading on any national securities exchange, the average of the closing bid and asked prices in the over-the-counter market as
furnished by any New York Stock Exchange member firm selected from time to time by the Company for that purpose. 
  

 2 

 “Code” has the meaning specified in Section 2.1. 
  
 “Commission” means the United States Securities and Exchange
Commission, as from time to time constituted, created under the Exchange Act, or, if at any time after the execution of this Indenture such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then
the body performing such duties at such time. 
  
 “Common
Stock” means the Common Stock, par value $1.00 per share, of the Company authorized at the date of this Indenture as originally executed or as such stock may be constituted from time to time (including upon a change in the par value of such
securities). Subject to the provisions of Section 12.11, shares issuable on conversion of Securities shall include only shares of Common Stock or shares of any class or classes of common stock resulting from any reclassification or reclassifications
thereof; provided, however, that if at any time there shall be more than one such resulting class, the shares so issuable on conversion of Securities shall include shares of all such classes, and 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 and further provided
that all references to “Common Stock” payable in connection with the purchase of Securities upon a Change in Control in accordance with the terms of Section 13.2 shall be deemed to include common stock of any entity, including the parent
company of any such entity, that the Company consolidates or merges with or into, that is merged into the Company, or to which the Company sells or transfers all or substantially all of the Company’s assets provided that such common stock is
listed on a national securities exchange or quoted on an inter-dealer quotation system, and further provided that Common Stock shall also include any associated rights under the Company’s certificate of incorporation, bylaws and stockholder
rights plan. 
  
 “common stock” includes any stock of
any class of capital stock which has no preference in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding up of the issuer thereof, which has unrestricted voting rights and
which is not subject to redemption by the issuer thereof. 
  
 “Company” means the Person named as the “Company” in the first paragraph of this Indenture until a successor Person shall have become such pursuant to the applicable provisions of this Indenture, and thereafter
“Company” shall mean such successor Person. 
  
 “Company Notice” has the meaning specified in Section 13.3. 
  
 “Company Request” or “Company Order” means a written request or order signed in the name of the Company by an Officer of the Company and delivered to the Trustee. 
  
 “Constituent Person” has the meaning specified in Section 12.11.

  
 “Conversion Agent” means any Person authorized by
the Company to convert Securities in accordance with Article XII. The Company has initially appointed the Trustee as its Conversion Agent pursuant to Section 10.2 hereof. 
  
 “Conversion Price” has the meaning specified in Section 13.4(3). 
  

 3 

 “Conversion Rate” has the meaning specified in Section 12.1. 
  
 “Corporate Trust Office” means the office of the Trustee at which
at any particular time the trust created by this Indenture shall be principally administered (which at the date of this Indenture is located in St. Paul, Minnesota). 
  
 “corporation” means a corporation, company, association, joint-stock company or business trust. 
  
 “Defaulted Interest” has the meaning specified in Section 3.7.

  
 “Depositary” means, with respect to any Securities
(including any Global Securities), a clearing agency that is registered as such under the Exchange Act and is designated by the Company to act as Depositary for such Securities (or any successor securities clearing agency so registered). 

 
 “Dollar” or “U.S. $” means a dollar or other
equivalent unit in such coin or currency of the United States as at the time shall be legal tender for the payment of public and private debts. 
  
 “DTC” means The Depository Trust Company, a New York corporation. 
  
 “Effective Failure” has the meaning specified in Section 2.2. 
  
 “Effectiveness Period” has the meaning specified in Section 2.2.

  
 “Event of Default” has the meaning specified in
Section 5.1. 
  
 “Exchange Act” means the Securities
Exchange Act of 1934 (or any successor statute), as amended from time to time. 
  
 “Global Security” means a Security that is registered in the Security Register in the name of a Depositary or a nominee thereof. 
  
 “Holder” means the Person in whose name the Security is registered in the Security Register. 
  
 “Indenture” means this Indenture as originally executed or as it
may from time to time be supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof, including, for all purposes of this Indenture and any such supplemental indenture, the
provisions of the Trust Indenture Act that are deemed to be a part of and govern this Indenture and any such supplemental indenture, respectively. 
  
 “Initial Purchasers” mean Goldman, Sachs & Co., Banc One Capital Markets, Inc., and J.P. Morgan Securities Inc. 
  
 “Initial Purchasers’ Option” has the meaning specified in
Section 3.1. 
  
 “Interest Payment Date” means the
Stated Maturity of an installment of interest on the Securities. 
  

 4 

 “Issue Date” means June 10, 2003. 
  
 “Liquidated Damages” has the meaning specified in Section 2.2. 
  
 “Maturity,” when used with respect to any Security, means the date
on which the principal of such Security becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, call for redemption, exercise of the repurchase right set forth in Article XIII or
otherwise. 
  
 “Non-electing Share” has the meaning
specified in Section 12.11. 
  
 “Notice Date” has the
meaning specified in Section 2.2. 
  
 “Notice of
Default” has the meaning specified in Section 5.1. 
  
 “Officer” means the Chairman or any Co-Chairman of the Board of Directors, any Vice Chairman of the Board of Directors, the Chief Executive Officer, the Chief Operating Officer, the President, any Executive Vice President, any
Vice President or the Chief Financial Officer of the Company. 
  
 “Officer’s Certificate” means a certificate signed by an Officer of the Company, and delivered to the Trustee. 
  
 “Opinion of Counsel” means a written opinion of counsel, who may be counsel for the Company, and who shall be reasonably acceptable to the
Trustee. 
  
 “Outstanding,” when used with respect to
Securities, means, as of the date of determination, all Securities theretofore authenticated and delivered under this Indenture, except: 
  
 (i) Securities theretofore canceled by the Trustee or delivered to the Trustee for cancellation; 
  
 (ii) Securities for which money in the necessary amount to pay or redeem such
Securities has been theretofore 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 that if such Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture; 
  
 (iii) Securities which have been cancelled pursuant to Section 3.6 in exchange for which 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; and 
  
 (iv) Securities
converted into Common Stock pursuant to Article XII; 
  
 provided, however,
that in determining whether the Holders of the requisite principal amount of Outstanding Securities are present at a meeting of Holders of Securities for quorum purposes or 

  

 5 

 
have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Securities owned by the Company or any other obligor upon the
Securities or any Affiliate of the Company or such other obligor shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Trustee shall be protected in relying upon any such determination as to the presence of a
quorum or upon any such request, demand, authorization, direction, notice, consent or waiver, only Securities which a Responsible Officer of the Trustee has been notified in writing to be so owned shall be so disregarded. Securities so owned which
have been pledged in good faith may be regarded as Outstanding if the pledgee is not the Company or any other obligor upon the Securities or any Affiliate of the Company or such other obligor, and the Trustee shall be protected in relying upon an
Officer’s Certificate to such effect. 
  
 “Paying
Agent” means any Person authorized by the Company to pay the principal of or interest on any Securities on behalf of the Company and, except as otherwise specifically set forth herein, such term shall include the Company if it shall act as its
own Paying Agent. The Company has initially appointed the Trustee as its Paying Agent pursuant to Section 10.2 hereof. 
  
 “Person” means any individual, corporation, limited liability company, partnership, joint venture, trust, estate, unincorporated organization or
government or any agency or political subdivision thereof. 
  
 “Place of Conversion” has the meaning specified in Section 3.1. 
  
 “Place of Payment” has the meaning specified in Section 3.1 
  
 “Predecessor Security” of any particular Security means every previous Security evidencing all or a portion of the same debt as that evidenced
by such particular Security; and, for the purposes of this definition, any Security authenticated and delivered under Section 3.6 in exchange for or in lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to evidence the same debt
as the mutilated, destroyed, lost or stolen Security. 
  
 “Purchase Agreement” means the Purchase Agreement, dated as of June 4, 2003, between the Company and the Initial Purchasers, as such agreement may be amended from time to time. 
  
 “Qualified Institutional Buyer” shall mean a “qualified
institutional buyer” as defined in Rule 144A. 
  
 “Record Date” means any Regular Record Date or Special Record Date. 
  
 “Record Date Period” means the period from the close of business of any Regular Record Date next preceding any Interest Payment Date to the opening of business on such Interest Payment Date. 
  
 “Redemption Date” when used with respect to any Security to be
redeemed, means the date fixed for such redemption by or pursuant to this Indenture. 
  
 “Redemption Price” when used with respect to any Security to be redeemed, means the price at which it is to be redeemed pursuant to this Indenture. 
  

 6 

 “Registrable Securities” has the meaning specified in Section 10.10. 
  
 “Registration Default” has the meaning specified in Section 2.2.

  
 “Registration Rights Agreement” means the
Registration Rights Agreement, dated as of June 10, 2003, between the Company and the Initial Purchasers, as such agreement may be amended from time to time in accordance with its terms. 
  
 “Regular Record Date” for interest payable in respect of any Security on any Interest Payment Date means the June
1 or December 1 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. 
  
 “Repurchase Date” has the meaning specified in Section 13.1. 
  
 “Repurchase Price” has the meaning specified in Section 13.1. 
  
 “Responsible Officer,” when used with respect to the Trustee, means
any officer within the Corporate Trust Office of the Trustee with direct responsibility for the administration of this Indenture and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred
because of his knowledge and familiarity with the particular subject. 
  
 “Restricted Global Security” has the meaning specified in Section 2.1. 
  
 “Restricted Securities” means all Securities required pursuant to Section 3.5(3) to bear any Restricted Securities Legend. Such term includes the Restricted Global Security. 
  
 “Restricted Securities Legend” means, collectively, the legends
substantially in the forms of the legends required in the form of Security set forth in Section 2.2 to be placed upon each Restricted Security. 
  
 “Rule 144” means Rule 144 under the Securities Act (or any successor provision), as it may be amended from time to time. 
  
 “Rule 144A” means Rule 144A under the Securities Act (or any
successor provision), as it may be amended from time to time. 
  
 “Rule 144A Information” has the meaning specified in Section 10.8. 
  
 “Securities” has the meaning ascribed to it in the first paragraph under the caption “Recitals of the Company.” 
  
 “Securities Act” means the United States Securities Act of 1933 (or any successor statute), as amended from time
to time. 
  
 “Security Register” and “Security
Registrar” have the respective meanings specified in Section 3.5. 
  
 “Shelf Registration Statement” has the meaning specified in Section 2.2. 
  

 7 

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

“Special Record Date” for the payment of any Defaulted Interest means a date fixed by the Company pursuant to Section 3.7. 
  
 “Stated Maturity” when used with respect to any Security or any
installment of interest thereon, means the date specified in such Security as the fixed date on which the principal of such Security or such installment of interest is due and payable. 
  
 “Subsidiary” means 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, “voting stock” means stock or other similar interests in the corporation which
ordinarily has or have voting power for the election of directors, or persons performing similar functions, whether at all times or only so long as no senior class of stock or other interests has or have such voting power by reason of any
contingency. 
  
 “Successor Security” of any particular
Security means every Security issued after, and evidencing all or a portion of the same debt as that evidenced by, such particular Security; and, for the purposes of this definition, any Security authenticated and delivered under Section 3.6 in
exchange for or in lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Security. 
  
 “Surrender Certificate” means a certificate substantially in the form set forth in Exhibit F. 
  
 “Trading Day” means (i) if the Common Stock is quoted on The New
York Stock Exchange or any other system of automated dissemination of quotations of securities prices, days on which trades may be effected through such system, (ii) if the Common Stock is listed or admitted for trading on any national or regional
securities exchange, days on which such national or regional securities exchange is open for business, or (iii) if the Common Stock is not listed on a national or regional securities exchange or quoted on The New York Stock Exchange or any other
system of automated dissemination of quotation of securities prices, days on which the Common Stock is traded regular way in the over-the-counter market and for which a closing bid and a closing asked price for the Common Stock are available.

  
 “Trust Indenture Act” means the Trust Indenture Act
of 1939, and the rules and regulations thereunder, as in force at the date as of which this Indenture was executed, provided, however, that in the event the Trust Indenture Act of 1939 is amended after such date, “Trust Indenture Act”
means, to the extent required by any such amendment, the Trust Indenture Act of 1939, and the rules and regulations thereunder, as so amended. 
  
 “Trustee” means the Person named as the “Trustee” in the first paragraph of this Indenture until a successor Trustee shall have become
such pursuant to the applicable provisions of this Indenture, and thereafter “Trustee” shall mean such successor Trustee. 
  

 8 

 “United States” means the United States of America (including the States and the District of
Columbia), its territories, its possessions and other areas subject to its jurisdiction (its “possessions” including Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island and the Northern Mariana Islands). 
  
 “Unrestricted Securities Certificate” means a certificate
substantially in the form set forth in Exhibit E. 
  
 SECTION 1.2 Compliance
Certificates And Opinions. 
  
 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 Officer’s Certificate stating that all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent, if any, have been complied with, except that in the case of any such application or request
as to which the furnishing of such documents is specifically required by any provision of this Indenture relating to such particular application or request, no additional certificate or opinion need be furnished. 
  
 Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture (including certificates provided for in Section 10.7) shall include: 
  
 (1) a statement that the individual signing such certificate or opinion 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 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 such individual, such condition or covenant has been complied with. 
  
 SECTION 1.3 Form of Documents Delivered to the Trustee. 
  
 In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such
matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such
Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents. 
  
 Any certificate or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which such certificate or opinion is based are 

  

 9 

 
erroneous. Any such certificate or opinion of counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company or any other Person stating that the information with respect to such factual matters is in the possession of the Company or such other Person, unless such counsel knows, or in the exercise
of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous. 
  
 Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and form one instrument. 
  
 SECTION 1.4 Acts of Holders of Securities. 
  
 (1) Any request, demand, authorization, direction, notice, consent, waiver or other action provided or permitted by this Indenture to be given or taken by Holders of Securities may be embodied in and evidenced by (A)
one or more instruments of substantially similar tenor signed by such Holders in person or by an agent or proxy duly appointed in writing by such Holders or (B) 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 IX. Such action shall become effective when such instrument or instruments or record is delivered to the
Trustee and, where it is hereby expressly required, to the Company. The Trustee shall promptly deliver to the Company copies of all such instruments and records delivered to the Trustee. Such instrument or instruments and records (and the action
embodied therein and evidenced thereby) are herein sometimes referred to as the “Act” of the Holders of Securities signing such instrument or instruments and so voting at such meeting. Proof of execution of any such instrument or of a
writing appointing any such agent or proxy, or of the holding by any Person of a Security, shall be sufficient for any purpose of this Indenture and (subject to Section 6.1) conclusive in favor of the Trustee and the 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 9.6. 
  
 (2) The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by
a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Where such execution is by a signer
acting in a capacity other than his individual capacity, such certificate or affidavit shall also constitute sufficient proof of his authority. 
  
 (3) The principal amount and serial number of any Security held by any Person, and the date of his holding the same, shall be proved by the Security
Register. 
  
 (4) The fact and date of execution of any such
instrument or writing and the authority of the Person executing the same may also be proved in any other manner which the Trustee deems sufficient; and the Trustee may in any instance require further proof with respect to any of the matters referred
to in this Section 1.4. 
  

 10 

 (5) The Company may set any Business Day as the record date for the purpose of determining the Holders
entitled to give or take any request, demand, authorization, direction, notice, consent, waiver or other action, or to vote on any action, authorized or permitted by this Indenture to be given or taken by Holders. Promptly and in any case not later
than ten days after setting a record date, the Company shall notify the Trustee and the Holders of such record date. If not set by the Company prior to the first solicitation of a Holder made by any Person in respect of any such action, or, in the
case of any such vote, prior to such vote, the record date for any such action or vote shall be the 30th day (or, if later, the date of the most recent list of Holders required to be provided pursuant to Section 14.1) prior to such first
solicitation or vote, as the case may be. With regard to any record date, the Holders on such date (or their duly appointed agents or proxies), and only such Persons, shall be entitled to give or take, or vote on, the relevant action, whether or not
such Holders remain Holders after such record date. Notwithstanding the foregoing, the Company shall not set a record date for, and the provisions of this paragraph shall not apply with respect to, any notice, declaration or direction referred to in
the next paragraph. 
  
 Upon receipt by the Trustee from any
Holder of (i) any notice of default or breach referred to in Section 5.1(4), if such default or breach has occurred and is continuing and the Trustee shall not have given such a notice to the Company, (ii) any declaration of acceleration referred to
in Section 5.2, if an Event of Default has occurred and is continuing and the Trustee shall not have given such a declaration to the Company, or (iii) any direction referred to in Section 5.12, if the Trustee shall not have taken the action
specified in such direction, then, with respect to clauses (ii) and (iii), a record date shall automatically and without any action by the Company or the Trustee be set for determining the Holders entitled to join in such declaration or direction,
which record date shall be the close of business on the tenth day (or, if such day is not a Business Day, the first Business Day thereafter) following the day on which the Trustee receives such declaration or direction, and, with respect to clause
(i), the Trustee may set any day as a record date for the purpose of determining the Holders entitled to join in such notice of default. Promptly after such receipt by the Trustee of any such declaration or direction referred to in clause (ii) or
(iii), and promptly after setting any record date with respect to clause (i), and as soon as practicable thereafter, the Trustee shall notify the Company and the Holders of any such record date so fixed. The Holders on such record date (or their
duly appointed agents or proxies), and only such Persons, shall be entitled to join in such notice, declaration or direction, whether or not such Holders remain Holders after such record date; provided that, unless such notice, declaration or
direction shall have become effective by virtue of Holders of the requisite principal amount of Securities on such record date (or their duly appointed agents or proxies) having joined therein on or prior to the 90th day after such record date, such
notice, declaration or direction shall automatically and without any action by any Person be canceled and of no further effect. Nothing in this paragraph shall be construed to prevent a Holder (or a duly appointed agent or proxy thereof) from
giving, before or after the expiration of such 90-day period, a notice, declaration or direction contrary to or different from, or, after the expiration of such period, identical to, the notice, declaration or direction to which such record date
relates, in which event a new record date in respect thereof shall be set pursuant to this paragraph. In addition, nothing in this paragraph shall be construed to render ineffective any notice, declaration or direction of the type referred to in
this paragraph given at any time to the Trustee and the Company by Holders (or their duly appointed agents or proxies) of the requisite principal amount of Securities on the date such notice, declaration or direction is so given. 
  

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 (6) Except as provided in Sections 5.12 and 5.13, any request, demand, authorization, direction, notice,
consent, election, waiver or other Act of the Holder of any Security shall bind every future Holder of the same Security and the Holder of every Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by the Trustee or the Company in reliance thereon, whether or not notation of such action is made upon such Security. 
  
 (7) The provisions of this Section 1.4 are subject to the provisions of Section 9.5. 
  
 SECTION 1.5 Notices, Etc. to the Trustee and Company. 
  
 Any request, demand, authorization, direction, notice, consent, election,
waiver or other Act of Holders of Securities or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with, 
  
 (1) the Trustee by any Holder of Securities or by the Company shall be sufficient for every purpose hereunder if made, given, furnished or filed in
writing to or with a Responsible Officer of the Trustee and received at its Corporate Trust Office, Attention: Institutional Trust Services. 
  
 (2) the Company by the Trustee or by any Holder of Securities shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided)
if in writing, mailed, first-class postage prepaid, or telecopied and confirmed by mail, first-class postage prepaid, or delivered by hand or overnight courier, addressed to the Company at 2051 Palomar Airport Road, Carlsbad, California 92009,
Attention: Chief Financial Officer, or at any other address previously furnished in writing to the Trustee by the Company. 
  
 SECTION 1.6 Notice to Holders of Securities; Waiver. 
  
 Except as otherwise expressly provided herein, where this Indenture provides for notice to Holders of Securities of any event, such notice shall be
sufficiently given to Holders if in writing and mailed, first-class postage prepaid or delivered by an overnight delivery service, to each Holder of a Security affected by such event, at the address of such Holder as it appears in the Security
Register, not earlier than the earliest date and not later than the latest date prescribed for the giving of such notice. 
  
 Neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder of a Security shall affect the sufficiency of
such notice with respect to other Holders of Securities. In case by reason of the suspension of regular mail service or by reason of any other cause it shall be impracticable to give such notice by mail, then such notification to Holders of
Securities as shall be made with the approval of the Trustee, which approval shall not be unreasonably withheld, shall constitute a sufficient notification to such Holders for every purpose hereunder. 
  
 Such notice shall be deemed to have been given on the date of such mailing,
if by mail or by overnight courier, and on the date the notice is furnished if by telecopy or by hand. 
  

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 Where this Indenture provides for notice in any manner, such notice may be waived in writing by the
Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders of Securities shall be filed with the Trustee, but such filing shall not be a condition
precedent to the validity of any action taken in reliance upon such waiver. 
  
 SECTION 1.7 Effect of Headings and Table of Contents. 
  
 The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. 
  
 SECTION 1.8 Successors and Assigns. 
  

All covenants and agreements in this Indenture by the Company shall bind its successors and assigns, whether so expressed or not. 
  
 SECTION 1.9 Separability Clause. 
  
 In case any provision in this Indenture or the Securities shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. 
  
 SECTION 1.10 Benefits of Indenture. 
  
 Nothing in this Indenture or in the Securities, express or implied, shall give to any Person, other than the parties hereto and their successors and
assigns hereunder and the Holders of Securities, any benefit or legal or equitable right, remedy or claim under this Indenture. 
  
 SECTION 1.11 Governing Law. 
  
 THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, THE UNITED STATES
OF AMERICA INCLUDING, WITHOUT LIMITATION, SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW AND NEW YORK CIVIL PRACTICE LAWS AND RULE 327(B), WITHOUT GIVING EFFECT TO ANY PROVISIONS THEREOF RELATING TO CONFLICT OF LAW.

  
 SECTION 1.12 Legal Holidays. 
  
 In any case where any Interest Payment Date, Redemption Date, Repurchase
Date or Stated Maturity of any Security or the last day on which a Holder of a Security has a right to convert his Security shall not be a Business Day at a Place of Payment or Place of Conversion, as the case may be, then (notwithstanding any other
provision of this Indenture or of the Securities) payment of principal of, premium, if any, or interest on, or the payment of the Redemption Price or Repurchase Price (whether the same is payable in cash or in shares of Common Stock or a combination
thereof in the case of the Repurchase Price) with respect to, or delivery for conversion of, such Security need not be made at such Place of Payment or Place of Conversion, 

  

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as the case may be, on or by such day, but may be made on or by the next succeeding Business Day at such Place of Payment or Place of Conversion, as the case
may be, with the same force and effect as if made on the Interest Payment Date, Redemption Date or Repurchase Date, or at the Stated Maturity or by such last day for conversion; provided, however, that in the case that payment is made on such
succeeding Business Day, no interest shall accrue on the amount so payable for the period from and after such Interest Payment Date, Redemption Date, Repurchase Date, Stated Maturity or last day for conversion, as the case may be. 
  
 SECTION 1.13 Conflict With Trust Indenture Act. 
  
 If any provision hereof limits, qualifies or conflicts with a provision of
the Trust Indenture Act that is required under such Act to be a part of and govern this Indenture, the latter provision shall control. If any provision of this Indenture modifies or excludes any provision of the Trust Indenture Act that may be so
modified or excluded, the latter provision shall be deemed to apply to this Indenture as so modified or to be excluded, as the case may be. Until such time as this Indenture shall be qualified under the Trust Indenture Act, this Indenture, the
Company and the Trustee shall be deemed for all purposes hereof to be subject to and governed by the Trust Indenture Act to the same extent as would be the case if this Indenture were so qualified on the date hereof. 
  
 ARTICLE II 
  
 SECURITY FORMS 
  
 SECTION 2.1 Form Generally. 
  
 The Securities shall be in substantially the form set forth in Exhibit A,
with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as
may be required to comply with the rules of any securities exchange, the Internal Revenue Code of 1986, as amended, and regulations thereunder (the “Code”), or as may, consistent herewith, be determined by the officers executing such
Securities, as evidenced by their execution thereof. All Securities shall be in fully registered form. 
  
 The Trustee’s certificates of authentication shall be in substantially the form set forth in Exhibit B. 
  
 Conversion notices shall be in substantially the form set forth in Exhibit C.

  
 Repurchase notices shall be substantially in the form set
forth in Exhibit E. 
  
 The Securities shall be printed,
lithographed, typewritten or engraved or produced by any combination of these methods or may be produced in any other manner permitted by the rules of any automated quotation system or securities exchange (including on steel engraved borders if so
required by any securities exchange upon which the Securities may be listed) on which the Securities may he quoted or listed, as the case may be, all as determined by the officers executing such Securities, as evidenced by their execution thereof.

  

 14 

 Upon their original issuance, Securities issued as contemplated by the Purchase Agreement to Qualified
Institutional Buyers in reliance on Rule 144A shall be issued in the form of one or more Global Securities in definitive, fully registered form without interest coupons and bearing the Restricted Securities Legend. Such Global Security shall be
registered in the name of DTC, as Depositary, or its nominee and deposited with the Trustee, as custodian for DTC, for credit by DTC to the respective accounts of beneficial owners of the Securities represented thereby (or such other accounts as
they may direct). Such Global Security, together with its Successor Securities which are Global Securities, are collectively herein called the “Restricted Global Security.” 
  
 SECTION 2.2 Form of Security. 
  
 The Securities shall be in the form attached hereto as Exhibit A. 
  

SECTION 2.3 Form of Certificate of Authentication. 
  
 The Certificate of Authentication shall be in the form attached hereto as Exhibit B. 
  
 SECTION 2.4 Form of Conversion Notice. 
  
 The Form of Conversion Notice shall be in the form attached hereto as Exhibit C. 
  
 SECTION 2.5 Form of Assignment. 
  
 The Form of Assignment shall be in the form attached hereto as Exhibit D.

  
 ARTICLE III 
  
 THE SECURITIES 
  
 SECTION 3.1 Title and Terms. 
  
 The aggregate principal amount of Securities which may be authenticated and
delivered under this Indenture is limited to U.S. $75,000,000, except for Securities authenticated and delivered pursuant to Section 3.4, 3.5, 3.6, 8.5, 12.2 or 13.3(5) in exchange for, or in lieu of, other Securities previously authenticated and
delivered under this Indenture. 
  
 The Securities shall be known
and designated as the “5.00% Convertible Senior Notes due June 15, 2010” of the Company. Their Stated Maturity shall be June 15, 2010 and they shall bear interest on their principal amount from June 10, 2003, payable semi-annually in
arrears on June 15 and December 15 in each year, commencing December 15, 2003, at the rate of 5.00% per annum until the principal thereof is due; provided, however, that payments shall only be made on a Business Day as provided in Section 1.12.

  
 The principal of, premium, if any, and interest on the
Securities shall be payable as provided in the form of Security set forth in Section 2.2, and the Repurchase Price, whether 

  

 15 

 
payable in cash or in shares of Common Stock or a combination thereof, shall be payable at such places as are identified in the Company Notice given pursuant
to Section 13.3 (any city in which any Paying Agent is located being herein called a “Place of Payment”). 
  
 The Registrable Securities are entitled to the benefits of a Registration Rights Agreement as provided by Section 10.10 and in the form of Security set
forth in Section 2.2. The Securities are entitled to the payment of Liquidated Damages as provided by Section 10.10. 
  
 At any time on or after June 15, 2008, the Securities shall be redeemable at the option of the Company, in whole or in part, subject to the conditions and
as otherwise provided in Article XI and in the form of Security set forth in Section 2.2. 
  
 The Securities shall be convertible as provided in Article XII (any city in which any Conversion Agent is located being herein called a “Place of Conversion”). 
  
 The Securities shall be subject to repurchase by the Company at the option of
the Holders as provided in Article XIII. 
  
 SECTION 3.2 Denominations.

  
 The Securities shall be issuable only in registered form,
without coupons, in denominations of U.S. $1,000 and integral multiples of U.S. $1,000 in excess thereof. 
  
 SECTION 3.3 Execution, Authentication, Delivery and Dating. 
  
 The Securities shall be executed on behalf of the Company by an Officer of the Company. Any such signature may be manual or facsimile. 
  
 Securities bearing the manual or facsimile signature of individuals who were
the proper officers of the Company at the time of execution shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Securities or did not hold
such offices at the date of such Securities. 
  
 At any time and
from time to time after the execution and delivery of this Indenture, the Company may deliver Securities executed by the Company to the Trustee or to its order 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 make available for delivery such Securities as in this Indenture provided. 
  
 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 in Exhibit B hereto executed by the Trustee by manual signature of an authorized signatory, and such certificate upon any Security shall be
conclusive evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder. 
  

 16 

 SECTION 3.4 Global Securities; Non-global Securities; Book-entry Provisions. 
  
 (1) Global Securities 
  
 (i) Each Global Security authenticated under this Indenture shall be
registered in the name of the Depositary designated by the Company for such Global Security or a nominee thereof and delivered to such Depositary or a nominee thereof or custodian therefor, and each such Global Security shall constitute a single
Security for all purposes of this Indenture. 
  
 (ii) No Global
Security may be exchanged in whole or in part for Securities registered, and no transfer of a Global Security in whole or in part may be registered, in the name of any Person other than the Depositary for such Global Security or a nominee thereof
unless (A) such Depositary (i) has notified the Company that it is unwilling, unable or no longer qualified to continue as Depositary for such Global Security or (ii) has ceased to be a clearing agency registered as such under the Exchange Act or
announces an intention permanently to cease business or does in fact do so or (B) there shall have occurred and be continuing an Event of Default with respect to such Global Security. In such event, if a successor Depositary for such Global Security
is not appointed by the Company within 90 days after the Company receives such notice or becomes aware of such ineligibility, the Company will execute, and the Trustee, upon receipt of an Officer’s Certificate directing the authentication and
delivery of Securities, will authenticate and deliver, Securities, in any authorized denominations in an aggregate principal amount equal to the principal amount of such Global Security in exchange for such Global Security. 
  
 (iii) If any Global Security is to be exchanged for other Securities or
canceled in whole, it shall be surrendered by or on behalf of the Depositary or its nominee to the Trustee, as Security Registrar, for exchange or cancellation, as provided in this Article III. If any Global Security is to be exchanged for other
Securities or canceled in part, or if another Security is to be exchanged in whole or in part for a beneficial interest in any Global Security, in each case, as provided in Section 3.5, then either (A) such Global Security shall be so surrendered
for exchange or cancellation, as provided in this Article III, or (B) the principal amount thereof shall be reduced or increased by an amount equal to the portion thereof to be so exchanged or canceled, or equal to the principal amount of such other
Security to be so exchanged for a beneficial interest therein, as the case may be, by means of an appropriate adjustment made on the records of the Trustee, as Security Registrar, whereupon the Trustee, in accordance with the Applicable Procedures,
shall instruct the Depositary or its authorized representative to make a corresponding adjustment to its records. Upon any such surrender or adjustment of a Global Security, the Trustee shall, subject to Section 3.5(3) and as otherwise provided in
this Article III, authenticate and deliver any Securities issuable in exchange for such Global Security (or any portion thereof) to or upon the order of, and registered in such names as may be directed by, the Depositary or its authorized
representative. Upon the request of the Trustee in connection with the occurrence of any of the events specified in the preceding paragraph, the Company shall promptly make available to the Trustee a reasonable supply of Securities that are not in
the form of Global Securities. The Trustee shall be entitled to rely upon any order, direction or request of the Depositary or its authorized representative which is given or made pursuant to this Article III 

  

 17 

 
if such order, direction or request is given or made in accordance with the Applicable Procedures. 
  
 (iv) Every Security authenticated and delivered upon registration of transfer
of, or in exchange for or in lieu of, a Global Security or any portion thereof, whether pursuant to this Article III or otherwise, shall be authenticated and delivered in the form of, and shall be, a registered Global Security, unless such Security
is registered in the name of a Person other than the Depositary for such Global Security or a nominee thereof, in which case such Security shall be authenticated and delivered in definitive, fully registered form, without interest coupons.

  
 (v) The Depositary or its nominee, as registered owner of a
Global Security, shall be the Holder of such Global Security for all purposes under the Indenture and the Securities, and owners of beneficial interests in a Global Security shall hold such interests pursuant to the Applicable Procedures.
Accordingly, any such owner’s beneficial interest in a Global Security will be shown only on, and the transfer of such interest shall be effected only through, records maintained by the Depositary or its nominee or its Agent Members and such
owners of beneficial interests in a Global Security will not be considered the owners or holders thereof. 
  
 (2) Non-global Securities 
  
 Securities issued upon the events described in Section 3.4(l)(ii) shall be in definitive, fully registered form, without interest coupons, and shall bear
the Restricted Securities Legend if and as required by this Indenture. 
  
 SECTION 3.5 Registration; Registration of Transfer and Exchange; Restrictions on Transfer. 
  
 (1) The Company shall cause to be kept at the Corporate Trust Office of the Trustee a register (the register maintained in such office referred to as the
“Security Register”) in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of Securities and of transfers of Securities. The Trustee is hereby appointed “Security
Registrar” for the purpose of registering Securities and transfers and exchanges of Securities as herein provided. 
  
 Upon surrender for registration of transfer of any Security at an office or agency of the Company designated pursuant to Section 10.2 for such purpose,
the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Securities of any authorized denominations and of a like aggregate principal amount and bearing such
restrictive legends as may be required by this Indenture. 
  
 At
the option of the Holder, and subject to the other provisions of this Section 3.5, Securities may be exchanged for other Securities of any authorized denomination and of a like aggregate principal amount, upon surrender of the Securities to be
exchanged at any such office or agency. Whenever any Securities are so surrendered for exchange, and subject to the other provisions of this Section 3.5, the Company shall execute, and the Trustee shall authenticate and deliver, the Securities that
the Holder making the exchange is entitled to receive. Every Security presented or surrendered for registration of transfer or for exchange shall (if so required by the 

  

 18 

 
Company or the Security Registrar) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company, the Trustee
and the Security Registrar duly executed, by the Holder thereof or his attorney duly authorized in writing. 
  
 All Securities issued upon any registration of transfer or exchange of Securities shall be the valid obligations of the Company, evidencing the same debt
and entitled to the same benefits under this Indenture as the Securities surrendered upon such registration of transfer or exchange. 
  
 No service charge shall be made to a Holder for any registration of transfer or exchange of Securities except as provided in Section 3.6, but the Company
may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Securities, other than exchanges pursuant to Section 3.4, 8.5, 12.2 or 13.3
(other than where the shares of Common Stock are to be issued or delivered in a name other than that of the Holder of the Security) not involving any transfer and other than any stamp and other duties, if any, which may be imposed in connection with
any such transfer or exchange by the United States or any political subdivision thereof or therein, which shall be paid by the Company. 
  
 In the event of a redemption of the Securities, neither the Company nor the Securities Registrar will 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 Security, or portion thereof,
called for redemption. 
  
 (2) Certain Transfers and
Exchanges. Notwithstanding any other provision of this Indenture or the Securities, transfers and exchanges of Securities and beneficial interests in a Global Security of the kinds specified in this Section 3.5(2) shall be made only in
accordance with this Section 3.5(2). 
  
 (i) Restricted Global
Security to Restricted Non-Global Security. In the event that non-Global Securities are to be issued pursuant to Section 3.4(1)(ii) in connection with any transfer of Securities, such transfer may be effected only in accordance with the
provisions of this Clause (2)(i) and subject to the Applicable Procedures. Upon receipt by the Trustee, as Security Registrar, of (A) a Company Order from the Company directing the Trustee, as Security Registrar, to (x) authenticate and deliver one
or more Securities of the same aggregate principal amount as the beneficial interest in the Restricted Global Security to be transferred, such instructions to contain the name or names of the designated transferee or transferees, the authorized
denomination or denominations of the Securities to be so issued and appropriate delivery instructions and (y) decrease the beneficial interest of a specified Agent Member’s account in a Restricted Global Security by a specified principal amount
not greater than the principal amount of such Restricted Global Security, and (B) such other certifications, legal opinions or other information as the Company or the Trustee may reasonably require to confirm that such transfer is being made
pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act, then the Trustee, as Security Registrar, shall decrease the principal amount of the Restricted Global Security by the specified
amount and authenticate and deliver Securities in accordance with such instructions from the Company as provided in Section 3.4(l)(iii). 
  

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 (ii) Restricted Non-Global Security to Restricted Global Security. If the Holder of a Restricted
Security (other than a Global Security) wishes at any time to transfer all or any portion of such Restricted Security to a Person who wishes to take delivery thereof in the form of a beneficial interest in the Restricted Global Security, such
transfer may be effected only in accordance with the provisions of this Clause (2)(ii) and subject to the Applicable Procedures. Upon receipt by the Trustee, as Security Registrar, of such Restricted Security as provided in Section 3.5(1) and
instructions from the Company directing that a beneficial interest in the Restricted Global Security in a specified principal amount not greater than the principal amount of such Security be credited to a specified Agent Member’s account, then
the Trustee, as Security Registrar, shall cancel such Restricted Security (and issue a new Restricted Security in respect of any untransferred portion thereof) as provided in Section 3.5(1) and increase the principal amount of the Restricted Global
Security by the specified principal amount as provided in Section 3.4(l)(iii). 
  
 (iii) Exchanges Between Global Security and Non-global Security. A beneficial interest in a Global Security may be exchanged for a Security that is not a Global Security only as provided in Section 3.4 or only
if such exchange occurs in connection with a transfer effected in accordance with Clause 2(i) above, provided that, if such interest is a beneficial interest in the Restricted Global Security, then such interest shall be exchanged for a Restricted
Security (subject in each case to Section 3.5(3)). A Security that is not a Global Security may be exchanged for a beneficial interest in a Global Security only if such exchange occurs in connection with a transfer effected in accordance with Clause
(2)(ii) above. 
  
 (3) Securities Act Legends. All
Securities issued pursuant to this Indenture, and all Successor Securities, shall bear the Restricted Securities Legend and shall be subject to the restrictions on transfer specified therein, subject to the following: 
  
 (i) subject to the following Clauses of this Section 3.5(3), a Security or
any portion thereof which is exchanged, upon transfer or otherwise, for a Global Security or any portion thereof shall bear the Restricted Securities Legend borne by such Global Security for which the Security was exchanged; 
  
 (ii) subject to the following Clauses of this Section 3.5(3), a new Security
that is not a Global Security and is issued in exchange for another Security (including a Global Security) or any portion thereof, upon transfer or otherwise, shall bear the Restricted Securities Legend borne by the Security for which the new
Security was exchanged; 
  
 (iii) any Securities that are sold or
otherwise disposed of pursuant to an effective registration statement under the Securities Act (including the Shelf Registration Statement), together with their Successor Securities shall not bear a Restricted Securities Legend; the Company shall
inform the Trustee in writing of the effective date of any such registration statement registering the Securities under the Securities Act and shall notify the Trustee, in writing, at any time when prospectuses must be delivered with respect to
Securities to be sold pursuant to such registration statement. The Trustee shall not be liable for any action taken or omitted to be taken by it in good faith in accordance with the aforementioned registration statement; 
  

 20 

 (iv) at any time after the Securities may be freely transferred without registration under the Securities
Act or without being subject to transfer restrictions pursuant to the Securities Act, a new Security that does not bear a Restricted Securities Legend may be issued in exchange for or in lieu of a Security (other than a Global Security) or any
portion thereof that bears such a legend if the Trustee has received an Unrestricted Securities Certificate, satisfactory to the Trustee and duly executed by the Holder of such Security bearing a Restricted Securities Legend or his attorney duly
authorized in writing, and after such date and receipt of such certificate, the Trustee shall authenticate and deliver such new Security in exchange for or in lieu of such other Security as provided in this Article III; 
  
 (v) a new Security that does not bear a Restricted Securities Legend may be
issued in exchange for or in lieu of a Security or any portion thereof that bears such a legend if, in the Company’s judgment, placing such a legend upon such new Security is not necessary to ensure compliance with the registration requirements
of the Securities Act, and the Trustee, at the direction of the Company, shall authenticate and deliver such a new Security as provided in this Article III; and 
  

(vi) notwithstanding the foregoing provisions of this Section 3.5(3), a Successor Security of a Security that does not bear a Restricted Securities
Legend shall not bear such legend unless the Company has reasonable cause to believe that such Successor Security is a “restricted security” within the meaning of Rule 144, in which case the Trustee, at the direction of the Company, shall
authenticate and deliver a new Security bearing a Restricted Securities Legend in exchange for such Successor Security as provided in this Article III. 
  
 (4) Any stock certificate representing shares of Common Stock issued upon conversion of the Securities shall bear the Restricted Securities Legend borne
by such Securities, to the extent required by this Indenture, unless such shares of Common Stock have been sold pursuant to a registration statement that has been declared effective under the Securities Act (and that continues to be effective at the
time of such transfer) or sold pursuant to Rule 144(k) of the Securities Act, or unless otherwise agreed by the Company in writing with written notice thereof to the transfer agent for the Common Stock. With respect to the transfer of shares of
Common Stock issued upon conversion of the Securities that are restricted hereunder, any deliveries of certificates, legal opinions or other instruments that would be required to be made to the Security Registrar in the case of a transfer of
Securities, as described above, shall instead be made to the transfer agent for the Common Stock. 
  
 (5) Neither the Trustee, the Paying Agent nor any of their agents shall (i) have any duty to monitor compliance with or with respect to any Federal or
state or other securities or tax laws or (ii) have any duty to obtain documentation on any transfers or exchanges other than as specifically required hereunder. 
  

SECTION 3.6 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. 
  

 21 

 If there be delivered to the Company and to the Trustee: 
  
 (1) evidence to their satisfaction of the destruction, loss or theft of any
Security, and 
  
 (2) such security or indemnity as may be
satisfactory to the Company and the Trustee to save each of them and any agent of either of them harmless, then, in the absence of actual notice to the Company or the Trustee that such Security has been acquired by a bona fide purchaser, the Company
shall execute and 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 conditions set forth in the preceding paragraph. 

 
 Upon the issuance of any new Security under this Section 3.6, 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 (other than any stamp and other duties, if any, which may be imposed in connection therewith by the United States or
any political subdivision thereof or therein, which shall be paid by the Company) and any other expenses (including the fees and expenses of the Trustee) connected therewith. 
  
 Every new Security issued pursuant to this Section 3.6 in lieu of any mutilated, destroyed, lost or stolen Security shall
constitute an original additional contractual obligation of the Company, whether or not the mutilated, destroyed, lost or stolen Security shall be at any time enforceable by anyone, and such new Security shall be entitled to all the benefits of this
Indenture equally and proportionately with any and all other Securities duly issued hereunder. 
  
 The provisions of this Section 3.6 are exclusive and shall preclude (to the extent lawful) all other rights and remedies of any Holder with respect to the replacement or payment of mutilated, destroyed, lost or stolen
Securities. 
  
 SECTION 3.7 Payment of Interest; Interest Rights
Preserved. 
  
 Subject to the last paragraph of this
Section, interest or Liquidated Damages, if any, on any Security that is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name that Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date for such interest. 
  
 Any interest or Liquidated Damages, if any, on any Security that is payable, but is not punctually paid or duly provided for, on any Interest Payment Date
(herein called “Defaulted Interest”) shall forthwith cease to be payable to the Holder on the relevant Regular Record Date by virtue of having been such Holder, and such Defaulted Interest may be paid by the Company, at its election in
each case, as provided in Clause (1) or (2) below: 
  
 (1) The
Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Securities (or their respective Predecessor Securities) are registered 

  

 22 

 
at the close of business on a Special Record Date for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Company shall
notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Security, the date of the proposed payment and the Special Record Date, and at the same time the Company shall deposit with the Trustee an amount of money
equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements reasonably satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be
held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this Clause provided. The Special Record Date for the payment of such Defaulted Interest shall be not more than 15 days and not less than 10 days prior to the
date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted
Interest and the Special Record Date therefor to be mailed, first-class postage prepaid, to each Holder at such Holder’s address as it appears in the Security Register, not less than 10 days prior to such Special Record Date. Notice of the
proposed payment of such Defaulted Interest and the Special Record Date therefor having been so mailed, such Defaulted Interest shall be paid to the Persons in whose names the Securities (or their respective Predecessor Securities) are registered at
the close of business on such Special Record Date and shall no longer be payable pursuant to the following Clause (2). 
  
 (2) The Company may make payment of any Defaulted Interest in any other lawful manner not inconsistent with the requirements of any securities exchange on
which the Securities may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this Clause, such manner of payment shall be deemed practicable by
the Trustee. 
  
 Subject to the foregoing and following provisions
of this Section and Section 3.5, each Security delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Security shall carry the rights to interest accrued and unpaid, and to accrue, which were
carried by such other Security. 
  
 Interest on any Security that
is converted in accordance with Section 12.2 during a Record Date Period shall be payable in accordance with the provisions of Section 12.2. 
  
 SECTION 3.8 Persons Deemed Owners. 
  
 Prior to due presentment of a Security for registration of transfer, the Company, the Trustee, any Paying Agent and any agent of the Company, the Trustee
or any Paying Agent may treat the Person in whose name such Security is registered as the owner of such Security for the purpose of receiving payment of principal of, premium, if any, and (subject to Section 3.7) interest on such Security and for
all other purposes whatsoever, whether or not such Security be overdue, and neither the Company, the Trustee, any Paying Agent nor any agent of the Company, the Trustee or any Paying Agent shall be affected by notice to the contrary. 
  

 23 

 SECTION 3.9 Cancellation. 
  
 All Securities surrendered for payment, redemption, repurchase, registration of transfer or exchange or conversion shall, if
surrendered to any Person other than the Trustee, be delivered to the Trustee. All Securities so delivered to the Trustee shall be canceled promptly by the Trustee (or its agent). No Securities shall be authenticated in lieu of or in exchange for
any Securities canceled as provided in this Section 3.9. The Trustee shall dispose of all canceled Securities in accordance with applicable law and its customary practices in effect from time to time. 
  
 SECTION 3.10 Computation of Interest. 
  
 Interest on the Securities (including any Liquidated Damages) shall be
computed on the basis of a 360-day year of twelve 30-day months. 
  
 SECTION
3.11 CUSIP Numbers. 
  
 The Company in issuing
Securities may use “CUSIP” numbers (if then generally in use) in addition to serial numbers; if so, the Trustee shall use such CUSIP numbers in addition to serial numbers in notices of redemption and repurchase as a convenience to Holders;
provided that any such notice may state that no representation is made as to the correctness of such CUSIP numbers either as printed on the Securities or as contained in any notice of a redemption or repurchase and that reliance may be placed only
on the serial or other identification numbers printed on the Securities, and any such redemption or repurchase shall not be affected by any defect in or omission of such CUSIP numbers. 
  
 ARTICLE IV 
  
 SATISFACTION AND DISCHARGE 
  
 SECTION 4.1 Satisfaction and Discharge of Indenture. 
  
 This Indenture shall upon Company Request cease to be of further effect (except as to any surviving rights of conversion, or registration of transfer or
exchange, or replacement of Securities herein expressly provided for and any right to receive Liquidated Damages as provided in the Registration Rights Agreement and in the form of Security set forth in Section 2.2 and the Company’s obligations
to the Trustee pursuant to Section 6.7), and the Trustee, at the expense of the Company, shall execute proper instruments in form and substance reasonably satisfactory to the Trustee acknowledging satisfaction and discharge of this Indenture, when

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

 24 

 (ii) all such Securities not theretofore delivered to the Trustee or its agent for cancellation (other
than Securities referred to in clauses (A) and (B) of clause (1)(i) above) 
  
 (a) have become due and payable, or 
  
 (b) will have become due and payable at their Stated Maturity within one year, or 
  
 (c) are to be called for redemption within one year under arrangements reasonably satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company,

  
 (d) and the Company, in the case of clause (a), (b) or (c)
above, has deposited or caused to be deposited with the Trustee as trust funds (immediately available to the Holders in the case of clause (a)) in trust for the purpose an amount in cash sufficient to pay and discharge the entire indebtedness on
such Securities not theretofore delivered to the Trustee for cancellation, for principal, premium, if any, and interest (including any Liquidated Damages) to the date of such deposit (in the case of Securities which have become due and payable) or
to the Stated Maturity or Redemption Date, as the case may be; 
  
 (2) the Company has paid or caused to be paid all other sums payable hereunder by the Company; and 
  
 (3) the Company has delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that all conditions precedent herein
provided for relating to the satisfaction and discharge of this Indenture have been complied with. 
  
 Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company to the Trustee under Section 6.7, the obligations of the
Company to any Authenticating Agent under Section 6.12, the obligation of the Company to pay Liquidated Damages, if money shall have been deposited with the Trustee pursuant to clause (l)(ii) of this Section 4.1, the obligations of the Trustee under
Section 4.2 and the last paragraph of Section 10.3 and the obligations of the Company and the Trustee under Section 3.5 and Article XII shall survive. 
  
 SECTION 4.2 Application of Trust Money. 
  
 Subject to the provisions of the last paragraph of Section 10.3, all money deposited with the Trustee pursuant to Section 4.1 shall be held in trust for
the sole benefit of the Holders, and such monies shall be applied by the Trustee, in accordance with the provisions of the Securities and this Indenture, to the payment, either directly or through any Paying Agent, to the Persons entitled thereto,
of the principal, premium, if any, and interest (including any Liquidated Damages) for whose payment such money has been deposited with the Trustee. 
  
 All moneys deposited with the Trustee pursuant to Section 4.1 (and held by it or any Paying Agent) for the payment of Securities subsequently converted
shall be returned to the Company. 
  

 25 

 The Company shall pay and indemnify the Trustee against any tax, fee or other charge imposed or assessed
against all money deposited with the Trustee pursuant to Section 4.1 (other than income taxes and franchise taxes incurred or payable by the Trustee and such other taxes, fees or charges incurred or payable by the Trustee that are not directly the
result of the deposit of such money with the Trustee). 
  
 ARTICLE V 
  
 REMEDIES 
  
 SECTION 5.1 Events of Default. 
  
 “Event of Default,” wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body): 
  
 (1) default in the
payment of the principal of or premium, if any, on any Security at its Maturity; or 
  
 (2) default in the payment of any interest (including any Liquidated Damages) upon any Security when it becomes due and payable, and continuance of such default for a period of 30 days; or 
  
 (3) failure by the Company to comply with its obligations to offer to
repurchase the Securities or to repurchase Securities properly tendered and not withdrawn upon the occurrence of a Change in Control; or 
  
 (4) default in the performance of any covenant of the Company in this Indenture (other than a covenant a default in the performance of which is
specifically dealt with elsewhere in this Section) and continuance of such default for a period of 60 days after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of
at least 25% in principal amount of the Outstanding Securities a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a “Notice of Default” hereunder; or 
  
 (5) a default in the payment when due (either at its stated maturity or upon
acceleration thereof, and after expiration of any applicable grace period) under any bonds, debentures, notes or other evidences of indebtedness for money borrowed (or guarantee thereof) by the Company (an “Instrument”) with an aggregate
principal amount in excess of U.S. $15,000,000; or 
  
 (6) the
entry by a court having jurisdiction in the premises of (A) a decree or order for relief in respect of the Company or any Significant Subsidiary in an involuntary case or proceeding under any applicable Federal or state bankruptcy, insolvency,
reorganization or other similar law or (B) a decree or order adjudging the Company or any Significant Subsidiary a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or
in respect of the Company or any Significant 

  

 26 

 
Subsidiary under any applicable Federal or state law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar
official of the Company or any Significant Subsidiary or of any substantial part of the property of either, 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 
  
 (7) the commencement by the Company or any Significant Subsidiary of a voluntary case or proceeding under any applicable 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 either to the entry of a decree or order for relief in respect of the Company or any Significant Subsidiary in an involuntary case or proceeding under any applicable Federal or state bankruptcy,
insolvency, reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against either, or the filing by either of a petition or answer or consent seeking reorganization or similar relief under any
applicable Federal or state law, or the consent by either to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or
any Significant Subsidiary or of any substantial part of the property of either, or the making by either of an assignment for the benefit of creditors, or the admission by either in writing of its inability to pay its debts generally as they become
due, or the taking of corporate action by the Company or any Significant Subsidiary in furtherance of any such action. 
  
 SECTION 5.2 Acceleration of Maturity; Rescission and Annulment. 
  
 If an Event of Default (other than an Event of Default specified in Section 5.1(6) or 5.1(7) with respect to the Company) occurs and is continuing, then
in every such case the Trustee or the Holders of not less than 25% in principal amount of the Outstanding Securities may declare the principal of all the Securities to be due and payable immediately, by a notice in writing to the Company (and to the
Trustee if given by the Holders), and upon any such declaration such principal and all accrued interest thereon shall become immediately due and payable. If an Event of Default specified in Section 5.1(6) or 5.1(7) with respect to the Company
occurs, the principal of, and accrued interest on, all the Securities shall become immediately due and payable without any declaration or other Act of the Holders or any act on the part of the Trustee. 
  
 At any time after such declaration of acceleration has been made and before a
judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter in this Article V provided, the Holders of a majority in principal amount of the Outstanding Securities, by written notice to the Company and the
Trustee, may, on behalf of all Holders, rescind and annul such declaration and its consequences if: 
  
 (1) the Company has paid or deposited with the Trustee a sum sufficient to pay 
  
 (i) all overdue interest on all Securities; 
  
 (ii) the principal of and premium, if any, on any Securities that have become due otherwise than by such declaration of
acceleration and any interest thereon at the rate borne by the Securities; and 
  

 27 

 (iii) all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel; 
  
 (2) all Events of Default, other than the nonpayment of the principal of and any premium and interest on, Securities which have become due solely by such declaration of acceleration, have been cured or waived as provided in Section 5.13;
and 
  
 (3) such rescission and annulment would not conflict with
any judgment or decree issued in appropriate judicial proceedings regarding the payment by the Trustee to the Holders of the amounts referred to in 5.2(1). 
  
 No rescission or annulment referred to above shall affect any subsequent default or impair any right consequent thereon. 
  
 SECTION 5.3 Collection of Indebtedness and Suits for Enforcement by Trustee.

  
 The Company covenants that if: 
  
 (1) default is made in the payment of any interest (including any Liquidated
Damages) on any Security when it becomes due and payable and such default continues for a period of 30 days, or 
  
 (2) default is made in the payment of the principal of or premium, if any, on any Security at the Maturity thereof, 
  
 the Company will, upon demand of the Trustee pay to it, for the benefit of
the Holders of such Securities the whole amount then due and payable on such Securities for principal and interest (including any Liquidated Damages), and in addition thereto, such further amount as shall be sufficient to cover the reasonable 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 or any other obligor upon the Securities and collect the moneys adjudged or
decreed to be payable in the manner provided by law out of the property of the Company or any other obligor upon the Securities, wherever situated. 
  
 lf an Event of Default occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders
of Securities by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of
any power granted herein, or to enforce any other proper remedy. 
  
 SECTION
5.4 Trustee May File Proofs of Claim. 
  
 In case of
the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the 

  

 28 

 
Company or any other obligor upon the Securities or the property of the Company or of such other obligor or the creditors of either, the Trustee
(irrespective of whether the principal of, and any interest on, the Securities shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand on the Company for
the payment of overdue principal or interest) shall be entitled and empowered, by intervention in such proceeding or otherwise, 
  
 (1) to file and prove a claim for the whole amount of principal, premium, if any, and interest owing and unpaid in respect of the Securities and take such
other actions, including participating as a member, voting or otherwise, of any official committee of creditors appointed in such matter, and to file such other papers or documents, in each of the foregoing cases, as may be necessary or advisable in
order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and of the Holders of Securities allowed in such judicial proceeding, and

  
 (2) to collect and receive any moneys or other property
payable or deliverable on any such claim and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Holder of Securities
to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders of Securities to pay to the Trustee any amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel and any other amounts due the Trustee under Section 6.7. 
  
 Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder of a Security any
plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof or to authorize the Trustee to vote in respect of the claim of any Holder of a Security in any such proceeding; provided,
however, that the Trustee may, on behalf of such Holders, vote for the election of a trustee in bankruptcy or similar official. 
  
 SECTION 5.5 Trustee May Enforce Claims Without Possession of Securities. 
  
 All rights of action and claims under this Indenture or the Securities may be prosecuted and enforced by the Trustee without
the possession of any of the Securities or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment
shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Holders of the Securities in respect of which judgment has been
recovered. 
  
 SECTION 5.6 Application of Money Collected.

  
 Any money collected by the Trustee pursuant to this
Article V shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money on account of principal, premium, if any, or interest, upon presentation of the Securities 

  

 29 

 
and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid: 
  
 FIRST: To the payment of all amounts due the Trustee under Section 6.7;

  
 SECOND: To the payment of the amounts then due and unpaid for
principal of, premium, if any, or 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, premium, if any, and interest (including Liquidated Damages, if any), respectively; 
  
 THIRD: To such other Person or Persons, if any, to the extent entitled thereto; and 
  
 FOURTH: Any remaining amounts shall be repaid to the Company. 
  
 SECTION 5.7 Limitation on Suits. 
  
 No Holder of any Security shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment
of a receiver or trustee, or for any other remedy hereunder, unless: 
  
 (1) such Holder has previously given written notice to the Trustee of an Event of Default that is continuing at the time of such institution; 
  
 (2) the Holders of not less than 25% in principal amount of the Outstanding Securities shall have made written request to the Trustee to institute
proceedings in respect of such Event of Default in its own name as Trustee hereunder; 
  
 (3) such Holder or Holders have offered to the Trustee, and if requested, shall have provided, reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request;

  
 (4) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity (or if requested, receipt of indemnity) has failed to institute any such proceeding; and 
  
 (5) no direction inconsistent with such written request has been given to the Trustee during such 60 day period by the Holders of a majority in principal
amount of the Outstanding Securities, it being understood and intended that no one or more of such Holders shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice
the rights of any other of such Holders, or to obtain or seek to obtain priority or preference over any other of such Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of
all such Holders. 
  
 SECTION 5.8 Unconditional Right of Holders to Receive
Principal, Premium and Interest and to Convert. 
  
 Notwithstanding any other provision in this Indenture, the Holder of any Security shall have the right, which is absolute and unconditional, to receive payment of the principal of, 

  

 30 

 
premium, if any, and (subject to Section 3.7) interest (including Liquidated Damages, if any) on such Security on the respective Stated Maturities expressed
in such Security (or, in the case of redemption or repurchase, on the Redemption Date or Repurchase Date, as the case may be), and to convert such Security in accordance with Article XII, and to institute suit for the enforcement of any such payment
and right to convert, and such rights shall not be impaired without the consent of such Holder. 
  
 SECTION 5.9 Restoration of Rights and Remedies. 
  
 If the Trustee or any Holder of a Security has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been
determined adversely to the Trustee or to such Holder, then and in every such case, subject to any determination in such proceeding, the 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 such Holders shall continue as though no such proceeding had been instituted. 
  
 SECTION 5.10 Rights and Remedies Cumulative. 
  
 Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities in the last paragraph of
Section 3.6, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders of Securities is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy. 
  
 SECTION
5.11 Delay or Omission Not Waiver. 
  
 No delay or
omission of the Trustee or of any Holder of any Security to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or any acquiescence therein. Every
right and remedy given by this Article V or by law to the Trustee or to the Holders of Securities may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or (subject to the limitations contained in this Indenture)
by the Holders of Securities as the case may be. 
  
 SECTION 5.12 Control by
Holders of Securities. 
  
 Subject to Section 6.3, the
Holders of a majority in principal amount of the Outstanding Securities shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the
Trustee, provided that 
  
 (1) such direction shall not be in
conflict with any rule of law or with this Indenture, and 
  

 31 

 (2) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with
such direction, and 
  
 (3) the Trustee need not take any action
that might involve it in personal liability or be unjustly prejudicial to the Holders of Securities not consenting. 
  
 SECTION 5.13 Waiver of Past Defaults. 
  
 The Holders, either (i) through the written consent of not less than a majority in 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 at least a majority in aggregate principal amount of the Outstanding Securities represented at such meeting, may on behalf of the
Holders of all the Securities waive any past default hereunder and its consequences, except a default (A) in the payment of the principal of, premium, if any, or interest (including Liquidated Damages, if any) on any Security, or (B) in respect of a
covenant or provision hereof which under Article VIII cannot be modified or amended without the consent of the Holder of each Outstanding Security affected. 
  
 Upon any such waiver, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon. 
  
 SECTION 5.14 Undertaking for Costs. 
  
 All parties to this Indenture agree, and each Holder of any Security by his 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 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 and expenses, 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 5.14 shall not apply to any suit instituted by the Company, to any suit instituted by the Trustee, to any suit instituted by any Holder, or group of
Holders, holding in the aggregate more than 10% in principal amount of the Outstanding Securities, or to any suit instituted by any Holder of any Security for the enforcement of the payment of the principal of, premium, if any, or interest on any
Security on or after the respective Stated Maturity or Maturities expressed in such Security (or, in the case of redemption or repurchase, on or after the Redemption Date or Repurchase Date, as the case may be) or for the enforcement of the right to
convert any Security in accordance with Article XII. 
  
 SECTION 5.15 Waiver
of Stay, Usury or Extension Laws. 
  
 The Company
covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, usury or extension law wherever enacted, now or at any time
hereafter in force, that 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 by reason of such law the execution of any 

  

 32 

 
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 VI 
  
 THE TRUSTEE 
  
 SECTION 6.1 Certain Duties and Responsibilities. 
  
 (1) 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, 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, but in the case of any such certificates or opinions which by any provision hereof are specifically required to be
furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture, but not to verify the contents thereof. 
  
 (2) In case an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. 

 
 (3) 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 (3) shall not be construed to limit the effect of paragraph (1) of this Section; 
  
 (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; 
  
 (iii) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the
Holders of a majority in principal amount of the Outstanding Securities 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; and 
  
 (iv) no provision of this Indenture shall
require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for 

  

 33 

 
believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. 
  
 (4) Whether or not therein expressly so provided, every provision of this
Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section. 
  
 (5) The Trustee may refuse to perform any duty or exercise any right or power unless it receives indemnity reasonably satisfactory to it against any loss,
liability or expense. 
  
 SECTION 6.2 Notice of Defaults.

  
 Within 90 days after the occurrence of any default
hereunder as to which the Trustee has received written notice, the Trustee shall give to all Holders of Securities, in the manner provided in Section 1.6, notice of such default, unless such default shall have been cured or waived; provided,
however, that, except in the case of a default in the payment of the principal of, premium, if any, or interest on any Security the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive
committee or a trust committee of directors or Responsible Officers of the Trustee in good faith determines that the withholding of such notice is in the interest of the Holders; and provided, further, that in the case of any default of the
character specified in Section 5.1(4), no such notice to Holders of Securities shall be given until at least 60 days after the occurrence thereof or, if applicable, the expiration of the cure period specified therein. For the purpose of this
Section, the term “default” means any event which is, or after notice or lapse of time or both would become, an Event of Default. 
  
 SECTION 6.3 Certain Rights of Trustee. 
  
 Subject to the provisions of Section 6.1: 
  
 (1) the Trustee may rely, and shall be protected in acting or refraining from acting, upon any resolution, Officer’s Certificate, other certificate,
statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, coupon, other evidence of indebtedness or other paper or document (collectively, the “Documents”) believed by it to be genuine and
to have been signed or presented by the proper party or parties, and the Trustee need not investigate any fact or matter stated in such Documents; 
  
 (2) any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Company Request or Company Order and any resolution of
the Board of Directors shall be sufficiently evidenced by a Board Resolution; 
  
 (3) whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other
evidence be the one specifically prescribed) may, in the absence of bad faith on its part, request and rely upon an Officer’s Certificate or Opinion of Counsel; 
  
 (4) the Trustee may consult with counsel of its selection and the advice of such counsel or any Opinion of Counsel shall be
full and complete authorization and protection in 

  

 34 

 
respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon; 
  
 (5) the Trustee shall be under no obligation to exercise any of the rights or
powers vested in it by this Indenture at the request or direction of any of the Holders of Securities pursuant to this Indenture, unless such Holders shall have offered, and, if requested by the Trustee, delivered to the Trustee reasonable security
against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; 
  
 (6) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture, note, coupon, other evidence of indebtedness or other paper or document, but the Trustee 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; 
  
 (7) the Trustee shall not be deemed to have notice of any Event of Default
unless a Responsible Officer of the Trustee has actual knowledge thereof or unless written notice of any Event of Default is received by the Trustee at the Corporate Trust Office of the Trustee, and such notice references the Securities and this
Indenture; and 
  
 (8) the Trustee may execute any of the trusts
or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it
hereunder. 
  
 SECTION 6.4 Not Responsible for Recitals or Issuance of
Securities. 
  
 The recitals contained herein and in the
Securities (except the Trustee’s certificates of authentication) shall be taken as the statements of the Company, and the Trustee assumes no responsibility for their correctness. The Trustee makes no representations as to the validity or
sufficiency of this Indenture, of the Securities or of the Common Stock issuable upon the conversion of the Securities. The Trustee shall not be accountable for the use or application by the Company of Securities or the proceeds thereof. 

 
 SECTION 6.5 May Hold Securities, Act as Trustee under Other Indentures.

  
 The Trustee, any Authenticating Agent, any Paying Agent,
any Conversion Agent or any other agent of the Company or the Trustee, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with the Company with the same rights it would have if it were not
Trustee, Authenticating Agent, Paying Agent, Conversion Agent or such other agent. 
  
 The Trustee may become and act as trustee under other indentures under which other securities, or certificates of interest or participation in other securities, of the Company are outstanding in the same manner as if
it were not Trustee hereunder. 
  

 35 

 SECTION 6.6 Money Held in Trust. 
  
 Money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law.
The Trustee shall be under no liability for interest on any money received by it hereunder except as otherwise agreed in writing with the Company. 
  
 SECTION 6.7 Compensation and Reimbursement. 
  
 The Company agrees: 
  
 (1) to pay to the Trustee from time to time such reasonable compensation as the Company and the Trustee shall from time to time agree in writing for its
acceptance of this Indenture and for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); 
  
 (2) except as otherwise expressly provided herein, to reimburse the Trustee
upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee (including costs and expenses of enforcing this Indenture and defending itself against any claim (whether asserted by the Company, any Holder of
Securities or any other Person) or liability in connection with the exercise of any of its powers or duties hereunder) in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of
its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence, willful misconduct or bad faith; and 
  
 (3) to indemnify the Trustee (and its directors, officers, employees and agents) for, and to hold it harmless against, any loss, liability or expense
incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of this trust, including the reasonable costs, expenses and reasonable attorneys’ fees of defending itself against any
claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. 
  
 The Trustee shall have a lien prior to the Securities on all money or property held or controlled by the Trustee to secure the Company’s payment
obligations in this Section 6.7, except that held in trust to pay principal and interest (including Liquidated Damages, if any) on the Securities. 
  
 When the Trustee incurs expenses or renders services in connection with an Event of Default specified in Section 5.1(6) or Section 5.1(7), the expenses
(including the reasonable charges of its counsel) and the compensation for the services are intended to constitute expenses of the administration under any applicable Federal or state bankruptcy, insolvency or other similar law. 
  
 The provisions of this Section shall survive the termination of this
Indenture or the earlier resignation or removal of the Trustee. 
  

 36 

 SECTION 6.8 Corporate Trustee Required; Eligibility. 
  
 There shall at all times be a Trustee hereunder which shall be a Person that
is eligible pursuant to the Trust Indenture Act to act as such, and the Trustee and its parent corporation shall have (or be part of a holding company group with) a combined capital and surplus of at least U.S. $50,000,000, subject to supervision or
examination by Federal or state authority, and in good standing. The Trustee or an Affiliate of the Trustee shall maintain an established place of business in the Borough of Manhattan, The City of New York. If such corporation publishes reports of
condition at least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such corporation shall be deemed to be its combined capital
and surplus as set forth in its most recent report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect
hereinafter specified in this Article and a successor shall be appointed pursuant to Section 6.9. 
  
 SECTION 6.9 Resignation and Removal; Appointment of Successor. 
  
 (1) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the applicable requirements of Section 6.10. 
  
 (2) The Trustee may resign at any time by giving written notice thereof to the Company. If the instrument of acceptance by a successor Trustee required by
Section 6.10 shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee. 

 
 (3) The Trustee maybe removed at any time by an Act of the Holders of a
majority in principal amount of the Outstanding Securities, delivered to the Trustee and the Company. If the instrument of acceptance by a successor Trustee required by Section 6.10 shall not have been delivered to the Trustee within 30 days after
the giving of such notice of removal, the removed Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee. 
  
 (4) The Trustee may be removed at any time by the Company and the Company may appoint a successor Trustee pursuant to this Article, provided, that (i)
there is not an Event of Default that is continuing at the time of removal, (ii) the successor Trustee appointed by the Company meets the eligibility requirements of Section 6.8, and (iii) such removal and resignation shall not become effective
until the acceptance of appointment by the successor Trustee in accordance with the applicable requirements of Section 6.10. 
  
 (5) If at any time: 
  
 (i) the Trustee shall cease to be eligible under Section 6.8 and shall fail to resign after written request therefor by the Company or by any Holder of a
Security who has been a bona fide Holder of a Security for at least six months, or 
  

 37 

 (ii) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a
receiver of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, 
  
 then, in any such case (i) the Company by a Board Resolution may remove the Trustee, or (ii)
subject to Section 5.14, any Holder of a Security who has been a bona fide Holder of a Security for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the
Trustee and the appointment of a successor Trustee. 
  
 (6) If the
Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause, the Company, by a Board Resolution, shall promptly appoint a successor Trustee and shall comply with the applicable
requirements of this Section and Section 6.10. If no successor Trustee shall have been so appointed by the Company or the Holders of Securities and accepted appointment in the manner required by this Section and Section 6.10, any Holder of a
Security who has been a bona fide Holder of a Security for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee. 
  
 (7) The Company shall give notice of each resignation and each removal of the
Trustee and each appointment of a successor Trustee to all Holders of Securities in the manner provided in Section 1.6. Each notice shall include the name of the successor Trustee and the address of its Corporate Trust Office. 
  
 SECTION 6.10 Acceptance of Appointment by Successor. 
  
 Every successor Trustee appointed hereunder shall execute, acknowledge and
deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on the request of the Company or the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an
instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder. Upon
request of any such successor Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts. 
  
 No successor Trustee shall accept its appointment unless at the time of such
acceptance such successor Trustee shall be eligible under this Article. 
  
 SECTION 6.11 Merger, Conversion, Consolidation or Succession to Business. 
  
 Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all of the corporate trust business of the Trustee (including the trust created by this Indenture), shall be 

  

 38 

 
the successor of the Trustee hereunder, provided such corporation shall be otherwise eligible under this Article, without the execution or filing of any
paper or any further act on the part of any of the parties hereto. In case any Securities shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating
Trustee may adopt such authentication and deliver the Securities so authenticated with the same effect as if such successor Trustee had itself authenticated such Securities. 
  
 SECTION 6.12 Authenticating Agents. 
  

The Trustee may, with the consent of the Company, appoint an Authenticating Agent or Agents acceptable to the Company with respect to the Securities,
which Authenticating Agent shall be authorized to act on behalf of the Trustee to authenticate Securities issued upon exchange or substitution pursuant to this Indenture. 
  
 Securities authenticated by an Authenticating Agent shall be entitled to the benefits of this Indenture and shall be valid
and obligatory for all purposes as if authenticated by the Trustee hereunder, and every reference in this Indenture to the authentication and delivery of Securities by the Trustee or the Trustee’s certificate of authentication shall be deemed
to include authentication and delivery on behalf of the Trustee by an Authenticating Agent and a certificate of authentication executed on behalf of the Trustee by an Authenticating Agent. Each Authenticating Agent shall be subject to acceptance by
the Company and shall at all times be a corporation organized and doing business under the laws of the United States of America, any State thereof or the District of Columbia, authorized under such laws to act as Authenticating Agent and subject to
supervision or examination by government or other fiscal authority. If at any time an Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section 6.12, such Authenticating Agent shall resign immediately in the
manner and with the effect specified in this Section 6.12. 
  
 Any
corporation into which an Authenticating Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which such Authenticating Agent shall be a party, or any
corporation succeeding to the corporate agency or corporate trust business of an Authenticating Agent, shall continue to be an Authenticating Agent, provided such corporation shall be otherwise eligible under this Section 6.12, without the execution
or filing of any paper or any further act on the part of the Trustee or the Authenticating Agent. 
  
 An Authenticating Agent may resign at any time by giving written notice thereof to the Trustee and to the Company. The Trustee may at any time terminate
the agency of an Authenticating Agent by giving written notice thereof to such Authenticating Agent and to the Company. Upon receiving such a notice of resignation or upon such a termination, or in case at any time such Authenticating Agent shall
cease to be eligible in accordance with the provisions of this Section 6.12, the Trustee may appoint a successor Authenticating Agent which shall be subject to acceptance by the Company. Any successor Authenticating Agent upon acceptance of its
appointment hereunder shall become vested with all the rights, powers and duties of its predecessor hereunder, with like effect as if originally named as an Authenticating Agent. No successor Authenticating Agent shall be appointed unless eligible
under the provisions of this Section 6.12. 
  

 39 

 The Company agrees to pay to each Authenticating Agent from time to time reasonable compensation for its
services under this Section 6.12. 
  
 If an Authenticating Agent
is appointed with respect to the Securities pursuant to this Section 6.12, the Securities may have endorsed thereon, in addition to or in lieu of the Trustee’s certification of authentication, an alternative certificate of authentication.

  
 SECTION 6.13 Disqualification; Conflicting Interests.

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

  
 SECTION 6.14 Preferential Collection of Claims Against Company.

  
 If and when the Trustee shall be or become a creditor of
the Company (or any other obligor upon the Securities), the Trustee shall be subject to the provisions of the Trust Indenture Act regarding the collection of claims against the Company (or any such other obligor). 
  
 ARTICLE VII 
  
 CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER, LEASE OR OTHER DISPOSITION

  
 SECTION 7.1 Company May Consolidate, Etc. Only on Certain Terms.

  
 The Company shall not consolidate with or merge into any
other Person or convey, transfer, sell or lease (other than a mere grant of security interest) all or substantially all of its properties and assets to any Person (other than to one or more of its Subsidiaries), unless: 
  
 (1) the Person formed by such consolidation or into or with which the
Company is merged or the Person to which the properties and assets of the Company are so conveyed, transferred, sold or leased (other than a mere grant of security interest) 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 other than the Company, shall expressly assume, by an indenture supplemental hereto, executed and delivered to the
Trustee, in form reasonably satisfactory to the Trustee, the due and punctual payment of the principal of, premium, if any, and interest (including Liquidated Damages, if any) on all of the Securities as applicable, and the performance or observance
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 all material respects in accordance with Article XII; 
  
 (2) immediately after giving effect to such transaction no Event of Default,
and no event that after notice or lapse of time or both, would become an Event of Default, shall have occurred and be continuing; and 
  
 (3) the Company has delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that such consolidation, merger,
conveyance, transfer, lease (other than a 

  

 40 

 
mere grant of security interest) or other disposition and, if a supplemental indenture is required in connection with such transaction, such supplemental
indenture comply with this Article and that all conditions precedent herein provided for relating to such transaction have been complied with, together with any documents required under Section 8.3. 
  
 SECTION 7.2 Successor Substituted. 
  
 Upon any consolidation of the Company with, or merger of the Company into
any other Person or any conveyance, transfer, lease (other than a mere grant of security interest) or other disposition of all or substantially all the properties and assets of the Company in accordance with Section 7.1, the successor Person formed
by such consolidation or into or with which the Company is merged or to which such conveyance, transfer, lease (other than a mere grant of security interest) or other disposition is made shall succeed to, and be substituted for, and may exercise
every right and power of, the Company under this Indenture with the same effect as if such successor Person had been named as the Company herein, and thereafter, except in the case of a lease, the predecessor Person shall be relieved of all
obligations and covenants under this Indenture and the Securities. 
  
 ARTICLE VIII 
  
 SUPPLEMENTAL INDENTURES

  
 SECTION 8.1 Supplemental Indentures 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 enter into one or more indentures supplemental hereto for any of the following purposes: 
  
 (1) to evidence the succession of another Person to the Company and the
assumption by any such successor of the covenants and obligations of the Company herein and in the Securities as permitted by Article VII of this Indenture; or 
  

(2) to add to the covenants of the Company for the benefit of the Holders of Securities or to surrender any right or power herein conferred upon the
Company; or 
  
 (3) to secure the Securities; or 
  
 (4) to make provision with respect to the conversion rights of Holders of
Securities pursuant to Section 12.11 or to make provision with respect to the repurchase rights of Holders of Securities pursuant to Section 13.5; or 
  
 (5) to comply with the requirements of the Trust Indenture Act or the rules and regulations of the Commission thereunder in order to effect or maintain
the qualification of this Indenture under the Trust Indenture Act, as contemplated by this Indenture or otherwise; or 
  
 (6) to evidence and provide for the acceptance of appointment hereunder by a successor Trustee; or 
  

 41 

 (7) to provide for uncertificated Securities; or 
  
 (8) to cure any ambiguity, to correct or supplement any provision herein that
may be inconsistent with any other provision herein or that is otherwise defective, or to make any other provisions with respect to matters or questions arising under this Indenture as the Company and the Trustee may deem necessary or desirable,
provided such action pursuant to this clause (9) shall not adversely affect the interests of the Holders of Securities in any material respect. 
  
 Upon Company Request, accompanied by a Board Resolution authorizing the execution of any such supplemental indenture, and subject to and upon receipt by
the Trustee of the documents described in Section 8.3 hereof, the Trustee shall join with the Company in the execution of any supplemental indenture authorized or permitted by the terms of this Indenture and to make any further appropriate
agreements and stipulations that may be therein contained. 
  
 Notwithstanding any other provision of the Indenture or the Securities, the Registration Rights Agreement and the obligation to pay Liquidated Damages thereunder may be amended, modified or waived in accordance with the provisions of the
Registration Rights Agreement. 
  
 SECTION 8.2 Supplemental Indentures with
Consent of Holders of Securities. 
  
 Except as set forth
in Section 8.1, with either (i) the written consent of the Holders of not less than a majority in principal amount of the Outstanding Securities, by the Act of said Holders delivered to the Company and the Trustee, 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 at least a majority in aggregate principal amount of the Outstanding Securities represented at such meeting, the Company, when
authorized by a Board Resolution, and the Trustee may enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of
modifying in any manner the rights of the Holders of Securities under this Indenture; provided, however, that no such supplemental indenture shall, without the consent or affirmative vote of the Holder of each Outstanding Security affected thereby,

  
 (1) change the Stated Maturity of the principal of, or any
installment of interest on, any Security, or reduce the principal amount of, or the premium, if any, or the rate of interest payable thereon, or reduce the amount payable upon a redemption or mandatory repurchase, or change the place or currency of
payment of the principal of, premium, if any, or interest on any Security (including any payment of Liquidated Damages (except as may be effected through an amendment of the Registration Rights Agreement in accordance with its terms) or Redemption
Price or Repurchase Price in respect of such Security) or impair the right to institute suit for the enforcement of any payment in respect of any Security on or after the Stated Maturity thereof (or, in the case of redemption or any repurchase, on
or after the Redemption Date or Repurchase Date, as the case may be); or 
  
 (2) reduce the requirements of Section 9.4 for quorum or voting, or reduce the percentage in 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 

  

 42 

 
waiver (of compliance with certain provisions of this Indenture or certain defaults hereunder and their consequences) provided for in this Indenture; or

  
 (3) modify any of the provisions of this Section or Section
5.13 or 10.11, 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;

  
 (4) modify the ranking of the Securities in a manner adverse
to the Holders (except for secured debt which shall effectively be senior in right of payment to the Securities to the extent of the value of the collateral securing that debt); or 
  
 (5) modify the Company’s right to redeem the Securities in a manner adverse to the Holders; or 
  
 (6) modify the Redemption Prices in a manner adverse to the Holders;

  
 (7) modify the provisions of Article XII or XIII in a manner
adverse to the Holders; 
  
 (8) modify the Company’s
obligation to maintain an office or agency (which may include the Trustee) in the Borough of Manhattan, the City of New York; or 
  
 (9) modify in a manner adverse to the Holders the Company’s obligation to deliver information required under Rule 144A to permit resales of the
Securities and the Common Stock issued upon conversion of the Securities if the Company ceases to be subject to the reporting requirements under the Exchange Act. 
  
 It shall not be necessary for any Act of Holders of Securities under this Section to approve the particular form of any
proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof. 
  
 SECTION 8.3 Execution of Supplemental Indentures. 
  
 In executing, or accepting the additional trusts created by, any supplemental indenture permitted by this Article or the modifications thereby of the
trusts created by this Indenture, the Trustee shall be entitled to receive, and (subject to Sections 6.1 and 6.3) shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such supplemental indenture is authorized
or permitted by this Indenture, and that such supplemental indenture has been duly authorized, executed and delivered by the Company and constitutes a valid and legally binding obligation of the Company enforceable against the Company in accordance
with its terms. The Trustee may, but shall not be obligated to, enter into any such supplemental indenture which adversely affects the Trustee’s own rights, duties or immunities under this Indenture or otherwise. 
  
 SECTION 8.4 Effect of Supplemental Indentures. 
  
 Upon the execution of any supplemental indenture under this Article, this
Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this 

  

 43 

 
Indenture for all purposes; and every Holder of Securities theretofore or thereafter authenticated and delivered hereunder appertaining thereto shall be
bound thereby. 
  
 SECTION 8.5 Reference in Securities to Supplemental
Indentures. 
  
 Securities authenticated and delivered
after the execution of any supplemental indenture pursuant to this Article may, and shall if required by the Trustee, bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture. If the Company shall
so determine, new Securities so modified as to conform, in the opinion of the Company and the Trustee, to any such supplemental indenture may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for
Outstanding Securities. 
  
 SECTION 8.6 Notice of Supplemental
Indentures. 
  
 Promptly after the execution by the
Company and the Trustee of any supplemental indenture pursuant to the provisions of Section 8.2, the Company shall give notice to all Holders of Securities of such fact, setting forth in general terms the substance of such supplemental indenture, in
the manner provided in Section 1.6. Any failure of the Company to give such notice, or any defect therein, shall not in any way impair or affect the validity of any such supplemental indenture. 
  
 ARTICLE IX 
  
 MEETINGS OF HOLDERS OF SECURITIES 
  
 SECTION 9.1 Purposes for Which Meetings May Be Called. 
  
 A meeting of Holders of Securities may be called at any time and from time
to time pursuant to this Article to make, give or take any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be made, given or taken by Holders of Securities. 
  
 SECTION 9.2 Call, Notice and Place of Meetings. 
  
 (1) The Trustee, with the Company’s consent (prior to an Event of
Default but not thereafter), may at any time call a meeting of Holders of Securities for any purpose specified in Section 9.1, to be held at such time and at such place in the Borough of Manhattan, The City of New York, as the Trustee shall
determine. Notice of every meeting of Holders of Securities, setting forth the time and the place of such meeting and in general terms the action proposed to be taken at such meeting, shall be given, in the manner provided in Section 1.6, not less
than 21 nor more than 180 days prior to the date fixed for the meeting. 
  
 (2) In case at any time the Company, pursuant to a Board Resolution, or, in an Event of Default, 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 9.1, by written request setting forth in reasonable detail the action proposed to be taken at the meeting, and the Trustee shall not have mailed the notice of such meeting 

  

 44 

 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, in an Event of Default, the Holders of Securities in the amount specified, as the case may be, may determine the time and the place in the Borough of Manhattan, The City of New York, for such meeting and may call such
meeting for such purposes by giving notice thereof as provided in paragraph (1) of this Section. 
  
 SECTION 9.3 Persons Entitled to Vote at Meetings. 
  
 To be entitled to vote at any meeting of Holders of Securities, a Person shall be (i) a Holder of one or more Outstanding Securities, or (ii) a Person
appointed by an instrument in writing as proxy for a Holder or Holders of one or more Outstanding Securities by such Holder or Holders. The only Persons who shall be entitled to be present or to speak at any meeting of Holders shall be the Persons
entitled to vote at such meeting and their counsel, any representatives of the Trustee and its counsel and any representatives of the Company and its counsel. 
  

SECTION 9.4 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 not less than 10 days as determined by the chairman of the
meeting prior to the adjournment of such adjourned meeting (subject to repeated applications of this sentence). Notice of the reconvening of any adjourned meeting shall be given as provided in Section 9.2(1), except that such notice need be given
only once not less than five days prior to the date on which the meeting is scheduled to be reconvened. Notice of the reconvening of an adjourned meeting shall state expressly the percentage of the principal amount of the Outstanding Securities that
shall constitute a quorum. 
  
 At a meeting or an adjourned
meeting duly reconvened and at which a quorum is present as aforesaid, any resolution and all matters (except as limited by the proviso to Section 8.2 and except to the extent Section 10.11 requires a different vote) shall be effectively passed and
decided if passed or decided by the Holders of not less than a majority in principal amount of Outstanding Securities. 
  
 Any resolution passed or decisions taken at any meeting of Holders of Securities duly held in accordance with this Section shall be binding on all the
Holders of Securities whether or not present or represented at the meeting. The Trustee shall, in the name and at the expense of the Company, notify all the Holders of Securities of any such resolutions or decisions pursuant to Section 1.6.

  
 SECTION 9.5 Determination of Voting Rights; Conduct and Adjournment of
Meetings. 
  
 (1) 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 

  

 45 

 
regard to proof of the holding of Securities and of the appointment of proxies and in regard to the appointment and duties of inspectors of votes, the
submission and examination of proxies, certificates and other evidence of the right to vote, and such other matters concerning the conduct of the meeting as it shall deem appropriate. Except as otherwise permitted or required by any such
regulations, the holding of Securities shall be proved in the manner specified in Section 1.4 and the appointment of any proxy shall be proved in the manner specified in Section 1.4 or by having the signature of the Person executing the proxy
guaranteed by any bank, broker or other eligible institution participating in a recognized medallion signature guarantee program. 
  
 (2) 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 9.2(l), 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. 
  
 (3) At any meeting, each Holder of a Security or proxy shall be entitled to
one vote for each U.S. $1,000 principal amount of Securities held or represented by him; provided, however, that no vote shall be cast or counted at any meeting in respect of any Security challenged as not Outstanding and ruled by the chairman of
the meeting to be not Outstanding. The chairman of the meeting shall have no right to vote, except as a Holder of a Security or proxy. 
  
 (4) Any meeting of Holders of Securities duly called pursuant to Section 9.2 at which a quorum is present may be adjourned from time to time by Persons
entitled to vote a majority in principal amount of the Outstanding Securities represented at the meeting, and the meeting may be held as so adjourned without further notice. 
  
 SECTION 9.6 Counting Votes and Recording Action of Meetings. 
  
 The vote upon any resolution submitted to any meeting of Holders of Securities shall be by written ballots on which shall be
subscribed the signatures of the Holders of Securities or of their representatives by proxy and the principal amounts at Stated Maturity and serial numbers of the Outstanding Securities held or represented by them. The permanent chairman of the
meeting shall appoint two inspectors of votes who shall count all votes cast at the meeting for or against any resolution and who shall make and file with the secretary of the meeting their verified written reports in duplicate of all votes cast at
the meeting. A record, at least in duplicate, of the proceedings of each meeting of Holders of Securities shall be prepared by the secretary of the meeting and there shall be attached to said record the original reports of the inspectors of votes on
any vote by ballot taken thereat and affidavits by one or more Persons having knowledge of the facts setting forth a copy of the notice of the meeting and showing that said notice was given as provided in Section 9.2 and, if applicable, Section 9.4.
Each copy shall 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. 
  

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 ARTICLE X 
  

COVENANTS 
  
 SECTION 10.1 Payment of Principal, Premium and Interest. 
  
 The Company covenants and agrees that it will duly and punctually pay the principal of and premium, if any, 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 or its nominee, no later than the opening of business on the date of the Stated Maturity of
any Security or no later than the opening of business on the due date for any installment of interest, all payments so due, which payments shall be in immediately available funds on the date of such Stated Maturity or due date, as the case may be.

  
 SECTION 10.2 Maintenance of Offices or Agencies. 
  
 The Company will maintain in the Borough of Manhattan, The City of New York,
an office or agency (which may include the Trustee) where the Securities may be surrendered for registration of transfer or exchange or for presentation for payment or for conversion, redemption or repurchase and where notices and demands to or upon
the Company in respect of the Securities and this Indenture may be served. The Company will give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency so designated or appointed by the
Trustee. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate
Trust Office or the office or agency of the Trustee in the Borough of Manhattan, The City of New York. 
  
 The Company may at any time and from time to time vary or terminate the appointment of any such agent or appoint any additional agents for any or all of
such purposes; provided, however, that until all of the Securities have been delivered to the Trustee for cancellation, or moneys sufficient to pay the principal of, premium, if any, and interest on the Securities have been made available for
payment and either paid or returned to the Company pursuant to the provisions of Section 10.3, the Company will maintain in the Borough of Manhattan, The City of New York, an office or agency where Securities may be presented or surrendered for
payment and conversion, which shall initially be the Corporate Trust Office of the Trustee, where Securities may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Company in respect of the
Securities and this Indenture may be served. The Company will give prompt written notice to the Trustee, and notice to the Holders in accordance with Section 1.6, of the appointment or termination of any such agents and of the location and any
change in the location of any such office or agency. 
  
 The
Company hereby initially designates the Trustee as Paying Agent, Security Registrar and Conversion Agent, and the Corporate Trust Office of the Trustee as one such office or agency of the Company for each of the aforesaid purposes. 
  

 47 

 SECTION 10.3 Money for Security Payments to Be Held in Trust. 
  
 If the Company shall act as its own Paying Agent, it will, on or before each
due date of the principal of, premium, if any, or interest on any of the Securities, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay the principal, premium, if any, or interest so becoming due
until such sums shall be paid to such Persons or otherwise disposed of as herein provided and the Company will promptly notify the Trustee, in writing, of its action or failure so to act. 
  
 Whenever the Company shall have one or more Paying Agents, it will, no later than the opening of business on each due date
of the principal of, premium, if any, or interest on any Securities, deposit with the Trustee a sum in funds immediately payable on the payment date sufficient to pay the principal, premium, if any, or interest so becoming due, such sum to be held
for the benefit of the Persons entitled to such principal, premium, if any, or interest, and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee, in writing, of any failure so to act. 
  
 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: 
  
 (1) hold all sums held by it for the payment of the principal of, premium, if any, or interest on Securities for the benefit
of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided; 
  
 (2) give the Trustee written notice of any default by the Company (or any other obligor upon the Securities) in the making of any payment of principal,
premium, if any, or interest; and 
  
 (3) at any time during the
continuance of any such default, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held by such Paying Agent. 
  
 The Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company
Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by the Company or such Paying Agent;
and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money. 
  
 Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of, premium, if any, or
interest on any Security and remaining unclaimed for two years after such principal, premium, if any, or interest has become due and payable shall be paid to the Company on Company Request, or (if then held by the Company) shall be discharged from
such trust; and the Holder of such Security shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability
of the Company as trustee thereof, shall thereupon cease. 
  

 48 

 SECTION 10.4 Existence. 
  
 Subject to Article VII, the Company will do or cause to be done all things necessary to preserve and keep in full force and
effect its 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 shall determine 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 10.5 Payment of Taxes and Other Claims. 
  
 The Company shall pay, subject to Sections 12.8 and 13.3(2), all stamps and other duties, if any, which may be imposed by the United States or any
political subdivision thereof or therein in connection with the issuance, transfer, exchange or conversion of any Securities or with respect to this Indenture except such as are contested in good faith and by appropriate proceedings or where the
failure to effect such payment is not adverse in any material respect to the Holders. 
  
 SECTION 10.6 Registration and Listing. 
  
 The Company will effect all registrations with, and obtain all approvals by, all governmental authorities that may be necessary under any United States Federal or state law (including the Securities Act, the Exchange Act and state
securities and Blue Sky laws) before the shares of Common Stock issuable upon conversion of Securities are issued and delivered, and qualified or listed as contemplated under the Registration Rights Agreement. 
  
 Nothing in this Section will limit the application of Section 10.10.

  
 SECTION 10.7 Statement by Officers as to Default. 
  
 The Company shall deliver to the Trustee, within 120 days after the end of
each fiscal year of the Company ending after the date hereof, an Officer’s Certificate, stating whether or not to the reasonable best knowledge of the signer thereof the Company is in default in the performance and observance of any of the
terms, provisions and conditions of this Indenture (without regard to any period of grace or requirement of notice provided hereunder) and, if the Company shall be in default, specifying all such defaults and the nature and status thereof of which
they may have knowledge. 
  
 The Company will deliver to the
Trustee, forthwith upon becoming aware of any default or any Event of Default under the Indenture, an Officer’s Certificate specifying with particularity such default or Event of Default and further stating what action the Company has taken, is
taking or proposes to take with respect thereto. For the purpose of this Section, the term “default” means any event which is, or after notice or lapse of time or both would become, an Event of Default. 
  
 Any notice required to be given under this Section 10.7 shall be delivered to
the Trustee at its Corporate Trust Office. 
  

 49 

 SECTION 10.8 Delivery of Certain Information. 
  
 At any time when the Company is not subject to Section 13 or 15(d) of the
Exchange Act, upon the request of a Holder of a Restricted Security or the holder of shares of Common Stock issued upon conversion thereof, the Company will promptly furnish or cause to be furnished Rule 144A Information (as defined below) to such
Holder of Restricted Securities or such holder of shares of Common Stock issued upon conversion of Restricted Securities, or to a prospective purchaser of any such security designated by any such Holder or holder, as the case may be, to the extent
required to permit compliance by such Holder or holder with Rule 144A under the Securities Act (or any successor provision thereto) in connection with the resale of any such security; provided, however, that the Company shall not be required to
furnish such information in connection with any request made on or after the date that is two years from the later of (i) the date such a security (or any such predecessor security) was last acquired from the Company or (ii) the date such a security
(or any such predecessor security) was last acquired from an “affiliate” of the Company within the meaning of Rule 144 under the Securities Act (or any successor provision thereto). “Rule 144A Information” shall be such
information as is specified pursuant to Rule 144A(d)(4) under the Securities Act (or any successor provision thereto). 
  
 SECTION 10.9 Resale of Certain Securities. 
  
 During the period beginning on the last date of original issuance of the Securities and ending on the date that is two years from such date, the Company
will not, and will not permit any of its subsidiaries or other “affiliates” (as defined under Rule 144 under the Securities Act or any successor provision thereto) to, resell (i) any Securities that constitute “restricted
securities” under Rule 144 or (ii) any securities into which the Securities have been converted under this Indenture that constitute “restricted securities” under Rule 144, that in either case have been reacquired by any of them. The
Trustee shall have no responsibility in respect of the Company’s performance of its agreement in the preceding sentence. 
  
 SECTION 10.10 Registration Rights. 
  
 The Company agrees that the Holders from time to time of Registrable Securities (as defined below) are entitled to the benefits of the Registration Rights
Agreement. 
  
 Whenever in this Indenture there is mentioned, in
any context, the payment of the principal of, premium, if any, or interest on, or in respect of, any Security, such mention shall be deemed to include mention of the payment of Liquidated Damages provided for in this Section to the extent that, in
such context, Liquidated Damages are, were or would be payable in respect thereof pursuant to the provisions of this Section and express mention of the payment of Liquidated Damages (if applicable) in any provisions hereof shall not be construed as
excluding Liquidated Damages in those provisions hereof where such express mention is not made. 
  
 For the purposes of the Registration Rights Agreement, “Registrable Securities” means all or any portion of the Securities issued from time to
time under this Indenture in registered form and the shares of Common Stock issuable upon conversion, repurchase or redemption of such Securities; provided, however, that a security ceases to be a Registrable Security when it is no longer a
Restricted Security pursuant to the Registration Rights Agreement. 
  

 50 

 If a Security, or the shares of Common Stock issuable upon conversion of a Security, is a Registrable
Security, and the Holder thereof elects to sell such Registrable Security pursuant to the Shelf Registration Statement then, by its acceptance thereof, the Holder of such Registrable Security will have agreed to be bound by the terms of the
Registration Rights Agreement relating to the Registrable Securities which are the subject of such election. 
  
 For the purposes of the Registration Rights Agreement, the term “Holder” means any Person that is the record owner of Registrable Securities
(and includes any Person that has a beneficial interest in any Registrable Security in book entry form). 
  
 If Liquidated Damages are payable under the Registration Rights Agreement, the Company shall deliver to the Trustee a certificate to that effect stating
(i) the amount of Liquidated Damages that is payable and (ii) the date on which Liquidated Damages are payable. Unless and until a Responsible Officer of the Trustee receives at the Corporate Trust Office such a certificate, the Trustee may assume
without inquiry that no Liquidated Damages are payable. If Liquidated Damages have been paid by the Company directly to the persons entitled to them, the Company shall deliver to the Trustee a certificate setting forth the particulars of such
payment. 
  
 SECTION 10.11 Waiver of Certain Covenants. 

 
 The Company may omit in any particular instance to comply with any
covenant or condition set forth in Sections 10.4 (other than with respect to the existence of the Company (subject to Article VII)) and 10.5, inclusive (other than a covenant or condition which under Article VIII cannot be modified or amended
without the consent of the Holder of each Outstanding Security affected), if before the time for such compliance the Holders shall, through (i) the written consent of not less than a majority in principal amount of the Outstanding Securities or (ii)
the adoption of a resolution at a meeting of Holders of the Outstanding Securities at which a quorum is present by the Holders of not less than a majority in aggregate principal amount of the Outstanding Securities represented at such meeting,
either waive such compliance in such instance or generally waive compliance with such covenant or condition, but no such waiver shall extend to or affect such covenant or condition except to the extent so expressly waived, and, until such waiver
shall become effective, the obligations of the Company and the duties of the Trustee or any Paying or Conversion Agent in respect of any such covenant or condition shall remain in full force and effect. 
  
 ARTICLE XI 
  
 REDEMPTION OF SECURITIES 
  
 SECTION 11.1 Right of Redemption. 
  
 The Securities may be redeemed in accordance with the provisions of the form
of Security set forth in Exhibit A hereto. 
  

 51 

 SECTION 11.2 Applicability of Article. 
  
 Redemption of Securities at the election of the Company or otherwise, as permitted or required by any provision of the
Securities or this Indenture, shall be made in accordance with such provision and this Article XI. 
  
 SECTION 11.3 Election to Redeem; Notice to Trustee. 
  
 The election of the Company to redeem any Securities shall be evidenced by a Board Resolution. In case of any redemption at the election of the Company of
any of the Securities, the Company shall, at least 30 days prior to the Redemption Date fixed by the Company (unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee in writing of such Redemption Date. 
  
 SECTION 11.4 Selection by Trustee of Securities to Be Redeemed. 
  
 If less than all the Securities are to be redeemed, the particular
Securities to be redeemed shall be selected by the Trustee within five Business Days after it receives the notice described in 11.3, from the Outstanding Securities not previously called for redemption, by lot or by such other method as the Trustee
may deem fair and appropriate. 
  
 If any Security selected for
partial redemption is converted in part before termination of the conversion right with respect to the portion of the Security so selected, the converted portion of such Security shall be deemed (so far as may be) to be the portion selected for
redemption. Securities which have been converted during a selection of Securities to be redeemed may be treated by the Trustee as Outstanding for the purpose of such selection. The Trustee shall promptly notify the Company and each Security
Registrar in writing of the Securities selected for redemption and, in the case of any Securities selected for partial redemption, the principal amount thereof to be redeemed. 
  
 For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of
Securities shall relate, in the case of any Securities redeemed or to be redeemed only in part, to the portion of the principal amount of such Securities which has been or is to be redeemed. 
  
 SECTION 11.5 Notice of Redemption. 
  
 Notice of redemption shall be given in the manner provided in Section 1.6 to
the Holders of Securities to be redeemed not less than 30 nor more than 60 days prior to the Redemption Date, and such notice shall be irrevocable. 
  
 All notices of redemption shall state: 
  
 (1) the Redemption Date, 
  
 (2) the Redemption Price, and accrued interest (including Liquidated Damages, if any), if any, to, but excluding, the Redemption Date, 
  

 52 

 (3) if less than all Outstanding Securities are to be redeemed, the aggregate principal amount of
Securities to be redeemed and the aggregate principal amount of Securities which will be outstanding after such partial redemption, 
  
 (4) that on the Redemption Date the Redemption Price, and accrued interest (including Liquidated Damages, if any), if any, to, but excluding, the
Redemption Date, will become due and payable upon each such Security to be redeemed, and that interest thereon shall cease to accrue on and after said date, 
  
 (5) the Conversion Rate, the date on which the right to convert the Securities to be redeemed will terminate and the places where such Securities may be
surrendered for conversion, and 
  
 (6) the place or places where
such Securities are to be surrendered for payment of the Redemption Price and accrued interest (including Liquidated Damages, if any), if any, to, but excluding, the Redemption Date. 
  
 In case of a partial redemption, the notice shall specify the serial and CUSIP numbers (if any) and the portions thereof
called for redemption and that transfers and exchanges may occur on or prior to the Redemption Date. 
  
 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 written request
(which request shall be delivered to the Trustee simultaneously with notification of the Redemption Date pursuant to Section 11.3), by the Trustee in the name of and at the expense of the Company. Notice of redemption of Securities to be redeemed at
the election of the Company received by the Trustee shall be given by the Trustee to each Paying Agent in the name of and at the expense of the Company. 
  
 SECTION 11.6 Deposit of Redemption Price. 
  
 On or prior to the Redemption Date, the Company shall deposit with the Trustee (or, if the Company is acting as its own Paying Agent, segregate and hold
in trust as provided in Section 10.3) an amount of money (which shall be in immediately available funds on such Redemption Date) sufficient to pay the Redemption Price of, and (except if the Redemption Date shall be an Interest Payment Date) accrued
interest (including Liquidated Damages, if any) to the Redemption Date on, all the Securities which are to be redeemed on that date other than any Securities called for redemption on that date which have been converted prior to the date of such
deposit. 
  
 lf any Security called for redemption is converted,
any money deposited with the Trustee 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 last paragraph
of Section 3.7) be paid to the Company or, if then held by the Company, shall be discharged from such trust. 
  

 53 

 SECTION 11.7 Securities Payable on Redemption Date. 
  
 Notice of redemption having been given as aforesaid, the Securities so to be
redeemed shall, on the Redemption Date, become due and payable at the Redemption Price therein specified and from and after such date (unless the Company shall default in the payment of the Redemption Price, including accrued interest) such
Securities shall cease to bear interest. Upon surrender of any Security for redemption in accordance with said notice such Security shall be paid by the Company at the Redemption Price together with accrued and unpaid interest (including Liquidated
Damages, if any) to but excluding the Redemption Date; provided, however, that installments of interest on Securities whose Stated Maturity is on or prior to the Redemption Date shall be payable to the Holders of such Securities, or one or more
Predecessor Securities, registered as such on the relevant Record Date according to their terms and the provisions of Section 3.7. 
  
 If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal amount of, premium, if any, and, to the
extent permitted by applicable law, accrued interest on such Security shall, until paid, bear interest from the Redemption Date at a rate of 6.00% per annum and such Security shall remain convertible until the Redemption Price of such Security (or
portion thereof, as the case may be) shall have been paid or duly provided for. 
  
 Any Security that is to be redeemed only in part shall be surrendered at the Corporate Trust Office or an office or agency of the Company designated for that purpose pursuant to Section 10.2 (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, 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. 
  
 ARTICLE XII 
  
 CONVERSION OF SECURITIES 
  
 SECTION 12.1 Conversion
Privilege and Conversion Rate. 
  
 Subject to and upon
compliance with the provisions of this Article, at the option of the Holder thereof, each U.S. $1,000 principal amount of Securities may be converted into fully paid and nonassessable shares (calculated as to each conversion to the nearest 1/100th
of a share) of Common Stock of the Company at the Conversion Rate, determined as hereinafter provided, in effect at the time of conversion. Such conversion right shall commence on the initial issuance date of the Securities and expire at the close
of business on the date of Maturity (unless such Securities have been previously redeemed or repurchased), subject, in the case of conversion of any Global Security, to any Applicable Procedures. In case a Security or portion thereof is called for
redemption at the election of the Company or the Holder thereof exercises his right to require the Company to repurchase the Security, such conversion right in respect of the Security, or 

  

 54 

 
portion thereof so called, shall expire at the close of business on the Business Day immediately preceding the Redemption Date or the Repurchase Date, as the
case may be, unless the Company defaults in making the payment due upon redemption or repurchase, as the case may be (in each case subject as aforesaid to any Applicable Procedures with respect to any Global Security). 
  
 The rate at which shares of Common Stock shall be delivered upon conversion
(herein called the “Conversion Rate”) shall be initially 76.0861 shares of Common Stock for each U.S. $l,000 principal amount of Securities. The Conversion Rate shall be adjusted in certain instances as provided in this Section 12.11.

  
 SECTION 12.2 Exercise of Conversion Privilege. 
  
 In order to exercise the conversion privilege, the Holder of any Security to
be converted shall surrender such Security, duly endorsed in blank, at any office or agency of the Company maintained for that purpose pursuant to Section 10.2, accompanied by a duly signed conversion notice substantially in the form set forth in
Section 2.4 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. Each Security surrendered for conversion (in whole or in part) during
the Record Date Period shall (except in the case of any Security or portion thereof which has been called for redemption, on a Redemption Date, or is repurchasable on a Repurchase Date, occurring, in either case, during the period from the close of
business on any Regular Record Date next preceding any Interest Payment Date to the close of business on the second Business Day following such Interest Payment Date and, as a result, the right to convert such Security would otherwise terminate in
such period if not exercised) be accompanied by payment in New York Clearing House funds or other funds acceptable to the Company of an amount equal to the interest payable on such Interest Payment Date on the principal amount of such Security (or
part thereof, as the case may be) being surrendered for conversion. The interest so payable on such Interest Payment Date with respect to any Security (or portion thereof, if applicable) that is surrendered for conversion during the Record Date
Period shall be paid to the Holder of such Security as of such Regular Record Date in an amount equal to the interest that would have been payable on such Security if such Security had been converted as of the close of business on such Interest
Payment Date. Interest payable on any Interest Payment Date in respect of any Security surrendered for conversion on or after such Interest Payment Date shall be paid to the Holder of such Security as of the Regular Record Date next preceding such
Interest Payment Date, notwithstanding the exercise of the right of conversion. Except as provided in this paragraph and subject to the last paragraph of Section 3.7, no cash payment or adjustment shall be made upon any conversion on account of any
interest accrued from the Interest Payment Date next preceding the conversion date, in respect of any Security (or part thereof, as the case may be) surrendered for conversion, or on account of any dividends on the Common Stock issued upon
conversion. The Company’s delivery to the Holder of the number of shares of Common Stock (and cash in lieu of fractions thereof, as provided in this Indenture) into which a Security is convertible will be deemed to satisfy the Company’s
obligation to pay the principal amount of the Security. 
  
 Securities shall be deemed to have been converted immediately prior to the close of business on the day of surrender of such Securities for conversion in accordance with the foregoing provisions, and at such time the rights of the Holders
of such Securities as Holders shall cease, and the Person or Persons entitled to receive the Common Stock issuable upon 

  

 55 

 
conversion shall be treated for all purposes as the record holder or holders of such Common Stock at such time. As promptly as practicable on or after the
conversion date, the Company shall issue and deliver to the Trustee, for delivery to the Holder (unless a different Person is indicated on the Conversion Notice), a certificate or certificates for the number of full shares of Common Stock issuable
upon conversion, together with payment in lieu of any fraction of a share, as provided in Section 12.3. 
  
 All shares of Common Stock delivered upon such conversion of Restricted Securities shall bear restrictive legends substantially in the form of the legends
required to be set forth on the Restricted Securities pursuant to Section 3.5 and shall be subject to the restrictions on transfer provided in such legends. Neither the Trustee nor any agent maintained for the purpose of such conversion shall have
any responsibility for the inclusion or content of any such restrictive legends on such Common Stock; provided, however, that the Trustee or any agent maintained for the purpose of such conversion shall have provided, to the Company or to the
Company’s transfer agent for such Common Stock, prior to or concurrently with a request to the Company to deliver such Common Stock, written notice that the Securities delivered for conversion are Restricted Securities. 
  
 In the case of any Security which is converted in part only, upon such
conversion the 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 an aggregate principal amount equal to the
unconverted portion of the principal amount of such Security. A Security may be converted in part, but only if the principal amount of such Security to be converted is any integral multiple of U.S. $1,000 and the principal amount of such security to
remain Outstanding after such conversion is equal to U.S. $1,000 or any integral multiple of $1,000 in excess thereof. 
  
 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 beneficial owner of such Restricted Security, then such Holder must deliver to the Conversion Agent a Surrender Certificate, dated the date of surrender of such Restricted Security and
signed by such beneficial owner, 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 beneficial owner, shares of Common Stock or Securities issued upon conversion of any such Restricted Security not so accompanied by a properly completed Surrender Certificate. 
  
 SECTION 12.3 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 issuable upon conversion thereof shall be computed on the basis of the aggregate principal amount of the Securities (or specified portions thereof) so surrendered.
Instead of any fractional share of Common Stock that would otherwise be issuable upon conversion of any Security or Securities (or specified portions thereof), the Company shall calculate and pay a cash adjustment in respect of such fraction
(calculated to the 

  

 56 

 
nearest 1/100th of a share) in an amount equal to the same fraction of the Closing Price Per Share at the close of business on the day of conversion.

  
 SECTION 12.4 Adjustment of Conversion Rate. 
  
 The Conversion Rate shall be subject to adjustments from time to time as
follows: 
  
 (1) In case the Company shall pay or make a dividend
or other distribution on shares of any class of capital stock payable in shares of Common Stock, the Conversion Rate in effect at the opening of business on the day following the date fixed for the determination of shareholders entitled to receive
such dividend or other distribution shall be increased by dividing the Conversion Rate in effect immediately prior to such date by a fraction of which the numerator shall be the number of shares of Common Stock outstanding at the close of business
on the date fixed for such determination and the denominator shall be the sum of such number of shares and the total number of shares constituting such dividend or other distribution, such increase to become effective immediately after the opening
of business on the day following the date fixed for such determination. If, after any such date fixed for determination, any dividend or distribution is not in fact paid, the Conversion Rate shall be immediately readjusted, effective as of the date
the Board of Directors determines not to pay such dividend or distribution, to the Conversion Rate that would have been in effect if such determination date had not been fixed. For the purposes of this paragraph (1), 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. 
  
 (2) In case the Company shall issue rights, options or warrants to all holders of its Common Stock entitling them to subscribe for or purchase shares of
Common Stock at a price per share less than the current market price per share (determined as provided in paragraph (6) of this Section 12.4) of the Common Stock on the date fixed for the determination of stockholders entitled to receive such
rights, options or warrants (other than any rights, options or warrants that by their terms will also be issued to any Holder upon conversion of a Security into shares of Common Stock without any action required by the Company or any other Person),
the Conversion Rate in effect at the opening of business on the day following the date fixed for such determination shall be increased by dividing the Conversion Rate in effect immediately prior to such date by a fraction of which the numerator
shall be the number of shares of Common Stock outstanding at the close of business on the date fixed for such determination plus the number of shares of Common Stock that the aggregate of the offering price of the total number of shares of Common
Stock so offered for subscription or purchase would purchase at such current market price and the denominator shall be the number of shares of Common Stock outstanding at the close of business on the date fixed for such determination plus the number
of shares of Common Stock so offered for subscription or purchase, such increase to become effective immediately after the opening of business on the day following the date fixed for such determination. If, after any such date fixed for
determination, any such rights, options or warrants are not in fact issued, or are not exercised prior to the expiration thereof, the Conversion Rate shall be immediately readjusted, effective as of the date such rights, options or warrants expire,
or the date the Board of Directors determines not to issue such rights, options or warrants, to the Conversion Rate that 

  

 57 

 
would have been in effect if the unexercised rights, options or warrants had never been granted or such determination date had not been fixed, as the case
may be. For the purposes of this paragraph (2), 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 issue any rights, options or warrants in respect of shares of Common Stock held in the treasury of the Company. 
  
 (3) In case 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. 
  

(4) In case the Company shall, by dividend or otherwise, distribute to all holders of its Common Stock cash (excluding cash distributed upon a merger
or consolidation to which Section 12.11 applies) in an aggregate amount that, combined together with (I) the aggregate amount of any other all-cash distributions to all holders of its Common Stock made exclusively in cash within the 365-day period
preceding the date of payment of such distribution and in respect of which no adjustment pursuant to this paragraph (4) or paragraph (5) of this Section 12.4 has been made and (II) the aggregate of any cash plus the fair market value (as determined
by the Board of Directors, whose determination shall be conclusive and described in a Board Resolution) of any non-cash consideration payable in respect of any tender offer by the Company or any of its Subsidiaries for all or any portion of the
Common Stock concluded within the 365-day period preceding the date of payment of such distribution and in respect of which no adjustment pursuant to paragraph (5) of this Section 12.4 has been made (the “combined cash and tender amount”)
exceeds 10% of the product of the current market price per share (determined as provided in paragraph (7) of this Section 12.4) of the Common Stock on the date for the determination of holders of shares of Common Stock entitled to receive such
distribution times the number of shares of Common Stock outstanding on such date (the “aggregate current market price”), then, and in each such case, immediately after the close of business on such date for determination, the Conversion
Rate shall be adjusted so that the same shall equal the rate determined by dividing the Conversion Rate in effect immediately prior to the close of business on the date fixed for determination of the stockholders entitled to receive such
distribution by a fraction (i) the numerator of which shall be equal to the current market price per share (determined as provided in paragraph (7) of this Section) of the Common Stock on the date fixed for such determination less an amount equal to
the quotient of (x) the excess of such combined cash and tender amount over 10% of such aggregate current market price divided by (y) the number of shares of Common Stock outstanding on such date for determination and (ii) the denominator of which
shall be equal to the current market price per share (determined as provided in paragraph (7) of this Section 12.4) of the Common Stock on such date fixed for determination. 
  

 58 

 (5) The Company will not be required to make any adjustment to the Conversion Rate until the cumulative
adjustments amount to 1.0% or more of the Conversion Rate. The Company will compute all adjustments to the Conversion Rate and will give notice of any adjustments by mail to the Holders. In addition, in connection with the Company’s stockholder
rights plan, in lieu of an adjustment to the Conversion Rate, the Securities will become entitled to receive upon conversion, in addition to the Company’s Common Stock issuable, any associated rights to the same extent as holders of the
Company’s Common Stock generally. 
  
 (6) In case a tender
offer made by the Company or any Subsidiary for all or any portion of the Common Stock shall expire and such tender offer (as amended upon the expiration thereof) shall require the payment to stockholders (based on the acceptance (up to any maximum
specified in the terms of the tender offer) of Purchased Shares (as defined below)) of an aggregate consideration having a fair market value (as determined by the Board of Directors, whose determination shall be conclusive and described in a Board
Resolution) that combined together with (I) the aggregate of the cash plus the fair market value (as determined by the Board of Directors, whose determination shall be conclusive and described in a Board Resolution), as of the expiration of such
tender offer, of any non-cash consideration payable in respect of any other tender offer by the Company or any Subsidiary for all or any portion of the Common Stock expiring within the 365-day period preceding the expiration of such tender offer and
in respect of which no adjustment pursuant to this paragraph (5) or paragraph (4) of this Section 12.4 has been made and (II) the aggregate amount of any cash distributions to all holders of the Common Stock within 365-day period preceding the
expiration of such tender offer and in respect of which no adjustment pursuant to paragraph (4) of this Section has been made (the “combined tender and cash amount”) exceeds 10% of the product of the current market price per share of the
Common Stock (determined as provided in paragraph (7) of this Section 12.4) as of the last time (the “Expiration Time”) tenders could have been made pursuant to such tender offer (as it may be amended) times the number of shares of Common
Stock outstanding (including any tendered shares) as of the Expiration Time, then, and in each such case immediately prior to the opening of business on the day after the date of the Expiration Time, the Conversion Rate shall be adjusted so that the
same shall equal the rate determined by dividing the Conversion Rate immediately prior to the close of business on the date of the Expiration Time by a fraction (i) the numerator of which shall be equal to (A) the product of (I) the current market
price per share of the Common Stock (determined as provided in paragraph (7) of this Section 12.4) on the date of the Expiration Time multiplied by (II) the number of shares of Common Stock outstanding (including any tendered shares) on the
Expiration Time less (B) the combined tender and cash amount, and (ii) the denominator of which shall be equal to the product of (A) the current market price per share of the Common Stock (determined as provided in paragraph (7) of this Section
12.4) on the date of the Expiration Time multiplied by (B) the number of shares of Common Stock outstanding (including any tendered shares) as of the Expiration Time less the number of all shares validly tendered and not withdrawn as of the
Expiration Time (the shares deemed so accepted up to any such maximum, being referred to as the “Purchased Shares”). 
  
 (7) The reclassification of Common Stock into securities other than Common Stock (other than any reclassification upon a consolidation or merger to which
Section 12.11 applies) shall be deemed to involve (a) a distribution of such securities other than Common Stock to all holders of Common Stock (and the effective date of such reclassification shall be deemed to be “the date fixed for the
determination of stockholders entitled to receive such distribution” and 

  

 59 

 
“the date fixed for such determination” within the meaning of paragraph (14) of this Section), and (b) a subdivision or combination, as the case
may be, of the number of shares of Common Stock outstanding immediately prior to such reclassification into the number of shares of Common Stock outstanding immediately thereafter (and the effective date of such reclassification shall be deemed to
be “the day upon which such subdivision becomes effective” or “the day upon which such combination becomes effective,” as the case may be, and “the day upon which such subdivision or combination becomes effective”
within the meaning of paragraph (3) of this Section 12.4). 
  
 (8)
For the purpose of any computation under paragraphs (2), (4), (5) or (14) of this Section 12.4, the current market price per share of Common Stock on any date shall be calculated by the Company and be the average of the daily Closing Prices Per
Share for the five consecutive Trading Days selected by the Company commencing not more than 10 Trading Days before, and ending not later than the earlier of the day in question and the day before the “ex date” with respect to the issuance
or distribution requiring such computation. For purposes of this paragraph, the term “ex date,” when used with respect to any issuance or distribution, means the first date on which the Common Stock trades regular way in the applicable
securities market or on the applicable securities exchange without the right to receive such issuance or distribution. 
  
 (9) No adjustment in the Conversion Rate shall be required unless such adjustment (plus any adjustments not previously made by reason of this paragraph
(9)) would require an increase or decrease of at least one percent in such rate; provided, however, that any adjustments which by reason of this paragraph (9) are not required to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Article shall be made to the nearest cent or to the nearest one-hundredth of a share, as the case may be. 
  
 (10) The Company may make such increases in the Conversion Rate, for the remaining term of the Securities or any shorter term, in addition to those
required by paragraphs (1), (2), (3), (5), (6) and (14) of this Section 12.4, as it considers to be advisable in order to avoid or diminish any income tax to any holders of shares of Common Stock resulting from any dividend or distribution of stock
or issuance of rights or warrants to purchase or subscribe for stock or from any event treated as such for income tax purposes. The Company shall have the power to resolve any ambiguity or correct any error in this paragraph (10) and its actions in
so doing shall, absent manifest error, be final and conclusive. 
  
 (11) Notwithstanding the foregoing provisions of this Section, no adjustment of the Conversion Rate shall be required to be made (a) upon the issuance of shares of Common Stock pursuant to any present or future plan for the reinvestment of
dividends, (b) upon a change in the par value of the Common Stock, or (c) because of a tender or exchange offer of the character described in Rule 13e-4(h)(5) under the Exchange Act or any successor rule thereto. 
  
 (12) 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 twenty (20) Business Days, the increase is irrevocable during such period, and the Board of Directors shall have made a determination that such increase
would be in the best interests of the Company, which determination shall be conclusive; provided, however, that no such increase shall be taken into account for purposes of determining (i) whether the Closing Price Per Share 

  

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of the Common Stock equals or exceeds 105% of the Conversion Price in connection with an event which would otherwise be a Change of Control pursuant to
Section 13.4 or (ii) whether the Closing Price Per Share of the Common Stock exceeds 105% of the Conversion Price in connection with redemption of the Securities in accordance with the provisions in the form of Security set forth in Section 2.2
hereof. Whenever the Conversion Rate is increased pursuant to the preceding sentence, the Company shall give notice of the increase to the Holders in the manner provided in Section 1.6 at least fifteen (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. 
  
 (13) If Holders of the Securities exercise the right of conversion after the date the rights issued under any future stockholder rights plan adopted by
the Company, separate from the underlying Common Stock and are therefore not entitled to receive the common stock rights that would otherwise be attributable to the shares of Common Stock received upon conversion, the Conversion Rate will be
adjusted as though such rights were being distributed to holders of Common Stock on the date of such separation. If such an adjustment is made and such rights are later redeemed, invalidated or terminated, then a corresponding reversing adjustment
will be made to the Conversion Rate on an equitable basis. 
  
 (14) In case the Company shall, by dividend or otherwise, distribute to all holders of its Common Stock evidences of its indebtedness, shares of any class of capital stock or other property (including cash or assets or securities, but
excluding (i) any rights, options or warrants referred to in paragraph (2) of this Section, (ii) any dividend or distribution paid exclusively in cash, other than those referred to in paragraphs 4 and 5 of this Section, (iii) any dividend or
distribution referred to in paragraph (1) of this Section and (iv) any consideration distributed in any merger or consolidation to which Section 12.11 applies), the Conversion Rate shall be adjusted so that the same shall equal the rate determined
by dividing the Conversion Rate in effect immediately prior to the close of business on the date fixed for the determination of stockholders entitled to receive such distribution by a fraction of which the numerator shall be the current market price
per share (determined as provided in paragraph (6) of this Section 12.4) of the Common Stock on the date fixed for such determination less the then fair market value (as determined by the Board of Directors, whose determination shall be conclusive
and described in a Board Resolution filed with the Trustee) of the portion of the assets, shares or evidences of indebtedness so distributed applicable to one share of Common Stock and the denominator shall be such current market price per share of
the Common Stock, such adjustment to become effective immediately prior to the opening of business on the day following the date fixed for the determination of stockholders entitled to receive such distribution. If after any such date fixed for
determination, any such distribution is not in fact made, the Conversion Rate shall be immediately readjusted, effective as of the date that the Board of Directors determines not to make such distribution, to the Conversion Rate that would have been
in effect if such determination date had not been fixed. 
  
 In
the event the then fair market value (as so determined) of the portion of the evidences of indebtedness, shares of any class of capital stock or other property so distributed is equal to or greater than the current market price per share of the
Common Stock on such date, in lieu of the foregoing adjustment, adequate provision shall be made so that each Holder of a Security shall have the right to receive upon conversion the amount of such evidences of indebtedness, shares 

  

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of any class of capital stock or other property such Holder would have received had such Holder converted each Security on such date. 
  
 SECTION 12.5 Notice of Adjustments of Conversion Rate. 
  
 Whenever the Conversion Rate is adjusted as herein provided: 
  
 (1) the Company shall compute the adjusted Conversion Rate in accordance
with Section 12.4 and shall prepare a certificate signed by its principal financial officer, Comptroller or Treasurer of the Company setting forth the adjusted Conversion Rate and showing in reasonable detail the facts upon which such adjustment is
based, and such certificate shall promptly be filed with the Trustee and with each Conversion Agent; and 
  
 (2) upon each such adjustment, a notice stating that the Conversion Rate has been adjusted and setting forth the adjusted Conversion Rate shall be
required, and as soon as practicable after it is required, such notice shall be provided by the Company to all Holders in accordance with Section 1.6. 
  
 Neither the Trustee nor any Conversion Agent shall be under any duty or responsibility with respect to any such certificate or the information and
calculations contained therein, except to exhibit the same to any Holder of Securities desiring inspection thereof at its office during normal business hours, and shall not be deemed to have knowledge of any adjustment in the Conversion Rate unless
and until a Responsible Officer of the Trustee shall have received such a certificate. Until a Responsible Officer of the Trustee receives such a certificate, the Trustee and each Conversion Agent may assume without inquiry that the last Conversion
Rate of which the Trustee has knowledge remains in effect. 
  
 SECTION 12.6
Notice of Certain Corporate Action. 
  
 In case:

  
 (1) the Company shall declare a dividend (or any other
distribution) on its Common Stock payable (i) otherwise than exclusively in cash or (ii) exclusively in cash in an amount that would require any adjustment pursuant to Section 12.4; or 
  
 (2) the Company shall authorize the granting to all or substantially all of the holders of its Common Stock of rights,
options or warrants to subscribe for or purchase any shares of capital stock of any class or of any other rights; or 
  
 (3) of any reclassification of the Common Stock, or of any consolidation, merger or share exchange to which the Company is a party and for which approval
of any stockholders of the Company is required, or of the conveyance, sale, transfer, lease (other than a mere grant of security interest) or other disposition of all or substantially all of the assets of the Company; or 
  
 (4) of the voluntary or involuntary dissolution, liquidation or winding up of
the Company; 
  

 62 

 then the Company shall cause to be filed at each office or agency maintained for the purpose of conversion of Securities
pursuant to Section 10.2, and shall cause to be provided to all Holders in accordance with Section 1.6, at least 20 days (or 10 days in any case specified in clause (1) or (2) above and 30 days for clause (3) above) prior to the applicable record or
effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, rights, options or warrants, or, if a record is not to be taken, the date as of which the holders of
Common Stock of record to be entitled to such dividend, distribution, rights, options or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, conveyance, transfer, sale, lease (other than a mere grant
of security interest), 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, consolidation, merger, conveyance, transfer, sale, lease, dissolution, liquidation or winding up. Neither the failure to give such notice or the notice referred to in the following
paragraph nor any defect therein shall affect the legality or validity of the proceedings described in clauses (1) through (4) of this Section 12.6. If at the time the Trustee shall not be the Conversion Agent, a copy of such notice shall also
forthwith be filed by the Company with the Trustee. 
  
 The
Company shall cause to be filed at the Corporate Trust Office and each office or agency maintained for the purpose of conversion of Securities pursuant to Section 10.2, and shall cause to be provided to all Holders in accordance with Section 1.6,
notice of any tender offer by the Company or any Subsidiary for all or any portion of the Common Stock at or about the time that such notice of tender offer is provided to the public generally. 
  
 SECTION 12.7 Company to Reserve Common Stock. 
  
 The Company shall at all times 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 Common Stock then issuable upon the conversion of all Outstanding Securities. 
  
 SECTION 12.8 Taxes on Conversions. 
  
 Except as provided in the next sentence, the Company will pay all stamp
taxes and other duties that may be payable in respect of the issue or delivery of shares of Common Stock on conversion of Securities pursuant hereto. The Company shall not, however, be required to pay any tax or duty that may be payable in respect
of (i) income of the Holder, or (ii) 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
and until 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. 
  

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 SECTION 12.9 Covenant as to Common Stock. 
  
 The Company agrees that all shares of Common Stock that may be delivered upon conversion of Securities, upon such delivery,
will have been duly authorized and validly issued and will be fully paid and nonassessable and, except as provided in Section 12.8, the 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 or
its agent to be canceled by or at the direction of the Trustee, which shall dispose of the same as provided in Section 3.9. 
  
 SECTION 12.11 Provision in Case of Consolidation, Merger or Sale of Assets. 
  
 In case of any merger or consolidation of the Company with or into any other Person (other than a merger that does not
result in any reclassification, conversion, exchange or cancellation of outstanding shares of Common Stock of the Company) or any conveyance, sale, transfer, lease (other than a mere grant of security interest) or other disposition of all or
substantially all of the assets of the Company (other than a sale of all or substantially all of the assets of the Company that does not result in any reclassification, conversion, exchange or cancellation of outstanding shares of Common Stock of
the Company), the Person formed by such consolidation or resulting from such merger or which acquires such assets, as the case may be, shall execute and deliver to the Trustee a supplemental indenture providing that the Holder of each Security then
Outstanding shall have the right thereafter, during the period such Security shall be convertible as specified in Section 12,1, to convert such Security only into the kind and amount of securities, cash and other property receivable upon such
consolidation, merger, conveyance, sale, transfer, lease (other than a mere grant of security interest) or other disposition by a holder of the number of shares of Common Stock of the Company into which such Security might have been converted
immediately prior to such consolidation, merger, conveyance, sale, transfer, lease (other than a mere grant of security interest) or other disposition, assuming such holder of Common Stock of the Company (i) is not (A) a Person with which the
Company consolidated or merged with or into or which merged into or with the Company or to which such conveyance, sale, transfer, lease (other than a mere grant of security interest) or other disposition was made, as the case may be (a
“Constituent Person”), or (B) an Affiliate of a Constituent Person and (ii) failed to exercise his rights of election, if any, as to the kind or amount of securities, cash and other property receivable upon such consolidation, merger,
conveyance, sale, transfer, lease (other than a mere grant of security interest) or other disposition (provided that if the kind or amount of securities, cash and other property receivable upon such consolidation, merger, conveyance, sale, transfer,
lease (other than a mere grant of security interest) or other disposition is not the same for each share of Common Stock of the Company held immediately prior to such consolidation, merger, conveyance, sale, transfer, lease (other than a mere grant
of security interest) or other disposition by others than a Constituent Person or an Affiliate thereof and in respect of which such rights of election shall not have been exercised (“Non-electing Share”), then for the purpose of this
Section 12.11 the kind and amount of securities, cash and other property receivable upon such consolidation, merger, conveyance, sale, transfer, lease (other than a mere grant of security interest) or other disposition by the holders of each Non-

  

 64 

 
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 that, for events subsequent to the effective date of such supplemental indenture, shall be as nearly equivalent as may be practicable to the adjustments provided for in this Article. The above provisions of this Section
12.11 shall similarly apply to successive consolidations, mergers, conveyances, sales, transfers or leases (other than a mere grant of security interest). Notice of the execution of such a supplemental indenture shall be given by the Company to the
Holder of each Security as provided in Section 1.6 promptly upon such execution. 
  
 Neither the Trustee nor any Conversion Agent shall be under any responsibility to determine the correctness of any provisions contained in any such supplemental indenture relating either to the kind or amount of
shares of stock or other securities or property or cash receivable by Holders of Securities upon the conversion of their Securities after any such consolidation, merger, conveyance, transfer, sale or lease (other than a mere grant of security
interest) or to any such adjustment, but may accept as conclusive evidence of the correctness of any such provisions, and shall be protected in relying upon, an Officer’s Certificate or an Opinion of Counsel with respect thereto, which the
Company shall cause to be furnished to the Trustee upon request. 
  
 SECTION
12.12 Rights Issued in Respect of Common Stock. 
  
 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 not be deemed distributed for purposes of Section 12.4(2) until the occurrence of the earliest Trigger Event. In addition, in the
event of any distribution of rights or warrants, or any Trigger Event with respect thereto, that shall have resulted in an adjustment to the Conversion Rate under Section 12.4(2), (1) in the case of any such rights or warrants that 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 warrants (assuming such holder had retained such rights or warrants), made to all holders of Common Stock as of
the date of such redemption or repurchase, and (2) in the case of any such rights or warrants all of which shall have expired without exercise by any holder thereof, the Conversion Price shall be readjusted as if such issuance had not occurred.

  

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 SECTION 12.13 Responsibility of Trustee for Conversion Provisions. 
  
 The Trustee, subject to the provisions of Section 6.1, and any Conversion
Agent shall not at any time be under any duty or responsibility to any Holder of Securities to determine whether any facts exist which may require any adjustment of the Conversion Rate, or with respect to the nature or extent of any such adjustment
when made, or with respect to the method employed, herein or in any supplemental indenture provided to be employed, in making the same, or whether a supplemental indenture need be entered into. Neither the Trustee, subject to the provisions of
Section 6.1, nor any Conversion Agent shall be accountable with respect to the validity or value (or the kind or amount) of any Common Stock, or of any other securities or property or cash, which may at any time be issued or delivered upon the
conversion of any Security; and it or they do not make any representation with respect thereto. Neither the Trustee, subject to the provisions of Section 6.1, nor any Conversion Agent shall be responsible for any failure of the Company to make or
calculate any cash payment or to issue, transfer or deliver any shares of Common Stock or share certificates or other securities or property or cash upon the surrender of any Security for the purpose of conversion; and the Trustee, subject to the
provisions of Section 6.1, and any Conversion Agent shall not be responsible for any failure of the Company to comply with any of the covenants of the Company contained in this Article. 
  
 ARTICLE XIII 
  
 REPURCHASE OF SECURITIES AT THE OPTION OF 
 THE HOLDER UPON A CHANGE IN CONTROL 
  
 SECTION 13.1 Right
to Require Repurchase. 
  
 In the event that a Change in
Control (as hereinafter defined) shall occur, then each Holder shall have the right, at the Holder’s option, but subject to the provisions of Section 13.2, to require the Company to repurchase, and upon the exercise of such right the Company
shall repurchase, all of such Holder’s Securities not theretofore called for redemption, or any portion of the principal amount thereof that is equal to U.S. $1,000 or any integral multiple of U.S. $1,000 in excess thereof (provided that no
single Security may be repurchased in part unless the portion of the principal amount of such Security to be Outstanding after such repurchase is equal to U.S. $1,000 or integral multiples of U.S. $1,000 in excess thereof), on the date (the
“Repurchase Date”) that is 31 days after the date of the Company Notice (as defined in Section 13.3) at a purchase price equal to 100% of the principal amount of the Securities to be repurchased plus interest accrued but unpaid to, but
excluding, the Repurchase Date (the “Repurchase Price”); provided, however, that installments of interest on Securities whose Stated Maturity is on or prior to the Repurchase Date shall be payable to the Holders of such Securities, or one
or more Predecessor Securities, registered as such on the relevant Record Date according to their terms and the provisions of Section 3.7. Such right to require the repurchase of the Securities shall not continue after a discharge of the Company
from its obligations with respect to the Securities in accordance with Article IV, unless a Change in Control shall have occurred prior to such discharge. At the option of the Company, the Repurchase Price may be paid in cash or, subject to the
fulfillment by the Company of the conditions set forth Section 13.2, by delivery of shares of Common Stock having a fair market value equal to the Repurchase Price (less any cash payments), or a combination of cash and Common Stock. Whenever in this
Indenture 

  

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(including Sections 2.2, 3.1, 5.1(1) and 5.8) there is a reference, in any context, to the principal of any Security as of any time, such reference shall be
deemed to include reference to the Repurchase Price payable in respect of such Security to the extent that such Repurchase Price is, was or would be so payable at such time, and express mention of the Repurchase Price in any provision of this
Indenture shall not be construed as excluding the Repurchase Price in those provisions of this Indenture when such express mention is not made. 
  
 SECTION 13.2 Conditions to the Company’s Election to Pay the Repurchase Price in Common Stock. 
  
 The Company may, at its option, pay the Repurchase Price in cash, in Common
Stock or a combination thereof. To the extent the Repurchase Price is paid in Common Stock, the Company may elect to pay such amount by delivery of shares of Common Stock pursuant to Section 13.1 if and only if the following conditions shall have
been satisfied: 
  
 (1) The shares of Common Stock deliverable in
payment of the Repurchase Price less any cash payments shall have a fair market value as of the Repurchase Date of not less than the Repurchase Price less any cash payments. For purposes of Section 13.1 and this Section 13.2, the fair market value
of shares of Common Stock shall be determined by the Company and shall be equal to 95% of the average of the Closing Prices Per Share of the Common Stock for the five consecutive Trading Days ending on the third Trading Day prior to the Repurchase
Date; 
  
 (2) The Repurchase Price shall be paid only in cash in
the event any shares of Common Stock to be issued upon repurchase of Securities hereunder (i) require registration under any Federal securities law before such shares may be freely transferable without being subject to any transfer restrictions
under the Securities Act upon repurchase and if such registration is not completed or does not become effective prior to the Repurchase Date, and/or (ii) require registration with or approval of any governmental authority under any state law or any
other Federal law before such shares may be validly issued or delivered upon repurchase and if such registration is not completed or does not become effective or such approval is not obtained prior to the Repurchase Date; 
  
 (3) Payment of the Repurchase Price may not be made in Common Stock unless
such stock is, or shall have been, listed on a national securities exchange or approved for quotation on an inter-dealer quotation system, in either case, on or prior to the Repurchase Date; and 
  
 (4) All shares of Common Stock that may be issued upon repurchase of
Securities will be issued out of the Company’s authorized but unissued Common Stock and, will upon issue, be duly and validly issued and fully paid and non-assessable and free of any preemptive or similar rights. 
  
 If all of the conditions set forth in this Section 13.2 are not satisfied in
accordance with the terms thereof, the Repurchase Price shall be paid by the Company only in cash. 
  
 SECTION 13.3 Notices; Method of Exercising Repurchase Right, Etc. 
  
 (1) Unless the Company shall have theretofore called for redemption all of the Outstanding Securities, on or before the 30th day after the occurrence of a
Change in Control, the 

  

 67 

 
Company or, at the request (and expense) of the Company on or before the 15th day after such occurrence, the Trustee, shall give to all Holders of
Securities, in the manner provided in Section 1.6, notice (the “Company Notice”) of the occurrence of the Change of Control and of the repurchase right set forth herein arising as a result thereof. The Company shall also deliver a copy of
such Company Notice to the Trustee. 
  
 Each Company Notice shall
state: 
  
 (i) the Repurchase Date, 
  
 (ii) the date by which the repurchase right must be exercised, 
  
 (iii) the Repurchase Price, and whether the Repurchase Price shall be paid by
the Company in cash or by delivery of shares of Common Stock, 
  
 (iv) a description of the procedure that a Holder must follow to exercise a repurchase right, and the place or places where such Securities are to be surrendered for payment of the Repurchase Price and accrued interest (including Liquidated
Damages, if any), if any to the Repurchase Date, 
  
 (v) that on
the Repurchase Date the Repurchase Price, and accrued interest (including Liquidated Damages, if any), if any to the Repurchase Date, will become due and payable upon each such Security designated by the Holder to be repurchased, and that interest
thereon shall cease to accrue on and after said date, 
  
 (vi) the
Conversion Rate then in effect, the date on which the right to convert the principal amount of the Securities to be repurchased will terminate and the place or places where such Securities may be surrendered for conversion, and 
  
 (vii) the place or places that the Security certificate with the Election of
Holder to Require Repurchase as specified in Section 2.2 shall be delivered, and if the Security is a Restricted Securities certificate the place or places that the Surrender Certificate required by Section 13.3(9) shall be delivered. 
  
 No failure of the Company to give the foregoing notices or defect therein
shall limit any Holder’s right to exercise a repurchase right or affect the validity of the proceedings for the repurchase of Securities. 
  
 If any of the foregoing provisions or other provisions of this Article XIII are inconsistent with applicable law, such law shall govern. 
  
 (2) To exercise a repurchase right, a Holder shall deliver to the Trustee on
or before the 30th day after the date of the Company Notice (i) written notice of the Holder’s exercise of such right, which notice shall set forth the name of the Holder, the principal amount of the Securities to be repurchased (and, if any
Security is to be repurchased in part, the serial number thereof, the portion of the principal amount thereof to be repurchased and the name of the Person in which the portion thereof to remain Outstanding after such repurchase is to be registered)
and a statement that an election to exercise the repurchase right is being made thereby, and, in the 

  

 68 

 
event that the Repurchase Price shall be paid in shares of Common Stock, the name or names (with addresses) in which the certificate or certificates for
shares of Common Stock shall be issued, and (ii) the Securities with respect to which the repurchase right is being exercised. Notwithstanding this notice, the Holder shall have the right to convert the Securities with respect to which the
repurchase right is being exercised until the close of business on the Business Day before the Repurchase Date. 
  
 (3) In the event a repurchase right shall be exercised in accordance with the terms hereof, the Company shall pay or cause to be paid to the Trustee the
Repurchase Price in cash or shares of Common Stock, for payment to the Holder on the Repurchase Date, together with accrued and unpaid interest to the Repurchase Date payable with respect to the Securities as to which the repurchase right has been
exercised; provided, however, that installments of interest that mature on or prior to the Repurchase 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. 
  
 (4) If any Security (or
portion thereof) surrendered for repurchase shall not be so paid on the Repurchase Date, the principal amount of such Security (or portion thereof, as the case may be) shall, until paid, bear interest to the extent permitted by applicable law from
the Repurchase Date at the rate of 6% per annum, and each Security shall remain convertible into Common Stock until the principal of such Security (or portion thereof, as the case may be) shall have been paid or duly provided for. 
  
 (5) Any Security that is to be repurchased 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 unrepurchased portion of the principal of the Security so surrendered. 
  
 (6) Any issuance of shares of Common Stock in respect of the Repurchase Price shall be deemed to have been effected immediately prior to the close of
business on the Repurchase Date and the Person or Persons in whose name or names any certificate or certificates for shares of Common Stock shall be issuable upon such repurchase shall be deemed to have become on the Repurchase Date the holder or
holders of record of the shares represented thereby; provided, however, that any surrender for repurchase on a date when the stock transfer books of the Company shall be closed shall constitute the Person or Persons in whose name or names the
certificate or certificates for such shares are to be issued as the record holder or holders thereof for all purposes at the opening of business on the next succeeding day on which such stock transfer books arc open. No payment or adjustment shall
be made for dividends or distributions on any Common Stock issued upon repurchase of any Security declared prior to the Repurchase Date. 
  
 (7) No fractions of shares shall be issued upon repurchase of Securities. If more than one Security shall be repurchased from the same Holder and the
Repurchase Price shall be 

  

 69 

 
payable in shares of Common Stock, the number of full shares that shall be issuable upon such repurchase shall be computed on the basis of the aggregate
principal amount of the Securities so repurchased. Instead of any fractional share of Common Stock that would otherwise be issuable on the repurchase of any Security or Securities, the Company will deliver to the applicable Holder its check for the
current market value of such fractional share. The current market value of a fraction of a share is determined by multiplying the current market price of a full share by the fraction, and rounding the result to the nearest cent. For purposes of this
Section, the current market price of a share of Common Stock is the Closing Price Per Share of the Common Stock on the Trading Day immediately preceding the Repurchase Date. 
  
 (8) Any issuance and delivery of certificates for shares of Common Stock on repurchase of Securities shall be made without
charge to the Holder of Securities being repurchased for such certificates or for any tax or duty in respect of the issuance or delivery of such certificates or the securities represented thereby; provided, however, that the Company shall not be
required to pay any tax or duty that may be payable in respect of (i) income of the Holder or (ii) any transfer involved in the issuance or delivery of certificates for shares of Common Stock in a name other than that of the Holder of the Securities
being repurchased, and no such issuance or delivery shall be made unless and until the Person requesting such issuance or delivery 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. 
  
 (9) If shares of
Common Stock to be delivered upon repurchase of a Security are to be registered in a name other than that of the beneficial owner of such Security, then such Holder must deliver to the Trustee a Surrender Certificate, dated the date of surrender of
such Restricted Security and signed by such beneficial owner, as to compliance with the restrictions on transfer applicable to such Restricted Security. Neither the Trustee nor any Registrar or Transfer Agent or other agents shall be required to
register in a name other than that of the beneficial owner shares of Common Stock issued upon repurchase of any such Restricted Security not so accompanied by a properly completed Surrender Certificate. 
  
 (10) All Securities delivered for repurchase 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 3.9. 
  
 SECTION 13.4 Certain Definitions. 
  
 For purposes of this Article XIII, 
  
 (1) the term “beneficial owner” shall be determined in accordance with Rule 13d-3, as in effect on the date of the original execution of this
Indenture, promulgated by the Commission pursuant to the Exchange Act; 
  
 (2) a “Change in Control” shall be deemed to have occurred at the time, after the original issuance of the Securities, of: 
  
 (i) the acquisition by any Person (including any syndicate or group deemed to be a “person” under Section 13(d)(3) of the Exchange Act) of
beneficial ownership, directly or indirectly, through a purchase, merger or other acquisition transaction or series of transactions, of 

  

 70 

 
shares of capital stock of the Company entitling such person to exercise 50% or more of the total voting power of all shares of capital stock of the Company
entitled to vote generally in the elections of directors, other than any such acquisition by the Company, any Subsidiary of the Company or any employee benefit plan of the Company; or 
  
 (ii) any consolidation of the Company with, or merger of the Company into, any other Person, any merger of another Person
into the Company, or any conveyance, sale, transfer, lease (other than a mere grant of security interest) or other disposition of all or substantially all of the assets of the Company to another Person (other than (a) any such transaction (x) that
does not result in any reclassification, conversion, exchange or cancellation of outstanding shares of capital stock of the Company and (y) pursuant to which the holders of 50% or more of the total voting power of all shares of the Company’s
capital stock entitled to vote generally in the election of directors immediately prior to such transaction have the entitlement to exercise, directly or indirectly, 50% or more of the total voting power of all shares of capital stock entitled to
vote generally in the election of directors of the continuing or surviving corporation immediately after such transaction or (b) any transaction which is effected solely to change the jurisdiction of incorporation of the Company and results in a
reclassification, conversion or exchange of outstanding shares of Common Stock into solely shares of common stock of the surviving entity); 
  
 (iii) provided, however, that a Change in Control shall not be deemed to have occurred if (I) the Closing Price Per Share of the Common Stock for any five
Trading Days within the period of 10 consecutive Trading Days ending immediately after the later of the date of the Change in Control or the date of the public announcement of the Change in Control (in the case of a Change in Control under clause
(i) above) or the period of 10 consecutive Trading Days ending immediately before the Change in Control (in the case of a Change in Control under clause (ii) above) shall, in the case of each of such five Trading Days, equal or exceed 105% of the
Conversion Price of the Securities in effect on each of such five Trading Days and (II) all of the consideration (excluding cash payments for fractional shares and cash payments made pursuant to dissenters’ appraisal rights) in a merger or
consolidation otherwise constituting a Change of Control under clause (i) and/or clause (ii) above consists of shares of common stock, depository receipts or other certificates representing common equity interests traded on a national securities
exchange or quoted on The New York Stock Exchange (or will be so traded or quoted immediately following such merger or consolidation) and as a result of such merger or consolidation the Securities become convertible solely into such common stock,
depository receipts or other certificates representing common equity interests; 
  
 (3) the term “Conversion Price” shall equal U.S. $1,000 divided by the Conversion Rate (rounded to the nearest cent); and 
  
 (4) for purposes of Section 13.4(2)(i), 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, as in effect on the date of the original execution of this Indenture. 
  

 71 

 SECTION 13.5 Consolidation, Merger, etc. 
  
 In the case of any merger, consolidation, conveyance, sale, transfer, lease (other than a mere grant of security interest)
or other disposition of all or substantially all of the assets of the Company to which Section 12.11 applies, in which the Common Stock of the Company is changed or exchanged as a result into the right to receive shares of stock and other securities
or property or assets (including cash) which includes shares of Common Stock of the Company or common stock of another Person that are, or upon issuance will be, traded on a United States national securities exchange or approved for trading on an
established automated over-the-counter trading market in the United States and such shares constitute at the time such change or exchange becomes effective in excess of 50% of the aggregate fair market value of such shares of stock and other
securities, property and assets (including cash) (as determined by the Company, which determination shall be conclusive and binding), then the Person formed by such consolidation or resulting from such merger or combination or which acquires the
properties or assets (including cash) of the Company, as the case may be, shall execute and deliver to the Trustee a supplemental indenture (which shall comply with the Trust Indenture Act as in force at the date of execution of such supplemental
indenture) modifying the provisions of this Indenture relating to the right of Holders to cause the Company to repurchase the Securities following a Change in Control, including without limitation the applicable provisions of this Article XIII and
the definitions of the Common Stock and Change in Control, as appropriate, and such other related definitions set forth herein as determined in good faith by the Company (which determination shall be conclusive and binding), to make such provisions
apply in the event of a subsequent Change in Control to the common stock and the issuer thereof if different from the Company and Common Stock of the Company (in lieu of the Company and the Common Stock of the Company). 
  
 ARTICLE XIV 
  
 HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY; NON- 
 RECOURSE 
  
 SECTION 14.1 Company to Furnish Trustee Names and Addresses of Holders. 
  
 The Company will furnish or cause to be furnished to the Trustee: 
  
 (1) semi-annually, not more than 15 days after the Regular Record Date, a list, in such form as the Trustee may reasonably
require, of the names and addresses of the Holders of Securities as of such Regular Record Date, and 
  
 (2) at such other times as the Trustee may reasonably request in writing, within 30 days after the receipt by the Company of any such request, a list of
similar form and content as of a date not more than 15 days prior to the time such list is furnished; 
  
 provided, however, that no such list need be furnished so long as the Trustee is acting as Security Registrar. 
  

 72 

 SECTION 14.2 Preservation of Information. 
  
 (1) The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders
contained in the most recent list furnished to the Trustee as provided in Section 14.1 and the names and addresses of Holders received by the Trustee in its capacity as Security Registrar. The Trustee may destroy any list, if any, furnished to it as
provided in Section 14.1 upon receipt of a new list so furnished. 
  
 (2) After this Indenture has been qualified under the Trust Indenture Act, the rights of Holders to communicate with other Holders with respect to their rights under this Indenture or under the Securities, and the corresponding rights, and
duties of the Trustee, shall be as provided by the Trust Indenture Act. 
  
 (3) Every Holder of Securities, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor the Trustee nor any agent of either of them shall be held accountable by reason of any disclosure of
information as to names and addresses of Holders made pursuant to the Trust Indenture Act. 
  
 SECTION 14.3 Reports by Trustee. 
  
 (1) After this Indenture has been qualified under the Trust Indenture Act, the Trustee shall transmit to Holders such reports concerning the Trustee and its actions under this Indenture as may be required pursuant to
the Trust Indenture Act at the times and in the manner provided pursuant thereto. 
  
 (2) After this Indenture has been qualified under the Trust Indenture Act, a copy of each such report shall, at the time of such transmission to Holders, be filed by the Trustee with each stock exchange upon which the
Securities are listed, with the Commission and with the Company. The Company will notify the Trustee when the Securities are listed on any stock exchange. 
  
 SECTION 14.4 Reports by Company. 
  
 After this Indenture has been qualified under the Trust Indenture Act, the Company shall file with the Trustee and the Commission, and transmit to
Holders, such information, documents and other reports, and such summaries thereof, as may be required pursuant to the Trust Indenture Act at the times and in the manner provided pursuant to such Act; provided that any such information, documents or
reports required to be filed with the Commission pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 shall be filed with the Trustee within 15 days after the same is so required to be filed with the Commission. Furthermore,
whether or not the Company is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, it will deliver to the Trustee, to each Holder and to prospective purchasers of notes identified to the Company as by one of the Initial
Purchasers, within 15 days after the Company is or would have been (if it were subject to such reporting obligations) required to file such with the Commission, annual and quarterly financial statements substantially equivalent to financial
statements that would have been included in reports filed with the Commission, if the Company were subject to the requirements of Section 13 or 15(d) of the Exchange Act, including, with respect to annual information only, a report thereon by the
Company’s certified independent 

  

 73 

 
public accountants, as such would be required in such reports to the Commission, and, in each case, together with a management’s discussion and analysis
of financial condition and results of operations which would be so required and, unless the Commission will not accept such reports, file with the Commission the annual, quarterly and other reports which it is or would have been required to file
with the Commission at such times as are required to be filed. 
  
 ARTICLE XV 
  
 IMMUNITY OF INCORPORATORS,
STOCKHOLDERS, OFFICERS AND DIRECTORS 
  
 SECTION 15.1 Indenture and
Securities Solely Corporate Obligations. 
  
 No recourse
for the payment of the principal of or premium, if any, or interest (including Liquidated Damages, if any) on any Security and no recourse under or upon any obligation, covenant or agreement of the Company in this Indenture or in any supplemental
indenture or in any Security, or because of the creation of any indebtedness represented thereby, shall be had against any past, present or future incorporator, stockholder, employee, agent, officer, or director or subsidiary, as such, 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; it being expressly understood that all such liability is hereby waived and
released as a condition of, and as a consideration for, the execution of this Indenture and the issue of the Securities. 
  
 This Indenture may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall
together constitute but one and the same instrument. 
  

 74 

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

	 K2 INC.,

		
	 By:
	 	 /s/    JOHN J. RANGEL

	 	 	 Name: John J. Rangel

	 	 	 Title: Senior Vice President and Chief Financial Officer

	
	 U.S. BANK NATIONAL ASSOCIATION,
 as Trustee

		
	 By:
	 	 /s/    FRANK P. LESLIE III

	 	 	 Name: Frank P. Leslie III

	 	 	 Title: Vice President

  

 75 

 EXHIBIT A — Form of Security 
  
 Form of Face 
  
 [THE FOLLOWING LEGEND SHALL APPEAR ON THE FACE OF EACH RESTRICTED SECURITY: 
  
 THIS NOTE AND ANY COMMON STOCK ISSUABLE UPON THE CONVERSION OF THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933,
AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS NOTE IS HEREBY NOTIFIED THAT THE SELLER OF THIS NOTE MAY BE
RELYING ON TILE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. 
  
 THIS NOTE AND ANY COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A) (1) TO A PERSON WHO THE
TRANSFEROR REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT ACQUIRING FOR ITS OWN ACCOUNT OR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144A, (2) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), (3) TO AN INSTITUTIONAL INVESTOR THAT IS AN “ACCREDITED INVESTOR” WITHIN THE MEANING OF RULE 501 (A)(1),
(2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT (IF AVAILABLE) OR (4) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, AND (B) IN ACCORDANCE WITH
ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES AND OTHER JURISDICTIONS. 
  
 THIS NOTE, ANY SHARES OF COMMON STOCK ISSUABLE UPON ITS CONVERSION AND ANY RELATED DOCUMENTATION MAY BE AMENDED OR SUPPLEMENTED FROM TIME TO TIME TO MODIFY THE RESTRICTIONS ON RESALES AND OTHER TRANSFERS OF THIS
NOTE AND ANY SUCH SHARES TO REFLECT ANY CHANGE IN APPLICABLE LAW OR REGULATION (OR THE INTERPRETATION THEREOF) OR IN PRACTICES RELATING TO THE RESALE OR TRANSFER OF RESTRICTED SECURITIES GENERALLY. THE HOLDER OF THIS NOTE AND ANY SUCH SHARES SHALL
BE DEEMED BY THE ACCEPTANCE OF THIS NOTE AND ANY SUCH SHARES TO HAVE AGREED TO ANY SUCH AMENDMENT OR SUPPLEMENT.] 
  

 1 

 [THE FOLLOWING LEGEND SHALL APPEAR ON THE FACE OF EACH GLOBAL SECURITY: 
  
 THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER
REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITARY OR A NOMINEE OF THE DEPOSITARY, WHICH MAY BE TREATED BY THE COMPANY, THE TRUSTEE AND ANY AGENT THEREOF AS OWNER AND HOLDER OF THIS SECURITY FOR ALL PURPOSES. 
  
 UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. 
  
 UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE REGISTERED FORM IN THE LIMITED CIRCUMSTANCES REFERRED TO IN THE INDENTURE, THIS GLOBAL SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A
WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITARY.] 
  

 2 

 K2 INC. 
  
 5.00% CONVERTIBLE SENIOR NOTE DUE JUNE 15, 2010 
  

	No. 1	 	$75,000,000

  
 CUSIP NO. 482732 AA 2 
  
 K2 Inc., a corporation duly organized and existing under the laws of the
State of Delaware (herein called the “Company,” which term includes any successor Person under the Indenture referred to on the reverse hereof), for value received, hereby promises to pay to Cede & Co., or registered assigns, the
principal sum of Seventy-Five Million United States Dollars (U.S. $75,000,000) by adjustments made on the records of the Trustee hereinafter referred to in accordance with the Indenture) on June 15, 2010 and to pay interest thereon, from June 10,
2003, or from the most recent Interest Payment Date (as defined below) to which interest has been paid or duly provided for, semi-annually in arrears on June 15 and December 15 in each year (each, an “Interest Payment Date”), commencing
June 15, 2003, at the rate of 5.00% per annum, until the principal hereof is due. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in the Indenture, be paid to the Person in whose name
this Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, which shall be the June 1 or December 1 (whether or not a Business Day), as the case may be, next preceding
such Interest Payment Date. Except as otherwise provided in the Indenture, any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the
Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Company, notice whereof shall be given to
Holders of Securities not less than 10 days prior to the Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any automated quotation system or securities exchange on which the Securities
may be quoted or listed, and upon such notice as may be required by such exchange, all as more fully provided in the Indenture. Payments of principal shall be made upon the surrender of this Security at the option of the Holder at the Corporate
Trust Office of the Trustee, or at such other office or agency of the Company as may be designated by it for such purpose in the Borough of Manhattan, The City of New York, in such lawful monies of the United States of America as at the time of
payment shall be legal tender for the payment of public and private debts, or at such other offices or agencies as the Company may designate, by United States Dollar check drawn on, or wire transfer to, a United States Dollar account (such a wire
transfer to be made only to a Holder of an aggregate principal amount of Securities in excess of U.S. $2,000,000 and only if such Holder shall have furnished wire instructions in writing to the Trustee no later than 15 days prior to the relevant
payment date). Payment of interest on this Security may be made by United States Dollar check mailed to the address of the Person entitled thereto as such address shall appear in the Security Register, or, upon written application by the Holder to
the Security Registrar setting forth wire instructions not later than the relevant Record Date, by transfer to a United States Dollar account (such a wire transfer to be made only to a Holder of an aggregate principal amount of Securities in excess
of U.S. $2,000,000 and only if such Holder shall have 

  

 3 

 
furnished wire instructions in writing to the Trustee no later than 15 days prior to the relevant payment date). 
  
 Except as specifically provided herein and in the Indenture, the Company
shall not be required to make any payment with respect to any tax, assessment or other governmental charge imposed by any government or any political subdivision or taxing authority thereof or therein. 
  
 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. 
  
 Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof or an Authenticating Agent by the
manual signature of one of their respective authorized signatories, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. 
  
 IN WITNESS WHEREOF, the Company has caused this Security to be duly executed. 
  

	 K2 INC.,

		
	 By:
	 	  

	 	 	 Name:

	 	 	 Title:

  
 TRUSTEE’S CERTIFICATE OF
AUTHENTICATION 
  
 This is one of the Securities referred to in the
within-mentioned Indenture. 
  
 Dated: 
  

	
	

	 as Trustee

		
	 By:
	 	

	 	 	Authorized Signatory

  

 4 

 Form of Reverse 
  
 This Security is one of a duly authorized issue of securities of the Company designated as its “5.00% Convertible
Senior Notes due June 15, 2010” (herein called the “Securities”), limited in aggregate principal amount to U.S. $75,000,000, issued and to be issued under an Indenture, dated as of June 10, 2003 (herein called the
“Indenture”), between the Company and U.S. Bank National Association, as Trustee (herein called the “Trustee,” which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental
thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Securities and of the terms upon which the Securities are, and are
to be, authenticated and delivered. As provided in the Indenture and subject to certain limitations therein set forth, Securities are exchangeable for a like aggregate principal amount of Securities of any authorized denominations as requested by
the Holder surrendering the same upon surrender of the Security or Securities to be exchanged, at the Corporate Trust Office of the Trustee. The Trustee upon such surrender by the Holder will issue the new Securities in the requested denominations.

  
 No sinking fund is provided for the Securities. 
  
 The Securities are subject to redemption at the option of the Company at any
time on or after June 15, 2008, in whole or in part, upon not less than 30 nor more than 60 days’ notice to the Holders prior to the Redemption Date at the Redemption Prices (expressed as percentages of the principal amount) as set forth below
for Securities redeemed during the following periods described below: 
  

	 PERIOD

	 	 REDEMPTION PRICE

	 Beginning on June 15, 2008 through June 14, 2009
	 	101.429%
	 Beginning on June 15, 2009 through June 14, 2010
	 	100.714%

  
 and thereafter at a Redemption Price
equal to 100% of the principal amount, together, in each case, with accrued interest to, but excluding, the Redemption Date; provided, however, that interest installments on Securities whose Stated Maturity is on or prior to such Redemption Date
will be payable to the Holders of such Securities, or one or more Predecessor Securities, of record at the close of business on the relevant Record Dates referred to on the face hereof, all as provided in the Indenture. 
  
 In the event of a redemption of the Securities, the Company will not be
required (a) to register the transfer or exchange of Securities for a period of 15 days immediately preceding the date notice is given identifying the serial numbers of the Securities called for such redemption or (b) to register the transfer or
exchange of any Security, or portion thereof, called for redemption. 
  

 5 

 In any case where the due date for the payment of the principal of, premium, if any, interest, or
Liquidated Damages on any Security or the last day on which a Holder of a Security has a right to convert his Security shall be, at any Place of Payment or Place of Conversion as the case may be, a day on which banking institutions at such Place of
Payment or Place of Conversion are authorized or obligated by law or executive order to close, then payment of principal, premium, if any, interest, or Liquidated Damages, or delivery for conversion of such Security need not be made on or by such
date at such place but may be made on or by the next succeeding day at such place which is not a day on which banking institutions are authorized or obligated by law or executive order to close, with the same force and effect as if made on the date
for such payment or the date fixed for redemption or repurchase, or by such last day for conversion, and no interest shall accrue on the amount so payable for the period after such date. 
  
 Subject to and upon compliance with the provisions of the Indenture, the Holder of this Security is entitled, at his option,
at any time on or before the close of business on the date of Maturity, or in case this Security or a portion hereof is called for redemption or the Holder hereof has exercised his right to require the Company to repurchase this Security or such
portion hereof, then in respect of this Security until the Business Day immediately preceding, but (unless the Company defaults in making the payment due upon redemption or repurchase, as the case may be) not after, the close of business on the
Business Day immediately preceding the Redemption Date or the Repurchase Date, as the case may be, to convert this Security (or any portion of the principal amount hereof that is an integral multiple of U.S. $1,000, provided that the unconverted
portion of such principal amount is U.S. $1,000 or any integral multiple of U.S. $l,000 in excess thereof) into fully paid and nonassessable shares of Common Stock of the Company at an initial Conversion Rate of 76.0861 shares of Common Stock for
each U.S. $l,000 principal amount of Securities (or at the current adjusted Conversion Rate if an adjustment has been made as provided in the Indenture) by surrender of this Security, duly endorsed or assigned to the Company or in blank and, in case
such surrender shall be made during the period from the close of business on any Regular Record Date next preceding any Interest Payment Date to the opening of business on such Interest Payment Date (except if this Security or portion thereof has
been called for redemption on a Redemption Date or is repurchasable on a Repurchase Date occurring, in either case, during the period from the close of business on any Regular Record Date next preceding any Interest Payment Date to the close of
business on the second Business Day following such Interest Payment Date and, for which the right to convert could terminate during such period, also accompanied by payment in New York Clearing House or other funds acceptable to the Company of an
amount equal to the interest payable on such Interest Payment Date on the principal amount of this Security then being converted, and also the conversion notice hereon duly executed, to the Company at the Corporate Trust Office of the Trustee, or at
such other office or agency of the Company, subject to any laws or regulations applicable thereto and subject to the right of the Company to terminate the appointment of any Conversion Agent (as defined below) as may be designated by it for such
purpose in the Borough of Manhattan, The City of New York, or at such other offices or agencies as the Company may designate (each a “Conversion Agent”), provided, further, that if this Security or portion hereof has been called for
redemption on a Redemption Date or is repurchasable on a Repurchase Date occurring, in either case, during the period from the close of business on any Regular Record Date next preceding any Interest Payment Date to the close of business on the
second Business Day following such Interest Payment Date, and as a result, the right to convert this Security would otherwise terminate in such period if not exercised and this Security is surrendered for 

  

 6 

 
conversion during such period, then the Holder of this Security on such Regular Record Date will be entitled to receive the interest accruing hereon from the
Interest Payment Date next preceding the date of such conversion to such succeeding Interest Payment Date and the Holder of this Security who converts this Security or a portion hereof during such period shall not be required to pay such interest
upon surrender of this Security for conversion. Subject to the provisions of the preceding sentence and, in the case of a conversion after the close of business on the Regular Record Date next preceding any Interest Payment Date and on or before the
close of business on the third Business Day following such Interest Payment Date, to the right of the Holder of this Security (or any Predecessor Security of record as of such Regular Record Date) to receive the related installment of interest to
the extent and under the circumstances provided in the Indenture, no cash payment or adjustment is to be made on conversion for interest accrued hereon from the Interest Payment Date next preceding the day of conversion, or for dividends on the
Common Stock issued on conversion hereof. The Company shall thereafter deliver to the Holder the fixed number of shares of Common Stock (together with any cash adjustment, as provided in the Indenture) into which this Security is convertible and
such delivery will be deemed to satisfy the Company’s obligation to pay the principal amount of this Security. No fractions of shares or scrip representing fractions of shares will be issued on conversion, but instead of any fractional interest
(calculated to the nearest  1/100th of a share) the Company shall pay a cash adjustment as provided in the
Indenture. The Conversion Rate is subject to adjustment as provided in the Indenture. In addition, the Indenture provides that in case of certain consolidations or mergers to which the Company is a party (other than a consolidation or merger that
does not result in any reclassification, conversion, exchange or cancellation of the Common Stock) or the conveyance, transfer, sale or lease (other than a mere grant of security interest) of all or substantially all of the property and assets of
the Company, the Indenture shall be amended, without the consent of any Holders of Securities, so that this Security, if then Outstanding, will be convertible thereafter, during the period this Security shall be convertible as specified above, only
into the kind and amount of securities, cash and other property receivable upon such consolidation, merger, conveyance, transfer, sale or lease by a holder of the number of shares of Common Stock of the Company into which this Security could have
been converted immediately prior to such consolidation, merger, conveyance, transfer, sale or lease (assuming such holder of Common Stock is not a Constituent Person or an Affiliate of a Constituent Person, failed to exercise any rights of election
and received per share the kind and amount received per share by a plurality of Non-electing Shares). No adjustment in the Conversion Rate will be made until such adjustment would require an increase or decrease of at least one percent of such rate,
provided that any adjustment that would otherwise be made will be carried forward and taken into account in the computation of any subsequent adjustment. 
  

If this Security is a Registrable Security (as defined in the Indenture), then the Holder of this Security and the Common Stock of the Company issuable
upon conversion hereof is entitled to the benefits of a Registration Rights Agreement, dated as of June 10, 2003 (the “Registration Rights Agreement”) between the Company and the Initial Purchasers. Pursuant to the Registration Rights
Agreement, the Company has agreed for the benefit of the Holders from time to time of the Registrable Securities that it will, at its expense, (a) within 90 days after the Issue Date tile a shelf registration statement (the “Shelf Registration
Statement”) with the Commission with respect to resales of the Registrable Securities, (b) use its reasonable best efforts to cause such Shelf Registration Statement to be declared effective by the Commission within 180 days after the Issue
Date of the Securities, provided, however, that the Company may, upon written 

  

 7 

 
notice to all the Holders, postpone having the Shelf Registration Statement declared effective for a reasonable period not to exceed 90 days if the Board of
Directors has determined in good faith that because of valid business reasons (not including avoidance of its obligations under the Registration Rights Agreement), including the acquisition or divestiture of assets, pending corporate developments
and similar events, it is in the Company’s best interests to postpone having the Shelf Registration Statement declared effective, and (c) use its reasonable best efforts to maintain such Shelf Registration Statement effective under the
Securities Act until the earliest of (i) two years after the effective date of the Shelf Registration Statement, (ii) the expiration of the period referred to in Rule 144(k) of the Securities Act with respect to Registrable Securities held by
non-affiliates of the Company and (iii) until there are no outstanding Registrable Securities (the “Effectiveness Period”). The Company will be permitted to suspend the use of the prospectus which is part of the Shelf Registration
Statement during certain periods of time as provided in the Registration Rights Agreement. 
  
 If (i) on or prior to the 90th day following the Issue Date, a Shelf Registration Statement has not been filed with the Commission, or (ii) on or prior to the 180th day following the Issue Date, such Shelf
Registration Statement is not declared effective (each, a “Registration Default”), additional liquidated damages (“Liquidated Damages”) will accrue on this Restricted Security from and including the day following such
Registration Default to but excluding the day on which such Registration Default has been cured. Liquidated Damages will be paid semiannually in arrears, with the first semi-annual payment due on the first Interest Payment Date, as applicable, in
respect of the Restricted Securities following the date on which such Liquidated Damages begin to accrue, and will accrue at a rate per annum equal to one-quarter of one percent (0.25%) of the principal amount of the Restricted Securities to and
including the 90th day following such Registration Default and at a rate per annum equal to one-half of one percent (0.50%) thereof from and after the 91st day following such Registration Default. Pursuant to the Registration Rights Agreement, in
the event that the Shelf Registration Statement ceases to be effective (or the Holders of Registrable Securities are otherwise prevented or restricted by the Company from effecting sales pursuant thereto) (an “Effective Failure”) during
the Effectiveness Period for more than 30 days, whether or not consecutive, during any 90-day period or for more than 90 days, whether or not consecutive, during any 365-day period, then the Liquidated Damages will accrue at a rate per annum equal
to an additional one-half of one percent (0.50%) of the principal amount of the Restricted Securities from the 31st day of the applicable 90-day period or the 91st day of the applicable 365-day period until the earlier of (A) such time as the
Effective Failure is cured or (B) the Effectiveness Period expires. 
  
 Whenever in this Security there is a reference, in any context, to the payment of the principal of, premium, if any, or interest on, or in respect of, any Security, such mention shall be deemed to include mention of the payment of
Liquidated Damages payable as described in the preceding paragraph to the extent that, in such context, Liquidated Damages are, were or would be payable in respect of such Security and express mention of the payment of Liquidated Damages (if
applicable) in any provisions of this Security shall not be construed as excluding Liquidated Damages in those provisions of this Security where such express mention is not made. 
  
 If this Security is a Registrable Security and the Holder of this Security (including any Person that has a beneficial
interest in this security) elects to sell this Security pursuant to the 

  

 8 

 
Shelf Registration Statement then, by its acceptance hereof, such Holder of this Security agrees to be bound by the terms of the Registration Rights
Agreement relating to the Registrable Securities which are the subject of such election. 
  
 If a Change in Control occurs, the Holder of this Security, at the Holder’s option, shall have the right, in accordance with the provisions of the Indenture, to require the Company to repurchase this Security (or
any portion of the principal amount hereof that is at least $1,000 or an integral multiple of $1,000 in excess thereof, provided that the portion of the principal amount of this Security to be Outstanding after such repurchase is at least equal to
U.S. $l,000) at a Repurchase Price equal to 100% of the principal amount thereof plus interest accrued but unpaid to but excluding the Repurchase Date. At the option of the Company, the Repurchase Price may be paid in cash or, subject to the
conditions provided in the Indenture, by delivery of shares of Common Stock valued at 95% of the average of the Closing Prices Per Share for the five consecutive Trading Days immediately preceding and including the third Trading Day prior to the
Repurchase Date. 
  
 Whenever in this Security there is a
reference, in any context, to the principal of any Security as of any time, such reference shall be deemed to include reference to the Repurchase Price payable in respect of such Security to the extent that such Repurchase Price is, was or would be
so payable at such time, and express mention of the Repurchase Price in any provision of this Security shall not be construed as excluding the Repurchase Price so payable in those provisions of this Security when such express mention is not made.

  
 In the event of a deposit or withdrawal of an interest in this
Security, including an exchange, transfer, redemption, repurchase or conversion of this Security in part only, the Trustee, as custodian of the Depositary, shall make an adjustment on its records to reflect such deposit or withdrawal in accordance
with the Applicable Procedures. 
  
 If an Event of Default shall
occur and be continuing, the principal of all the Securities, together with accrued interest to the date of declaration, may be declared due and payable in the manner and with the effect provided in the Indenture. Upon payment of the amount of
principal so declared due and payable, together with accrued interest to the date of declaration, all of the Company’s obligations in respect of the payment of the principal of and interest on the Securities shall terminate. 
  
 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 either (a) the written consent of the Holders of
not less than a majority in principal amount of the Securities at the time Outstanding, 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 and entitled to vote at such meeting. 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 

  

 9 

 
Holder and upon all future Holders of this Security and of any Security issued in exchange therefor or in lieu hereof whether or not notation of such consent
or waiver is made upon this Security or such other Security. 
  
 As provided in and subject to the provisions of the Indenture, the Holder of this Security shall not have the right to institute any proceeding with respect to the Indenture or for the appointment of a receiver or trustee or for any other
remedy thereunder, unless such Holder shall have previously given the Trustee written notice of a continuing Event of Default, the Holders of not less than 25% in principal amount of the Outstanding Securities shall have made written request to the
Trustee to institute proceedings in respect of such Event of Default as Trustee and offered the Trustee reasonable indemnity and the Trustee shall not have received from the Holders of a majority in principal amount of the Securities Outstanding a
direction inconsistent with such request, and shall have failed to institute any such proceeding, for 60 days after receipt of such notice, request and offer of indemnity. The foregoing shall not apply to any suit instituted by the Holder of this
Security for the enforcement of any payment of principal hereof, premiums if any, or interest (including Liquidated Damages, if any) hereon on or after the respective due dates expressed herein or for the enforcement of the right to convert this
Security as provided in the Indenture. 
  
 No reference herein to
the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, premium, if any, 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. 
  
 As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registrable on the Security Register
upon surrender of this Security for registration of transfer at the Corporate Trust Office of the Trustee or at such other office or agency of the Company as may be designated by it for such purpose in the Borough of Manhattan, The City of New York
(which shall initially be an office or agency of the Trustee), or at such other offices or agencies as the Company may designate, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the
Security Registrar duly executed by, the Holder thereof or his attorney duly authorized in writing, and thereupon one or more new Securities, of authorized denominations and for the same aggregate principal amount, will be issued to the designated
transferee or transferees by the Registrar. No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to recover any tax or other governmental charge payable in
connection therewith. 
  
 Prior to due presentation of a Security
for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name such Security is registered, as the owner thereof for all purposes, whether or not such Security be overdue, and
neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. 
  
 No recourse for the payment of the principal (and premium, if any) or interest on this Security and no recourse under or upon any obligation, covenant or
agreement of the Company 

  

 10 

 
in the Indenture or any indenture supplemental thereto or in any Security, or because of the creation of any indebtedness represented thereby, shall be had
against any incorporator, stockholder, employee, agent, officer or director or subsidiary, as such, past, present or future, of the Company or of any successor corporation, either directly or through the Company or any successor corporation, whether
by virtue of any constitution, statute or rule of law or by the enforcement of any assessment or penalty or otherwise, all such liability being, by the acceptance hereof and as part of consideration for the issue hereof, expressly waived and
released. 
  
 THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, THE UNITED STATES OF AMERICA INCLUDING, WITHOUT LIMITATION, SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW AND NEW YORK CIVIL PRACTICE LAWS AND RULE
327(B), WITHOUT GIVING EFFECT TO ANY PROVISIONS THEREOF RELATING TO CONFLICT OF LAW. 
  
 All terms used in this Security which are defined in the Indenture shall have the meanings assigned to them in the Indenture. 
  

 11 

 ABBREVIATIONS 
  
 The following abbreviations, when used in the inscription of the face of this Security, shall be construed as though they were written out in full
according to applicable laws or regulations: 
  

	 TEN COM
	  	 as tenant in common
	  	UNIF GIFT MIN ACT	  	             Custodian            
(Cust)       
             (Minor)
under Uniform Gifts to
Minors Act
            
                      (State)
	 TEN ENT
	  	 as tenants by the entireties (Cust)
	  	 	  
	 JT TEN
	  	as joint tenants with right of survivorship and not as tenants in common	  	 	  

  
 Additional
abbreviations may also be used though not in the above list. 
  

 12 

 ELECTION OF HOLDER TO REQUIRE REPURCHASE 
  
 (1) Pursuant to Section 13.1 of the Indenture, the undersigned hereby elects to have this Security repurchased by the
Company. 
  
 (2) The undersigned hereby directs the Trustee or the
Company to pay it or              an amount in cash or, at the Company’s election, Common Stock valued as set forth in the Indenture, equal to 100% of the principal amount to be
repurchased (less any cash payments) (as set forth below), or a combination of cash and Common Stock, plus interest accrued to, but excluding, the Repurchase Date, as provided in the Indenture. 
  

	 Dated:

	
	

	
	

	 Signature(s)

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

	 Signature Guaranteed

	
	Principal amount to be repurchased (at least U.S. $1,000 or an integral multiple of $1,000 in excess thereof):
                                
	
	Remaining principal amount following such repurchase (not less than U.S. $1,000):
	
	

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

 13 

 EXHIBIT B — Form of Certificate of Authentication 
  
 This is one of the Securities referred to in the within-mentioned Indenture.

  
 Dated:                         

	
	

	 as Trustee

		
	 By:
	 	  

	 	 	Authorized Signatory

  

 14 

 EXHIBIT C — Form of Conversion Notice 
  
 CONVERSION NOTICE 
  
 The undersigned Holder of this Security hereby irrevocably exercises the option to convert this Security, or any portion of the principal amount hereof
(which is U.S. $1,000 or an integral multiple of U.S. $1,000 in excess thereof, provided that the unconverted portion of such principal amount is U.S. $1,000 or any integral multiple of U.S. $1,000 in excess thereof) below designated, into shares of
Common Stock in accordance with the terms of the Indenture referred to in this Security, and directs that such shares, together with a check in payment for any fractional share and any Securities representing any unconverted principal amount hereof,
be delivered to and be registered in the name of the undersigned unless a different name has been indicated below. If shares of Common Stock or Securities are to be registered in the name of a Person other than the undersigned, (a) the undersigned
will pay all transfer taxes payable with respect thereto and (b) signature(s) must be guaranteed by an Eligible Guarantor Institution with membership in an approved signature guarantee program pursuant to Rule 17Ad-l5 under the Securities Exchange
Act of 1934. Any amount required to be paid by the undersigned on account of interest accompanies this Security. 
  

	 Dated:
                                
	 	  

	 	 	Signature(s)

  

	If shares or Securities are to be registered in the name of
a Person other than the Holder, please print such
Person’s name and address:	  	 
	
	  	 
	 (Name)
	  	 
		
	
	  	 
		
	
	  	 
	 (Address)
	  	 
		
	
	  	 
	 Social Security or other Identification Number, if any
	  	 
		
	Signature(s) must be guaranteed by an Eligible Guarantor Institution with membership in an approved signature guarantee program pursuant to Rule 17Ad-15 under the Securities Exchange
Act of 1934.	  	 

  

 15 

	  

	[Signature Guaranteed]

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

	1.	 	Principal amount to be converted: U.S. $              

  

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

  

	 Amount: U.S.
$                
	  	 Denominations: U S.
$                

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

  
  

 16 

 EXHIBIT D — Form of Assignment 
  
 For value received
                     hereby sell(s), assign(s) and transfer(s) unto
                     (Please insert social security or other identifying number of assignee) the within Security, and hereby irrevocably
constitutes and appoints                      as attorney to transfer the said Security on the books of the Company, with full power of
substitution in the premises. 
  

	 Dated:                     
	 	 	 	
 Signature(s)

					
	 	 	 	 	 	 	 	 	Signature(s) must be guaranteed by an Eligible Guarantor Institution with membership in an approved signature guarantee program pursuant to Rule 17Ad—15 under the Securities
Exchange Act of 1934.
					
	 	 	 	 	 	 	 	 	
 Signature Guaranteed

  
  

 17 

 EXHIBIT E — Form of Unrestricted Securities Certificate 
  
 UNRESTRICTED SECURITIES CERTIFICATE 
  
 (For removal of Restricted Securities Legend pursuant to Section 3.5(3))

  
 ___________________ 
 [Address] 
  
 ___________________ 
 Institutional Trust Services Window 
 [Address] 
  
 RE: 5.00%
CONVERTIBLE SENIOR NOTES DUE JUNE 15, 2010 OF K2 INC. (THE “SECURITIES”) 
  
 Reference is made to the Indenture, dated as of June 10, 2003 (the “Indenture”), from K2 Inc. (the “Company”) to U.S. Bank National Association, as Trustee. Terms used herein and defined in the
Indenture or in Rule 144 under the U.S. Securities Act of 1933 (the “Securities Act”) are used herein as so defined. 
  
 This certificate relates to U.S. $             principal amount of Securities, which
are evidenced by the following certificate(s) (the “Specified Securities”): 
  
 CUSIP No.              
  
 CERTIFICATE No(s).              
  
 The person in whose name this certificate is executed below (the
“Undersigned”) hereby certifies that either (i) it is the sole beneficial owner of the Specified Securities or (ii) it is acting on behalf of all the beneficial owners of the Specified Securities and is duly authorized by them to do so.
Such beneficial owner or owners are referred to herein collectively as the “Owner”. If the Specified Securities are represented by a Global Security, they are held through the Depositary or an Agent Member in the name of the Undersigned,
as or on behalf of the Owner. If the Specified Securities are not represented by a Global Security, they are registered in the name of the Undersigned, as or on behalf of the Owner. 
  
 The Owner has requested that the Specified Securities be exchanged for Securities bearing no Restricted Securities Legend
pursuant to Section 3.5(3) of the Indenture. In connection with such exchange, the Owner hereby certifies that the exchange is occurring after a period of at least two years has elapsed since the Issue Date, and the Owner is not, and during the
preceding three months has not been, an affiliate of the Company. The Owner also acknowledges that any future transfers of the Specified Securities must comply with all applicable securities laws of the States of the United States and other
jurisdictions. 
  

 18 

 This certificate and the statements contained herein are made for your benefit and the benefit of the
Company and the Initial Purchasers. 
  
 Dated:
                 
  
 (Print the name of the Undersigned, as such term is defined in the third paragraph of this certificate.) 
  

	 By:
	 	  

	 Name:
	 	  

	 Title:
	 	  

  
 (If the Undersigned is a corporation,
partnership or fiduciary, the title of the person signing on behalf of the Undersigned must be stated.) 
  

 19 

 EXHIBIT F — Form of Surrender Certificate 
  
 In connection with the certification contemplated by Section 12.2 or 13.3(9)
relating to compliance with certain restrictions relating to transfers of Restricted Securities, such certification shall be provided substantially in the form of the following certificate, with only such changes thereto as shall be approved by the
Company and Goldman, Sachs & Co.: 
  
 CERTIFICATE 

 
 K2 INC. 
  
 5.00% CONVERTIBLE SENIOR NOTES DUE JUNE 15, 2010 
  
 This is to certify that as of the date hereof with respect to U.S.
$             principal amount of the above-captioned securities surrendered on the date hereof (the “Surrendered Securities”) for registration of transfer, or for
conversion or repurchase where the securities issuable upon such conversion or repurchase are to be registered in a name other than that of the undersigned Holder (each such transaction being a “transfer”), the undersigned Holder (as
defined in the Indenture) certifies that the transfer of Surrendered Securities associated with such transfer complies with the restrictive legend set forth on the face of the Surrendered Securities for the reason checked below: 
  
              The transfer
of the Surrendered Securities complies with Rule 144A under the Securities Act; or 
  
              The transfer of the Surrendered Securities complies with Rule 144 under the United States Securities Act of 1933, as amended (the “Securities Act”);
or 
  
              The transfer of the Surrendered Securities has been made to an institution that is an “accredited investor” within the meaning of Rule
50l(a)(l), (2), (3) or (7) under the Securities Act in a transaction exempt from the registration requirements of the Securities Act and a signed letter containing certain representations and agreements relating to restrictions on transfer of the
Securities has been delivered (and if such transfer is for an aggregate principal amount less than $250,000 an opinion of counsel acceptable to the Company if requested by the Company, that such transfer is exempt from registration); or 

 
              The
transfer of the Surrendered Securities has been made pursuant to an exemption from registration under the Securities Act and an opinion of counsel has been delivered to the Company with respect to such transfer. 
  
 [Name of Holder] 
  
 Dated:
                                     
 *To be dated the date of surrender 
  

 20

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